NEW YORK (AP) — Duke Energy lost $97 million in the first quarter because it reduced the value of a fleet of coal-fired power plants in the Midwest that it is trying to sell.
The company’s regulated utility operations, however, performed better than expected because of higher rates and stronger demand for power.
Duke reported Wednesday that it lost 14 cents per share on revenue of $6.62 billion in the first three months of the year. Last year, the company earned $634 million, or 89 cents per share, on revenue of $5.9 billion.
Adjusted to remove the $1.4 billion write-down of the coal plants, Duke earned $1.17 per share in the latest quarter. That’s up from last year’s adjusted $1.02 per share and higher than the $1.12 expected, on average, by analysts surveyed by FactSet.
In a good sign for the economy in Duke’s service territory, demand for power rose in the quarter even after adjusting for the effect of a brutally cold winter.
“We’re seeing this economic recovery deepen and broaden a bit,” said Duke CFO Steve Young in an interview Wednesday. “It’s started to get into median income households and small businesses.”
Electricity sales rose 7.1 percent in the quarter, and 2.6 percent when the effect of weather was removed.
Duke also benefited from higher rates that regulators have allowed the company to charge customers.
Duke Energy Corp., based in Charlotte, is the nation’s largest electric utility by market value and number of customers. It serves 7.2 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky.
Duke announced in February that it would seek to sell its fleet of power plants in the Midwest that sell power into wholesale markets, instead of directly to customers. Electricity prices in wholesale markets have been extremely volatile and generally low in recent years mainly because of low natural gas prices.
Duke CEO Lynn Good said in an interview Wednesday that Duke was working to deliver steady and strong results for shareholders, and the volatility and low returns of the Midwestern fleet was hindering that effort.
Because wholesale power prices are expected to continue to be low, Duke is unlikely to sell the plants for as much as they were initially valued by the company so it had to write down their value.
In February, a pipe at the bottom of a pond that held waste from a Duke coal plant in North Carolina burst and spilled toxic ash into the Dan River. Good said cleanup efforts cost the company $15 million in the quarter. She said while there will be more costs to come, she does not expect them to be large enough to materially affect overall results.
Duke shares closed at $73.07 per share on Tuesday. Its shares are up almost 6 percent so far this year.
Jonathan Fahey can be reached at http://twitter.com/JonathanFahey .