Duke Energy Corporation (Holding Company)

Good day, everyone, and thank you for standing by. Welcome to the Duke Energy fourth quarter earnings conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jack Sullivan, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Hannah. Good morning, everyone, and welcome to Duke Energy's fourth quarter 2020 earnings review and business update. Leading our call today is Len Good, our Chair, President, and Chief Executive Officer. 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 dukenergy.com. Please note the appendix for today's presentation includes supplemental information and additional disclosures. So with that, let's turn the call over to Lynn.

Jack, thank you, and good morning, everyone. I want to take a moment and welcome Jack to his first earnings call. He has recently assumed responsibility as Vice President of Investor Relations after a very strong 15-year career with Duke where he's had financial experience, capital markets experience, M&A experience, and brings that wealth of background to this role as well as a deep understanding of our company and our industry. We have put him to work over the last couple of weeks with all of our announcements. So many of you have already had a chance to meet and talk with Jack, but you can look forward to more interaction with him as we go forward. So good morning to all of you. It's great to be with you for our fourth quarter 2020 earnings call. We begin the year with significant momentum on strategic, regulatory, and stakeholder fronts, and I'm very optimistic about our future heading into 2021. Today we announced adjusted earnings per share of 512 for the year, putting us solidly within our updated guidance range for 2020. These results reflect the strength of our regulated utilities, our commitment to generating sustainable shareholder value, and our financial agility, especially in response to the unique difficulties of this past year. We also affirmed our 2021 guidance range of $5 to $5.30, with a midpoint of $5.15, and our recently increased long-term EPS growth rate of 5% to 7% through 2025, based off the midpoint of our 2021 guidance range. Like most companies, 2020 presented us with new challenges, and I'm extremely proud of how we responded. We faced those challenges head-on, swiftly responding to the COVID-19 pandemic to support our customers and our workforce, adjusting our plans after removing Atlantic Coast Pipeline, producing $450 million in mitigation actions, and responding to significant storms throughout the year. All of this was made possible by our employees, who showed incredible resolve as they adjusted to new working conditions, identified cost savings and operational improvements, and maintained reliable service for our customers. In short, we did more than just get through 2020. We adapted and delivered, learning new ways of working that will benefit us in the years ahead. The momentum from 2020 has continued into 2021. And turning to slide five, Duke Energy has made significant progress, resolving uncertainties around our company and laying a solid foundation for growth into the future. Slide 5 captures the myriad accomplishments that the Duke Energy team delivered, all providing benefits to our customers and our investors, and allowing us to turn our full attention to advancing our goal to reduce carbon emissions by 50% by 2030 and achieve net zero by 2050. In North Carolina, we reached a milestone settlement with the State Attorney General, public staff, and Sierra Club to close the debate around coal ash cost recovery. We're pleased that this balanced compromise resolves several outstanding issues, including the remand of the 2017 rate cases and the pending 2019 rate cases. It also provides greater clarity in recovery of coal ash costs incurred through early 2030 and preserves our ability to earn an equity return on deferred coal ash costs. This settlement complements the previous settlement reached in the summer of 2020 on ROE and capital structure. and again demonstrates our commitment to working collaboratively with stakeholders in our jurisdictions. We look forward to the Commission's order addressing these settlements and the remaining issues in the case. We also developed innovative IRPs in the Carolinas, outlining comprehensive proposals and offering six portfolios to meet key carbon reduction milestones over the next 15 years. And for the past year, we've been working with stakeholder groups to help shape North Carolina's Clean Energy Plan, with a common goal of reaching net zero carbon in a way that best serves our customers. This complements the efforts underway on regulatory reform and introducing more efficient cost recovery mechanisms. Shifting to Florida, we worked with business and consumer groups, including the Office of Public Counsel, to propose a new three-year settlement, giving our investors and customers clear visibility through 2024. The settlement includes multi-year base rate increases to recover significant investments in the grid, solar generation, and electric vehicle infrastructure. It also allows for the accelerated depreciation of coal plants and supports innovative technology pilot programs that are important to achieving our carbon goals and clean energy future. We expect an order from the Florida Commission by the end of the second quarter with rates effective in January of 2022. Beyond the multi-year rate plan, we also received approval of the first three years of our storm protection plans, representing a $6 billion investment in grid hardening projects over the next 10 years. In Indiana, we recently announced that GIC, a global investment firm with significant experience investing in U.S. infrastructure companies, will become a minority investor in Duke Energy Indiana. For $2.05 billion, GIC will acquire a 19.9% ownership stake with governance rights commensurate with their equity ownership. GIC highlighted that our proven track record of high performance and clear commitment to a clean energy transition make this an attractive partnership for them. The transaction values are DEI utility and an attractive multiple to our current stock valuation, providing an efficient source of financing for our business and allowing us to eliminate all common equity from our five-year plan. The structure of the investment also allows us to better match financing with capital needs, bringing $1 billion into our company in 2021 and the second tranche no later than January of 2023. This investment is a strong endorsement of our company and of Duke Energy Indiana, our operations, employees, and opportunities for growth. It is also a strong endorsement of our overall strategy to be a leader in clean energy transformation. We also significantly expanded our renewable footprint in our regulated and commercial businesses, announcing more than 700 megawatts of solar and wind energy projects. And we built momentum around electric vehicle pilot programs, which was further amplified by our own pledge to electrify the Duke Energy fleet. And turning to Tennessee, we reached a constructive settlement in our Piedmont natural gas rate case with the Attorney General's Consumer Advocate Division, This is our first general rate case in Tennessee in almost nine years, allowing us to recover needed infrastructure investments to serve our growing customer base in and around Nashville. This is an impressive list of accomplishments, and we will keep going with a clear, clean energy vision and growth in the 5% to 7% range, underpinned by a robust capital plan, constructive jurisdictions, operational excellence, and a diverse, committed workforce. Shifting to slide six, we begin 2021 with a clear vision for the future to lead the clean energy transition in our communities. Our goal is captured clearly in our climate strategy, at least 50% carbon reduction by 2030 and net zero by 2050. We crossed a major milestone in 2020, surpassing 40% carbon reduction from 2005 levels, and we're poised to hit more milestones in the years to come. Our roadmap to success involves close collaboration with key stakeholders, an accelerated move from coal and into cleaner forms of generation, including renewables and battery storage, the modernization of our grid to enable more clean energy, and an unwavering commitment to reliability and affordability. 2021 is an important year on this journey, and North Carolina stakeholder discussions initiated by the Governor's Clean Energy Plan are beginning to wrap up. These conversations have been very helpful. in creating a common understanding among the interested parties on clean energy principles and the regulatory changes needed to effectuate a generation transition. As the 2021 legislative session begins, we believe both stakeholders and policymakers will benefit from this work, as well as the information found in the comprehensive IRPs we filed last summer. Those resource plans present several pathways that illustrate the tradeoffs between the pace of transition and cost implications. We look forward to working with legislators and stakeholders over the next several weeks and months to evaluate the various options, and we are optimistic about the policies that can be created from shared objectives around North Carolina's clean energy transition, as well as the regulatory reforms that provide for timely recovery of these investments. In Indiana, we will continue our critical grid improvement projects and further our clean energy transition as we file our 2021 IRP this November. In Florida, a recent settlement outlines a clear path for further renewable and EV investment in the state through 2024 and the accelerated retirement of coal plants. At the federal level, we will work closely with policymakers as the Biden administration reenters the Paris Agreement and sets a national policy that advances our country's transition to clean energy. We look forward to adding our voice to this important discussion, ensuring that the policies strategically integrate emissions reductions, cost considerations, and the promotion of a broad range of technology development. Our objectives are clear and will create value for all of our stakeholders. Our climate strategy is our growth strategy, and our relentless commitment to our bold climate targets means we are leading the transition to clean energy. Our aggressive $59 billion capital plan is among the largest in the industry, placing us at the forefront of clean energy at scale. We're confident this capital will generate value for our growing constructed jurisdictions and provide clean, affordable energy for the more than 25 million customers we serve every day. This capital plan positions Duke to achieve earnings growth of 5% to 7% based off the 2021 midpoint of 515. I'm very proud of our results and excited about Duke Energy's path forward. And with that, let me turn the call over to Steve.