Duke Energy CORP (DUK) Q3 2026 Earnings Call

the national average. We expect orders on both cases by mid-November with rates effective

in January of 2027. We also reached a settlement with public staff and several large customers

around a proposed large load tariff in early October. We believe the settlement achieves

a constructive outcome that balances the goals of protecting existing customers while supporting economic growth. We expect the Commission to issue an order on the tariff along with the rate cases. Our guiding principle on large loads is simple. Ensure everyone benefits from the influx of economic development projects, preserving reliability, powering economic growth, and producing shared value.

The large load tariffs we are advancing align with our Customer Protection Plus commitment and the key provisions in our existing ESAs, including long-term contracts with minimum demand charges, early termination penalties, interruptibility, credit support, and capital advances.

The progression of large load tariffs across our states ensures large customers' users cover the cost of serving their facilities and deliver billions of dollars in benefits for our customers and communities over the life of their contracts.

Turning to Indiana, we have provided notice of our intent to follow our first multi-year rate plan later this year. We share the goals of Indiana customers, regulators, and policy makers to keep bills as low as possible, maintain reliability, while supporting growth in the state. We start from a strong position with some of the lowest residential rates in the state and a track record of effective cost management and operational excellence, including storm response.

We look forward to developing a cost-effective plan that delivers continued value to our customers.

As outlined on slide 6, we continue to make significant progress on one of the largest generation expansion programs in the industry, adding 16 gigawatts of capacity by 2031.

We're advancing resource plans in our largest jurisdictions to reflect the once-in-a-generation growth we're experiencing.

In August, we filed the 2026 Carolinas Resource Plan in South Carolina. The plan reflects our all-of-the-above generation strategy with additional combined cycles, combustion turbines, increased battery storage, and continued solar development.

The Commission will hold a hearing on the resource plan in April of 27 and issue an order by June of 27.

Our resource plans make clear the important role natural gas will play in the near term to ensure reliability.

That's why we're advancing regulatory filings specific to natural gas generation with more than 5 gigawatts under construction in the Carolinas and Indiana, and another 5 gigawatts in development.

Since our second quarter call, we received approval from the North Carolina Commission on our first out-of-state CPCN filing for the Anderson County Combined Cycle Plant and a construction monitoring request for the first-person county unit.

Just last month, we pre-filed CPCNs for two combined cycle plants totaling near 2,800 megawatts at the Davie-Davidson site in North Carolina and expect to file CPCNs early next year.

We continue to evaluate a liquefied natural gas storage facility on the site to support our generation fleet, which would provide greater supply flexibility and diversity, while reducing exposure to price volatility to support reliable and affordable service.

In closing, we are leveraging our economies of scale to create value.

As we progress these generation projects, we are focused on delivery certainty, utilizing

our framework agreements and repeatable execution models to de-risk every dollar and ensure we deliver on time and on budget. With that, let me turn the call over to Brian.

Thanks, Harry, and good morning, everyone. As shown on slide seven, we delivered another strong quarter with both reported and adjusted earnings per share of $1.99 compared to $1.81 in the prior year. Electric utilities and infrastructure increased 20 cents as the growth engine of the company continues to produce strong results. Rate cases and riders, along with higher sales volumes and hot summer weather, fueled the growth in the quarter.

These drivers were partially offset by higher depreciation and interest expense associated with our growing asset base and the minority interest at Duke Energy Florida.

Gas utilities and infrastructure was up a penny, and the other segment was down 3 cents due to lower market returns on benefit trusts.

Our results continue to reflect disciplined execution of our strategy, and I'm proud of the way our teams maintain reliable service

to extreme summer heat across our jurisdictions. As we close out 2026, we're reinvesting some

weather benefits to further strengthen the system as we exercise O&M agility to deliver

consistent, sustainable growth year after year. We also expect lower quarterly results in the gas segment

as we enter the first winter heating season following the Piedmont Tennessee sale.

Overall, we are extremely pleased with our year-to-date performance and are well positioned

to deliver full-year results near the top end of our narrowed EPS guidance range.

Moving to 2027 growth drivers on slide eight, we will implement new rates across many of our service territories next year, including in North Carolina, where we will begin our next multi-year rate plan, subject to final commission orders.

In Florida, we will move into the final year of the current rate plan, utilizing battery

tax credits to keep base rates flat for customers. We also expect continued customer growth and the ramp of economic development projects to support our 3% to 4% load growth outlook. To meet this accelerating demand and maintain reliable service for customers, we will continue to execute our record generation build and grid investment plan, driving higher AFUDC and rider recovery. These positive drivers will be partially offset by a return

to normal weather, higher depreciation, and higher interest expense as we fund the

growth of the business. The fundamentals underpinning our long-term outlook are as

strong as ever. Our communities continue to benefit from population migration and vibrant

economies, creating an extensive runway of capital investment opportunities well into

the next decade. That investment supports sustained earnings-based growth with additional upside

as we secure large load projects in our pipeline. And the efficient recovery mechanisms across

our jurisdiction support timely recovery, strengthen the balance sheet, and minimize cost for customers.

Positioning the company to deliver 5-7% long-term earnings growth with confidence to earn in the top half of the range beginning in 2028.

Turning to slide 9, we continue to advance economic development prospects into contracted load and connect customers to the system.

Load growth has accelerated through 2026. Third quarter demand increased 2%, our strongest quarterly growth since 2022.

Residential customer growth is steady at nearly 2%, outfacing the national average, while advanced manufacturing loads are beginning to come online and ramp. These trends reinforce confidence in our 3% to 4% load growth projection over the remainder of the five-year plan, as contracted data center load begins coming online next year.

I also want to reiterate Harry's comments on the work we've done in the regulatory space

to bring greater transparency to our large load contracts.

The constructive settlement we reached in North Carolina formalizes customer protections,

further ensuring that as data centers come online, they will deliver billions in benefits

for customers and communities. Moving to slide 10, we remain confident in converting the full

15.4 gigawatt late-stage pipeline to ESAs by the first half of 2027. We are advancing negotiations with prospective large load customers, with multiple projects executing preliminary agreements during the quarter, and providing deposits to begin initial transmission system work. We are actively planning the generation and transmission investments to serve them, with the potential for $5 to $10 billion of capital to be added to the five-year plan upon final contract

Conversion of the remaining pipeline will extend the runway of load growth and capital investment well into the next decade.

Finally, the 5.2 gigawatts of data centers currently under construction remain on schedule to begin taking energy in the second half of 2027 and into 2028. Turning to the balance sheet on slide 11, we remain on track to achieve our 14.5% FFO to debt target for 2026.

Our disciplined financing strategy continues to support a strong balance sheet

and provides the financial flexibility needed to execute our investment plans to reliably serve customers.

We're supporting our growth capital plan with $10 billion of equity

and have already addressed one-third of our expected needs.

We priced $825 million of equity through our ATM program year to date, with settlement expected in December of 2027.

In August, we issued $2 billion of mandatory convertible equity units, and we expect to issue $125 million annually through our dividend reinvestment plan beginning in 2027.

Together, these actions limit near-term dilution and preserve future share price appreciation upside. This proactive approach reduces financing risk while supporting an efficient cost of capital. We are also actively managing interest rate exposure as we address ongoing financing needs. As we've discussed in prior calls, the Piedmont, Tennessee, and Duke Energy Florida minority investment proceeds reduce holding company leverage,

An increasing benefit as interest rates rise and support our long-term target of 15% FFO to debt.

Near term, Brookfield plans to accelerate $1 billion of its investment from

2028 to this December, with the remaining $2 billion to be funded in 2027. The rest of our

2026 plan is nearly complete, with our remaining issuances fully hedged. Across the five-year plan,

our long-standing programmatic hedging strategy helps moderate interest rate volatility. We will

continue to optimize the timing, duration, and structure of our financings to minimize costs and create long-term value for customers and shareholders. Let me close with slide 12. Our strategy is clear. Seize growth opportunities. Execute our all-of-the-above generation plan to reliably serve our customers. And work with stakeholders to reach constructive regulatory outcomes that support critical investments while keeping costs as low as possible.

We remain on track to deliver results near the top end of our narrowed 2026 EPS guidance

range and 5-7% EPS growth through 2030, with confidence to earn the top half of the range

beginning in 2028. Discipline execution of our capital investment plan will produce value for

customers and position us to deliver on our growth targets, which combined with our attractive dividend

yield provide a compelling risk-adjusted return for shareholders. With that, we'll open the line

for your questions. We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Char Perez with Wells Fargo.

Char, please go ahead. Hey, guys. Good morning. Morning, Char. Morning. Morning, Harry. Let me just start on Florida. I know you guys continue to kind of highlight the additional capital opportunities to serve large loads. I guess, can you talk about how this week's PSE decision to delay the tariff and any impact to the opportunity set? I guess, what's the path forward there? Or can you continue to move forward as planned without the tariff?

in place? Thanks. Yeah, great, great question, Char. Yeah, this week, Florida gave us feedback on our file tariff. You know, we have the same focus as our regulators, as well as our stakeholders, customers and policymakers to make sure that these data centers are paying their fair share, providing benefits to the customers, as well as maintaining reliability. So we really appreciate the Commission's look at that and the feedback they gave us.

We're making adjustments to our tariff and plan on refiling that.

In the meantime, we're continuing to talk to our customers and continuing to advance the process there on what we're going to need to build for them and the commercial terms that we're going to need to have.

So no slowdown in what we're doing in Florida. We'll have to refile the tariffs, but we feel confident that we'll be able to reach agreement with the feedback that we received.

Okay, perfect. And then just on Indiana, obviously, there's been a lot of attention on affordability. So with the potential opportunity you see to serve the large load, I guess, would you consider maybe a Genco-type structure, given the benefits of speed-to-market, obviously, by bypassing the CPCN process?

And then, obviously, that structure has a much more visible way to flow back the savings to customers publicly, as we've seen with the peer in the state.

I guess, have conversations started around this structure type? And just what's your view there? Thanks.

Yeah, sure. So, again, we share the commission and the governor's focus on affordability.

It's something that we've done for over 120 years, making sure that we have reliable service at the lowest cost possible.

We're in a strong position in Indiana with the lowest rates in the state.

We continue to work with all our stakeholders to make sure that we're providing the reliable service as well as growing the state.

We are moving forward, having discussions with customers, advancing the pipeline that we have up there, and feel confident that we're going to be able to sign some ESAs before the end of the first half of next year.

We always are evaluating when we will need or if we will need a GenCO kind of operation, so we're open to that.

We continue to feel like we can continue to provide the service that we need for our customers and under our current model.

But if things change and it makes sense to have a GenCO for the reasons that you mentioned, then we will absolutely be doing that.

Got it. That's perfect. Appreciate it, guys, and see you in a couple days.

Yep. Your next question comes from the line of Julian DeMoulin-Smith with Jeffries. Julian, please go ahead.

Hey, good morning, team. Thanks for the time. I appreciate it. Hey, maybe just to follow up on the Carolinas real quickly, maybe more of a housekeeping item, but as you think about the next few weeks, how do you think about the just approval process of the settlement here? I mean, there's sort of an element of just follow through, but just want to make sure you guys feel good about that.

If there were to be any tweaks in this, how do you think about that being reflected? Obviously, we've seen commissions, but specifically in the Carolinas, take a lot of focus on large loads and the tariffs and cost allocation appropriately. But again, really narrowly here, follow through and approval as is of the settlement, and if there's any twist, how do you think about that?

Yeah, good morning, Julian. Yeah, we're very pleased on the settlements that we reached with public staff and nearly all the intervening parties in the state. I think the settlements reflect extensive negotiations that we had amongst the stakeholders and addressed all the key issues that a lot of them raised during the proceedings. We really focused and I believe we were successful in balancing customer affordability with the investments that we needed to be making to improve reliability

Harden the grid, and support the tremendous growth that we're seeing in our state, both from population growth, data centers, as well as other economic development projects.

We have a very strong track record of constructive regulatory outcomes in North Carolina, and we believe that this settlement, because it represents a balanced, well-supported outcome, that we will be successful in getting approval.

We will continue to remain focused on other things that we can do to continue to drive affordability with our nuclear PTC credits, our storm securitization, our one utility that will start off in January.

Those are all things DOE loans. Those are all things that we're doing to help reduce the customer bill, and we'll continue to look for other options to do that as we move forward.

Excellent. I appreciate it here. And if the plant cost referrals let you delay the next North Carolina rate case, I mean, does your outlook assume kind of a similar earnings sharing, just the overall framework, maybe is the right way to say it, that still applies in 29, just as you think about the outlook here? If you can elaborate a little bit.

Yeah, we do, Julian. You know, as part of the settlement, we have the option of staying out in 2029. That is predicated on a deferral for the generation facilities that will be coming online. So we'll be evaluating that as we get closer to that date. But all the other conditions will continue to imply, including the earnings sharing mechanism.

And Jillian, I'll add to that. With the revenue acceleration from the large load customers coming online in 2027 that ramped into 2028 and 2029, it really sets the stage that would create the opportunity for the stay out. And that was part of underpinning the negotiation, and we're excited to see that come to fruition.

Got it. And your confidence in being able to leverage those kinds of mechanisms, given some of the pushback in a more discreet fashion in recent months to some of the investments, again, those are discrete and separate factors, but your confidence that you're on the right track to be able to get these plants approved broadly. Again, separate issues, but again, I know that there's been some specific nuances here on some of the latest assets you put before the commission.

Yeah, absolutely, Julian. We feel North Carolina is a constructive place. We're seeing the tremendous growth, and it's a dynamic environment that we have to continue to work with all our stakeholders and policymakers to make sure that we're doing the right things for our customers and for our state to maintain reliability and affordability and serve this tremendous load that we're seeing. So I think everybody's aligned on that.

Okay. All right. Fair enough. I'll leave it there. Thank you guys very much. All the best. Good luck here.

Thank you. Thank you.

Your next question comes from the line of Nicholas Campanella

with Barclays. Nicholas, please go ahead. Hey, morning. Thanks for all the updates.

Morning, morning, Nick. Hey, maybe just on the roll forward, you kind of highlighted this 5 to

7 or the 5 to 10 billion of additional capital in Florida and Indiana. Can you just kind of talk to

what that is worth from like an earnings-based increase or rate-based increase perspective as we think about the roll forward? And then just what are the incremental items that we're not thinking about in the Carolinas or in transmission otherwise? I know you kind of brought up this natural gas liquid facility as part of the Carolinas IRP. Just what else is worth kind of thinking incrementally from this? Thanks.

No, thanks, Nick. And this is Brian. As you pointed out, I mean, we're in the throes of building our next role of the plan. And bottom line, capital is increasing, right? We're investing about a billion and a half a month right now, and that's going to step up to about $2 billion a month with a B beginning as we get into 2027. And there's a ton of projects and execution underpinning that capital deployment.

And, you know, the $5 to $10 billion we highlighted for the large load projects, that's in the overlapping period.

But you think about it, as we get deeper in the generation build cycle and we add 2031, it's much larger than 2026. So the capital plan is moving up in a sizable way because, you know, we've got 5 gigawatts of natural gas plants under construction along with about 5 gigawatts of batteries and solar in the system.

We'll be adding more gigawatts because we've got 5 gigawatts of natural gas under development, and those will be becoming investments in the next role of the plan.

So the plan's going up, and these large load projects even kind of boost the increase in the CapEx.

And, Nick, I would add that, you know, our growth opportunities are tremendous.

You know, we're seeing population growth over 2%.

Charlotte's the fastest growing city in the U.S., so being able to serve that load with transmission and distribution, those investments, as well as the generation, we're seeing no end to the data centers and the economic development projects as we continue to work through the funnel on those, so a lot of opportunity for investment in the future.

That's great. Appreciate the color. And then maybe just on the election updates over the last 24 hours, I'm just wondering how you'd frame it impacting the states that you operate in, understanding there haven't been any major changes in governorship in most states, but just if the attitudes are changing towards large load customers in some of the adjacent states outside your territory, is there any anecdotal pieces that you could offer as it relates

to your late-stage pipeline. Could we see upside to that as people come to your territory

on the back of what we just saw yesterday? Thanks.

Yeah, well, first off, I want to congratulate everybody on the election. It was kind of a historic night. I was watching, and I didn't get any sleep till after midnight watching the results come in. But, you know, we've always worked with our policymakers, and we share their goals, which is reliable service, affordable service, and making investments that help grow the state and bring jobs to the states that we serve.

And we've been successful for over 125 years doing that.

So we have a track record of that, working with both sides of the aisle to be able to accomplish that.

We don't see any changes in that focus or any changes in our ability to work with those that were recently elected.

I think they share the same thing, that they want to grow the states, they want to bring jobs, and they all agree that we're a vital part of that.

So we'll continue to work through our pipelines, through our economic development teams, and working closely with the state to bring those jobs and those projects in.

I think they're all very supportive. They share our goal, too, of protecting our customers and making sure these large loads pay for their fair share and provide benefits to the customers,

which is what our ESA contracts do already and these tariffs that we're filing do already.

So I feel like we'll be very successful moving forward. They're all aligned with that.

All right. Thanks for the thoughts.

Thank you, Ned.

Your next question comes from the line of Carly Davenport with Goldman Sachs. Carly, please go ahead.

Hey, good morning. Thanks for taking the questions. Maybe just a quick follow-up, I think, on one of Julian's questions earlier.

As you think about the gas build, can you just talk a little bit about the plan to refile the CPCN for the Smith CT, and then just as you think about preparing the filing for the Davy-Davidson combined cycles, any lessons learned or concerns that you'd have about securing approvals there?

Yeah, good morning, Carly. Yeah, I'd be glad to handle that. Yeah, so our Smith CPCN that we filed was denied by the commission. They had some questions.

I think they were really focused on the IRP proceeding and validating the load requirements

in there. We still feel very confident that that's a good project. It's a small project,

but it is a low-cost solution to help the generation need that we have in the state to serve our

customers reliably and affordably. So we feel confident after the IRP filing that IRP decision

that we will be able to re-evaluate what we need to do there. We've had the out-of-state CPCN for Anderson County was approved.

So we still feel like there's support for these projects and gas build in the Carolinas, and we feel confident that the Davey-Davidson CPCN that we follow early next year will be successful. Great. Thank you for that, caller. Super helpful. And then maybe the follow-up just on nuclear. I guess there have been, you know, continued developments at the federal level to support new large-scale reactors. I guess any developments you'd highlight in your discussions with key stakeholders there and any shifts in how you're thinking about the appetite

for new nuclear with some of these moves on the federal funding side. Yeah, Carly, there's really been no shift in our position. We still feel nuclear is very important to our current system as well as our future, so we're focused on the same things we were before, upgrading our current units, so we have 300 megawatts that we'll be adding to our units over the next five years, as well as extending the lives of our current plants to serve 80 years, so we have two already approved and filed

but there it is taking longer because of the complexities and obviously with a dynamic environment. I think everybody's experience in this, whether it's elections, whether it's tariff proceedings, all those things come into play, but we're making progress on those, and we feel very confident that we'll be able to sign the rest of those between now and the first half of next year.

That's all I had. See you guys in Phoenix.

See you. Thank you.

Your next question comes from the line of Nick Amacucci with Evercore ISI. Nick, please go ahead.

Hey, good morning, guys. Just really one quick one for me. I just wanted to get a sense, too, when we think about the acceleration of the Florida minority sale proceeds from 2028 into 2026, just, I guess, the rationale for that, and then how should we balance kind of the avoided holding company interest?

Um, with, uh, alongside the, um, kind of the equity requirements. Is it just primarily timing, or is there something else to do?

Yeah, Nick, uh, good morning. Um, you know, I, I think we, we always contemplated this was a possibility, because Brookfield had the optionality to accelerate their investment tranches, and, um, so it's, it's, uh, it's been in our planning assumptions that it could happen, and if it did, uh, it, it's net, net accretive to us.

I mean, and I mentioned on my prepared remarks,

in the rising interest rate environment, those deals look better every day, bringing in eight and a half billion dollars to delever Holtco when interest rates are moving against us is a great, great thing.

So, you know, we definitely have a higher ownership percentage for Brookfield for Florida earlier, but that is, you know, remember, we sold this business, that minority stake at, you know, near a 30 PE.

So it's accretive to the bottom line for having that interest being sold sooner. And it's a nice help while we don't have to access the market near as much at the holding company in 2027 with these proceeds coming in. Makes perfect sense. Thanks. There are no further questions at this time. I will now turn the call back over to Harry Sedaris for closing remarks.

So I'll wrap this up real quickly. You know, our focuses remain straightforward. We're going to maintain operational excellence. We're supporting the once-in-a-generation growth, and we're delivering value for our customers. We're very pleased with our performance so far this year and continued progress that we're making on our strategic priorities as we move forward. We are very confident in our 2026 outlook and in our ability to deliver the upper half of our

5% to 7% earnings per share growing in 2028. Our plan is very durable, and we're well positioned to create the long-term value for our customers, our communities, and our shareholders. So thank you again for joining us today. I look forward to seeing a lot of you out in Arizona later this weekend. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.