Duke Energy 2015 Annual Report Download - page 5

2015 ANNUAL REPORT / 3 /
Growing our core businesses
Let’s start with the strategic steps
we’ve taken to realign our business
portfolio to focus our capital investments
and management attention on
creating long-term value in our core
businesses – regulated utilities, natural
gas infrastructure and renewable energy
projects. These are the fundamental
building blocks of our business that
we must get right in order to reach the
long-term goals we have set.
We are completing our multiyear
transition to a higher quality, more stable
business mix that started with the 2012
Duke Energy-Progress Energy merger.
We expect that by the end of 2016 we
will have moved Duke Energy from a
company with 25 percent exposure to
more volatile earnings and cash ows
to a business fully focused on our
domestic regulated and highly contracted
businesses and the customers we serve.
As part of this transition, we announced
in early 2016 our intent to exit Duke
Energy International, which owns mostly
hydroelectric plants in Latin America. It
has struggled the last two years under
extreme drought in Brazil, deteriorating
economic conditions and an unfavorable
foreign exchange rate. Despite the
outstanding efforts by our employees, the
underlying strength of these assets and
the great contributions over the years, the
earnings are now inconsistent with Duke
Energy’s risk prole and strategic focus.
The other important portfolio exit was
our Midwest commercial generation
business. In April 2015, we successfully
closed on the $2.8 billion sale of these
assets to Dynegy. The cash transaction
reduced our exposure to the volatile
commercial power market.
In July 2015, we completed our $1.2
billion purchase of the North Carolina
Eastern Municipal Power Agency’s
minority interest in four of our jointly-
owned nuclear and coal plants in North
Carolina. This supports our core business
and helps the power agency’s 32 cities
reduce their high electric rates. It also
provides long-term cost savings and fuel
diversity for our retail customers. State
and local ofcials praised the transaction
for its economic lift in this region.
But the most signicant moves we
made were to expand our natural gas
platform – a key part of the U.S. energy
future as we retire more coal plants,
move toward a low-carbon future and
build clean generation capacity that can
operate night and day.
In October 2015, we announced our
plan to purchase Piedmont Natural Gas
for $4.9 billion in cash. Based here in
Charlotte, Piedmont is a premier local
distribution company that supplies
natural gas to much of the Carolinas and
parts of Tennessee. It is an outstanding
strategic complement to our regulated
utility operations and will triple our
natural gas customers to 1.5 million.
We anticipate completing the transaction
by the end of 2016.
The Piedmont Natural Gas transaction
follows our 40 percent project ownership
“ We’re making
strategic investments
in cleaner energy
sources and
smart options
for customers.”
Doug Esamann
Executive Vice President
and President – Midwest
and Florida Regions*
*
The seven executives pictured in this report are members of the Senior Management Committee.