Duke Energy Corp. saw a strong rebound in retail load growth, with year-over-year electricity sales up 6.5% in the second quarter, as the U.S. economy reopens while navigating new coronavirus variants.
"On our sales in the quarter, they were strong certainly compared to last year's second quarter," Duke Energy Executive Vice President and CFO Steven Young said in an Aug. 5 phone interview prior to the company's second-quarter earnings call. "And again, last year's second quarter was the low point related to the impact [from] COVID. So, we saw a lot of growth. And we did see in the second quarter, as vaccinations were rolled out and restrictions were lifted, that the economy has definitely picked up, and our electricity and gas sales certainly did as well."
Duke Energy in February reported a full-year 2020 earnings impact of 28 cents per share from load declines and other costs related to the coronavirus pandemic.
While residential sales fell 0.6% in the second quarter of this year, Duke Energy reported an 11.7% jump in commercial retail electric volumes and an 11.8% spike in industrial load.
Duke Energy reported a 2.3% drop in electricity consumption from 2019 levels in 2020 and expects 1% to 2% load growth by the end of 2021.
"We've certainly seen continued population growth through the COVID-19 situation in our service territories, and we think that will continue to contribute to strong load growth for us as we go forward," Young said. "We'll keep an eye on the delta variant and what impact that will have as we move forward, but in general as things open up, they will open up strongly across our franchise footprint."
Duke Energy used $450 million of mitigation efforts by the end of 2020, including total savings in operations and maintenance of about $320 million, to offset coronavirus impacts. The company plans to sustain $200 million of these savings in 2021 and continues to have levers at its disposal to mitigate future impacts, according to the CFO.
"We've certainly worked over the past several years to build agility across our company to respond to various events," Young said. "We feel good about our overall control of costs. We have an ongoing sustainable effort to find efficiencies every day."
On the legislative front, Duke Energy is watching energy legislation in North Carolina and the bipartisan infrastructure bill recently unveiled in the U.S. Senate, which Young said Duke Energy supports.
"Anything that helps advance the path to clean energy production, we think is the step in the right direction," Young said, adding that funding for research and development is "essential" for the utility sector to reach net-zero emissions.
The federal legislation also includes funding for hydrogen, nuclear generation, carbon capture and battery storage, electric vehicles, and transmission.
"We need to look across the spectrum of technologies here and advance those as rapidly as possible if we are going to get to net-zero by 2050," Young said.
The CFO said Duke Energy has "a lot of organic spending opportunities" as it embarks on the energy transition. Duke Energy has a nearly $60 billion capital spending plan through 2025 and anticipates $65 billion to $75 billion in additional capital in the last half of the decade.
"In general, as we move through our transition, our capital plan is going to grow," Young said.
Duke Energy on Aug. 5 reported second-quarter 2021 adjusted earnings per share of $1.15, above the S&P Capital IQ normalized consensus EPS estimate of $1.11 and up from adjusted EPS of $1.08 for the second quarter of 2020.
The company reaffirmed its 2021 adjusted EPS guidance range of $5.00 per share to $5.30 per share and its long-term adjusted EPS growth rate of 5% to 7% through 2025.
