Duke Energy's profits fell 6% during the first quarter compared with a year ago as warm winter weather reduced energy usage.
Temperatures were above-normal across Duke Energy's service areas in the Carolinas, Florida, and the Midwest as the year began, which hurt sales, said Chief Financial Officer Brian Savoy.
"Weather was very warm across our jurisdictions in January and February, and that created a headwind for us for 2023," Savoy said.
In North Carolina, for example, a warm spell pushed temperatures into the 70s in the first week of the year. Overall, average temperatures were several degrees above normal.
So Savoy said Duke responded by cutting expenses. That included delaying noncritical work, reducing spending on overtime and outside services, and limiting travel. The cost-cutting comes in addition to a $300 million cost-cutting campaign Duke announced when it reported year-end earnings in February.
Meanwhile, earnings also fell as Charlotte-based Duke wrote down the value of its commercial renewables business by another 10%. The company announced last year it planned to sell the business to make itself more attractive to investors as a stand-alone regulated utility company.
Duke took a $175 million charge to reflect a lower value for the business, on top of a $1.28 billion charge in the fourth quarter of last year. Savoy said the value has declined because the business generates the most revenue when solar and wind installations start up and become less profitable over time. He said that's in part because of investment tax credits that are recognized in the first couple of years.
Duke plans to sell the business in two parts — one that runs large solar and wind farms across the country, and the other that sells rooftop solar projects to commercial customers. The two units combined once had a book value of $3 billion. It's now just over half that.
Duke hasn't said much about potential buyers for the two parts of the business, but hinted that parts of the wind and solar business could go to fellow investors. The company expects the sales to close in the second half of the year.
Overall in the first quarter, Duke's profit fell to $765 million, from $810 million a year ago. Earnings per share were $1.01 per share, down seven cents from a year ago.
Adjusted for one-time items, earnings per share were $1.20, which fell short of Wall Street expectations.
But Savoy says Duke's territory is continuing to grow and it's on track to hit its profit target for the year.
Duke says it expects to earn $5.55 to $5.75 per share for the full year. And the company reaffirmed its projected growth rate of 5% to 7% annually through 2027.
