Volatile fuel prices and economic uncertainty weren’t enough to keep Duke Energy’s core operations from performing well, the company said in reporting 2Q2008 adjusted diluted earnings of 27 cents/share, up from 24 cents in 2Q2007.
The quarterly results reflected strong performances by Duke’s three largest segments, partially offset by a $113 million charge related to impairments recorded by the company’s former land management and development wing, Crescent Resources. Duke sold a 49% stake in Crescent to Morgan Stanley Real Estate for $1.4 billion in 2006 (see Daily GPI, Sept. 11, 2006). Duke retained a 49% stake in the Charlotte, NC-based real estate company.
Duke’s U.S. Franchised Electric and Gas (USFE&G) unit reported 2Q2008 earnings before interest and taxes (EBIT) of $503 million, compared with $452 million in 2Q2007. The increase was due primarily to the conclusion in the third quarter of 2007 of North Carolina clean air amortization, the substantial completion of rate credits in 2007 related to Duke’s merger with Cinergy Corp. and higher Allowance for Funds Used During Construction, including the impact of a favorable regulatory ruling in Indiana. USFE&G also benefited from higher rates in the Midwest, primarily a result of recovery of qualifying pollution control costs in Indiana, Duke said.
Duke’s Commercial Power segment, which buys and sells electricity on the wholesale market, reported 2Q2008 EBIT of $235 million, compared to $64 million in 2Q2007. Commercial Power results increased primarily because of higher mark-to-market gains due to economic hedges, gains on the sale of emission allowances, lower purchase accounting expenses and improved operations.
During the quarter Duke acquired Catamount Energy Corp. from funds affiliated with Diamond Castle Holdings LLC for approximately $240 million, significantly increasing its wind energy operations and announced a $100 million plan to install solar panels at up to 850 North Carolina sites.
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