Duke Energy Annual Meeting Focuses on the Future
CHARLOTTE, N.C. - After closing a major merger and selling non-core businesses in 2006, and spinning off its natural gas businesses in January, Duke Energy today focused on its plans for the future during its annual meeting of shareholders.
“We have come together as one company with one purpose – to create value for our customers and shareholders,” Chairman, President and CEO Jim Rogers told the approximately 200 shareholders who gathered at the company’s Charlotte headquarters.
Rogers presented a four-point agenda for the next three years:
* Investing to meet growing demand: The company could spend from $10 to $15 billion over the next nine years on the development of new generation capacity, including advanced cleaner coal, natural gas, nuclear, renewable energy and energy efficiency assets. He noted that the company filed its innovative save-a-watt energy efficiency plan with North Carolina regulators earlier in the week.
* Modernizing our grid: Rogers said the company would build the “utility of the future” by converting its analog distribution grid into a digital “smart grid” to serve as an information-rich backbone for more efficient energy use. “We are involved in two pilot programs, one in Charlotte and one in the Midwest, to test two different technologies (for Broadband over Power Lines),” he said. “Our goal is to make our grid more efficient and help our customers better manage their energy use.”
* Reducing our environmental footprint: Rogers said that with the company’s new generation assets and energy efficiency programs, the company will work to effectively “decarbonize” itself over the next 30 years by shutting down older coal plants and making environmental retrofits on existing plants. “We will have one of the cleanest coal fleets in the country,” he said. “We have a special responsibility to get it right with the environment.”
* Creating a regulatory framework for the future: Rogers said the company is making good progress on its regulatory efforts to recover its investments. He noted that last week, South Carolina lawmakers passed legislation allowing the recovery of financing costs as new base-load generation is built. The company has similar cost recovery initiatives under way in its other states.
“We will continue to talk with customers and regulators so they are supportive of our initiatives,” Rogers said. Proper regulatory support is necessary to execute a stakeholder-focused strategy that will ensure rates remain competitive, service stays reliable, customers are satisfied and the company’s environmental impact continues to lessen.
“We’re paying attention and we will be good environmental stewards,” he added.
On the financial side, Rogers said the company expects ongoing diluted earnings per share growth of 4 to 6 percent through 2009, and dividend growth is expected to be in line with earnings growth, with a 70 to 75 percent payout ratio. “Most importantly, we expect to meet our 2007 employee incentive target of $1.15 per share, on an ongoing diluted basis,” he said.
During the meeting, shareholders re-elected all 10 members of the board of directors to one-year terms. The company has a declassified board of directors, which means all of the directors are voted on every year at the annual meeting.
Shareholders also ratified the selection of Deloitte & Touche as the company’s independent public accountant for 2007.
NON-GAAP FINANCIAL MEASURES
This document includes a reference to the company’s 2007 employee earnings per share (“EPS”) incentive target of $1.15. The EPS measure used for employee incentive bonuses is based on ongoing diluted EPS. Ongoing diluted EPS is a non-GAAP financial measure as it represents diluted EPS from continuing operations, adjusted for the per-share impact of special items. Special items represent certain charges and credits which management believes will not be recurring on a regular basis. The most directly comparable GAAP measure for ongoing diluted EPS is reported diluted EPS from continuing operations, which includes the impact of special items. Due to the forward-looking nature of this non-GAAP financial measure, information to reconcile it to the most directly comparable GAAP financial measure is not available at this time, as management is unable to forecast special items for future periods.
This document also includes a reference to the company’s expected range of growth in ongoing diluted EPS through 2009. These percentages are based on anticipated ongoing diluted EPS amounts for future periods. This ongoing diluted EPS measure is a non-GAAP financial measure as it represents diluted EPS from continuing operations, adjusted for the impact of special items. Due to the forward-looking nature of ongoing diluted EPS, and related growth rates, for future periods, information to reconcile such non-GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time, as management is unable to forecast any special items for future periods.
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