Duke Energy Corporation (Holding Company)

Good day, everyone, and welcome to the Duke Energy first quarter earnings call. Today's call is being recorded. And now at this time, I'd like to turn the call over to Jack Sullivan. Please go ahead.

Thank you, April. Good morning, everyone, and welcome to Duke Energy's first quarter 2021 earnings review and business update. Leading our call today is Len Good, 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. We're pleased to be with you to share our results and the excellent progress we're making in our strategic initiatives. Today we announced adjusted earnings per share of $1.26 for the quarter, delivering strong results to start the year, driven by growth at our electric utilities. Our first quarter results demonstrate the power of our clean energy strategy and our ability to execute that strategy. We also continue to tightly manage costs and engage stakeholders throughout our business as we develop and implement smart policy solutions. With the first quarter behind us and a clear path forward, we are reaffirming our 2021 adjusted EPS guidance range of $5 to $5.30, with a midpoint of 515, and our long-term EPS growth rate of 5% to 7% through 2025, based off the 515 midpoint. Turning to slide five, just over a year ago, we launched our comprehensive response to COVID-19. And although the pandemic is not behind us, I'm very proud of our response, demonstrating our commitment to health, safety, and customer service in the face of very difficult circumstances. But as I reflect on the past year, we accomplished so much more. We made the difficult but appropriate decision to step away from the Atlantic Coast pipeline. We hosted a successful ESG day, clearly articulating our clean energy vision and how we are pursuing the largest fleet transition in the U.S. We actively participated in stakeholder meetings in the Carolinas focused on our clean energy transition and regulatory reforms necessary to recover those investments, laying the groundwork for comprehensive energy legislation. We announced a market-leading transaction with GIC, delivering $2 billion of accretive investment into our company and eliminating the need for equity over the five-year period. We maintained a sharp focus on our cost structure, operational excellence, and customer service, delivering industry-leading safety results and surpassing our internal customer satisfaction target by nearly 15%. We outlined an updated five-year $59 billion capital plan and raised our growth rate to 5% to 7%. Further, we achieved numerous regulatory outcomes, including the successful completion of our first rate case in Indiana in 16 years, resulting in multi-year rate increases, accelerated depreciation of coal plants, and recovery of coal ash costs. We reached comprehensive settlements in our North Carolina rate cases with a broad range of stakeholders, which have been approved by the NCUC. We reached a comprehensive settlement on coal ash recovery, providing customers with near-term benefits while establishing recovery with a return in the years to come, which was also approved. And finally, in Florida, we received approval of a new multi-year rate plan, as well as the Clean Energy Connection Program, and the first three years of our Storm Protection Plan. In light of these accomplishments, which included eliminating uncertainties and creating a clear vision for growth, the stock has performed well, and we're poised to deliver even more in 2021. Turning to slide six, we're leading the way to cleaner energy and continue to make progress toward our 2030 goals and our target of net zero emissions by 2050. Across our jurisdictions, we're engaging with policymakers and stakeholders to accelerate the transition while keeping a sharp focus on reliability and affordability. I wanted to provide an update on the legislative session in North Carolina. As we discussed in February, ongoing work continues to build alignment on the shared objectives that came out of the Clean Energy Plan process. These shared objectives include North Carolina's clean energy transition, as well as the regulatory reforms that provide for timely recovery of these investments. We are now entering the middle phase of the legislative long session, and the legislative process, including opportunities to introduce new legislation, is expected to continue into the summer months. We continue to see momentum from a broad range of stakeholders to make progress on these objectives in 2021, and we remain optimistic for comprehensive energy legislation this year, aligned with our shared goals of generation transition and regulatory reforms needed to enable that change. Moving to Florida, our DEF utility continues to enjoy robust growth, deliver strong returns, and support important energy infrastructure for the benefit of customers. Our constructive relationship with customer and consumer groups has resulted in the advancement of critical infrastructure investments that accelerate our shared clean energy vision. This was clearly demonstrated with the Public Service Commission's approval of our multi-year base rate settlement on May 4th. As the Commission noted in their ruling, the settlement was the culmination of extensive engagement with many interested parties, including the Office of Public Counsel. We appreciate the Commissioner's complimentary remarks on our robust process to reach settlement. keeping the interests of all stakeholders in mind and arriving at a fair and equitable rate design. The settlement approval provides clarity through 2024 and includes recovery of significant investments in the grid, solar generation, and electric vehicle infrastructure. This settlement builds on our Clean Energy Connection solar program and Storm Protection Plan grid program as we continue to advance our transition to net zero emissions. Our Florida operation, positioned well for the economic rebound, continues to build momentum with investments aligned to our clean energy transition. Shifting to Indiana, we're making progress as we move through the state's integrated resource plan process. We've hosted multiple stakeholder sessions, receiving input from various interested parties as we collaborate on the path forward, all while ensuring our system remains reliable as we transition to new energy sources. Stakeholders have always been a part of the IRP process in Indiana, and their feedback is valuable as we evaluate a number of possible scenarios for future generation. Our filing will be submitted in November of this year, continuing our progress toward the energy transition in the state. At the federal level, we are actively engaged with policymakers on climate, infrastructure, and tax policy. We support policies that pave the way to net zero emissions while ensuring customer affordability and reliability. We also support investments in research and development for new clean technologies, which will be critical to achieving net zero. To that end, we see permitting reform as a solution to help streamline the process to build infrastructure without compromising community involvement and environmental protections. Electrification has also entered the climate discussions and represents an exciting opportunity to address transportation sector emissions. In the months ahead, we expect more clarity on the form and content of these policies, potentially an infrastructure bill, tax incentive extensions, and regulatory proposals, among others. We will continue to advocate for policies that support and accelerate our clean energy transition, emphasizing the importance of maintaining affordability and reliability for our customers. We will keep you informed along the way. It's important at this early stage, however, to recognize that we see great alignment between our vision of a net zero clean energy future and the policies that are being discussed. Shifting to slide seven, it's clear our industry is transforming and the pace of change is increasing. Duke Energy is not only keeping pace with this change, but we are at the forefront. Our transition to net zero is enabled by our growing capital plan, which in the back half of the decade ranges from $65 to $75 billion. This range of investment is consistent with our integrated resource plan filings and includes up to 15 to 20 gigawatts of additional renewable investment, tripling the amount of renewables on our system by 2030. We are also planning for retirements of 7 gigawatts of coal-only capacity, an amount that could increase as policies and regulations continue to unfold in this decade. The ultimate pace of our clean energy transition will be shaped by a variety of factors, including state and federal clean energy regulations and policies. We are actively engaged with policymakers and regulators on this important topic and are prepared to move as quickly as state and federal regulation and policy allow. We remain confident in achieving our carbon reduction and earnings growth goals as we continue the execution of our clean energy vision, creating value for our customers and growth for our investors. Shifting to slide A, we've carried our momentum forward in our environmental, social, and governance commitments, following our ESG day and fourth quarter call in February. In April, we released our 15th consecutive sustainability report, outlining our tremendous progress during 2020, and we've reached additional milestones in just the last few months. In March, we retired a 270-megawatt coal unit in DEC ahead of schedule, marking the 52nd coal unit closed across the enterprise. We also announced the accelerated closure of our Gallagher station in Indiana, bringing the retirement forward a year and a half to June of 2021. These decisions place us another step closer to our goal of removing all coal-only units from our portfolio in the Carolinas by 2030 and advances the targets for our Midwest utilities as well. As we retire coal, we are also adding renewables and other clean energy infrastructure across our system. In our commercial renewables business, we placed the 350 megawatt Frontier II wind farm in service in Oklahoma during the quarter. And in the regulated business, we placed 220 megawatts of solar in service in the Carolinas and Florida. Our electric vehicle strategy remains front and center as we continue to position Duke Energy as a key enabler of mass electric vehicle adoption. With commission approvals in the Carolinas and Florida, we're investing $100 million to implement pilot programs to support decarbonization of the electric sector across the southeast. And we joined the Electric Highway Coalition to help expand charging infrastructure across the nation's highways, aligned with many of our peer utilities. I'm also pleased to share that we're one of the first in the industry to release EEO diversity data as part of our sustainability report. demonstrating not only our commitment to transparency, but also to moving the needle on our diversity and inclusion metrics across the enterprise. Beyond that, we are one of the first in the industry to issue a report detailing our trade association memberships and their positions on climate change. It's these types of disclosures and transparent reporting that have earned us top rankings for investor transparency. And finally, last week, we announced three new directors to join our board. maintaining a strong focus on diversity, as well as bringing a wide range of backgrounds and skills to the table. Each of these steps highlights our keen focus on ESG priorities, and we look forward to sharing additional updates throughout the year as we make progress on our strategy. With the first quarter behind us and a clearly defined strategy ahead of us, I'm confident in Duke Energy's strong growth trajectory and believe our investment plan will deliver sustainable value and 5% to 7% growth over the next five years. And with that, let me turn it over to Steve.