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Duke Looks for ’23 Return to Normal Load Growth

Feb. 10, 2023
The utility has taken a large impairment charge on the renewables business it is looking to sell.

After two years of electric volume growth topping 2%, Duke Energy Corp. leaders are forecasting a return to a more normal pace in 2023.

Charlotte-headquartered Duke, which has electric utility operations in the Carolinas, Florida, Ohio, Kentucky and Indiana with a combined 8.2 million retail customers, saw total retail volumes climb 2.5% in 2022, led by growth of 3.5% among commercial clients rebounding from the worst of the COVID-19 pandemic.

Demand from that customer group will retreat about 1% this year, CEO Lynn Good and CFO Brian Savoy told analysts and investors Feb. 9, while volumes from residential and industrial clients are forecast to climb about 1%. As a result, overall retail volumes are expected to climb about 0.5%.

“We expect load growth in the commercial class to moderate this year following two years of significant growth,” Savoy said on a conference call discussing Duke’s fourth-quarter results. “But the upside is in industrial as easing supply chain constraints fuel a continued rebound for certain large manufacturers.”

Duke posted a net loss of $531 million on (operating revenues of nearly $7.4 billion) in the last three months of 2022, which was primarily due to a nearly $1.3 billion impairment charge related to the portfolio of commercial renewables assets it is looking to sell. Excluding that and other special items, adjusted profits were $869 million compared to $690 million in late 2021.

Good and her team last fall put Duke’s commercial renewables division on the market, joining a number of other utilities in looking to get out of that line of business to focus on regulated investments. Good said she feels good about the progress being made on the sale even though its completion is now contemplated for later in 2023 rather than the originally contemplated midyear.

Speaking to the large writedown, Good said “that's really driven by the earnings profile of renewables, where a lot of the profit that's in the early part of the life [and] you then depreciate it over a longer period of time. So when you make a decision to exit before the end of the useful life, you've kind of set yourself up for an impairment.”

Shares of Duke (Ticker: DUK) fell about 2% to roughly $97.40 Feb. 9. Over the past six months, they have given up about 10% of their value, trimming the company’s market capitalization to $75 billion.

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