By Ernest Scheyder
Aug 7 Duke Energy Corp, the largest
power provider in the United States, posted a
lower-than-expected quarterly profit on Wednesday due in part to
weak commercial sales.
Duke, which uses coal, natural gas and nuclear plants to
generate electricity, has struggled this year with sales to
large, U.S. commercial clients affiliated with PJM
Interconnection, a wholesale distributor that holds a popular
auction for companies to sell electricity.
Wholesale prices dropped this year to $16 per megawatt hour
in a PJM auction from $110 per megawatt hour in 2012, due in
part to overcapacity, sharply denting Duke's profit. The low
prices are only temporary and should rise next year to $126 per
megawatt hour, CEO Lynn Good said in an interview.
"You can expect the prices to increase from here to 2015 and
then they'll moderate," said Good, who was named Duke's CEO
earlier this summer.
Despite the disappointing commercial sales, Duke still
expects to earn $4.20 to $4.45 per share this year. The midpoint
of that forecast roughly matches analysts' average estimate of
Good said she believes Duke can hit that goal as rate
increase requests are approved in North Carolina and Ohio and
the company squeezes more cost savings from the integration of
Progress Energy, acquired last summer for $18 billion.
"We're going to hit consensus," Good said. "We feel like we
have built a lot of momentum and have resolved our near-term
priorities and are positioning the company for the future."
For the second quarter, the company posted net income of
$339 million, or 48 cents per share, compared with $444 million,
or 99 cents per share, in the year-ago period.
Excluding charges to write off investments in a failed
Florida nuclear project, as well as other one-time items, the
company earned 87 cents per share.
By that measure, analysts expected earnings of 94 cents per
share, according to Thomson Reuters I/B/E/S.
The company's 2012 buyout of rival Progress Energy
substantially increased the company's float.
Operating revenue rose to $5.88 billion from $3.58 billion,
missing the $5.73 billion expected by Wall Street.
Duke's shares have gained 11.5 percent so far this year and
closed Tuesday at $71.12.