Duke Energy Corporation (Holding Company)

Good day and welcome to the Duke Energy Third Quarter Earnings Call. Today's conference is being recorded and at this time I would like to turn the conference over to Brian Buckler, Vice President of Investor Relations. Please go ahead.

Thank you, Savannah. Good morning, everyone, and welcome to Duke Energy's Third Quarter 2020 Earnings Review and Business Update. Leading our call today is Lynn Good, Chair, President, and Chief Executive Officer of along with Steve Young, Executive Vice President and CFO. Today's discussion will include the use of non-GAAP financial measures and forward-looking information within the meaning of the securities laws. Actual results could differ materially from such forward-looking statements, and those factors are outlined herein and disclosed in Duke Energy's SEC filings. A reconciliation of non-GAAP financial measures can be found in today's materials and on Duke-NMG.com. Please note the appendix for today's presentation includes supplemental information and additional disclosures. As summarized on slide four, during today's call, Lynn will provide an update on our 2020 and 2021 outlooks. She will also share insights on the company's long-term strategy and clean energy investment plans. Steve will then share an overview of our third quarter financial results. He will also provide updates on our economic and road growth outlook, progress against our 2020 mitigation targets, an update on our 2021 earnings drivers, and Duke Energy's long-term capital investment plan. With that, let me turn the call over to Lynn.

Brian, thank you, and good morning, everyone. Today, we announced adjusted earnings per share of $1.87 for the quarter, favorable to the third quarter of 2019 by $0.08. These results were driven by higher earnings at our electric utilities from rate case activity, strong O&M, and other mitigation actions and growth in our commercial renewables business. I am very proud of our workforce for their consistent focus on reducing costs and driving efficiencies to offset a number of headwinds this year. while continuing to provide outstanding service for our customers. And a recent example is Hurricane Zeta. I want to give a special thanks to the men and women who just this past week responded with outstanding restoration services after the remnants of the hurricane caused significant damage in the Carolinas. Despite the challenges presented by 2020, our team remained focused on serving our customers with excellence. We've also made great progress with our mitigation actions to offset the impacts of COVID delivering 35 cents of benefit through September. As Steve will speak to in a moment, we now expect to deliver full-year earnings benefits of 40 to 45 cents. We will use our size and scale to carry many of these efforts into next year, a continuation of our successful track record in these areas since 2015. With the third quarter behind us, we are narrowing our full-year guidance range to 505 to 520. we have successfully offset the impacts of COVID load and costs, weather, and storms, including EFIES and VEDA, with exceptional cost management, giving us confidence that we can deliver results within this range for 2020. With ACP behind us, we are well-positioned to deliver in 2021 as well and are pointing to a solid $5.15 with upside potential. We continue to finalize our business plans for the year ahead And consistent with our typical practice, we will provide complete guidance, including detailed capital and financing plans in February. Our confidence in our ability to deliver results goes well beyond next year. We expect to deliver at the top end of the 4% to 6% range through 2024, grounded in our robust investment plan to deliver cleaner energy and sustainable value for our communities and our industry-leading cost-efficiency programs. We shared our vision and the significant runway of growth potential during our October 9th inaugural ESG Investor Day. During the event, we outlined the investment opportunities we are pursuing to support our goal to achieve net zero carbon emissions by 2050. And while we are already an industry leader in carbon free generation, we have near-term ambitious plans to double our renewables portfolio by 2025, deploy energy storage across the Carolinas and Florida, and extend the licenses of our nuclear fleet, all to the benefit of our customers and communities. To support this work, we increased our five-year capital plan to $58 billion and outlined a robust $65 to $75 billion capital plan for the 2025 through 2029 period. This incremental capital drives our earnings-based CAGR from the 6% level we shared with you in February to progressively higher levels. We now expect a 6.5% rate-based taker through 2024 and growing to a 7% rate-based taker by the end of the five-year planning period. As we move forward, our path is underpinned by strong governance, collaboration with stakeholders, and most importantly, developing our people and fostering a culture rooted in diversity and inclusion. I'm incredibly proud of our work, and this foundation in 2020 gives us confidence as we close out the year and move through the next few years. Turning to slide six, we're advancing our clean energy strategy and building momentum in the states we serve. We operate in attractive jurisdictions that are considering various policy changes to support cleaner energy futures for our communities. We are partnering with stakeholders in each state to find solutions that accelerate carbon reductions while also balancing customer affordability and the financial health of our utilities. In North Carolina, the governor's clean energy plan process is well underway and and we, along with many stakeholders, are in the midst of constructive policy conversations. The pathways we outlined in our IRP serve as fundamental pillars, demonstrating what it will take to achieve the objectives outlined in the Clean Energy Plan. In addition, the detailed analysis in our filings is informing carbon policy discussions. We recognize our leadership role in decarbonizing the state and the robust, thoughtful portfolios we've shared help shape the path forward. The carbon policy discussions will be summarized in a report to the governor by year end. We are also advancing the process around the IRP itself. We've shared the IRP with dozens of stakeholders, ensuring we received feedback from a wide variety of interest groups. The approach and modeling we used in the filing add a new level of transparency and sets a standard for how to collaborate and seek input. We anticipate hearings in the first half of 2021 in North Carolina. and look forward to working with stakeholders to define the best pathway to reduce carbon emissions. We are also advancing the IRP in South Carolina with a hearing expected in April and a decision from the Commission expected in June. This will allow us to have more clarity about how our proposed portfolios integrate into the state's policy objectives. Also in South Carolina, we've reached multiple milestones with stakeholders. We received commission approval of our EV infrastructure pilot in September and reached a settlement agreement on net metering with solar developers. These developments highlight South Carolina's commitment to a cleaner energy future. Turning to Indiana, we are actively engaged in the state's 21st Century Energy Policy Task Force, which is focused on transitioning the state's generation mix and integrating renewables while ensuring high levels of reliability and resiliency. Their findings will be compiled into a report due to the General Assembly by December. This work builds on the advances we made as part of our 2019 IRP and 2020 rate case, where we received approval to reduce the average remaining depreciable lives of our Indiana coal assets by approximately 40%. And in Florida, the Clean Energy Connection and solar-based rate adjustment programs underpin our commitment to renewable energy. A hearing on the Clean Energy Connection proposal is scheduled for November 17th. If approved, we would launch a $1 billion shared solar program, which includes 750 megawatts of renewable resources. We've received strong support for our proposal from a broad range of stakeholders and look forward to the outcome of the hearing. We're also making headway on the SOBRA investments, with nearly half of the 700 megawatts of utility-scale solar installed. This also represents a billion-dollar investment in the state. We understand our integral role to lead the clean energy transition will strengthen and modernize the energy grid, increase our investments in renewables and new technologies, and advocate for energy policy and regulatory mechanisms that align with industry best practices and shareholder expectations. This is an exciting time for our company and our communities, and we look forward to making meaningful progress on the clean energy transition in 2021. Before I move to the next slide, let me make a brief comment on the elections. I know some results are still being counted with final results a few days or weeks away. But what I do know is that they are strong bipartisan support for investing in critical infrastructure, driving economic growth and job creation for clean energy and resiliency investments. Our capital plan offers meaningful solutions to these and other needs of the communities we serve. I want to congratulate Governor Cooper on his reelection and thank him for his leadership of North Carolina. We are proud to be headquartered in North Carolina and look forward to working with his administration and the incoming members of the General Assembly. I also want to congratulate Indiana Governor Holcomb on his victory. Indiana has a bright future as we transition our generation fleet and make critical investments in the grid. We welcome the opportunity to continue engaging with the Governor and the General Assembly in Indiana, as well as all of our jurisdictions in which we operate. Before turning it over to Steve, let me reiterate our value proposition. We operate in premium utilities across the Southeast and Midwest, and our service areas continue to benefit from strong growth as new residences and businesses move into our service territories. We are positioned to deliver 95% of our earnings from lower-risk regulated electric and gas utilities, and our growth profile is driven by our robust five-year $58 billion capital plan. The past year has made our great company even stronger and more agile, and we look forward to a strong finish to 2020 and to carrying our momentum forward into future years. Our clean energy vision is transforming Duke, providing clear benefits to our customers and to our investors. For this reason, we are confident in our ambitious investment plans and our ability to deliver the top end of our growth range. And with that, let me turn the call over to Steve.