Duke Energy Corp.'s CEO on June 6 attributed the recent slide in the company's share price to a rising interest rate environment, and said Duke has already addressed the effects of federal tax reform through its capital deployment plans.
Lynn Good, Duke's chairman, president and CEO, appeared on CNBC from the Edison Electric Institute's annual convention in San Diego. She was just elected chairman of that trade group, which represents U.S. investor-owned utilities.
Duke stock is down over 7% from its April 27 closing price of $80.50 per share. Three days earlier, the yield on the 10-year Treasury note rose above 3% for the first time in over four years, with some observers expecting it to hit 3.5% by the end of 2018.
When asked by CNBC's "Power Lunch" hosts why Duke shares are underperforming their utility peers, Good responded that "stock performance this year has been largely impacted by a rising interest rate environment, and also the uncertainty that was presented early in the year around [federal] tax reform."
"We've addressed the issue around tax reform," she continued, "and are really hard at work putting capital to work and delivering service to customers, so we're optimistic about the remainder of 2018."
Good said Duke has spent about $8 billion to $10 billion of capital annually, and that range will remain the same in 2018. The company in March completed a $1.6 billion equity offering, with Executive Vice President and CFO Steven Young telling S&P Global Market Intelligence in May that Duke's 2018 equity issuance plan of $2 billion should meet its needs over the next five years.
'Anxious to learn' about DOE proposal
The CEO was also asked about the Trump administration's efforts to shore up uneconomic coal and nuclear assets in select markets, including a draft document by the U.S. Department of Energy that seeks to direct grid operators to buy electricity or capacity from plants powered by those fuels.
"We are still studying the proposal that has been the subject of conversation," Good said. Duke prioritizes resiliency and reliability, she said, and the company will "be anxious to learn more" about the agency's vision.
"And if in fact there are resiliency issues that need to be pursued, we'd be anxious to work with the administration to identify and address them," she continued, "but do so in a way that does not raise prices to customers because affordability is also part of the equation."
Duke in March said it plans to eliminate coal from its generation mix by 2050, as one component of its first-ever climate risk assessment. Good in May answered shareholder questions on that and other topics in the environmental, social and governance realm.
Gas permitting reform sought, blockchain being studied
When asked if there is a certain infrastructure-related item Duke would like help with, Good said the company wants permitting and siting reform for developing gas pipeline projects.
"These projects are ready to go to serve our customers, and we're anxious to put that capital to work," she said. "And I believe investing in infrastructure is important as we continue to grow the economy."
Good also brought up the industry discussion surrounding peer-to-peer electricity markets powered by blockchain, which she said Duke is studying alongside artificial intelligence and machine learning.
"It's really an exciting time to be in the energy industry, determining how to put these tools to work for the benefit of our customers," Good said. "But I would say it's very early-stage understanding for us."
