Research Update: Duke Energy Corp. And Subsidiaries Outlooks Revised To Negative On Higher Regulatory Risks, Elevated Spending Plan

The Supreme Court of North Carolina opined on several matters related to previous rate case orders for Duke Energy Corp. subsidiaries Duke Energy Carolina LLC (DEC) and Duke Energy Progress LLC (DEP), affirming parts of those rate case orders and remanding a part of them back to the North Carolina Utilities Commission (NCUC). In our opinion, the potential of an equitable sharing proposal of Duke Energy's coal ash costs raises regulatory risk for the company. In addition, we view the recent decision by the NCUC for a peer utility as inconsistent with past regulatory decisions on matters relating to coal ash cost recovery. Separately, Duke Energy recently raised its five-year capital spending budget by roughly $8 billion compared to this

...- The Supreme Court of North Carolina opined on several matters related to previous rate case orders for Duke Energy Corp. subsidiaries Duke Energy Carolina LLC (DEC) and Duke Energy Progress LLC (DEP), affirming parts of those rate case orders and remanding a part of them back to the North Carolina Utilities Commission (NCUC). - In our opinion, the potential of an equitable sharing proposal of Duke Energy's coal ash costs raises regulatory risk for the company. In addition, we view the recent decision by the NCUC for a peer utility as inconsistent with past regulatory decisions on matters relating to coal ash cost recovery. - Separately, Duke Energy recently raised its five-year capital spending budget by roughly $8 billion compared to this period last year, which suggests that financial measures could weaken further during our forecast period. - Taken together, we see increased probability that Duke Energy's credit quality could weaken over the next 12 months. Hence, we revised our outlook...

Research Update