Duke Energy: earnings hot, regulatory momentum cool (Charlotte)

Duke Energy Corp. reported better than expected earnings for the second quarter and has outperformed utility stock indexes since the start of 2009. But in the long term, this may prove the summer of Duke’s discontent.

Federal carbon regulation, which Chief Executive Jim Rogers pushed and on which Duke spent hundreds of thousands in lobbying costs, is dead. Come Jan. 2, the Environmental Protection Agency will impose limits on carbon, and Rogers acknowledges that will be more costly — to Duke and its customers — than the legislation he and Duke supported.

Duke and the industry as a whole have started running into resistance to smart-grid proposals. That digital upgrade to transmission and distribution systems holds considerable promise for energy efficiency and ultimately cutting customer use in a time of rising prices. But the costs of the conversion are giving some regulators pause.

Duke’s basic strategy for producing energy from renewable resources is being called into question in the Carolinas. And Duke continues to skirmish with regulators over treatment of payments under its Save-A-Watt initiative.

Rogers repeatedly says the power industry needs to know what the ground rules will be as it spends billions in the next 10 to 20 years to replace its aging coal plants, undertake nuclear construction, adopt renewable-energy sources and implement smart grid and other efficiency programs.

"We haven’t gotten clarity from the regulators. I don’t think we’ve got clarity from Congress," he says. "But on some level that is predictable and it should be expected."

Rogers describes himself as an optimist. The summer of 2010, at least, gives him a lot to be optimistic about.

Read the full story in the Charlotte Business Journal.