Duke Energy Corporation (Holding Company)

Good day, and welcome to the Duke Energy fourth quarter earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jack Sullivan, Vice President of Investor Relations. Please go ahead.

Thank you, Samara. Good morning, everyone, and welcome to Duke Energy's fourth quarter 2021 earnings review and business update. Leading our call today is Lynn 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 securities laws. Actual results may be different than 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. During our call this morning, we're pleased to share our 2021 results and our outlook for 2022 and beyond, including progress on our clean energy transition. The fourth quarter capped off a strong finish to a very productive 2021. where we made great progress against our strategic and financial goals. As a result, today we announced 2021 adjusted earnings per share of $5.24, putting us above the midpoint of our updated guidance range. We also announced our 2022 guidance range of 530 to 560 with a midpoint of 545, extending our 5% to 7% earnings growth rate through 2026, up the midpoint of our original 2021 guidance range. Our clean energy strategy requires significant investment, and we're now budgeting $63 billion in CapEx over the next five years, 80% of which represents investments toward our clean energy transition. This growing investment base in constructive and thriving jurisdictions give us confidence in our ability to earn within our 5% to 7% earnings guidance range throughout the next five years and in the top half of the range as our plan progresses. Steve will go into more details on our 2021 results and our updated five-year financial plan. But before I turn the call over to him, I'd like to highlight some of the important strategic work underway. 2021 was a transformative year for our company, and in each of our three regions, we made meaningful progress, and we enter 2022 on strong footing. In North Carolina, leaders came together to pass House Bill 951, This landmark bipartisan legislation defines the state's clean energy transition and work is underway to implement it. The North Carolina Utilities Commission is developing rules on the performance-based rate-making provisions in the legislation. We're confident the commission will adopt a balanced set of rules that provide flexibility to implement performance-based rates in a way that achieves policy goals and aligns with customer interests. We expect an order later this week. The North Carolina Commission is also developing rules related to the securitization of 50% of subcritical coal plants upon their early retirement. We've proposed a set of rules consistent with the North Carolina storm securitization bonds we issued last fall. Those bonds will save customers approximately 35% or $300 million over the next 20 years. We expect an order on securitization by mid-April. We plan to file our carbon plan in May after gathering stakeholder input over the next several months. HB 951 provides a framework to reach 70% carbon reduction by 2030, and the carbon plan will be a roadmap to achieve this objective. The plan we submit will have multiple portfolios that weigh the costs and benefits, including reliability and affordability, of various resource types. We will also evaluate with stakeholders and our regulators the full range of potential risks and opportunities related to new clean energy technologies. We expect an order on the carbon plan by the end of this year. In Indiana, we submitted an IRP in December after extensive stakeholder engagement. As the largest generator in the state of Indiana, we are retiring more coal and adding more renewables than any other Indiana utility. Our preferred scenario reduces carbon emissions from our Indiana fleet by 63% by 2030 and 88% by 2040 compared to 2005 levels. It adds over 7 gigawatts of renewables over the 20-year horizon and accelerates the retirement of coal generation with a targeted exit from coal by 2035. This plan also includes natural gas and a prudent amount of market purchases for capacity and energy requirements. As is the case in all jurisdictions, we expect a robust review of all planned resource additions to achieve the environmental, reliability, and affordability goals of the state. We will issue a request for proposal for new generation later this month, and following the RFP process, we will file CPCNs with the Indiana Commission later this year. In Florida, we received approval of the $1 billion Clean Energy Connection solar program, which calls for 750 megawatts over the next three years. We'll begin the first year of that program in 2022, along with completing the final solar projects under the SOBR rider. To date, we've put approximately 600 megawatts of solar generation in service in Florida with another 150 megawatts currently under construction. Let me close by putting our progress and our plans for the future in the context of our climate strategy. Given the scale of our company, we're leading the industry's most ambitious clean energy transformation. This demands active engagement with regulators, policymakers, customers, and stakeholders to make the vision a reality. It requires candid discussions about the appropriate energy policy for each state, recognizing the unique differences of existing resources, customer bases, and policy objectives. It also requires a focus on keeping customer bills affordable, a critical variable as we pursue this transformation. We continue to make progress and are strongly positioned to achieve our clean energy vision. Slide six captures our progress and the work underway. Let me share a few important highlights. We're executing the largest planned coal fleet retirement in our industry, targeting energy from coal to represent less than 5% by 2030 and a full exit by 2035. Embedded within Duke Energy is a top 10 U.S. renewable energy company. We now own, operate, or purchase more than 10,000 megawatts of solar and wind energy. We plan to reach 16,000 megawatts by 2025 and 24,000 megawatts by 2030. We've reduced our carbon emissions by 44% from 2005 levels, and we're on track to exceed 50% by 2030 and net zero by 2050. We're actively engaged with policymakers and advocating for and piloting new clean energy technologies necessary to meet our net zero goal. We're also stepping back and evaluating our climate goals more broadly as we engage with our shareholders and discuss the growing importance of scope two and three emissions. And just yesterday, we announced we're expanding our net zero goals to now include scope two and certain scope three emissions. such as upstream emissions related to procurement of fossil resources and downstream emissions from our natural gas customers' consumption. These initiatives will be a key focus area for our management team and across the entire company in 2022 and beyond. We look forward to sharing more details about what it will take and the ways we're building upon our success to advance our long-term business strategy at our next ESG Day, planned for October 4th. I encourage you to join us for this interactive live streamed event. We accomplished a great deal in 2021. We delivered on our commitments while also strategically positioning the company for the future, de-risking investments, simplifying our business, and modernizing our regulatory frameworks. We have a clear vision to meet the needs of our customers and communities while remaining a strong steward of the environment. We believe this strategy will deliver strong, consistent, and enduring benefits to our customers communities, and investors. And with that, let me turn the call over to Steve.