Duke Energy Corporation
Company Analysis Project
Table of Contents
Utility Structure 4
Microeconomic Environment 5
Macroeconomic Environment 7
Regulatory Impacts 9
Ethical Considerations 12
Duke Energy Corporation is an energy company headquartered in Charlotte, North Carolina that operates in the United States as well as in Latin America and is subject to regulation by the Federal Energy Regulatory Commission. 2013 operating revenues totaled $24.6 billion and assets totaled $114.8 billion (Duke Energy, 2014). On December 31, 2013, Duke Energy had 27,948 employees with 5,548 operating and maintenance employees ...view middle of the document...
13 per share (Duke Energy, 2014).
International Energy, headquartered in Houston, Texas, power generation is primarily targeted in Latin America consisting of baseload hydroelectric generation facilities; however, International Energy also owns a 25 percent interest in National Methanol Company, a large regional producer of a gasoline additive located in Saudi Arabia (Duke, 2014). Operations are subject to both country-specific and international laws and regulations. International Energy recognized second quarter 2014 adjusted segment income of $146 million, compared to $87 million in the second quarter 2013, an increase of $0.09 per share (Duke Energy, 2014).
Commercial Power’s generation consists primarily of Duke Energy Ohio’s coal-fired and gas-fired nonregulated generation assets located in the Midwest region of the United States as well as wind and solar generation located throughout the United States. Generation from the coal-fired and gas-fired assets earn energy and capacity revenue at market prices dispatched on the PJM wholesale market. On February 17, 2014, Duke Energy Ohio announced that it had initiated a process to exit its nonregulated Midwest generation business and expects to dispose of the nonregulated Midwest generation business by early to mid-2015 (Duke Energy, 2014). Commercial Power recognized second quarter 2014 adjusted segment income of $16 million, compared to a segment loss of $3 million in the second quarter 2013, and increase of $0.02 per share (Duke Energy, 2014).
Duke Energy operates as a regulated monopoly in North Carolina, South Carolina, Florida, Indiana and Kentucky required to serve all the customers in their service area with fair and reasonable rates. Consistent with regulatory policy for providing safe and reliable electricity at fair prices, state commissions approve rates designed to include the costs of providing these services and a reasonable rate of return on invested capital. Without a reasonable return on investment, shareholders would not provide Duke Energy the money needed to keep serving its customers.
Ohio’s customer choice law provided electric competition. Since January 2001, customers have been able to buy electricity and certain ancillary services competitively from suppliers other than Duke Energy Ohio. Generation from the coal-fired and gas-fired assets earn energy and capacity revenue at market prices dispatched on the PJM wholesale market. A listing of suppliers certified by the Public Utilities Commission of Ohio and approved by Duke Energy Ohio is maintained on the Duke Energy website for customer use. Although customers can buy their electric generation from another supplier, Duke Energy Ohio still provides regulated functions of transmitting and distributing electricity to end-use customers. On February 17, 2014, Duke Energy Ohio announced that it had initiated a process to exit its nonregulated Midwest generation business and expects to...