Duke Energy 2011 Annual Report Download - page 5

Merger positioning
Our plans to close our announced merger with Progress
Energy at year-end were delayed in December. The
Federal Energy Regulatory Commission (FERC) turned
down our proposed plan to mitigate the market power of
the merged company in the Carolinas. On February 22,
2012, we filed a summary of our revised mitigation plan
with the North Carolina Utilities Commission (NCUC),
and we expect to submit that revised plan to FERC by
the end of March.
We believe the revised plan responds to the concerns
of FERC by providing for permanent transmission upgrades
and interim firm sales of capacity and energy. The NCUC
is reviewing the mitigation plan in advance of our filing
with FERC.
Throughout the merger process, our objective has been
to strike the right balance between benefits to customers
and shareholders. Over the coming months, both
Duke Energy and Progress Energy will be working closely
with the North Carolina Public Staff and the Office of
Regulatory Staff in South Carolina to achieve that balance.
Final agreement on the proposed mitigation efforts will
depend on the successful resolution of appropriate state
ratemaking treatment associated with measures in the
revised mitigation plan and other merger-related issues.
The U.S. Nuclear Regulatory Commission (NRC), the
Kentucky Public Service Commission and the shareholders
of both companies have already approved the merger. The
closing date will depend on the successful completion of
the regulatory approval process.
Positioned financially
During 2011, we stayed focused on earnings and dividend
growth, and maintaining the strength of our balance
sheet and credit ratings. Although we did not experience
the weather extremes that boosted sales and earnings in
2010, we still ended 2011 with adjusted diluted earnings
per share (EPS) of $1.46. This exceeded both our original
adjusted diluted EPS guidance range of $1.35 to $1.40
for the year and our increased range of $1.40 to $1.45,
and our 2010 results of $1.43 — growing adjusted diluted
EPS for the third consecutive year.
In 2011, we increased our quarterly cash dividend
to shareholders from 24.5 to 25 cents per share. Our
dividend yield at year-end was 4.5 percent, and our
payout ratio (based on 2011 adjusted diluted EPS of
$1.46) was approximately 68 percent (within the 65 to
70 percent target range set by our board of directors).
2011 was the 85th consecutive year Duke Energy has
paid a quarterly dividend on its common stock.
We also continued to take advantage of historically
low interest rates to issue new debt and refinance
maturing debt, in order to finance our modernization
investments. Over the past three years, we have issued
$7.65 billion of fixed-rate debt in the U.S. at a weighted-
average interest rate of approximately 4.3 percent and
weighted-average maturity of 13 years. (This excludes
tax-exempt financings and international/project financings.)
We expect to issue approximately $2.2 billion of debt in
2012. The current low-interest-rate environment helps
us mitigate rate increases needed to recover our costs to
“ 2011 was a remarkable year in many ways. The achievements
of the women and men of Duke Energy speak volumes about
our culture of safety, customer and community service and
excellent operational performance.”
DUKE ENERGY CORPORATION 2011 ANNUAL REPORT 3