The top executives of Duke Energy Corp. have ratcheted up their projections for load growth and capital spending through 2028, thanks to strong in-migration trends and economic development pipelines in their service areas.
In their fourth-quarter earnings report and subsequent conference call Feb. 8, Chair, President and CEO Lynn Good and CFO Brian Savoy said Charlotte-based Duke plans to spend $73 billion on capital projects in the next five years, which is an $8 billion increase from the total planned spend they envisaged for the 2023-2027 window. In addition, they now expect load growth through 2028 to be in the range of 1.5% to 2%, a significant jump from their previous forecast of 0.5% to 1%.
A ”robust” economic development climate is a big player in the new forecasts: Good, Savoy and their team last fall thought that new industrial and commercial projects in the Carolinas, Florida, Ohio, Kentucky and Indiana would add between 7,000 and 9,000 GWh of demand to their system by 2027. Today, they are projecting that incremental demand will be between 8,000 and 13,000 GWh in 2027—and will grow to between 10,000 and 16,000 GWh by the end of 2028.
“Dirt is moving, letters of agreement have been signed and we’re moving forward,” Good said about the commercial and industrial momentum that has pushed her team “to mature our own thinking” about what’s likely to come. “The combination of our existing base population migration and the strong economic development gave us confidence to raise the long-term growth rate.”
Duke executives said the Carolinas account for the majority of the project pipeline (and will get nearly $45 billion of the planned $73 billion of capex) but also noted that Indiana is benefiting significantly from the manufacturing and distribution sectors’ reshoring investments. On the residential side, Savoy pointed out that Duke last year added a record 195,000 customers to its books.
Two items of note in terms of demand trends: Savoy said that the migration of workers back to the office after working from home during the COVID pandemic’s peak stabilized in late 2023. That, he said, sets the stage for residential usage to again grow more in line with historical trends of around 1.8%. Secondly, the businesses customers who last year saw a reduction in load are “very optimistic” about what’s ahead in coming quarters.
“They kind of see a rebound happening maybe mid-ish year,” Savoy said.
In the last three months of 2023, Duke posted a net profit of $2.87 billion, which was up 17% from the prior-year period, on total operating revenues that rose about 1% to nearly $29.1 billion. Lower natural gas prices and a $434 million impairment charge in late 2022 helped those comparisons while the company’s total customer count rose 1.8% to nearly 8.4 million.
Shares of Duke (Ticker: DUK) fell more than 3% to about $92 on the earnings report and spending outlook. Over the past six months, they are essentially flat, leaving the company’s market capitalization at about $72 billion.
