Duke Energy Shopping for Distressed Wind Assets

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Duke Energy (s duk) is keeping an eye out for distressed assets such as wind farms that other companies are willing to sell off in the sour economy, executives said in a conference call Tuesday held to discuss its earnings for the first quarter of 2009.

The Charlotte, N.C.,-based utility ended the quarter with $1.2 billion in cash and showed an ability to raise capital in the recession by issuing $1.65 billion of fixed-rate debt during the three-month period. Asked by an analyst whether Duke would consider distressed wind assets with its cash, CFO David Hauser replied:

To the degree there are opportunities where somebody is distressed with a wind farm or something like that, we’re interested, and we do have the capital. We’re also interested in responding to requests for proposals for new wind farms. So we’re doing a lot of that.

Currently, Duke has 500 megawatts of wind power in operation and plans to bring on 250 megawatts of new wind energy online annually. CEO Jim Rogers said Duke has about 5 gigawatts of potential wind development in 14 states in the Midwest and the Mountain West states. “Our preference is to secure longer-term purchase power agreements and then invest in capital in the assets,” Rogers said.

Rogers also said that the stimulus package passed in February will generate about $400 million in new cash flows this year, largely from tax credits and bonus depreciation for wind development. Duke is working to secure grants and credits for carbon capture, smart grid and other investments once it determines which projects are eligible for stimulus funds.

Duke Energy is seeing demand for power slow in the recession, with businesses in the Carolinas and the Midwest hit harder than those in other regions. Revenue for the first three months of 2009 were flat with the year-ago period, at $3.3 billion, while net earnings totaled $344 million, or 27 cents a share. Analysts had been expecting $3.4 billion in revenue and 32 cents a share.

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