Duke Energy CORP Q3 FY2026 earnings call

• Financial Performance: Delivered adjusted EPS of $1.99 in Q3 2026, significantly outperforming the prior year's $1.81. Year-to-date results support narrowing the full-year guidance range to $6.70–$6.80, with expectations to finish near the top end.
• Capital Investment & Growth: Executing a $103 billion capital plan over five years. Adding 16 gigawatts (GW) of generation capacity by 2031 via an "all-of-the-above" strategy including natural gas, batteries, and solar. Anticipating $5–$10 billion in upside capital for large load customers in Indiana and Florida upon finalizing contracts.
• Regulatory Progress: Reached comprehensive settlements in North Carolina for rate cases and large load tariffs, ensuring customer protections and shared value. Expect orders by mid-November 2026, effective January 2027. In Indiana, preparing to file the first multi-year rate plan. In Florida, adjusting tariff filings based on PSC feedback but continuing project advancement.
• Operational Excellence: Restored nearly 200,000 customers within 48 hours after Winter Storm Fern. Received EEI Emergency Recovery Award. Secured $50 million DOE grant for advanced transmission projects in the Carolinas, bringing total DOE grants to ~$150 million.
• Load Growth: Q3 demand grew 2%, the strongest since 2022. Residential growth steady at ~2%. Contracted data center load begins ramping in H2 2027. Confident in converting 15.4 GW late-stage pipeline to Electric Service Agreements (ESAs) by H1 2027.
• Long-Term Outlook: Reaffirmed 5%–7% EPS growth through 2030, with confidence to earn the top half of this range starting in 2028 as large load projects accelerate.

Electric Utilities and Infrastructure reported adjusted EPS of $1.99, up 20 cents year-over-year, driven by higher sales volumes, hot summer weather, and rate case riders. Gas Utilities and Infrastructure was up 1 cent, while the Other segment declined 3 cents due to lower market returns on benefit trusts.

• Narrowed 2026 Adjusted EPS Guidance Range: Reduced to $6.70–$6.80 per share, with expectation to finish near the top end ($6.80).
• Long-Term EPS Growth: Reaffirmed 5%–7% annual growth through 2030. Management expressed confidence in delivering the top half of this range (6%–7%) beginning in 2028.
• Load Growth Projection: Maintained 3%–4% annual load growth outlook over the remainder of the five-year plan, supported by population migration and economic development.
• Balance Sheet Target: On track to achieve 14.5% FFO to debt ratio target for 2026.

• Regulatory Uncertainty: Potential delays or modifications in tariff approvals, particularly in Florida where the PSC delayed the tariff filing requiring adjustments and refiling. Indiana’s multi-year rate plan is still in preparation.
• Execution Risk: Significant capital deployment ($1.5B/month increasing to $2B/month) carries execution risk; management emphasizes framework agreements to de-risk delivery.
• Interest Rate Exposure: Rising interest rates increase financing costs for the growing asset base, though mitigated by hedging strategies and proceeds from minority investments.
• Operational Disruptions: Continued exposure to severe weather events (hurricanes, derechos, winter storms) requiring robust storm recovery capabilities.

Q: Char Perez asked about the impact of Florida's PSC delaying the large load tariff and whether Duke can continue advancing projects without it.

A: Harry Sideris confirmed that while the tariff needs adjustment and refiling based on regulator feedback, there is no slowdown in project advancement. Duke continues negotiations with customers and is confident in reaching an agreement that ensures data centers pay their fair share and provide benefits to existing customers.

Q: Julian Dumoulin-Smith inquired about the likelihood of approval for the North Carolina settlement and whether deferrals could allow staying out of the 2029 rate case.

A: Sideris expressed high confidence in approval due to the balanced nature of the settlement involving public staff and interveners. He noted the option to stay out of the 2029 rate case is predicated on deferring costs for new generation facilities coming online, with earnings sharing mechanisms remaining in place.

Q: Nicholas Campanella asked about the earnings/rate impact of the $5–$10 billion additional capital for large loads in Florida and Indiana, and if elections would change regulatory attitudes toward large loads.

A: Brian Savoy explained that capital spending will step up to ~$2B/month by 2027, with the $5–$10B being part of a larger expansion cycle. Sideris stated that recent election results do not change Duke’s approach; all stakeholders align on reliable, affordable service and ensuring large loads contribute fairly to infrastructure costs.

Q: Carly Davenport asked about lessons learned from the denied Smith CPCN in NC and how it impacts upcoming filings like Davie-Davidson.

A: Sideris acknowledged the denial but emphasized that the project remains a low-cost solution for reliability. He noted that the out-of-state Anderson County CPCN was approved, indicating continued support for gas projects in the Carolinas, and he expects the Davie-Davidson filing to be successful.

Q: Nick Amakuchi asked about the rationale for Brookfield accelerating its $1 billion investment in Duke Energy Florida from 2028 to December 2026.

A: Savoy explained that this acceleration was anticipated due to Brookfield’s optionality and is net-net accretive. In a rising interest rate environment, bringing $8.5 billion into the holding company early reduces leverage and financing costs, providing greater financial flexibility.