UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 27, 2021
| Commission file number | Registrant, State of Incorporation or Organization,
Address of Principal Executive Offices and Telephone Number | IRS Employer
Identification Number |
| |  | |
| 1-32853 | DUKE ENERGY CORPORATION (a Delaware corporation) 550 South Tryon Street Charlotte, North Carolina 28202-1803 704-382-3853 | 20-2777218 |
| 1-4928 | DUKE ENERGY CAROLINAS, LLC (a North Carolina limited liability company) 526 South Church Street Charlotte, North Carolina 28202-1803 704-382-3853 | 56-0205520 |
| | | |
1-3382 | DUKE ENERGY PROGRESS, LLC (an North Carolina limited liability company) 410 South Wilmington Street Raleigh, North Carolina 27601-1748 704-382-3853 | 56-0165465 |
| | | |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c))
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
| Registrant | | Title of each class | | Trading
Symbol(s) | | Name of each exchange on which
registered |
| Duke Energy | | Common Stock, $0.001 par value | | DUK | | New York Stock Exchange LLC |
| | | | | | | |
| Duke Energy | | 5.625% Junior Subordinated Debentures due September 15, 2078 | | DUKB | | New York Stock Exchange LLC |
| | | | | | | |
| Duke Energy | | Depositary Shares each representing a 1/1,000th interest in a share of 5.75% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share | | DUK PR A | | New York Stock Exchange LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 7.01. Regulation FD Disclosure.
In connection with the rate case applications filed in South Carolina in 2018 by each of Duke Energy Carolinas, LLC (“DEC”) and Duke Energy Progress, LLC (“DEP”), the Public Service Commission of South Carolina (the “PSCSC”) issued orders in May 2019 (the “PSCSC Orders”) in the two rate cases which, among other things, denied recovery of $115 million of certain coal ash remediation costs at DEC and $65 million of certain coal ash remediation costs at DEP. These costs were deemed by the PSCSC to be related to the North Carolina Coal Ash Management Act of 2014 (“CAMA”) and incremental to the federal Coal Combustion Residuals Rule (the “CCR Rules”). After filing Petitions for Rehearing or Reconsideration in 2019, which were subsequently denied by the PSCSC, DEC and DEP each filed an appeal with the Supreme Court of South Carolina (the “Court”) in November 2019.
On October 27, 2021, the Court issued an opinion affirming the PSCSC’s decision to (1) disallow cost recovery on coal ash compliance costs the PSCSC deemed as incremental to the CCR Rules; (2) disallow recovery of coal ash litigation expenses incurred by both DEC and DEP; (3) disallow a return on certain deferred expenses; and 4) allow recovery of pre-construction costs related to the Lee Nuclear Station by DEC. The Court’s decision notes the prior recommendation of the South Carolina Office of Regulatory Staff that DEC and DEP could ask for coal ash costs not initially approved in the PSCSC Orders to be submitted for recovery in the future by DEC and DEP if they can be attributed to the CCR Rules rather than CAMA. Petitions for rehearing are due November 11, 2021, unless an extension is sought and granted.
As a result of the Court’s opinion, DEC and DEP expect to recognize total estimated pre-tax charges of approximately $100 million to $200 million in the third quarter of 2021 principally related to coal ash remediation at retired coal sites. Additionally, future annual earnings impacts resulting from the Court’s opinion are not considered material. These estimated impacts could change in the future if federal rules and regulations covering coal ash remediation are modified, coal ash remediation estimates are changed, or the remaining estimated depreciable lives of the related coal plants are revised.
Item 2.06. Material Impairments.
The information contained in Item 7.01 above relating to material charges is incorporated into this Item 2.06 by reference.
Forward Looking Statements
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions and can often be identified by terms and phrases that include “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook” or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but are not limited to:
| · | The impact of the COVID-19 pandemic; |
| · | State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, including those related to climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices; |
| · | The extent and timing of costs and liabilities to comply with federal and state laws, regulations and legal requirements related to coal ash remediation, including amounts for required closure of certain ash impoundments, are uncertain and difficult to estimate; |
| · | The ability to recover eligible costs, including amounts associated with coal ash impoundment retirement obligations and costs related to significant weather events, and to earn an adequate return on investment through rate case proceedings and the regulatory process; |
| · | The costs of decommissioning nuclear facilities could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process; |
| · | Costs and effects of legal and administrative proceedings, settlements, investigations and claims; |
| · | Industrial, commercial and residential growth or decline in service territories or customer bases resulting from sustained downturns of the economy and the economic health of our service territories or variations in customer usage patterns, including energy efficiency efforts and use of alternative energy sources, such as self-generation and distributed generation technologies; |
| · | Federal and state regulations, laws and other efforts designed to promote and expand the use of energy efficiency measures and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in customers leaving the electric distribution system, excess generation resources as well as stranded costs; |
| · | Advancements in technology; |
| · | Additional competition in electric and natural gas markets and continued industry consolidation; |
| · | The influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts, earthquakes and tornadoes, including extreme weather associated with climate change; |
| · | Changing customer expectations and demands including heightened emphasis on environmental, social and governance concerns; |
| · | The ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to the company resulting from an incident that affects the U.S. electric grid or generating resources; |
| · | Operational interruptions to our natural gas distribution and transmission activities; |
| · | The availability of adequate interstate pipeline transportation capacity and natural gas supply; |
| · | The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches, operational accidents, information technology failures or other catastrophic events, such as fires, explosions, pandemic health events or other similar occurrences; |
| · | The inherent risks associated with the operation of nuclear facilities, including environmental, health, safety, regulatory and financial risks, including the financial stability of third-party service providers; |
| · | The timing and extent of changes in commodity prices and interest rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets; |
| · | The results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations, compliance with debt covenants and conditions and general market and economic conditions; |
| · | Credit ratings of the Duke Energy and its subsidiaries (the “Duke Energy Registrants) may be different from what is expected; |
| · | Declines in the market prices of equity and fixed-income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans and nuclear decommissioning trust funds; |
| · | Construction and development risks associated with the completion of the Duke Energy Registrants’ capital investment projects, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner, or at all; |
| · | Changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants; |
| · | The ability to control operation and maintenance costs; |
| · | The level of creditworthiness of counterparties to transactions; |
| · | The ability to obtain adequate insurance at acceptable costs; |
| · | Employee workforce factors, including the potential inability to attract and retain key personnel; |
| · | The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent); |
| · | The performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities; |
| · | The effect of accounting pronouncements issued periodically by accounting standard-setting bodies; |
| · | The impact of U.S. tax legislation to our financial condition, results of operations or cash flows and our credit ratings; |
| · | The impacts from potential impairments of goodwill or equity method investment carrying values; |
| · | The actions of activist shareholders could disrupt our operations, impact our ability to execute on our business strategy, or cause fluctuations in the trading price of our common stock; and |
| · | The ability to implement our business strategy, including enhancing existing technology systems. |
Additional risks and uncertainties are identified and discussed in the Duke Energy Registrants’ reports filed with the SEC and available at the SEC’s website at sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made and the Duke Energy Registrants expressly disclaim an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | DUKE ENERGY CORPORATION |
| | |
| Date: October 29, 2021 | By: | /s/ David S. Maltz |
| | Name: | David S. Maltz |
| | Title: | Vice President, Legal, Chief Governance Officer and Assistant Corporate Secretary |
| | |
| | DUKE ENERGY CAROLINAS, LLC |
| | |
| Date: October 29, 2021 | By: | /s/ David S. Maltz |
| | Name: | David S. Maltz |
| | Title: | Vice President, Legal, Chief Governance Officer and Assistant Secretary |
| | |
| | DUKE ENERGY PROGRESS, LLC |
| | |
| Date: October 29, 2021 | By: | /s/ David S. Maltz |
| | Name: | David S. Maltz |
| | Title: | Vice President, Legal, Chief Governance Officer and Assistant Secretary |
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