Duke lowers earnings forecast for rest of year, ’03

CHARLOTTE, N.C. – Duke Energy has sharply lowered its earnings forecast for the rest of the year and 2003, citing continued weakness in its wholesale power market in North America.

The Charlotte-based energy company also said it was stopping construction of three power plants in the western United States until market conditions improve. Deferred are the Grays Harbor Energy Facility in Washington, the Deming Energy Facility in New Mexico and the Moapa Energy Facility in Nevada.

Duke Energy owns the Maine Independence power plant in Veazie, Maine, and is majority owner of the Maritimes & Northeast natural gas pipeline that runs from Nova Scotia through Maine.

The company is projecting earnings of $1.95 to $2.05 for 2002, far below Wall Street’s consensus estimate of $2.46 a share. It also warned that its 2003 earnings may be flat or lower than 2002. Analysts surveyed by Thomson First Call had been expecting Duke to earn $2.61 a share in 2003.

Duke will take a charge of between 19 cents and 23 cents a share in the third quarter after putting off construction of the power plants, known as merchant plants that sell the power at generally unregulated prices, usually to utilities.

If the North American merchant energy market does not improve in 2003, earnings may be lower than 2002 ongoing earnings, the company said.

“We have used the term ‘perfect storm’ for this,” Richard Priory, Duke Energy’s chairman, president and chief executive officer, told analysts on a conference call. “We moved from the wind at our backs to the point where there’s wind, and a little bit of rain, too, in our faces.

“We have navigated through difficult storms before,” he said. “We will navigate through this perfect storm.”