Q2 2021 Duke Energy Corp Earnings Call
[music].
Please standby were about to begin.
Good day and welcome to the Duke Energy second quarter Earnings Conference call Today's conference is being recorded.
At this time I would like to turn the conference over to Mr. Jack Sullivan, Vice President of Investor Relations. Please go ahead Sir.
Thank you Cody and good morning, everyone and welcome to Duke Energy's second quarter 2021 earnings review and business update.
During 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 the securities laws actual results could differ materially from such forward looking statements and those factors are outlined here and and disclosed and Duke Energy's SEC filings.
A reconciliation of non-GAAP financial measures can be found in today's materials and on Duke energy Dot 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 channel.
Jack Thank you and good morning, everyone. It's great to be with you for our second quarter 2021 earnings call.
Today, we announced strong results for the quarter with adjusted earnings per share of $1.15. These.
These results driven in part by economic recovery also demonstrate the continued strength of our clean energy strategy, we are leading the transition to cleaner energy by adding significant amounts of renewables to our portfolio hardening the grid through investments and our transmission and distribution assets and collaborating with stakeholders and policymakers.
And 2 advanced supportive energy policy.
We have positive momentum going into the second half of the year and are reaffirming our 2021, adjusted EPS guidance range of $5 to $5.30.
We're also reaffirming our long term EPS growth rate of 5% to 7% through 2025 based off of $5.15 midpoint for 2021, and we remain fully committed to creating value for shareholders by recently, increasing our quarterly cash dividend for the 15th consecutive year.
Looking ahead, we have a number of strategic milestones that we're working towards that we're working toward and the second half of the year. We anticipate the closing of the minority sale of Duke energy, Indiana to GIC announced earlier this year at an attractive premium to our public equity valuation this transaction satisfies our equity needs for the.
Next 5 years.
We received <unk> approval and June FERC approval is the only remaining closing requirements and we anticipate receiving approval at any time during the third quarter.
We continue engaging with stakeholders on important work and the Carolinas on our 2020, IRB and energy legislation and and Indiana on our 2021 IRT I will speak further about those and just a moment.
And operationally, we have 4 remaining months of hurricane season, and our team is ready to respond on behalf of our customers and July Elsa was our first official storm of the 2021 season.
While we had minimal intact, and our Florida and Carolinas service territories, we were prepared and restoring power quickly to our customers I am very proud of our accomplishments to date and we're poised for a strong finish to 2021.
Turning to slide 5 we continue to advance our clean energy transformation powered by our 5 year $59 billion growth capital plan. These investments are delivering value for our customers and communities and driving strong growth for our investors I want to highlight a couple of recent accomplishment renewed.
Renewables are playing a major role on our path to net zero. We continue construction on approximately 250 megawatts of new solar projects, and North Carolina, and Florida that we expect to bring online by the end of this year and in recent weeks, we commissioned the 144 megawatt <unk> solar and 182 megawatt Mary Neil.
Wind projects in Texas with the completion of these 2 projects we hit a significant milestone.
Surpassing 10000 megawatts of solar and wind resources. This is a testament to the hard work and dedication of our employees and strong support we received from the communities, where we operate and addition to carbon reduction and the benefits of creating a diverse energy infrastructure solar and wind investments Foster economic development tax.
Revenue and job creation and the areas we serve.
This milestone reflects our leadership and clean energy and we are on track to past 16000 megawatts of renewables by 2025, and approximately 24000 megawatts by 2030.
By 2050, renewables will represent 40% or more of our energy mix.
Nuclear is also a foundational component of our strategy, providing the largest source of reliable carbon free energy, we have on our system and June we submitted our application to renew of Kony nuclear stations operating licenses for an additional 20 years, which was accepted by the NRC for review.
This is our first subsequent license renewal application among our 6 nuclear sites and the Carolinas and the review process will move forward over the next 18 months.
And the pone as our largest nuclear station with 3 generating units and produce more than 2500 megawatts of carbon free baseload generation enough to power more than $1.9 million homes.
Our nuclear fleet provided 83% of the company's carbon free generation in 2020 and avoided the release of nearly 50 million tons of carbon dioxide will.
We will pursue similar extensions for each of our remaining reactors as they approach the end of their respective licensing periods.
Our ambitious climate strategy also puts us on a strong and positioned to help other sectors such as transportation.
Meet their emission reduction goals, we continue to build out electric vehicle infrastructure and our service territories and 1 of our subsidiaries E. Trans energy was recently named a preferred provider by GM to help its fleet customers transition to electric vehicles and.
Electrifying vehicles is a win win approach to reducing carbon emissions from both the electric and the transportation sectors.
Turning to slide 6 we are actively engaging policymakers and stakeholders across our jurisdictions and at the federal level and North Carolina. The House of Representatives recently passed House Bill 951. This.
And this legislation directs and orderly clean energy transition from North Carolina, including mandates to retire 12 coal units at 5 locations and.
And replace them with cleaner forms of generation renewed solar programs and modern ratemaking tools to better align clean energy investments with customer needs and we support household $9.51, and we will continue to monitor its progress through the legislative process.
North Carolina has a long history of constructive energy policy that was developed by finding common ground, which has helped position the state as a leader and clean energy and and economic development advancing this clean energy transition continues to be a priority for the state and its leaders.
We also continue to work with the commissions in both North and South Carolina to advance our integrated resource plans and regulators have been complimentary of the extensive stakeholder feedback process and comprehensive data incorporated into the <unk>.
And South Carolina, we received an order from the commission requesting additional analyses and modeling which will be filed later this month and and North Carolina. The commission plans to hold additional proceedings and will be providing guidance on next steps.
This is the first time, we presented multiple generation scenarios and the IRB and we welcome the opportunity to provide our regulators with more input.
And Florida, we received the final order from the Commission and June approving the new multi year rate plan settlement.
And the significant agreement includes the continued expansion of utility scale solar energy storage, New electric vehicle charging station programs and provides rate certainty to benefit customers. Among other things. Our investments include 10, new solar power plants across the state that will deliver 750 megawatts of cost effective renewable energy to custom.
This multiyear rate plan is in addition to our storm protection plan, which entail $6.2 billion and grid investments through 2029 to harden and strengthen the grid protecting and against significant weather events and improving reliability for customers.
And Indiana The commission approves step 2 from our 2019 rate case, which updates rate base through year end 2020, and trues up carrying costs back to January 1.2020 1 as.
As we prepare to submit our Indiana ERP and November we continue to engage business customers consumer advocates and environmental groups to solicit input on transitioning to cleaner generation sources, while keeping a sharp focus on reliability and affordability for customers. We took an important step on our last rate case by reducing the.
<unk> lives for our coal capacity and look to the IOP to continue this progress.
We will collaborate with stakeholders and policymakers to find the best path forward for the state's clean energy transition.
Shifting to the Ldc's, we've filed rate cases in 2 jurisdictions. This year across our gas segment. We've worked to keep O&M costs relatively flat during a period of strong customer growth and capital additions our Piedmont natural gas rate request continues to move through the regulatory process and North Carolina District.
And this request includes construction costs related to our new natural gas storage facility and Robertson County, a hearing is scheduled for September and if approved rates would be affected by year end.
And Kentucky, we've made strategic investments to improve the reliability and integrity of our natural gas delivery system and filed a request with the public service Commission to recover those costs, we've invested nearly $190 million and a variety of capital projects across northern Kentucky, since we last thought and natural gas base rate increase and.
2018, we will present, our case to the commission in October.
And finally, let me comment on the work and D. C. We are engaged with Congress and the administration and on a wide range of issues, including infrastructure tax on climate policy.
The bipartisan infrastructure framework is the subject of much discussion and could serve as a powerful catalyst to modernize our nation's infrastructure. It includes funding for large scale expansion of charging infrastructure to prepare for and further drive adoption of electric vehicles and us charging infrastructure grows grows so will the need for grid investments.
And invest innovation will also be a critical part of the journey to net zero because with our existing technologies, we can make important progress but cannot close the gap. We're pleased to see the framework includes funding to accelerate the development of next generation clean energy technologies, such as hydrogen and carbon capture and advanced nuclear robust and.
Sustained government support is vital to ensure the commercialization of these advanced technologies.
And it's critical for us to tackle this issue today. So the technologies are scalable and when we need them.
And closing our continued growth and strong second quarter results were driven by solid execution across all our jurisdictions as we lead the largest clean energy transition and our industry I am confident we will continue to bill on this momentum to deliver sustainable value and grow earnings 5% to 7% over the next 5 years with.
With that let me turn it over to Steve.
Thanks, Lynn and good morning, everyone I'll start with a brief discussion on our quarterly results highlighting a few of the key variances to the prior year for more detailed information on variance drivers and a reconciliation of reported to adjusted results. Please refer to the supporting materials that accompany today's press release and presentation.
And as slowly as shown on slide 7 and our second quarter reported earnings per share was <unk> 96 and our.
Our adjusted earnings per share was $1.15. This is compared to a reported loss of $1.13, and and adjusted earnings per share or gain of $1.8 last year.
The difference between second quarter reported and adjusted earnings per share is due to the onetime impacts of the initiative to redefine workspace usage in light of what we've learned from Covid. This.
Effort involves consolidation and corporate office space and accommodating a hybrid work environment, resulting in a 60% reduction square footage and annual savings of approximately $25 million to $30 million.
And the adjusted earnings per share growth and the quarter continues to be strong led by electric utilities and infrastructure, which was up 24 cents compared to the prior year results were favorable due to benefits from base rate increases favorable volumes riders and weather, partially offsetting these items were higher O&M costs due to <unk>.
COVID-19 mitigation efforts and 2020.
Shifting to gas utilities and infrastructure results were down 3 sales primarily due to the cancellation of ACP last year and.
And our commercial renewables segment results were down 6 cents for the quarter, driven by lower investments and new renewables projects compared to prior year. This is consistent.
With our guidance in February and we expect full year 2021 earnings to be within our $200 million to $250 million range.
There was unfavorable for us for the quarter, principally due to less favorable market returns on certain benefit plans and higher income tax expense, partially offset by lower financing costs.
And finally segment results are impacted by <unk> <unk> of share dilution related to the $2.5 billion equity issuance that closed in December 2020. Overall, we had strong results compared to last year supported by our continued execution and the rebounding economy, we remain confident and our ability to consistently grow.
Our adjusted EPS at 5% to 7% throughout the 5 year period after 2021 base year.
Turning to slide 8 let me provide an overview of electric volumes and economic trends our results for the second quarter were up approximately 6.5% year over year keep in mind, we are comparing sales data to Q2 of last year, which experienced the largest impact from COVID-19.
Residential volumes were down 6%, however, given stay at home orders during the same period last year. The modest decrease indicates and many people continue to work from home on a at least a part time basis and.
Fact, this quarter's results are more than 4% above the second quarter of 2019, highlighting the continued strength of the residential class, which is supported by customer growth across our service territories.
As reported on our first quarter earnings call nearly all large commercial and industrial customers have resumed operations and the sector and the sector is showing signs of optimism.
The commercial class has rebounded considerably from prior year with an increase of 11, 7% retail dining and recreation. We're all driving the positive year over year comparison is most COVID-19 restrictions have been lifted.
Similarly, industrial volumes have increased 11, 8% for the quarter, whereas volumes have declined 15% last year, we expect improvement and the commercial and industrial classes as employment recovers and supply chain bottlenecks are resolved.
As we've progressed and the back half of the year, we are monitoring the pace of economic recovery and potential impacts of the delta there.
At the same time, we are encouraged by the sales trends so far this year.
And with strong customer growth across our service territories with Q2 overall retail volumes returning to Q2.2019 levels, we remain confident and our full year expectation of 1% to 2% load growth for 2021 and are trending towards the top half of that range.
On slide 9 I'd like to share an update on where we are with our financing plan and dividend growth. We remain on track with the financing plan, we outlined on our fourth quarter call. The proceeds from the GIC minority interest sale, along with our overall financing plan and allow us to maintain a strong credit profile without the.
Need from common equity issuances throughout our 5 year plan.
We are on track to complete the North Carolina Storm securitization. This fall and we recently issued $3 billion of holding company debt at low attractive rates.
Finally, we understand the value of our dividend to our investors. This year marks the 95th consecutive year of paying a quarterly cash dividend and the 15th conserve consecutive annual increase.
Moving to slide 10, and I wanted to provide some perspective on timing considerations for the second half of the year and an update on our cost management efforts. We expect volumes will continue to recover over the balance of the year, but as we saw on the second quarter, we expect O&M to be unfavorable and the third quarter when compared to 2020.
This is due to the actions we took to significantly reduce O&M during the pandemic such as deferred outages that are generating stations.
Overall, we reduced O&M $320 million and 2020 equivalents to more than 6% over a non rider recoverable O&M on our February call. We shared that we plan to sustain 65% or $200 million of those savings and carry them forward into 2021, we are on track.
And to achieve those savings this.
This is consistent with our cost management track record since 2016 on.
On a consolidated basis over the past 5 years, our net regulated electric and gas O&M has declined approximately 1% per year and we expect this trend to continue.
Before we open it up for questions. Let me close with Slide 11, we remain confident and our 2021 adjusted earnings per share guidance of $5 to $5.30, with a midpoint of $5.15 sales our year to date results position us well to achieve full year results within this range as we can.
<unk> to invest and important energy infrastructure to benefit our customers and communities.
And our attractive dividend yield coupled with our long term earnings growth profile of 5% to 7% provide a compelling risk adjusted return for our shareholders.
As Lynn discussed we continue to advance our clean energy strategy, adding new renewable generation and taking steps to extend the lives of our carbon free nuclear fleet.
We continue to engage with state and federal leaders as they work to pave the way for a clean energy future.
We're executing our capital plan to support those efforts by investing and our energy grid, all while employing financing solutions that save customers money and add value for shareholders, Duke energy is well positioned to lead us the pace of change and our industry accelerates delivering sustainable value to our customers.
And investors with that we'll open the line for your questions.
Thank you if you'd like to ask a question. Please Sigma pressing star 1 on your telephone keypad.
If you are using a speaker phone. Please make sure that your mute function is turned off to allow your signal to reach on equipment.
And once again that is star 1 if you would like to ask a question.
And we'll take our first question from Shar <unk> with Guggenheim Partners. Please go ahead.
Hey, good morning, guys.
Hi, good morning.
So appreciate.
And your prepared remarks around how spill on line 1 Lynn.
And the process.
And today are you still optimistic I mean, couldnt help but notice some of the lack of bipartisanship going on.
Should we be sort of concerned here at this stage.
Yes sure. The Bill is moving and we are encouraged by what we're seeing I think you know that it passed the house.
And we've seen support from Senate leadership, the energy legislation remains a priority and the governor has been clear for.
And for some time about his strong commitment to carbon reduction and renewable investment and the state. So we're encouraged that the legislative branch executive branch and all of the broad stakeholders involved in this process, we'll find common ground and that has been the long history, and North Carolina and <unk>.
<unk> diverse parties together and advancing energy policy.
And just I wanted to just elaborate a little bit around sort of the common ground and I know this is and obviously, a Duke energy Bill and there's a lot of stakeholders involved.
On passage of its going on obviously impact your clean energy transition right and the state.
Investors kind of want to know if there is a possibility of compromise I E between the draft Bill.
And as legislators versus the Governor's very vocal comments right. It's not really your call, but could we see a faster coal retirement outlook may be a little less dependency on gas a bit more solar and the governor once more and so do you see a path forward to kind of maybe bridge this sort of bid ask that's out there.
Sure.
Shar, we do and I think your comments around comprehensive there are many elements to it you have a broad range of stakeholders. It is natural and expected that theyre going to be different points of view and that conversation and what <unk> 9 and 51 does is it outlines a path to a clean energy transition.
<unk> and the discussion is centering around that pace of cost maintaining reliability and we would expect that legislators and administration. We will evaluate all portions of this draft bill to find the right balance.
So I think advanced and clean energy transition remains a priority for the state and its leaders as well as this broad range of stakeholders and we will keep you informed as the bill continues to move.
Okay perfect. Thank you very much and congrats on the quarter and thank you.
Thank you Sean.
And we'll take our next question from Julien Dumoulin Smith with Bank of America.
Hi, Julian and Hey, Good morning can you hear me Hey, Thank you for the time.
Sure absolutely.
So at risk of asking more on the legislation and perhaps I can pivot a little bit more strategically or if you don't mind and I'd love to hear if you have any latest thoughts with regards to undertaking any further review of the company I know that theres been a lot of shall we say noise out there.
And I would love to hear your latest thoughts there and I'll leave it as open and as you'd like to comment.
Sure.
And Julien.
I assume that's a comment about Elliott management.
And so let me just answer it in that context, and then we can take it any place you want to go.
And we regularly engage with our shareholders. We regularly review our portfolio our operations and business strategy and it has our approach around engagement has been similar with Elliot.
And we have been and discussions with them for over a year.
Comprehensively reviewing all of the ideas engaging advisers, when we need to and discussing with our board all of these ideas.
And it's not appropriate for me to comment any further on the specifics, but I would confirm to you that we remain open to constructive engagement and we'll evaluate all proposals act on those and we believe delivers value to our stakeholders.
And I would also say that we remain focused on.
The serving of customers, maintaining our assets advancing the strategic priorities around our clean energy transition and that remains unchanged and as well.
Got it excellent. Thank you for the thoughts.
Perhaps if I can pivot a little bit differently here as you think about the non utility side of the business can you comment on that at all on us.
On scaling that are non obviously, it's not been.
On to Corp of focus of late but given some of the pressures across the wider renewable businesses out there would be curious what youre seeing.
And it's impacting any of your timeline and our aspiration business, but altogether.
And Julian we've just crossed an important milestone.
And of renewables, So 10000 megawatts of renewables, which includes both regulated and nonregulated and investment and we see the growth of renewable energy is important to the clean energy transition our commercial team continues to deliver.
And they are forecasting to achieve $200 million to $250 million per year and have been consistent and accomplishing that so it remains an important part of the company. It remains an important part of our commitment around carbon reduction our ESG story and general and the team is on track to deliver in 2021.
122 and beyond.
Right excellent.
And just to clarify.
And to which you would get this legislation done.
And I know, it's always difficult to say, but any updated thoughts at the end of the forecast period and how that might change as you refine your planning might be a little bit early and I know it.
Transient and what could ultimately be included but I figure I'd be remiss, if I didn't sure.
No and you know Julien.
The plan that we've put in front of US 2021 to 2025 is not dependent on legislation, we have a high degree of confidence and the ability to achieve our 5% to 7% growth rate, but as we talked about and October of last year, and we opened the horizon to what the back half of the decade could look like we do see acceleration of cash.
<unk>.
Not only in pursuit of retirement of assets and building replacement generation, but also our grid investment as well. So we'll continue to update us in the ordinary course, giving you a view on February of what we think 2026 looks like.
But we continue to expect acceleration of capital on the back half of the decade.
Okay, Alright, well clarify that later, thank you so much and best of luck. Thanks, so much.
Thank you and then take our next question from Jonathan Arnold with vertical research.
Hi, good morning, guys.
Hi, John Good morning.
Just on on the North Carolina process and then.
Last quarter, then you to dissuade us from being over.
On the consumer.
And I and about any particular day could you just remind us sort of what the timing and the legislature is through the rest of the year and just any other.
And we should be looking out for.
Procedurally or is it essentially open ended.
Sure Jonathan what I would say is that the timing is difficult to predict and these processes. It is within the hands of the legislative leadership, and we will know more as the bill progresses through the Senate. There was in fact, a hearing this morning and the Senate. So we'll continue to keep you updated I think you know that the long session and North Carolina does not.
Not have a statutory and date. So we will continue to monitor as it moves through the Senate process.
Okay.
Thank you for that and then just and I was just to comment on feeling.
Yes, you are trending towards the top half of the.
Sales.
On the load forecast for this year.
And that sort of translate into how you feel you are tracking on earnings as well or are there other things sort of.
On the other side.
Yeah, Jonathan we will reset and give you a finer look at where we're trending and the guidance range. After third quarter. I mean, there's just so much weather volatility here and the southeast we have hurricane season underway. So we will continue to monitor that and giving you an update third quarter, but I would say.
We're off to a strong start strong start on the economic rebound strong start on maintaining our focus on O&M delivering on our key milestones around regulatory approvals et cetera.
So I'm pleased with where we are and.
Also pleased to see the economic recovery those strong results and commercial and industrial are indicative of the economy opening and are opening up and I think that's a good thing.
Great. Thank you and just 1 very.
Very quick 1 on the annual savings you talked about for the office reconfiguration.
Is that a pretax or after tax number the $25 million to $30 million.
That's a pretax number Jonathan great. Thank you Steven.
Thank you.
Yeah.
Thank you we'll take our next question from Steve Fleishman with Wolfe Research.
Okay.
Thanks, Good morning.
Alright.
Hi, Lynn and Steve. So this may of I think this may have been asked a little bit but just wanted to.
To better clarify the and.
Watching the IRB and the different scenarios that come out how should we think about.
What's embedded in your current capital plan.
Versus what might be incremental or is it just mainly focused on beyond the current capital plan.
Yeah.
Yes, so Steve.
Capital plan is basically the base of the IRT.
And.
And so you should think about it that way the 6 scenarios as you move further to the right and you introduce additional technologies and the timeframe.
And that's where the legislation and begins to come in giving us some flexibility to move more rapidly on some of the retirements et cetera. So.
When we talk about the implications of how <unk> fits with the legislation we've got a clear line of sight, 2021% to 2025 based on present law based on the present processes present regulatory processes and the opportunity really exists and the back half of the decade.
So that's how I would respond and I don't know, Steve and if you'd add anything to that yes, I think as you move towards a more rapid de carbonization number then the capital increases I think within our current 5 year plan the upside would be at the back end of things.
And that texture to it.
Okay, great. Thank you.
Thank you.
Thank you we'll hear next from their gas Chopra Evercore ISI.
Our ISI excuse me.
Hey, good morning, good morning, good morning.
Good morning, most of my questions have been answered good morning, Steve just maybe big picture Lynn sort of what are sort of what have you and some of the other utility meters and look.
And at Washington, and infrastructure, Bill sort of us being debated today and then the reconciliation royal going into year end, and maybe sort of what are sort of the top towards thing towards 3 things that you see coming out between now and year end, which impacts us sector.
And cash I would say the infrastructure Bill will continue to make its path.
And we're supportive of a bipartisan approach I think is and infrastructure builder.
Our success over many years has been and a bipartisan framework.
And we're encouraged by the focus on electric vehicles and electric vehicle infrastructure. As you know that's been a priority for Duke and we have about $100 million targeted on that investment and there is certainly potential to expand it.
The President today also has been advocating for 40% to 50% of vehicles electric vehicles by 2030.
We are also pleased to see investments and zero and low carbon technologies like advanced nuclear hydrogen and carbon capture because we believe those technologies are important for and net zero world.
That's what I would say around infrastructure I think on the remaining the reconciliation process.
Tax policy climate legislation are all being discussed I think it's too early to tell how those shape up but we are engaged with the administration and with Congress really talking about the tools that would be helpful for us to pursue.
Our clean energy strategy and see a lot of alignment over time.
But as you know and a tight.
Senate and house it can be challenging at times to find the right path, but we remain engaged.
Got it thanks, so much I appreciate the time thank you.
Great.
And your next from Jeremy Tonet with J P. Morgan.
Hi, good morning.
Hi, Jeremy good morning.
Hi.
Just wanted to start off here and when thinking about the energy transition and kind of from a different perspective, I know Duke has some irons and the fire with regards to R&D investments, but do you see any potential for kind of upsize. This increases over time are there policies out there at the federal and state level that could be helpful. On these efforts.
We are getting started I would say Jeremy on R&D. It is.
Consistent with our overall climate targets certainly are.
Goals are 100% methane goal et cetera and are.
And we're working actively to learn more about the technology learn more about how it impacts our system and have made some very strategic investments and so I do think there's an opportunity for it to develop over time.
And the team is working actively with policymakers with the communities.
Suppliers that would be relevant to this and I think it'll be a bigger story as we move forward.
Got it that's helpful and then.
Could you give any more color just kind of pivoting here on what we should be looking for with the IOP filing and Indiana. Later this year what are some of the considerations versus maybe what we saw.
Coming out of the Carolinas last year.
It's a really good question and Jeremy because we are in the midst of stakeholder engagement and Indiana as well and engagement with the environmental community with our large customers certainly the regulators and other policymakers who are irrelevant to that process.
The goal is decarbonizing the goal is diversifying.
And.
If you look at our last IRB that we filed on Indiana. We had about 2300.2400 megawatts of solar starting in 2023, we would expect that to grow and.
And so we've got a couple of more months here and working through the stakeholder process, but we see this as a next step where we and the rate case, we accelerated retirement dates of coal plants.
And <unk> gives us a chance to expand that discussion on the clean energy transition over the next 20 years and I think it's an important part of the ongoing conversation and Indiana on how the state will position itself for growth and the clean energy transition.
So more to come on that and as we look forward to November 3rd quarter, Paul <unk> et cetera, and we'll have more that we can share around and deanna.
Got it that's very helpful. Just a real quick last 1 from me.
We very recently seen some utility peers beef up their corporate governance with certain actions and I was just wondering if Duke is considered taken actions like this.
I think Duke has a strong track record on governance, Jeremy If you were to look back at the feedback we've received from shareholders and the additional disclosures and adoption of certain practices that we've followed we have been very open minded about these and we will continue to do so so that.
That becomes a key focus here on the fall as we engage with shareholders specifically focused on ESG topics. Our corporate governance Committee is very involved and that the board is very involved and some of the conversations with shareholders as well. So you can expect us to continue to be responsive to.
To our shareholders in this regard.
Got it and I'll leave it there thank you.
Alright, thank you.
Thank you we'll hear next from Michael that participants Goldman Sachs.
Hey, guys, Hey, Lynn why Michael and Alright. Thank you Robert Thank you guys for taking my question.
Just curious how are you on thinking about the commercial power business and what the growth profile of that business looks like over the next couple of years relative to investing in renewables and in the regulated business I guess to simplify what's a better return on capital investing and renewables outside of the regulated.
<unk> or within the regulated utility if you could allocate capital only to 1 of those alternatives.
And Michael It's a really good question because we have we do a lot of work around capital allocation of course, what meets the needs of our customers, which fits the policy of our state what delivers the highest return those are all key considerations and our commercial renewables business has performed well against our <unk>.
<unk> of what we expect from that business in terms of returns, but what you're suggesting is as we see more opportunity and the regulated business, how will that impact commercial and I would say that will be very closely reviewed as part of our capital allocation plan going forward.
I think you also know that we entered.
A joint.
And venture with John Hancock on the commercial renewable business recycling that capital and the way that it's been quite effective and those are the types of transactions. We will also evaluate over time.
And we like the business and the context of our ongoing ESG story, and our pursuit of carbon reduction, but we will closely scrutinized how capital is allocated.
Got it and also 1 follow up a number of your peers some of the other large cap.
So on our AEP have made investments and their.
They are almost like venture capital like investments.
And various clean energy related companies, some of which have gone public and the last 6 to 12 months. Just curious does Duke have similar type of investments and have you ever made any disclosure and <unk>.
<unk> of them material or something that would show up and kind of the income statement over time.
And so Michael we are active in this area and do make investments, let me ask Steve to comment.
We look at it from a couple of perspective, certainly there is an opportunity to earn a return but as importantly, there is an opportunity to learn about what's going on and.
Various technology development and various methods of.
Technology is to serve customers technologies that could advance carbon reduction and as part of our Treasury corporate development organization.
We're focused on.
Investment in that area and a way that complements our business yes.
Yes, I would add that we have made investments and various venture funds and we work closely with the fund managers to understand what the investment profile is and as Lynn said, it's aligned with our strategy looks and things like Evs and new technologies and.
And we also ensure that there is communication among our operating folks.
With the.
And the funds and the companies that we invest and so we can transfer learnings there and we've had some good success there it's not been material.
<unk>.
We're certainly learning a lot from us.
Got it thank you guys.
Thanks, Michael.
Thank you and we'll take our final question from Anthony <unk> with Mizuho.
Good morning, Lynn and good morning, Steve Thanks for taking my question.
Sure just to I guess, a quick question on earlier in the year.
Duke and be able to resolve rate case and North Carolina.
Florida, I think last year, you resolved, Indiana, but just are there any other Duke.
Properties with Duke utilities on their earning your allowed and may be creating more of a headwind than you thought versus when you went into the year. I think you can provide some disclosure on the fourth quarter slide deck of may be adjusted book ROE going into the year, just as everyone on target or is some of them, maybe performing better than you thought or less and you thought.
Anthony.
Forming well, we do look over time at our allowed returns and we've got a good history across our footprint of earning at or even above our allowed returns and they will move around a bit as you're building a rate base.
4 and upcoming rate case, so youll see some movement around the return based upon some of those profiles, but we feel good about.
Our regulatory cadence and our investments around that cadence and.
And the execution has been good.
Indiana case, and the Carolinas case are coming through nicely and we are preparing for the future cases that Lynn was discussing and we think that process is working well and Anthony I would just add that Steve runs a tight process around optimizing capital.
To make sure it's getting spent and at a time that matches with that regulatory calendar. So we do all that we know to do to minimize lag and the result of that is that we have a good track record of earning a return.
Great and just a last 1 from me you may have touched on it earlier Lynn and a question I think on maybe some.
And stuff going on and Washington, Theres talk of maybe on <unk>.
Nuclear legislation or some may be.
Subsidy for nuclear plants, you're talking about.
License extension on Kony, just any thoughts to maybe <unk>.
And your view on nuclear legislation that may be part of the infrastructure Bill and would it impact Duke.
So Anthony we are strong supporters of nuclear as you know and I think as you look here.
And the Carolinas and particular, 50% of the power comes from nuclear across the entire enterprise, 80% of our carbon free generation us from nuclear so we are very active we intend to pursue second license renewal as.
As you indicated and the discussion in Washington is really centered more around the plants that are exposed to markets commercial markets, So think about plants and PJM and otherwise.
But we have had discussions with a number of people about the importance of nuclear and that transition and I do believe it is being recognized by the administration and by Congress and so.
That's an important area of advocacy for us not only and existing plants, but on new technologies that would keep nuclear as part of the solution set for the clean energy transition.
Great. Thanks for taking my question and congrats on a solid quarter.
Thanks, Tim.
Thank you and that does conclude today's question and answer session and you could turn the conference back over to Lynn good for closing remarks.
Well, thank you Cody and thanks to all of you who participated today for your interest and investment and Duke energy and as always we're available for further discussion on the IR team, Steve and I as well so thanks again for participating.
Thank you and that does conclude today's conference. We do thank you all for your participation you may now disconnect.
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