KEY POINTS
- Duke Energy faces up to $2.9 billion in hurricane restoration costs.
- Restoration efforts impact 2024 credit, with recovery anticipated in 2025.
- The utility reaffirms its profit forecast, projecting a lower-end finish due to storm expenses.
Duke Energy, the largest utility company in North and South Carolina, estimates restoration costs of up to $2.9 billion following the severe damage caused by Hurricanes Debby, Milton, and Helene.
The storms, which tore through the region in recent months, devastated miles of transmission lines and power poles, leaving thousands of customers without power.
Financial impact and recovery strategy
The utility giant reported that the total restoration expenses for the storms, including capital expenditures, could range between $2.4 billion and $2.9 billion.
According to Reuters, of this amount, approximately $750 million has already been recognized in its latest quarterly report. Chief Financial Officer Brian Savoy addressed the financial impact in a recent earnings call, acknowledging that these storm-related costs would temporarily affect Duke Energy’s credit standing for 2024.
However, he expressed confidence in the company’s capacity to recover these costs through established mechanisms by 2025, helping to stabilize financial performance.
Earnings and future outlook
The extensive damage from the hurricanes also impacted Duke’s quarterly earnings, resulting in adjusted income for its electric utilities and infrastructure segment to drop by 4.3 percent compared to the previous year.
Duke’s third-quarter profit fell below Wall Street expectations, with adjusted earnings reported at $1.62 per share, missing the projected $1.70. Despite this setback, Duke Energy maintained its full-year profit forecast, although it expects profits to trend toward the lower end of its $5.85 to $6.10 per share guidance, mainly due to the hurricane-related expenses.
Looking ahead, the company anticipates stronger earnings in the current quarter, driven by recent rate increases in both its electric and gas segments and higher sales volumes.
Nonetheless, Duke noted it may face some revenue reductions from outages linked to Hurricane Milton. In addition to storm recovery efforts, Duke has allocated significant resources to bolster its infrastructure, aiming to reduce vulnerability to future storms.
As the company moves into 2025, its focus on strategic investments and efficient cost recovery will play a crucial role in offsetting the financial strain of this year’s unprecedented storm season.
