With more “normalized” natural gas prices that will push first quarter earnings lower than they were in 2001, Duke Energy Corp. CFO Robert Brace said Wednesday earnings growth for 2002 still should reach the “high end” of the 10-15% range, fueled by its Westcoast Energy acquisition and plant completions that will add 6,700 MW to the portfolio by this summer. Duke’s earnings in the first quarter will fall between 35 and 45 cents per share, with the company’s strongest earnings expected in the third quarter.

The Westcoast acquisition, which was completed in mid-March (see NGI, March 11), will add about 3 cents to Duke’s earnings in the 10 months of 2002 that it will be on the books, Brace said during a scheduled teleconference with investors. Also, Duke expects to complete a “significant” amount of generating plants by this summer, which will also positively affect the company’s gas storage and transmission business. Westcoast alone will push up Duke’s gas transmission earnings 7-9% this year, higher than a previous estimate of 5-7%, he said.

“With our expansion into Canada, our gas transmission will greatly push growth,” said Brace, not just with the Westcoast acquisition, but with its opportunities into the future. “This acquisition offers strategic benefits, extending Duke Energy’s business to provide a strong platform.” Brace said that Duke believes Canada “will be important for us in terms of gas supply,” offering the company infrastructure from the northwest part of North America across the United States. “It gives us tons of opportunities we didn’t have before…with a lot of growth there in gas supply.”

First quarter earnings will be released in April, Brace said, but he acknowledged that earnings could not “reasonably” be compared with those of the first quarter of 2001, when there were record commodity prices and unusually cold temperatures. However, Duke expects to see more normal weather and more normal pricing going forward for natural gas, which he noted has seen an upturn in the past several weeks.

“In 2002,” said Brace, “we are looking at more normalized expectations on prices…more opportunities to grow through acquisitions and internal development…and a recovering U.S. economy.”

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