EX-99.1 2 d482442dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO       NEWS RELEASE
     

Duke Energy Corporation

     

P.O. Box 1009

     

Charlotte, NC 28201-1009

 

Feb. 13, 2013    MEDIA CONTACT:   
   Tom Shiel        704-382-2355
   24-Hour:        800-559-3853
   ANALYSTS:   
  

Bob Drennan

Bill Currens

  

    704-382-4070

    704-382-1603

Duke Energy 2012 results near top of EPS guidance range

 

   

Company achieves adjusted diluted earnings per share (EPS) of $4.32 in 2012, compared to $4.38 in 2011; reported diluted EPS $3.07 for 2012, compared to $3.83 in 2011

 

   

Fourth quarter 2012 adjusted diluted EPS of 70 cents, compared with 71 cents for the fourth quarter 2011; fourth quarter 2012 reported diluted EPS of 62 cents, compared to 65 cents in 2011

 

   

Company will provide updates on its businesses, report on regulatory initiatives, and offer a financial and business outlook for 2013 and beyond during Feb. 28 analyst meeting

CHARLOTTE, N.C. - Duke Energy today posted 2012 full-year adjusted diluted EPS of $4.32, which was near the top of its adjusted diluted EPS guidance range of $4.20 to $4.35.

For 2012, adjusted EPS reflected the addition of earnings from Progress Energy, net of the impact of shares issued in connection with the merger, the impact of the new market-based Electric Security Plan (ESP) in Ohio, and unfavorable weather.

These were partially offset by revised customer rates at Duke Energy Carolinas.

 

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Duke Energy’s full-year reported diluted EPS was $3.07 for 2012, compared to $3.83 in 2011.

Fourth quarter 2012 adjusted diluted EPS was 70 cents, compared to 71 cents for fourth quarter 2011. Fourth quarter 2012 reported diluted EPS was 62 cents, compared to 65 cents for fourth quarter 2011.

“For Duke Energy, 2012 was a year of unprecedented accomplishment, highlighted by the merger with Progress Energy that has already begun providing savings for our customers,” said Jim Rogers, chairman, president and chief executive officer. “We also made significant progress with our fleet modernization program by bringing online three major new power plants in North Carolina, enabling us to retire older, less efficient coal-fired units.”

“I am especially pleased with the outstanding performance and resilience of our employees,” he added. “During a year of change and uncertainty, they maintained their focus and strong commitment. The nuclear fleet maintained a capacity factor greater than 90 percent, excluding Crystal River 3, for the 13th consecutive year and the company achieved its best safety record ever.

“From a financial perspective, we achieved our objectives by delivering 2012 adjusted diluted EPS near the top of our guidance range, increasing the dividend and maintaining the strength of our balance sheet,” Rogers said.

The company also resolved two significant regulatory proceedings in 2012: the North Carolina Utility Commission’s merger investigation, and the Indiana Utility Regulatory Commission’s cost recovery settlement for the Edwardsport Integrated Gasification Combined Cycle (IGCC) station.

BUSINESS UNIT RESULTS

The discussion below of fourth-quarter and year-end 2012 financial results includes adjusted segment income, which is a non-GAAP financial measure. The tables on pages 24 through 27 present a reconciliation of reported results to adjusted results.

 

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U.S. Franchised Electric and Gas (USFE&G)

USFE&G recognized fourth-quarter 2012 adjusted segment income of $498 million, compared to $206 million in the fourth quarter 2011, an increase of $0.42 per share.

USFE&G’s increased results were primarily driven by the addition of Progress Energy’s regulated utility operations in the Carolinas and Florida (+$0.28 per share).

Other drivers, excluding the addition of Progress Energy, included:

 

   

Increased pricing and riders principally related to the implementation of revised customer rates at Duke Energy Carolinas as a result of the 2011 rate case (+$0.07 per share)

 

   

Adjustments to income taxes (+$0.07 per share)

 

   

More favorable weather (+$0.03 per share)

These results were partially offset by higher operating and maintenance expenses (-$0.05 per share).

Full-year 2012 adjusted segment income for USFE&G was $2,086 million compared to $1,316 million in 2011, an increase of $1.34 per share.

Higher year-over-year results were primarily driven by the addition of Progress Energy’s regulated utility operations in the Carolinas and Florida (+$1.02 per share). Excluding the addition of Progress Energy, other drivers included increased pricing and riders principally related to the implementation of revised customer rates at Duke Energy Carolinas (+$0.48 per share) and lower operating and maintenance and governance costs (+$0.06 per share).

These results were partially offset by unfavorable weather compared to the prior year (-$0.19 per share).

 

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International Energy

International Energy recognized fourth-quarter 2012 adjusted segment income of $89 million, compared to $96 million in the fourth quarter 2011, a decrease of $0.01 per share.

International Energy’s quarterly results decreased primarily due to higher purchased power costs in Brazil because of unfavorable hydrology (-$0.02 per share) and unfavorable foreign exchange rates primarily in Brazil (-$0.01 per share).

These results were partially offset by increased volumes for our thermal generation in Central America due to drier weather (+$0.02 per share).

Full-year 2012 adjusted segment income for International Energy was $439 million compared to $466 million in 2011, a decrease of $0.05 per share.

Lower year-over-year results were primarily driven by unfavorable foreign exchange rates primarily in Brazil (-$0.06 per share) and lower results in Central America due to lower average prices (-$0.04 per share).

These results were partially offset by higher average sales prices and volumes in Brazil (+$0.03 per share) and higher average MTBE prices and volumes at National Methanol Company (+$0.03 per share).

Commercial Power

Commercial Power’s adjusted segment earnings for the fourth quarter 2012 were break-even, compared to $30 million in the fourth quarter 2011, a decrease of $0.04 per share.

 

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Commercial Power’s quarterly results decreased primarily due to adjustments to income taxes (-$0.03 per share) and lower results from the Midwest gas generation fleet (-$0.01 per share) driven by lower capacity revenues, partially offset by lower operating and maintenance costs.

Results for the Midwest coal generation fleet were flat primarily due to the net impacts of the new market-based ESP in Ohio (-$0.05 per share), offset by the absence of a prior-year fee related to exiting the Midwest Independent System Operator (+$0.04 per share), and lower operating and maintenance costs (+$0.01 per share).

Full-year 2012 adjusted segment income for Commercial Power was $93 million, compared to $186 million in 2011, a decrease of $0.16 per share.

Lower year-over-year results were driven by lower results for the Midwest coal generation fleet due to the net impacts of the new market-based Ohio ESP on the Midwest coal generation fleet (-$0.21 per share) offset by the absence of a prior-year fee related to exiting MISO (+$0.04 per share), and lower operating and maintenance costs (+$0.04 per share). Additionally, lower results were due to unfavorable pricing and lower sales volumes for Duke Energy Retail (-$0.08 per share).

These were partially offset by higher results at Duke Energy Renewables (+$0.04 per share).

Results for the Midwest gas generation fleet were flat primarily due to the offsetting impacts of favorable generation volumes (+$0.06 per share), lower operating and maintenance costs (+$0.03 per share), and unfavorable capacity revenues (-$0.11 per share).

 

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Other

On an adjusted basis, Other primarily includes corporate interest expense not allocated to the business units, results from Duke Energy’s captive insurance company, other investments, and quarterly income tax levelization adjustments.

Other recognized fourth-quarter 2012 adjusted net expense of $91 million, compared to net expense of $17 million in the fourth quarter 2011, a difference of $0.12 per share. Other’s results were primarily due to the addition of interest expense on Progress Energy’s corporate debt (-$0.06 per share).

Full-year 2012 adjusted net expense for Other was $135 million compared to a net expense of $25 million in 2011, a difference of $0.19 per share.

Increased year-over-year adjusted net expense for Other was primarily driven by the addition of interest expense on Progress Energy’s corporate debt (-$0.12 per share) and higher interest expense on Duke Energy corporate debt (-$0.05 per share).

Share Dilution

On July 2, 2012, Duke Energy issued approximately 258 million shares of common stock in connection with the closing of the merger with Progress Energy Inc. The issuance of these additional shares had a dilutive impact of $0.26 per share and $1.00 per share on the quarter-over-quarter and year-over-year adjusted diluted EPS results, respectively.

Earnings Conference Call for Analysts

An earnings conference call for analysts is scheduled for 10 a.m. ET Wednesday, Feb. 13, to discuss Duke Energy’s financial performance for the fourth quarter 2012 as well as providing other business updates. The conference call will be hosted by Jim Rogers, chairman, president and chief executive officer, and Lynn Good, executive vice president and chief financial officer.

 

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The call can be accessed via the investors’ section (http://www.duke-energy.com/investors/) of Duke Energy’s website or by dialing 888-695-0608 in the United States or 719-325-2286 outside the United States. The confirmation code is 4249923. Please call in 10 to 15 minutes prior to the scheduled start time.

A replay of the conference call will be available until midnight ET, Feb. 22, 2013, by calling 888-203-1112 in the United States or 719-457-0820 outside the United States and using the code 4249923. A replay and transcript also will be available by accessing the investors’ section of the company’s website.

Analyst Meeting Feb. 28

Duke Energy will host an investor and analyst meeting Thursday, Feb. 28, from 8:30 a.m. to 12:30 p.m. ET in New York City.

Rogers and other members of the Duke Energy management team will provide updates on the company’s operating businesses, report on regulatory initiatives, and offer the company’s financial and business outlook for 2013 and beyond.

A live webcast of the meeting can be accessed via the investors’ section of Duke Energy’s website (http://www.duke-energy.com/investors/) or by dialing 719-325-2329 outside the United States or 888-427-9376 in the United States. The confirmation code is 8401489. Please call 10 to 15 minutes prior to the scheduled start time. A replay and transcript of the meeting will be available by accessing the investors’ section of the company’s website.

 

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Special Items and Non-GAAP Reconciliation

Special items affecting Duke Energy’s adjusted diluted EPS for fourth quarter 2011 and fourth quarter 2012 include:

 

(In millions, except per-share amounts)

   Pre-Tax
Amount
    Tax
Effect
    4Q2012
EPS
Impact
    4Q2011
EPS
Impact
 

Fourth Quarter 2012

        

•    Costs to Achieve, Progress Energy Merger

   $ (164   $ 73      $ (0.13  

•    Edwardsport Charges

   $ (28   $ 11      $ (0.02  

•    Discontinued Operations

   $ 56      $ (25   $ 0.05     

•    Economic Hedges (Mark-to-Market)

   $ 26      $ (10   $ 0.02     

Fourth Quarter 2011

        

•    Costs to Achieve, Progress Energy Merger

   $ (39   $ 11        $ (0.06

•    Economic Hedges (Mark-to-Market)

   $ 2      $ (1       —     
      

 

 

   

 

 

 

Total diluted EPS impact

       $ (0.08   $ (0.06
      

 

 

   

 

 

 

Special items affecting Duke Energy’s adjusted diluted EPS for full-year 2011 and full-year 2012 include:

 

(In millions, except per-share amounts)

   Pre-Tax
Amount
    Tax
Effect
    2012
EPS
Impact
    2011
EPS
Impact
 

Full-Year 2012

        

•    Costs to Achieve, Progress Energy Merger

   $ (636   $ 239      $ (0.70  

•    Edwardsport Charges

   $ (628   $ 226      $ (0.70  

•    DNC Host Committee Support

   $ (10   $ 4      $ (0.01  

•    Economic Hedges (Mark-to-Market)

   $ (9   $ 3      $ (0.01  

•    Voluntary Opportunity Plan Deferral

   $ 99      $ (39   $ 0.11     

•    Discontinued Operations

   $ 60      $ (24   $ 0.06     

Full-Year 2011

        

•    Edwardsport Impairment

   $ (222   $ 87        $ (0.30

•    Emission Allowance Impairment

   $ (79   $ 28        $ (0.12

•    Costs to Achieve, Progress Energy Merger

   $ (68   $ 17        $ (0.12

•    Economic Hedges (Mark-to-Market)

   $ (1   $ —          $ (0.01
      

 

 

   

 

 

 

Total diluted EPS impact

       $ (1.25   $ (0.55
      

 

 

   

 

 

 

 

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Reconciliation of reported to adjusted diluted EPS for the quarters:

 

      4Q2012
EPS
     4Q2011
EPS
 

Diluted EPS, as reported

   $ 0.62       $ 0.65   

Adjustments to reported EPS:

     

•      Diluted EPS impact of special items and mark-to-market in Commercial Power

   $ 0.08       $ 0.06   
  

 

 

    

 

 

 

Diluted EPS, adjusted

   $ 0.70       $ 0.71   
  

 

 

    

 

 

 

Reconciliation of reported to adjusted diluted EPS for the annual periods:

 

      2012
EPS
     2011
EPS
 

Diluted EPS, as reported

   $ 3.07       $ 3.83   

Adjustments to reported EPS:

     

•      Diluted EPS impact of special items and mark-to-market in Commercial Power

   $ 1.25       $ 0.55   
  

 

 

    

 

 

 

Diluted EPS, adjusted

   $ 4.32       $ 4.38   
  

 

 

    

 

 

 

NON-GAAP FINANCIAL MEASURES

The primary performance measure used by management to evaluate segment performance is segment income. Segment income is defined as income from continuing operations net of income attributable to non-controlling interests. In addition, direct interest expense and income taxes are included in segment income and certain governance costs are allocated to each of the segments.

Management believes segment income, which is the GAAP measure used to report segment results, is a good indicator of each segment’s operating performance as it represents the approximate net income contribution of Duke Energy’s business segments by incorporating the direct financing methods or capital structures of the business segments as well as the income tax attributes of the businesses and regions in which they operate.

Duke Energy’s management uses adjusted diluted EPS, which is a non-GAAP financial measure as it represents diluted EPS from continuing operations attributable to Duke Energy Corporation common shareholders, adjusted for the per-share impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment, as a measure to evaluate operations of the company. In addition, Duke Energy’s management calculates the EPS impact of segment income drivers to facilitate an understanding of the impacts of each income driver on consolidated adjusted diluted EPS.

 

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Special items represent certain charges and credits, which management believes will not be recurring on a regular basis, although it is reasonably possible such charges and credits could recur. Mark-to-market adjustments reflect the mark-to-market impact of derivative contracts, which is recognized in GAAP earnings immediately as such derivative contracts do not qualify for hedge accounting or regulatory accounting treatment, used in Duke Energy’s hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS provides useful information to investors, as it provides them an additional relevant comparison of the company’s performance across periods. Adjusted diluted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measure for adjusted diluted EPS is reported diluted EPS from continuing operations attributable to Duke Energy Corporation common shareholders, which includes the impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Due to the forward-looking nature of adjusted diluted EPS for future periods, information to reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items and the mark-to-market impacts of economic hedges in the Commercial Power segment for future periods.

Duke Energy also uses adjusted segment income and adjusted Other net expenses as a measure of historical and anticipated future segment and Other performance. Adjusted segment income and adjusted Other net expenses are non-GAAP financial measures, as they represent reported segment income and Other net expenses adjusted for special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Management believes that the presentation of adjusted segment income and adjusted Other net expenses provides useful information to investors, as it provides them an additional relevant comparison of a segment’s or Other’s performance across periods. When an EPS amount is provided for a segment income driver, the per share impact is derived by taking the before-tax amount of the item less income taxes based on Duke Energy’s consolidated effective tax rate, divided by the Duke Energy weighted-average diluted shares outstanding for the period. The most directly comparable GAAP measure for adjusted segment income or adjusted Other net expenses is reported segment income or Other net expenses, which represents segment income and Other net expenses from continuing operations, including any special items and the mark-to-market impacts of economic hedges in

 

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the Commercial Power segment. Due to the forward-looking nature of any forecasted adjusted segment income or adjusted Other net expenses and any related growth rates for future periods, information to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items, the mark-to-market impacts of economic hedges in the Commercial Power segment, or any amounts that may be reported as discontinued operations or extraordinary items for future periods.

Duke Energy is the largest electric power holding company in the United States with more than $100 billion in total assets. Its regulated utility operations serve approximately 7.1 million electric customers located in six states in the Southeast and Midwest. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.

Headquartered in Charlotte, N.C., Duke Energy is a Fortune 250 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at: www.duke-energy.com.

 

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DUKE ENERGY CORPORATION

EARNINGS VARIANCES

December 31, 2012 QTD vs. Prior Year

 

($ per share)    U.S. Franchised
Electric & Gas
    International
Energy
    Commercial
Power
    Other     Consolidated  

2011 QTD Reported Earnings Per Share, Diluted

   $ 0.46      $ 0.22      $ 0.07      $ (0.10   $ 0.65   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs to Achieve, Progress Energy Merger

     —           —           —           0.06        0.06   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2011 QTD Adjusted Earnings Per Share, Diluted

   $ 0.46      $ 0.22      $ 0.07      $ (0.04   $ 0.71   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Share Differential (a)

     (0.17     (0.08     (0.03     0.02        (0.26
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2011 QTD Adjusted Earnings Per Share, Diluted, Recasted for Share Issuance

   $ 0.29      $ 0.14      $ 0.04      $ (0.02   $ 0.45   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Progress Energy Contribution

     0.28        —           —           (0.06     0.22   

Weather

     0.03        —           —           —           0.03   

Pricing and Riders (b)

     0.07        —           —           —           0.07   

Operation and Maintenance and Governance Expenses

     (0.05     —           —           —           (0.05

Latin America, including Foreign Exchange Rates (c)

     —           —           —           —           —      

Midwest Coal Generation (d)

     —           —           —           —           —      

Midwest Gas Generation (e)

     —           —           (0.01     —           (0.01

Duke Energy Retail

     —           —           (0.01     —           (0.01

Interest Expense

     —           —           0.01        (0.01     —      

Adjustments to income taxes

     0.07        —           (0.03     (0.04     —      

Other

     0.02        (0.01     —           (0.01     —      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2012 QTD Adjusted Earnings Per Share, Diluted

   $ 0.71      $ 0.13      $ —         $ (0.14   $ 0.70   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs to Achieve, Progress Energy Merger

     —           —           —           (0.13     (0.13

Edwardsport Charges

     (0.02     —           —           —           (0.02

Economic Hedges (Mark-to-Market)

     —           —           0.02        —           0.02   

Discontinued Operations

     —           —           —           —           0.05   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2012 QTD Reported Earnings Per Share, Diluted

   $ 0.69      $ 0.13      $ 0.02      $ (0.27   $ 0.62   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Note 1: Earnings Per Share amounts are calculated using the consolidated effective income tax rate.

Note 2: Adjusted and Reported Earnings Per Share amounts by segment may not recompute from other published schedules due to rounding.

 

(a) Reflects the impact on prior period earnings per diluted share due to the increase in Duke Energy’s weighted-average diluted common shares outstanding as a result of shares issued to complete the merger with Progress Energy. Weighted-average diluted shares outstanding increased from 444 million for the quarter ended December 31, 2011 to 705 million for the quarter ended December 31, 2012.
(b) Primarily due to implementation of revised customer rates in North Carolina and South Carolina as a result of the 2011 Duke Energy Carolinas rate cases (+$0.09) and decreased riders (-$0.02).
(c) Primarily due to increased volumes in Central America (+$0.02), net of higher purchased power in Brazil (-0.02) and unfavorable foreign currency exchange rates (-$0.01).
(d) Primarily due to the new market-based Ohio ESP (-$0.08), partially offset by the absence of prior year MISO exit fees (+$0.04), non-bypassable stabilization charge (+$0.02), capacity revenues received from PJM in 2012 (+$0.01), and lower operation and maintenance expenses (+$0.01).
(e) Primarily due to a decrease in capacity revenue (-$0.02) net of lower operation and maintenance expenses (+$0.01).

 

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DUKE ENERGY CORPORATION

EARNINGS VARIANCES

December 31, 2012 YTD vs. Prior Year

 

($ per share)    U.S. Franchised
Electric & Gas
    International
Energy
    Commercial
Power
    Other     Consolidated  

2011 YTD Reported Earnings Per Share, Diluted

   $ 2.66      $ 1.05      $ 0.29      $ (0.17   $ 3.83   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs to Achieve, Progress Merger

     —           —           —           0.12        0.12   

Edwardsport Charges

     0.30        —           —           —           0.30   

Emission Allowances Impairment

     —           —           0.12        —           0.12   

Economic Hedges (Mark-to-Market)

     —           —           0.01        —           0.01   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2011 YTD Adjusted Earnings Per Share, Diluted

   $ 2.96      $ 1.05      $ 0.42      $ (0.05   $ 4.38   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Share Differential (a)

     (0.67     (0.24     (0.10     0.01        (1.00
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2011 YTD Adjusted Earnings Per Share, Diluted, Recasted for Share Issuance

   $ 2.29      $ 0.81      $ 0.32      $ (0.04   $ 3.38   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Progress Energy Contribution

     1.02        —           —           (0.12     0.90   

Weather

     (0.19     —           —           —           (0.19

Pricing and Riders (b)

     0.48        —           —           —           0.48   

Volume

     0.04        —           —           —           0.04   

Operation and Maintenance and Governance Expenses

     0.06        —           —           —           0.06   

Latin America, including Foreign Exchange Rates (c)

     —           (0.09     —           —           (0.09

National Methanol Company

     —           0.03        —           —           0.03   

Midwest Coal Generation (d)

     —           —           (0.13     —           (0.13

Midwest Gas Generation (e)

     —           —           —           —           —      

Duke Energy Retail

     —           —           (0.08     —           (0.08

Duke Energy Renewables

     —           —           0.04        —           0.04   

Interest Expense

     (0.02     —           0.01        (0.05     (0.06

Adjustments to income taxes

     0.06        —           (0.02     (0.02     0.02   

Other (f)

     (0.11     0.01        0.02        —           (0.08
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2012 YTD Adjusted Earnings Per Share, Diluted

   $ 3.63      $ 0.76      $ 0.16      $ (0.23   $ 4.32   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Costs to Achieve, Progress Merger

     —           —           —           (0.70     (0.70

Voluntary Opportunity Plan Deferral

     0.11        —           —           —           0.11   

Edwardsport Charges

     (0.70     —           —           —           (0.70

Democratic National Convention Host Committee Support

     —           —           —           (0.01     (0.01

Economic Hedges (Mark-to-Market)

     —           —           (0.01     —           (0.01

Discontinued Operations

     —           —           —           —           0.06   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

2012 YTD Reported Earnings Per Share, Diluted

   $ 3.04      $ 0.76      $ 0.15      $ (0.94   $ 3.07   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Note 1: Earnings Per Share amounts are calculated using the consolidated effective income tax rate.

Note 2: Adjusted and Reported Earnings Per Share amounts by segment may not recompute from other published schedules due to rounding.

 

(a) Reflects the impact on prior period earnings per diluted share due to the increase in Duke Energy’s weighted-average diluted common shares outstanding as a result of shares issued to complete the merger with Progress Energy. Weighted-average diluted shares outstanding increased from 444 million for the year ended December 31, 2011 to 575 million for the year ended December 31, 2012.
(b) Primarily due to implementation of revised customer rates in North and South Carolina as a result of the 2011 Duke Energy Carolinas rate cases (+$0.44) and increased riders (+$0.04).
(c) Primarily driven by unfavorable foreign exchange rates (-$0.06), lower average prices and lower capitalized interest in Central America (-$0.04), and the absence of a prior year arbitration award net of higher pricing in Peru (-$0.01), partially offset by higher average sales prices and volumes in Brazil (+$0.03).
(d) Primarily due to the new market-based Ohio ESP (-$0.44), partially offset by the non-bypassable stabilization charge (+$0.13), capacity revenues received from PJM in 2012 (+$0.10), absence of prior year MISO exit fees (+$0.04) and lower operation and maintenance expenses between years (+$0.04).
(e) Primarily due to favorable generation volumes (+$0.06), lower operation and maintenance expenses between years (+$0.03), and recovery of a Lehman Brothers receivable previously written-off (+$0.02), partially offset by a decrease in capacity revenue (-$0.11).
(f) Amount for U.S. Franchised Electric & Gas is primarily due to an increase in depreciation and amortization expense (-$0.14), partially offset by other miscellaneous items (+$0.03).

 

13


December 2012

QUARTERLY HIGHLIGHTS

(Unaudited)

 

     Three Months Ended
December 31,
    Years Ended
December 31,
 

(In millions, except per-share amounts and where noted)

   2012     2011     2012     2011  

COMMON STOCK DATA

        

Income from continuing operations attributable to Duke Energy Corporation common shareholders (a)

        

Basic

   $ 0.57      $ 0.65      $ 3.01      $ 3.83   

Diluted

   $ 0.57      $ 0.65      $ 3.01      $ 3.83   

Income from discontinued operations attributable to Duke Energy Corporation common shareholders (a)

        

Basic

   $ 0.05      $ —         $ 0.06      $ —      

Diluted

   $ 0.05      $ —         $ 0.06      $ —      

Net income attributable to Duke Energy Corporation common shareholders (a)

        

Basic

   $ 0.62      $ 0.65      $ 3.07      $ 3.83   

Diluted

   $ 0.62      $ 0.65      $ 3.07      $ 3.83   

Dividends Declared Per Share (a)

   $ —         $ —         $ 3.03      $ 2.97   

Weighted-Average Shares Outstanding (a)

        

Basic

     704        444        574        444   

Diluted

     705        444        575        444   

SEGMENT INCOME BY BUSINESS SEGMENT

        

U.S. Franchised Electric and Gas (b)(c)(d)

   $ 481      $ 206      $ 1,744      $ 1,181   

Commercial Power (e)

     16        31        87        134   

International Energy

     89        96        439        466   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segment Income

     586        333        2,270        1,781   

Other Net Expense (f)(g)

     (182     (45     (538     (76

Income from Discontinued Operations, net of tax

     31        —          36        1   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income Attributable to Duke Energy Corporation

   $ 435      $ 288      $ 1,768      $ 1,706   
  

 

 

   

 

 

   

 

 

   

 

 

 

CAPITALIZATION

        

Total Common Equity

         50     52

Preferred Stock of Subsidiaries

         —           —      

Total Debt

         50     48

Total Debt

       $ 40,518      $ 21,000   

Book Value Per Share (a)

       $ 58.12      $ 51.36   

Actual Shares Outstanding (a)

         704        445   

CAPITAL AND INVESTMENT EXPENDITURES

        

U.S. Franchised Electric and Gas

   $ 1,360      $ 1,061      $ 4,220      $ 3,717   

Commercial Power

     213        268        1,038        492   

International Energy

     432        18        551        114   

Other

     65        41        149        141   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Capital and Investment Expenditures

   $ 2,070      $ 1,388      $ 5,958      $ 4,464   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Reflects the impact of the 1-for-3 reverse stock split on July 2, 2012.
(b) Includes charges of $17 million in the fourth quarter of 2012 related to the Edwardsport IGCC project (net of tax of $11 million).
(c) Includes impairment and other charges of $402 million for the year ended December 31, 2012, related to the Edwardsport IGCC project (net of tax of $226 million).
(d) Includes impairment and other charges of $135 million for the year ended December 31, 2011, related to the Edwardsport IGCC project (net of tax of $87 million).
(e) Includes non-cash impairment charges of $51 million for the year ended December 31, 2011, related to an emission allowance impairment (net of tax of $28 million).
(f) Includes costs to achieve of $91 million in the fourth quarter of 2012 related to the Progress Energy merger (net of tax of $73 million).
(g) Includes costs to achieve of $397 million for the year ended December 31, 2012, related to the Progress Energy merger (net of tax of $239 million).

 

14


December 2012

QUARTERLY HIGHLIGHTS

(Unaudited)

 

     Three Months Ended
December 31,
    Years Ended
December 31,
 

(In millions, except where noted)

   2012     2011     2012     2011  

U.S. FRANCHISED ELECTRIC AND GAS

        

Operating Revenues (a)

   $ 4,873      $ 2,461      $ 16,080      $ 10,619   

Operating Expenses (b)

     4,029        2,027        12,943        8,473   

Gains on Sales of Other Assets, net

     2        —          15        2   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income (Loss)

     846        434        3,152        2,148   

Other Income and Expenses

     114        73        341        274   

Interest Expense

     260        149        806        568   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income Before Income Taxes

     700        358        2,687        1,854   

Income Tax Expense (c)

     218        152        941        673   

Less: Income Attributable to Noncontrolling Interests

     1        —          2        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Income

   $ 481      $ 206      $ 1,744      $ 1,181   
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and Amortization

   $ 552      $ 351      $ 1,827      $ 1,383   

Duke Energy Carolinas GWh sales

     19,547        18,501        81,362        82,127   

Progress Energy Carolinas GWh sales (g)

     14,425        12,609        58,390        56,223   

Progress Energy Florida’s GWh sales (h)

     8,629        8,272        38,443        39,578   

Duke Energy Ohio GWh sales

     5,744        5,608        24,344        24,923   

Duke Energy Indiana GWh sales

     7,893        7,680        33,577        33,181   

Net Proportional MW Capacity in Operation

         49,654        27,397   

COMMERCIAL POWER

        

Operating Revenues

   $ 471      $ 565      $ 2,078      $ 2,491   

Operating Expenses (d)

     469        559        1,981        2,300   

Gains on Sales of Other Assets, net

     (3     —          8        15   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income (Loss)

     (1     6        105        206   

Other Income and Expenses

     13        —          39        21   

Interest Expense

     8        20        63        87   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income Before Income Taxes

     4        (14     81        140   

Income Tax Expense

     (12     (45     (7     (2

Less: Income Attributable to Noncontrolling Interests

     —          —          1        8   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Income

   $ 16      $ 31      $ 87      $ 134   
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and Amortization

   $ 56      $ 57      $ 228      $ 230   

Actual Coal-fired Plant Production, GWh

     3,743        3,958        16,164        17,378   

Actual Gas-fired Plant Production, GWh

     3,639        3,545        17,122        12,021   

Actual Renewable Plant Production, GWh

     1,053        846        3,452        3,132   
  

 

 

   

 

 

   

 

 

   

 

 

 

Actual Plant Production, GWh

     8,435        8,349        36,738        32,531   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Proportional MW Capacity in Operation

         8,094        8,325   

INTERNATIONAL ENERGY

        

Operating Revenues

   $ 368      $ 353      $ 1,549      $ 1,467   

Operating Expenses

     275        231        1,043        946   

Gains on Sales of Other Assets, net

     —          (1     —          (1
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income (Loss)

     93        121        506        520   

Other Income and Expenses

     35        37        171        203   

Interest Expense

     16        16        76        47   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income Before Income Taxes

     112        142        601        676   

Income Tax Expense

     20        41        149        195   

Less: Income Attributable to Noncontrolling Interests

     3        5        13        15   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Income

   $ 89      $ 96      $ 439      $ 466   
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and Amortization

   $ 25      $ 24      $ 99      $ 90   

Sales, GWh

     4,868        5,021        20,132        18,889   

Proportional MW Capacity in Operation

         4,584        4,277   

OTHER

        

Operating Revenues

   $ 23      $ 10      $ 74      $ 44   

Operating Expenses (e)

     190        54        704        133   

(Losses) Gains on Sales of Other Assets, net

     (4     —          (7     (8
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income (Loss)

     (171     (44     (637     (97

Other Income and Expenses

     2        6        16        49   

Interest Expense

     101        39        297        157   
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) Income Before Income Taxes

     (270     (77     (918     (205

Income Tax (Benefit) Expense (f)

     (86     (29     (378     (114

Less: Income (Loss) Attributable to Noncontrolling Interests

     (2     (3     (2     (15
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Expense

   $ (182   $ (45   $ (538   $ (76
  

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and Amortization

   $ 36      $ 28      $ 135      $ 103   

 

(a) Includes pre-tax charges of $28 million for the three months and year ended December 31, 2012, related to the Edwardsport IGCC project.
(b) Includes pre-tax impairment and other charges of $600 million and $222 million for the years ended December, 2012 and 2011, respectively, related to the Edwardsport IGCC project.
(c) Includes a tax benefit of $226 million and $87 million for the years ended December 31, 2012 and 2011, respectively, on the impairment and other charges related to the Edwardsport IGCC project.
(d) Includes pre-tax non-cash impairment charges of $79 million for the year ended December 31, 2011, related to an impairment of emission allowances due to the Cross State Air Pollution Rule.
(e) Includes costs to achieve of $166 million recorded in Operating Expense for the three months ended December 31, 2012, and $628 million recorded in Operating Expense for the year ended December 31, 2012.
(f) Includes a tax benefit related to costs to achieve of $73 million for the three months ended December 31, 2012, and $239 million for the year ended December 31, 2012.
(g) All of Progress Energy Carolinas’ GWh sales for the three months and year ended December 31, 2011, and 26,634 GWh sales for the year ended December 31, 2012, occurred prior to the merger with Progress Energy.
(h) All of Progress Energy Florida’s GWh sales for the three months and year ended December 31, 2011, and 18,348 GWh sales for the year ended December 31, 2012, occurred prior to the merger with Progress Energy.

 

15


DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per-share amounts)

 

     Years Ended  
     December 31,  
     2012      2011      2010  

Operating Revenues

        

Regulated electric

   $ 15,621       $ 10,589       $ 10,723   

Non-regulated electric, natural gas, and other

     3,534         3,383         2,930   

Regulated natural gas

     469         557         619   
  

 

 

    

 

 

    

 

 

 

Total operating revenues

     19,624         14,529         14,272   
  

 

 

    

 

 

    

 

 

 

Operating Expenses

        

Fuel used in electric generation and purchased power - regulated

     5,582         3,309         3,345   

Fuel used in electric generation and purchased power - non-regulated

     1,722         1,488         1,199   

Cost of natural gas and coal sold

     264         348         381   

Operation, maintenance and other

     5,006         3,770         3,825   

Depreciation and amortization

     2,289         1,806         1,786   

Property and other taxes

     985         704         702   

Goodwill and other impairment charges

     666         335         726   
  

 

 

    

 

 

    

 

 

 

Total operating expenses

     16,514         11,760         11,964   
  

 

 

    

 

 

    

 

 

 

Gains on Sales of Other Assets and Other, net

     16         8         153   
  

 

 

    

 

 

    

 

 

 

Operating Income

     3,126         2,777         2,461   
  

 

 

    

 

 

    

 

 

 

Other Income and Expenses

        

Equity in earnings of unconsolidated affiliates

     148         160         116   

Impairments and gains on sales of unconsolidated affiliates

     22         11         103   

Other income and expenses, net

     397         376         370   
  

 

 

    

 

 

    

 

 

 

Total other income and expenses

     567         547         589   
  

 

 

    

 

 

    

 

 

 

Interest Expense

     1,242         859         840   
  

 

 

    

 

 

    

 

 

 

Income From Continuing Operations Before Income Taxes

     2,451         2,465         2,210   

Income Tax Expense from Continuing Operations

     705         752         890   
  

 

 

    

 

 

    

 

 

 

Income From Continuing Operations

     1,746         1,713         1,320   

Income From Discontinued Operations, net of tax

     36         1         3   
  

 

 

    

 

 

    

 

 

 

Net Income

     1,782         1,714         1,323   

Less: Net Income Attributable to Noncontrolling Interests

     14         8         3   
  

 

 

    

 

 

    

 

 

 

Net Income Attributable to Duke Energy Corporation

   $ 1,768       $ 1,706       $ 1,320   
  

 

 

    

 

 

    

 

 

 

Earnings Per Share - Basic and Diluted

        

Income from continuing operations attributable to Duke Energy Corporation common shareholders

        

Basic

   $ 3.01       $ 3.83       $ 2.99   

Diluted

   $ 3.01       $ 3.83       $ 2.99   

Income from discontinued operations attributable to Duke Energy Corporation common shareholders

        

Basic

   $ 0.06       $ —          $ 0.01   

Diluted

   $ 0.06       $ —          $ 0.01   

Net Income attributable to Duke Energy Corporation common shareholders

        

Basic

   $ 3.07       $ 3.83       $ 3.00   

Diluted

   $ 3.07       $ 3.83       $ 3.00   

Dividends declared per share

   $ 3.03       $ 2.97       $ 2.91   

Weighted-average shares outstanding

        

Basic

     574         444         439   

Diluted

     575         444         440   

 

16


DUKE ENERGY CORPORATION

CONSOLIDATED

BALANCE SHEETS

(Unaudited)

(In millions)

 

     December 31,
2012
    December 31,
2011
 

ASSETS

    

Current Assets

    

Cash and cash equivalents

   $ 1,424      $ 2,110   

Short-term investments

     333        190   

Receivables (net of allowance for doubtful accounts of $34 at December 31, 2012 and $35 at December 31, 2011)

     1,516        784   

Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $44 at December 31, 2012 and $40 at December 31, 2011)

     1,201        1,157   

Inventory

     3,223        1,588   

Other

     2,425        1,051   
  

 

 

   

 

 

 

Total current assets

     10,122        6,880   
  

 

 

   

 

 

 

Investments and Other Assets

    

Investments in equity method unconsolidated affiliates

     483        460   

Nuclear decommissioning trust funds

     4,242        2,060   

Goodwill

     16,365        3,849   

Intangibles, net

     372        363   

Notes receivable

     71        62   

Restricted other assets of variable interest entities

     62        135   

Other

     2,399        2,231   
  

 

 

   

 

 

 

Total investments and other assets

     23,994        9,160   
  

 

 

   

 

 

 

Property, Plant and Equipment

    

Cost

     98,833        60,377   

Cost, variable interest entities

     1,558        913   

Accumulated depreciation and amortization

     (31,969     (18,709

Generation facilities to be retired, net

     136        80   
  

 

 

   

 

 

 

Net property, plant and equipment

     68,558        42,661   
  

 

 

   

 

 

 

Regulatory Assets and Deferred Debits

    

Regulatory assets

     11,004        3,672   

Other

     178        153   
  

 

 

   

 

 

 

Total regulatory assets and deferred debits

     11,182        3,825   
  

 

 

   

 

 

 

Total Assets

   $ 113,856      $ 62,526   
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current Liabilities

    

Accounts payable

   $ 2,444      $ 1,433   

Notes payable and commercial paper

     745        154   

Non-recourse notes payable of variable interest entities

     312        273   

Taxes accrued

     459        431   

Interest accrued

     448        252   

Current maturities of long-term debt

     3,110        1,894   

Other

     2,511        1,091   
  

 

 

   

 

 

 

Total current liabilities

     10,029        5,528   
  

 

 

   

 

 

 

Long-term Debt

     35,499        17,730   
  

 

 

   

 

 

 

Non-recourse long-term debt of variable interest entities

     852        949   
  

 

 

   

 

 

 

Deferred Credits and Other Liabilities

    

Deferred income taxes

     10,490        7,581   

Investment tax credits

     458        384   

Accrued pension and other post-retirement benefit costs

     2,520        856   

Asset retirement obligations

     5,169        1,936   

Regulatory liabilities

     5,584        2,919   

Other

     2,221        1,778   
  

 

 

   

 

 

 

Total deferred credits and other liabilities

     26,442        15,454   
  

 

 

   

 

 

 

Commitments and Contingencies

    

Preferred stock of subsidiaries

     93        —     

Equity

    

Common stock, $0.001 par value, 2 billion shares authorized; 704 million and 445 million shares outstanding at December 31, 2012 and December 31, 2011, respectively

     1        1   

Additional paid-in capital

     39,279        21,132   

Retained earnings

     1,889        1,873   

Accumulated other comprehensive loss

     (306     (234
  

 

 

   

 

 

 

Total Duke Energy Corporation shareholders’ equity

     40,863        22,772   

Noncontrolling interests

     78        93   
  

 

 

   

 

 

 

Total equity

     40,941        22,865   
  

 

 

   

 

 

 

Total Liabilities and Equity

   $ 113,856      $ 62,526   
  

 

 

   

 

 

 

 

17


DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)

 

     Years Ended
December 31,
 
     2012     2011  

CASH FLOWS FROM OPERATING ACTIVITIES

    

Net income

   $ 1,782      $ 1,714   

Adjustments to reconcile net income to net cash provided by operating activities:

     3,439        1,958   
  

 

 

   

 

 

 

Net cash provided by operating activities

     5,221        3,672   
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

    

Net cash used in investing activities

     (6,174     (4,434
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

    

Net cash provided by financing activities

     267        1,202   
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

     (686     440   

Cash and cash equivalents at beginning of period

     2,110        1,670   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,424      $ 2,110   
  

 

 

   

 

 

 

 

18


Duke Energy Carolinas

Quarterly Highlights

Supplemental Franchised Electric Information

December 2012

 

     Three Months Ended
December 31
    Years Ended
December 31
 
     2012     2011     %
Inc.(Dec.)
    2012     2011     %
Inc.(Dec.)
 

GWH Sales

            

Residential

     5,745        5,631        2.0     26,279        28,323        (7.2 %) 

General Service

     6,419        6,357        1.0     27,476        27,593        (0.4 %) 

Industrial

     5,079        5,001        1.6     20,978        20,783        0.9

Other Energy Sales

     73        71        1.6     290        286        1.1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Regular Sales Billed

     17,316        17,060        1.5     75,023        76,985        (2.5 %) 

Special Sales (1)

     1,666        1,225        36.0     6,130        5,911        3.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Electric Sales

     18,982        18,285        3.8     81,153        82,896        (2.1 %) 

Unbilled Sales

     565        216        161.3     209        (769     n/a   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Electric Sales - Duke Energy Carolinas

     19,547        18,501        5.7     81,362        82,127        (0.9 %) 

Average Number of Customers

            

Residential

     2,056,785        2,043,114        0.7     2,052,799        2,040,848        0.6

General Service

     337,316        335,218        0.6     336,756        334,531        0.7

Industrial

     6,679        6,872        (2.8 %)      6,749        6,958        (3.0 %) 

Other Energy Sales

     14,363        14,262        0.7     14,342        14,218        0.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Regular Sales

     2,415,143        2,399,466        0.7     2,410,646        2,396,555        0.6

Special Sales

     21        24        (10.5 %)      23        26        (11.5 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Average Number of Customers - Duke Energy Carolinas

     2,415,164        2,399,490        0.7     2,410,669        2,396,581        0.6

Heating and Cooling Degree Days

            

Actual

            

Heating Degree Days

     1,206        1,110        8.6     2,694        3,063        (12.0 %) 

Cooling Degree Days

     24        10        149.8     1,568        1,776        (11.7 %) 

Variance from Normal

            

Heating Degree Days

     (3.5 %)      (11.7 %)      n/a        (16.5 %)      (4.4 %)      n/a   

Cooling Degree Days

     (44.7 %)      (77.5 %)      n/a        1.3     19.1     n/a   

 

(1) Fourth quarter 2012 and year-to-date 2012 include 103 GWH and 421 GWH, respectively, of sales associated with the FERC mitigation contracts, for which the financial results are excluded from the U.S. Franchised Electric & Gas segment earnings.

 

19


Progress Energy Carolinas

Quarterly Highlights

Supplemental Franchised Electric Information

December 2012

 

     Three Months Ended
December 31
    Years Ended
December 31
 
     2012     2011     %
Inc.(Dec.)
    2012     2011     %
Inc.(Dec.)
 

GWH Sales

            

Residential

     3,748        3,668        2.2     16,663        18,148        (8.2 %) 

General Service

     3,497        3,544        (1.3 %)      15,062        15,331        (1.8 %) 

Industrial

     2,624        2,573        2.0     10,508        10,613        (1.0 %) 

Other Energy Sales

     31        31        0.0     122        124        (1.6 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Regular Sales Billed

     9,900        9,816        0.9     42,355        44,216        (4.2 %) 

Special Sales (a)

     4,153        2,765        50.2     15,870        12,605        25.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Electric Sales

     14,053        12,581        11.7     58,225        56,821        2.5

Unbilled Sales

     372        28        n/a        165        (598     n/a   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Electric Sales - Progress Energy Carolinas

     14,425        12,609        14.4     58,390        56,223        3.9

Average Number of Customers

            

Residential

     1,234,321        1,223,251        0.9     1,231,065        1,221,426        0.8

General Service

     220,156        217,944        1.0     219,477        217,296        1.0

Industrial

     4,420        4,469        (1.1 %)      4,431        4,486        (1.2 %) 

Other Energy Sales

     1,811        1,900        (4.7 %)      1,836        1,950        (5.8 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Regular Sales

     1,460,708        1,447,564        0.9     1,456,809        1,445,158        0.8

Special Sales

     15        18        (16.7 %)      18        18        0.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Average Number of Customers - Progress Energy Carolinas

     1,460,723        1,447,582        0.9     1,456,827        1,445,176        0.8

Heating and Cooling Degree Days

            

Actual

            

Heating Degree Days

     1,116        981        13.8     2,508        2,821        (11.1 %) 

Cooling Degree Days

     60        49        22.4     1,887        2,122        (11.1 %) 

Variance from Normal

            

Heating Degree Days

     (5.0 %)      (16.4 %)      n/a        (19.1 %)      (9.1 %)      n/a   

Cooling Degree Days

     (18.9 %)      (36.4 %)      n/a        3.3     19.1     n/a   

 

(a) Year-to-date 2012 includes 577 GWH of sales associated with the FERC mitigation contracts, for which the financial results are excluded from the U.S. Franchised Electric & Gas segment earnings.

 

20


Progress Energy Florida

Quarterly Highlights

Supplemental Franchised Electric Information

December 2012

 

     Three Months Ended
December 31
    Years Ended
December 31
 
     2012     2011     %
Inc.(Dec.)
    2012     2011     %
Inc.(Dec.)
 

GWH Sales

            

Residential

     4,309        4,094        5.3     18,251        19,238        (5.1 %) 

General Service

     3,661        3,655        0.2     14,945        15,091        (1.0 %) 

Industrial

     776        783        (0.9 %)      3,160        3,243        (2.5 %) 

Other Energy Sales

     6        6        2.4     25        25        0.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Regular Sales Billed

     8,753        8,539        2.5     36,381        37,597        (3.2 %) 

Special Sales

     428        532        (19.6 %)      1,818        2,763        (34.2 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Electric Sales

     9,181        9,071        1.2     38,199        40,360        (5.4 %) 

Unbilled Sales

     (552     (798     (30.9 %)      244        (781     n/a   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Consolidated Electric Sales - Progress Energy Florida

     8,629        8,272        4.3     38,443        39,578        (2.9 %) 

Average Number of Customers

            

Residential

     1,467,235        1,453,982        0.9     1,464,154        1,452,497        0.8

General Service

     188,266        186,432        1.0     187,445        185,879        0.8

Industrial

     2,366        2,392        (1.1 %)      2,371        2,413        (1.7 %) 

Other Energy Sales

     1,576        1,550        1.7     1,560        1,573        (0.8 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Regular Sales

     1,659,443        1,644,356        0.9     1,655,530        1,642,362        0.8

Special Sales

     18        15        20.0     15        15        0.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Average Number of Customers - Progress Energy Florida

     1,659,461        1,644,371        0.9     1,655,545        1,642,377        0.8

Heating and Cooling Degree Days

            

Actual

            

Heating Degree Days

     156        106        47.2     367        411        (10.7 %) 

Cooling Degree Days

     420        377        11.4     3,111        3,155        (1.4 %) 

Variance from Normal

            

Heating Degree Days

     (7.3 %)      (36.9 %)      n/a        (21.5 %)      (12.0 %)      n/a   

Cooling Degree Days

     (4.8 %)      (14.5 %)      n/a        3.7     5.2     n/a   

 

21


Duke Energy Ohio

Quarterly Highlights

Supplemental Franchised Electric Information

December 2012

 

     Three Months Ended
December 31, 2012
    Years Ended
December 31, 2012
 
     2012     2011     %
Inc.(Dec.)
    2012     2011     %
Inc.(Dec.)
 

GWH Sales

            

Residential

     1,821        1,779        2.4     8,591        8,880        (3.3 %) 

General Service

     2,187        2,186        0.0     9,375        9,626        (2.6 %) 

Industrial

     1,421        1,359        4.6     5,761        5,728        0.6

Other Energy Sales

     28        35        (20.0 %)      113        114        (0.9 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Regular Electric Sales Billed

     5,457        5,359        1.8     23,840        24,348        (2.1 %) 

Special Sales

     189        161        17.4     425        663        (35.9 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Electric Sales

     5,646        5,520        2.3     24,265        25,011        (3.0 %) 

Unbilled Sales

     98        88        11.4     79        (88     n/a   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Electric Sales - Duke Energy Ohio

     5,744        5,608        2.4     24,344        24,923        (2.3 %) 

Average Number of Customers

            

Residential

     735,557        732,359        0.4     734,270        730,839        0.5

General Service

     85,938        85,331        0.7     85,672        85,143        0.6

Industrial

     2,571        2,589        (0.7 %)      2,582        2,601        (0.7 %) 

Other Energy

     2,916        2,865        1.8     2,898        2,850        1.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Regular Sales

     826,982        823,144        0.5     825,422        821,433        0.5

Special Sales

     1        1        0.0     1        1        0.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Average Number Electric Customers - Duke Energy Ohio

     826,983        823,145        0.5     825,423        821,434        0.5

Heating and Cooling Degree Days

            

Actual

            

Heating Degree Days

     1,284        1,090        17.8     3,002        3,435        (12.6 %) 

Cooling Degree Days

     5        14        (64.3 %)      1,389        1,303        6.6

Variance from Normal

            

Heating Degree Days

     (3.7 %)      (19.6 %)      n/a        (17.9 %)      (5.2 %)      n/a   

Cooling Degree Days

     (77.3 %)      (39.1 %)      n/a        21.2     19.7     n/a   

Note: Includes data for Duke Energy Ohio and Duke Energy Kentucky

 

22


Duke Energy Indiana

Quarterly Highlights

Supplemental Franchised Electric Information

December 2012

 

     Three Months Ended
December 31, 2012
    Years Ended
December 31, 2012
 
     2012     2011     %
Inc.(Dec.)
    2012     2011     %
Inc.(Dec.)
 

GWH Sales

            

Residential

     1,928        1,914        0.7     8,867        9,316        (4.8 %) 

General Service

     1,931        1,945        (0.7 %)      8,314        8,359        (0.5 %) 

Industrial

     2,540        2,555        (0.6 %)      10,412        10,237        1.7

Other Energy Sales

     13        14        (7.1 %)      53        54        (1.9 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Regular Electric Sales Billed

     6,412        6,428        (0.2 %)      27,646        27,966        (1.1 %) 

Special Sales

     1,341        1,127        19.0     5,796        5,370        7.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Electric Sales

     7,753        7,555        2.6     33,442        33,336        0.3

Unbilled Sales

     140        125        12.0     135        (155     n/a   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Electric Sales - Duke Energy Indiana

     7,893        7,680        2.8     33,577        33,181        1.2

Average Number of Customers

            

Residential

     685,700        680,649        0.7     683,335        678,931        0.6

General Service

     100,171        100,013        0.2     100,120        99,795        0.3

Industrial

     2,723        2,744        (0.8 %)      2,734        2,754        (0.7 %) 

Other Energy

     1,441        1,410        2.2     1,433        1,399        2.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Regular Sales

     790,035        784,816        0.7     787,622        782,879        0.6

Special Sales

     9        11        (18.2 %)      10        11        (9.1 %) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Average Number Electric Customers - Duke Energy Indiana

     790,044        784,827        0.7     787,632        782,890        0.6

Heating and Cooling Degree Days

            

Actual

            

Heating Degree Days

     1,426        1,157        23.2     3,242        3,701        (12.4 %) 

Cooling Degree Days

     5        12        (58.3 %)      1,483        1,384        7.2

Variance from Normal

            

Heating Degree Days

     (1.0 %)      (21.2 %)      n/a        (18.1 %)      (5.9 %)      n/a   

Cooling Degree Days

     (78.3 %)      (47.8 %)      n/a        30.8     28.7     n/a   

 

23


DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Three Months Ended December 31, 2012

(Dollars in millions, except per-share amounts)

 

          Special Items                          
    Adjusted
Earnings
    Costs to
Achieve,
Progress
Energy
Merger
    Edwardsport
Charges
    Economic
Hedges (Mark-
to-Market) *
    Discontinued
Operations
    Total
Adjustments
    Reported
Earnings
 

SEGMENT INCOME

             

U.S. Franchised Electric and Gas

  $ 498      $ —        $ (17 D    $ —        $ —        $ (17   $ 481   

Commercial Power

    —           —          —          16  B      —          16        16   

International Energy

    89        —          —          —          —          —          89   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segment Income

    587        —          (17     16        —          (1     586   

Other

    (91     (91 A        —          —          (91     (182
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segment Income and Other Net Expense

  $ 496      $ (91   $ (17   $ 16      $ —        $ (92     404   

Discontinued Operations

    —                 31  C      31        31   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (Loss) Attributable to Duke Energy Corporation

  $ 496      $ (91   $ (17   $ 16      $ 31      $ (61   $ 435   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC

  $ 0.70      $ (0.13   $ (0.02   $ 0.02      $ 0.05      $ (0.08   $ 0.62   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED

  $ 0.70      $ (0.13   $ (0.02   $ 0.02      $ 0.05      $ (0.08   $ 0.62   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

A - Net of $73 million tax benefit. $3 million of gain recorded in Regulated electric (Operating Revenues), $166 million recorded within Operating Expenses and $1 million recorded in Interest Expense on the Consolidated Statements of Operations.
B - Net of $10 million tax expense. $27 million gain recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $1 million loss recorded within Fuel used in electric generation and purchased power-non-regulated (Operating Expenses) on the Consolidated Statements of Operations.
C - Recorded in Income (Loss) From Discontinued Operations, net of tax on the Consolidated Statements of Operations.
D - Net of $11 million tax benefit. Recorded in Regulated Electric within Operating Revenues on the Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic

     704   

Diluted

     705   

 

* Represents the mark-to-market impact of derivative contracts, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge or regulatory accounting, used in Duke Energy Corporation’s hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, gas, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods.

 

24


DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

December 2012 Year-to-Date

(Dollars in millions, except per-share amounts)

 

          Special Items                          
    Adjusted
Earnings
    Costs to
Achieve,
Progress
Energy
Merger
    Voluntary
Opportunity
Plan
Deferral
    Edwardsport
Charges
    DNC Host
Committee
Support
    Economic
Hedges (Mark-
to-Market) *
    Discontinued
Operations
    Total
Adjustments
    Reported
Earnings
 

SEGMENT INCOME

                 

U.S. Franchised Electric and Gas

  $ 2,086      $ —        $ 60  C    $ (402 E    $ —        $ —        $ —        $ (342   $ 1,744   

Commercial Power

    93        —          —          —          —          (6 B      —          (6     87   

International Energy

    439        —          —          —          —          —          —          —          439   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segment Income

    2,618        —          60        (402     —          (6     —          (348     2,270   

Other

    (135     (397 A      —          —          (6 F      —          —          (403     (538
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segment Income and Other Net Expense

    2,483        (397     60        (402     (6     (6     —           (751     1,732   

Discontinued Operations

    —          —          —          —          —          —          36 D        36        36   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (Loss) Attributable to Duke Energy Corporation

  $ 2,483      $ (397   $ 60      $ (402   $ (6   $ (6   $ 36      $ (715   $ 1,768   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC

  $ 4.33      $ (0.70   $ 0.10      $ (0.70   $ (0.01   $ (0.01   $ 0.06      $ (1.26   $ 3.07   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED

  $ 4.32      $ (0.70   $ 0.11      $ (0.70   $ (0.01   $ (0.01   $ 0.06      $ (1.25   $ 3.07   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

A - Net of $239 million tax benefit. $2 million recorded in Regulated electric (Operating Revenues), $628 million recorded within Operating Expenses and $6 million recorded in Interest Expense on the Consolidated Statements of Operations.
B - Net of $3 million tax benefit. $6 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $3 million loss recorded within Fuel used in electric generation and purchased power-non-regulated (Operating Expenses) on the Consolidated Statements of Operations.
C - Net of $39 million tax expense. $101 million recorded in Operation, maintenance and other and $2 million expense recorded in Depreciation and amortization (all Operating Expenses) on the Consolidated Statements of Operations.
D - Recorded in Income (Loss) From Discontinued Operations, net of tax on the Consolidated Statements of Operations.
E - Net of $226 million tax benefit. $28 million recorded in Regulated electric within Operating Revenues, $580 million recorded in Impairment charges (Operating Expenses) and $20 million recorded within within Operation, maintenance and other (Operating Expenses) on the Consolidated Statements of Operations.
F - Net of $4 million tax benefit. Recorded within within Operation, maintenance and other (Operating Expenses) on the Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic

     574   

Diluted

     575   

 

* Represents the mark-to-market impact of derivative contracts, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge or regulatory accounting, used in Duke Energy Corporation’s hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, gas, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods.

 

25


DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Three Months Ended December 31, 2011

(Dollars in millions, except per-share amounts)

 

           Special Items                    
     Adjusted
Earnings
    Costs to
Achieve,
Progress
Energy
Merger
    Economic
Hedges (Mark-
to-Market) *
    Total
Adjustments
    Reported
Earnings
 

SEGMENT INCOME

          

U.S. Franchised Electric and Gas

   $ 206      $ —         $ —        $ —         $ 206   

Commercial Power

     30        —          1  B      1        31   

International Energy

     96          —          —          96   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segment Income

     332        —           1        1        333   

Other

     (17     (28 A      —          (28     (45
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (Loss) Attributable to Duke Energy Corporation

   $ 315      $ (28   $ 1      $ (27   $ 288   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC

   $ 0.71      $ (0.06   $ —        $ (0.06   $ 0.65   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED

   $ 0.71      $ (0.06   $ —        $ (0.06   $ 0.65   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

A - Net of $11 million tax benefit. Recorded in Operation, maintenance and other (Operating Expenses) on the Consolidated Statements of Operations.
B - Net of $1 million tax expense. Recorded within Non-regulated electric, natural gas, and other (Operating Revenues) on the Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic

     444   

Diluted

     444   

 

* Represents the mark-to-market impact of derivative contracts in the non-native portfolio, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge or regulatory accounting, used in Duke Energy’s hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods.

 

26


DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Twelve Months Ended December 31, 2011

(Dollars in millions, except per-share amounts)

 

          Special Items                          
    Adjusted
Earnings
    Costs to
Achieve,
Progress
Energy
Merger
    Edwardsport
Impairment
    Emission
Allowances
Impairment
    Economic
Hedges (Mark-
to-Market) *
    Discontinued
Operations
    Total
Adjustments
    Reported
Earnings
 

SEGMENT INCOME

               

U.S. Franchised Electric and Gas

  $ 1,316      $ —         $ (135 C    $ —         $ —         $ —        $ (135   $ 1,181   

Commercial Power

    186        —          —          (51 E      (1 B      —          (52     134   

International Energy

    466          —          —          —          —          —          466   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segment Income

    1,968        —           (135     (51     (1     —           (187     1,781   

Other

    (25     (51 A        —          —          —          (51     (76
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Reportable Segment Income and Other Net Expense

    1,943        (51     (135     (51     (1     —           (238     1,705   

Discontinued Operations

    —                  1   D      1        1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (Loss) Attributable to Duke Energy Corporation

  $ 1,943      $ (51   $ (135   $ (51   $ (1   $ 1      $ (237   $ 1,706   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC

  $ 4.38      $ (0.12   $ (0.30   $ (0.12   $ (0.01   $ —        $ (0.55   $ 3.83   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED

  $ 4.38      $ (0.12   $ (0.30   $ (0.12   $ (0.01   $ —        $ (0.55   $ 3.83   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

A - Net of $17 million tax benefit. Recorded in Operation, maintenance and other (Operating Expenses) on the Consolidated Statements of Operations.
B - Net of an insignificant tax amount. $2 million of gain recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $3 million loss recorded within Fuel used in electric generation and purchased power-non-regulated (Operating Expenses) on the Consolidated Statements of Operations.
C - Net of $87 million tax benefit. Recorded in Impairment charges within Operating Expenses on the Consolidated Statements of Operations.
D - Recorded in Income (Loss) From Discontinued Operations, net of tax on the Consolidated Statements of Operations.
E - Net of $28 million tax benefit. Recorded in Impairment charges within Operating Expenses on the Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic

     444   

Diluted

     444   

 

* Represents the mark-to-market impact of derivative contracts, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge or regulatory accounting, used in Duke Energy Corporation’s hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, gas, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods.

 

27