Duke Energy Corporation’s (DUK) regulated utility subsidiary Duke Energy Carolinas issued a request for proposal (RFP) to purchase up to 1,500 megawatts of intermediate and/or peaking electricity generation (capacity and energy) in the 2015 through 2017 timeframe.
The RFP is driven by the company’s plan to retire by 2015 all un-scrubbed coal-fired generation in the Carolinas. The company found it uneconomical to install a sulfur-dioxide scrubber in place. The company will accept proposals till November 1, 2011.
The focus of Duke Energy towards clean electricity comes on the heel of its move towards compliance with the North Carolina Renewable Energy and Energy Efficiency Portfolio Standard. Proposals from qualified bidders will be evaluated based on cost and other factors.
Duke seeks offers from respondents who can deliver capacity and energy for a minimum of one year on dates between January 1, 2015 and December 31, 2017. Consideration will also be given for proposals that start prior to January 1, 2015.
Duke Energy Carolinas owns nuclear, coal-fired, natural gas and hydroelectric generation facilities. The diverse fuel mix provides approximately 19,000 megawatts of owned electric capacity to roughly 2.4 million customers in a 24,000-square-mile service area of North and South Carolinas.
Duke Energy will also stand to gain in the Carolinas from the ongoing merger with Progress Energy Inc. (PGN). Earlier, in January 2011, both companies had unanimously approved the definitive merger agreement combining the two entities in a stock-for-stock transaction. Duke Energy estimates fuel cost savings of $60–800 million for customers issuing from the Duke-Progress union.
Charlotte, North Carolina-based Duke Energy Corp. is a diversified energy company with a portfolio of domestic and international, natural gas and electric, regulated and unregulated businesses. Its regulated utility operations serve approximately 4 million customers in North Carolina, South Carolina, Indiana, Ohio and Kentucky, comprising a population of approximately 11 million.
Duke Energy’s stable U.S. electricity and gas operations provide a relatively stable and growing earnings stream. Looking ahead, higher rates through recent settlement agreements in Kentucky, North Carolina and South Carolina will stand the company’s long-term goal of 4%–6% earnings growth in good stead.
Duke Energy’s Commercial Power and International Business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the U.S.
Duke Energy currently has a short term Zacks #2 Rank (Buy). Over the longer run we maintain our long-term Neutral recommendation on the stock.
