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): March 10, 2022
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 | 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 |
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 application filed in Indiana in 2019 by Duke Energy Indiana, LLC (“DEI”), the Indiana Utility Regulatory Commission (the “IURC”) issued an order in June 2020 (the “IURC Order”) which, among other things, provided for recovery of approximately $211 million of certain coal ash closure costs incurred by DEI prior to the IURC Order. The IURC Order was appealed to the Indiana Court of Appeals in 2020, which affirmed the IURC Order in May 2021. The Indiana Office of Utility Consumer Counselor and the Duke Industrial Group filed a joint petition to transfer the rate case appeal to the Indiana Supreme Court (the “Court”) in June 2021.
On March 10, 2022, the Court issued an opinion which reversed the portion of the IURC’s Order that approved coal ash closure costs incurred prior to the IURC Order on the basis that the IURC Order violated the statutory prohibition against retroactive ratemaking, and that, absent IURC preapproval of deferred accounting treatment, DEI could not recover coal ash closure costs incurred between base rate cases. The opinion was limited to past coal ash spend incurred prior to the IURC Order that was approved for recovery through DEI’s base rates and expressly states that it is not applicable to forecasted coal ash costs. The Court remanded the matter back to the IURC for proceedings consistent with the opinion.
DEI is evaluating whether to request rehearing of the matter by the Court, which would be due by April 11, 2022.
As a result of the Court’s opinion, DEI expects to recognize total estimated pre-tax charges of approximately $250 million to $275 million in the first quarter of 2022 principally related to coal ash closure costs, as well as accrued interest and other related costs. As a result of the sale of an 11.05% minority interest in Duke Energy Indiana Holdco, LLC, the holding company for DEI, to an affiliate of GIC Private Limited in September 2021, Duke Energy Corporation’s allocated share of these pre-tax charges is approximately $222 million to $245 million.
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, asset retirement and construction costs related to carbon emissions reductions, 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, natural gas building and appliance electrification, 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, natural gas electrification, and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in a reduced number of customers, 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 investor, customer and other stakeholder 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 United States 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, an individual utility’s generation mix, and general market and economic conditions; |
| ◦ | Credit ratings of 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; |
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: March 15, 2022 | By: | /s/ David S. Maltz |
| Name: | David S. Maltz | |
| Title: | Vice President, Legal, Chief Governance Officer and Assistant Corporate Secretary | |
| DUKE ENERGY INDIANA, LLC | ||
| Date: March 15, 2022 | By: | /s/ David S. Maltz |
| Name: | David S. Maltz | |
| Title: | Vice President, Legal, Chief Governance Officer and Assistant Secretary |