Duke Energy Corp (DUK) — Q2 2021 Earnings Call Transcript

Thank you, Cody. Good morning, everyone, and welcome to Duke Energy's second quarter 2021 earnings review and business update. Leading our call today is Lynn Good, Chair, President and Chief Executive Officer; along with Steve Young, Executive Vice President and CFO. Today's discussion will include the use of non-GAAP financial measures and forward-looking information within the meaning of the securities laws. Actual results could differ materially from such forward-looking statements, and those factors are outlined herein and disclosed in Duke Energy's SEC filings. A reconciliation of non-GAAP financial measures can be found in today's materials and on dukeenergy.com. Please note the appendix for today's presentation includes supplemental information and additional disclosures. So with that, let's turn the call over to Lynn.

Jack, thank you, and good morning, everyone. It's great to be with you for our second quarter 2021 earnings call. Today, we announced strong results for the quarter, with adjusted earnings per share of $1.15. These results, driven in part by economic recovery, also demonstrate the continued strength of our clean energy strategy. We are leading the transition to cleaner energy by adding significant amounts of renewables to our portfolio, hardening the grid through investments in our transmission and distribution assets, and collaborating with stakeholders and policymakers to advance supportive energy policy. We have positive momentum going into the second half of the year and are reaffirming our 2021 adjusted EPS guidance range of $5 to $5.30. We're also reaffirming our long-term EPS growth rate of 5% to 7% through 2025, based off of a $5.15 midpoint for 2021. And we remain fully committed to creating value for shareholders by recently increasing our quarterly cash dividend for the 15th consecutive year. Looking ahead, we have a number of strategic milestones that we're working toward in the second half of the year. We anticipate the closing of the minority sale of Duke Energy Indiana to GIC announced earlier this year at an attractive premium to our public equity valuation. This transaction satisfies our equity needs for the next five years. We received CFIUS approval in June. FERC approval is the only remaining closing requirement, and we anticipate receiving approval at any time during the third quarter. We continue engaging with stakeholders on important work in the Carolinas on our 2020 IRPs and energy legislation and in Indiana on our 2021 IRP. I will speak further about those in just a moment. And operationally, we have four remaining months of hurricane season, and our team is ready to respond on behalf of our customers. In July, Elsa was our first official storm of the 2021 season. While we had minimal impact in our Florida and Carolinas service territories, we were prepared and restored power quickly to our customers. I'm very proud of our accomplishments to date and we're poised for a strong finish to 2021. Turning to Slide 5. We continue to advance our clean energy transformation powered by our five-year $59 billion growth capital plan. These investments are delivering value for our customers and communities and driving strong growth for our investors. I want to highlight a couple of recent accomplishments. Renewables are playing a major role in our path to net zero. We continue construction on approximately 250 megawatts of new solar projects in North Carolina and Florida that we expect to bring online by the end of this year. And in recent weeks, we commissioned the 144-megawatt Pflugerville solar and 182-megawatt Maryneal wind projects in Texas. With the completion of these two projects, we hit a significant milestone, surpassing 10,000 megawatts of solar and wind resources. This is a testament to the hard work and dedication of our employees and strong support we receive from the communities where we operate. In addition to carbon reduction and the benefits of creating a diverse energy infrastructure, solar and wind investments foster economic development, tax revenue and job creation in the areas we serve. This milestone reflects our leadership in clean energy, and we are on track to pass 16,000 megawatts of renewables by 2025 and approximately 24,000 megawatts by 2030. By 2050, renewables will represent 40% or more of our energy mix. Nuclear is also a foundational component of our strategy, providing the largest source of reliable carbon-free energy we have in our system. In June, we submitted our application to renew Oconee Nuclear Station's operating licenses for an additional 20 years, which was accepted by the NRC for review. This is our first subsequent license renewal application among our six nuclear sites in the Carolinas, and the review process will move forward over the next 18 months. Oconee is our largest nuclear station, with three generating units that produce more than 2,500 megawatts of carbon-free base-load generation, enough to power more than 1.9 million homes. Our nuclear fleet provided 83% of the company's carbon-free generation in 2020 and avoided the release of nearly 50 million tons of carbon dioxide. We'll pursue similar extensions for each of our remaining reactors as they approach the end of their respective licensing periods. Our ambitious climate strategy also puts us in a strong position to help other sectors, such as transportation, meet their emission reduction goals. We continue to build out electric vehicle infrastructure in our service territories, and one of our subsidiaries, eTransEnergy, was recently named a preferred provider by GM to help its fleet customers transition to electric vehicles. Electrifying vehicles is a win-win approach to reducing carbon emissions from both the electric and the transportation sectors. Turning to Slide 6. We're actively engaging policymakers and stakeholders across our jurisdictions and at the federal level. In North Carolina, the House of Representatives recently passed House Bill 951. This legislation directs an orderly clean energy transition for North Carolina, including mandates to retire 12 coal units at five locations and replace them with cleaner forms of generation, renewed solar programs and modern ratemaking tools to better align clean energy investments with customer needs. We support House Bill 951 and will continue to monitor its progress through the legislative process. North Carolina has a long history of constructive energy policy that was developed by finding common ground, which has helped position the state as a leader in clean energy and in economic development. Advancing this clean energy transition continues to be a priority for the state and its leaders. We also continue to work with the commissions in both North and South Carolina to advance our integrated resource plans. Regulators have been complementary of the extensive stakeholder feedback process and comprehensive data incorporated into the IRPs. In South Carolina, we received an order from the commission requesting additional analysis and modeling, which will be filed later this month. And in North Carolina, the commission plans to hold additional proceedings and will be providing guidance on next steps. This is the first time we've presented multiple generation scenarios in the IRP, and we welcome the opportunity to provide our regulators with more input. In Florida, we received the final order from the commission in June, approving the new multiyear rate plan settlement. The significant agreement includes the continued expansion of utility-scale solar, energy storage, new electric vehicle charging station programs, and provides rate certainty to benefit customers. Among other things, our investments include 10 new solar power plants across the state that will deliver 750 megawatts of cost-effective renewable energy to customers. This multiyear rate plan is in addition to our Storm Protection Plan, which entails $6.2 billion in grid investments through 2029 to harden and strengthen the grid, protecting it against significant weather events and improving reliability for customers. In Indiana, the commission approves Step 2 from our 2019 rate case, which updates rate base through year-end 2020 and trues up carrying costs back to January 1, 2021. As we prepare to submit our Indiana IRP in November, we continue to engage business customers, consumer advocates and environmental groups to solicit input on transitioning to cleaner generation sources while keeping a sharp focus on reliability and affordability for customers. We took an important step in our last rate case by reducing the depreciable lives for our coal capacity and look to the IRP to continue this progress. We'll collaborate with stakeholders and policymakers to find the best path forward for the state's clean energy transition. Shifting to the LDCs. We've filed rate cases in two jurisdictions this year. Across our gas segment, we've worked to keep O&M costs relatively flat during a period of strong customer growth and capital additions. Our Piedmont Natural Gas rate request continues to move through the regulatory process in North Carolina. This request includes construction costs related to our new natural gas storage facility in Robeson County. A hearing is scheduled for September. And if approved, rates would be effective by year-end. In Kentucky, we've made strategic investments to improve the reliability and integrity of our natural gas delivery system and filed a request with the Public Service Commission to recover those costs. We've invested nearly $190 million in a variety of capital projects across Northern Kentucky since we last sought a natural gas base rate increase in 2018. We will present our case to the commission in October. And finally, let me comment on the work in D.C. We're engaged with Congress and the administration on a wide range of issues, including infrastructure, tax, and climate policy. The bipartisan infrastructure framework is the subject of much discussion and could serve as a powerful catalyst to modernize our nation's infrastructure. It includes funding for large-scale expansion of charging infrastructure to prepare for and further drive adoption of electric vehicles. And as charging infrastructure grows, so will the need for grid investments. Innovation will also be a critical part of the journey to net zero because with our existing technologies, we can make important progress, but cannot close the gap. We're pleased to see the framework includes funding to accelerate the development of next-generation clean-energy technologies such as hydrogen, carbon capture, and advanced nuclear. Robust and sustained government support is vital to ensure the commercialization of these advanced technologies. It's critical for us to tackle this issue today so the technologies are scalable when we need them. In closing, our continued growth and strong second quarter results were driven by solid execution across all our jurisdictions as we lead the largest clean energy transition in our industry. I'm confident we will continue to build on this momentum to deliver sustainable value and grow earnings 5% to 7% over the next 5 years. With that, let me turn it over to Steve.

Thanks, Lynn, and good morning, everyone. I'll start with a brief discussion on our quarterly results, highlighting a few of the key variances to the prior year. For more detailed information on variance drivers and a reconciliation of reported to adjusted results, please refer to the supporting materials that accompany today's press release and presentation. As shown on Slide 7, our second quarter reported earnings per share was $0.96 and our adjusted earnings per share was $1.15. This is compared to a reported loss of $1.13 and an adjusted earnings per share gain of $1.08 last year. The difference between second quarter reported and adjusted earnings per share is due to the onetime impacts of the initiative to redefine workspace usage in light of what we have learned from COVID. This effort involves the consolidation of corporate office space and accommodating a hybrid work environment, resulting in a 60% reduction in square footage and annual savings of approximately $25 million to $30 million. The adjusted earnings per share growth in the quarter continues to be strong, led by Electric Utilities and Infrastructure, which was up $0.24 compared to the prior year. Results were favorable due to benefits from base rate increases, favorable volumes, riders, and weather. Partially offsetting these items were higher O&M costs due to COVID-19 mitigation efforts in 2020. Shifting to Gas Utilities and Infrastructure, results were down $0.03, primarily due to the cancellation of ACP last year. In our Commercial Renewables segment, results were down $0.06 for the quarter, driven by lower investments in new renewables projects compared to the prior year. This is consistent with our guidance in February, and we expect full year 2021 earnings to be within our $200 million to $250 million range. Other was unfavorable $0.04 for the quarter, principally due to less favorable market returns on certain benefit plans and higher income tax expense, partially offset by lower financing costs. Finally, segment results are impacted by $0.04 of share dilution related to the $2.5 billion equity issuance that closed in December 2020. Overall, we had strong results compared to last year, supported by our continued execution and the rebounding economy. We remain confident in our ability to consistently grow our adjusted EPS at 5% to 7% throughout the 5-year period off the 2021 base year. Turning to Slide 8. Let me provide an overview of electric volumes and economic trends. Our results for the second quarter were up approximately 6.5% year-over-year. Keep in mind, we are comparing sales data to Q2 of last year, which experienced the largest impact from COVID-19. Residential volumes were down 6%. However, given stay-at-home orders during the same period last year, the modest decrease indicates many people continue to work from home on at least a part-time basis. In fact, this quarter's results are more than 4% above the second quarter of 2019, highlighting the continued strength of the residential class, which is supported by customer growth across our service territories. As reported on our first quarter earnings call, nearly all large commercial and industrial customers have resumed operations in the sector, and the sector is showing signs of optimism. The commercial class has rebounded considerably from the prior year with an increase of 11.7%. Retail, dining, and recreation were all driving the positive year-over-year comparison as most COVID restrictions have been lifted. Similarly, industrial volumes have increased 11.8% for the quarter, whereas volumes had declined 15% last year. We expect improvement in the commercial and industrial classes as employment recovers and supply chain bottlenecks are resolved. As we progress through the back half of the year, we are monitoring the pace of economic recovery and potential impacts of the Delta variant. At the same time, we are encouraged by the sales trends so far this year, along with strong customer growth across our service territories. With Q2 overall retail volumes returning to Q2 2019 levels, we remain confident in our full-year expectation of 1% to 2% load growth for 2021 and are trending towards the top half of that range. On Slide 9, I'd like to share an update on where we are with our financing plan and dividend growth. We remain on track with the financing plan we outlined on the fourth-quarter call. The proceeds from the GIC minority interest sale, along with our overall financing plan, allow us to maintain a strong credit profile without the need for common equity issuances throughout our 5-year plan. We are on track to complete the North Carolina storm securitization this fall, and we recently issued $3 billion of holding company debt at low attractive rates. Finally, we understand the value of our dividend to our investors. This year marks the 95th consecutive year of paying a quarterly cash dividend and the 15th consecutive annual increase. Moving to Slide 10. I want to provide some perspective on timing considerations for the second half of the year and an update on our cost management efforts. We expect volumes will continue to recover over the balance of the year. But as we saw in the second quarter, we expect O&M to be unfavorable in the third quarter when compared to 2020. This is due to the actions we took to significantly reduce O&M during the pandemic, such as deferred outages at our generating stations. Overall, we reduced O&M by $320 million in 2020, equivalent to more than 6% of our non-rider recoverable O&M. On our February call, we shared that we plan to sustain 65% or $200 million of those savings and carry them forward into 2021. We are on track to achieve those savings. This is consistent with our cost management track record since 2016. On a consolidated basis, over the past 5 years, our net regulated electric and gas O&M has declined approximately 1% per year, and we expect this trend to continue. Before we open it up for questions, let me close with Slide 11. We remain confident in our 2021 adjusted earnings per share guidance of $5 to $5.30 with a midpoint of $5.15. Our year-to-date results position us well to achieve full-year results within this range as we continue to invest in important energy infrastructure to benefit our customers and communities. Our attractive dividend yield, coupled with our long-term earnings growth profile of 5% to 7%, provide a compelling risk-adjusted return for our shareholders. As Lynn discussed, we continue to advance our clean energy strategy, adding new renewable generation and taking steps to extend the lives of our carbon-free nuclear fleet. We continue to engage with state and federal leaders as they work to pave the way for a clean energy future. We're executing our capital plan to support those efforts by investing in our energy grid, all while employing financing solutions that save customers money and add value for shareholders. Duke Energy is well positioned to lead as the pace of change in our industry accelerates, delivering sustainable value to our customers and investors. With that, we'll open the line for your questions.

Hey, good morning, guys.

Good morning, Shahriar.

Good morning.

So I appreciate your prepared remarks around House Bill 951, Lynn. Where are we in the process as it stands today? Are you still optimistic? I mean, couldn't help but notice some of the lack of bipartisanship going on. Should we be sort of concerned here at this stage?

Sure. The bill is moving and we are encouraged by what we're seeing. I think you know that it passed the House. We've seen support from Senate leadership, the energy legislation remains a priority, and the Governor has been clear for some time about his strong commitment to carbon reduction and to renewable investment in the State. So we're encouraged that the legislative branch, executive branch, and all of the broad stakeholders involved in this process will find common ground. And that has been the long history in North Carolina, bringing diverse parties together in advancing energy policy.

I want to elaborate on the common ground. I understand this isn't strictly a Duke Energy bill and that there are many stakeholders involved, but the passage of it will significantly impact your clean energy transition in the state. Investors are looking for potential compromises between the draft bill, legislators, and the Governor's vocal comments. While it's not entirely your decision, could we expect a quicker coal retirement outlook, less dependency on gas, and perhaps increased use of solar? The Governor is advocating for more. Do you see a way to bridge the gap between these positions?

Yes, we do have a comprehensive approach that includes various elements and stakeholders, which naturally leads to different perspectives in this discussion. HB 951 outlines a pathway for transitioning to clean energy, and the focus is on the pace, cost, and reliability of that transition. We expect legislators and the administration to assess all aspects of the draft bill to strike the right balance. Advancing the clean energy transition is a priority for the state, its leaders, and stakeholders, and we will keep you updated as the bill progresses.

Okay, perfect. Thank you very much. Congrats on the quarter.

Thank you. Thank you, Shahriar.

Hi, Julien.

Hey, good morning. Can you hear me? Hey, thanks for the time.

We can hear you.

So at risk of asking more on the legislation, perhaps I can pivot a little bit more strategically, if you don't mind. And I'd love to hear if you have any latest thoughts with regards to undertaking any further review of the company. I know that there's been a lot of, shall we say, noise out there. And would love to hear your latest thoughts there in. I'll leave it as open-ended as you'd like to comment.

Sure. Julien, I believe your comment relates to Elliott Management. Let me address it in that context, and then we can discuss anything else you’d like. We consistently engage with our shareholders and review our portfolio, operations, and business strategy. Our engagement approach has been similar with Elliott, and we have been in discussions with them for over a year, thoroughly reviewing all ideas, consulting advisors as necessary, and discussing these matters with our board. While I can't go into specifics, I want to assure you that we are open to constructive engagement, willing to evaluate all proposals, and will act on those that we believe will create value for our stakeholders. Additionally, we remain focused on serving our customers, maintaining our assets, and advancing our strategic priorities related to the clean energy transition, which has not changed.

Got it. Excellent. Thank you for this answer. Perhaps if I can pivot a little bit differently here as you think about the nonutility side of the business. Can you comment at all on just thoughts on scaling that or not? Obviously, it's not been too core of a focus of late, but given some of the pressures across the wider renewable businesses out there, would be curious what you're seeing, if that's impacting any of your timelines and/or aspirations in the business put all together.

And Julien, we just crossed an important milestone of renewables, so 10,000 megawatts of renewables, which includes both regulated and nonregulated investment. And we see the growth of renewable energy as important to the clean energy transition. Our commercial team continues to deliver. They are forecasting to achieve $200 million to $250 million per year and have been consistent in accomplishing that. So it remains an important part of the company. It remains an important part of our commitment around carbon reduction, our ESG story in general. And the team is on track to deliver in 2021, 2022, and beyond.

Just to clarify, do you plan to have this legislation completed? I know it's hard to predict, but do you have any updated thoughts on how that might change by the end of the forecast period as you've refined your planning? It may be a bit early, and I realize that what could ultimately be included is uncertain, but I thought I should ask.

Sure. No. Julien, the plan that we've put in front of you, 2021 to 2025, is not dependent on legislation. We have a high degree of confidence in the ability to achieve our 5% to 7% growth rate. But as we talked about in October of last year and we opened the horizon to what the back half of the decade could look like, we do see acceleration of capital not only in pursuit of retirement of assets and building replacement generation, but also our grid investment as well. So we'll continue to update this in the ordinary course, giving you a view in February of what we think 2026 looks like, but we continue to expect acceleration of capital in the back half of the decade.

Okay. All right. We’ll clarify that later. Thank you so much. Best of luck here.

Thanks so much.

Hi, good morning, guys.

Hi, Jonathan.

Good morning.

Just on the North Carolina process, in the last quarter when you sort of dissuaded us from being overly concerned about any particular dates, but could you just remind us sort of what the timing in the legislature is through the rest of the year? And just anything we should be looking out procedurally? Or is it essentially open-ended?

Sure. Jonathan, what I would say is that the timing is difficult to predict in these processes. It is within the hands of the legislative leadership. And we will know more as the bill progresses through the Senate. There was, in fact, a hearing this morning in the Senate, so we'll continue to keep you updated. I think you know that the long session in North Carolina does not have a statutory end date. So we will continue to monitor as it moves through the Senate process.

Thank you for that. I wanted to ask if your positive sales trend also reflects your expectations for earnings, or if there are other factors affecting that.

Jonathan, we will reset and give you a finer look at where we were trending in the guidance range after third quarter. I mean, there's just so much weather volatility here in the Southeast. We have hurricane season underway. So we will continue to monitor that and give you an updated third quarter. But I would say we're off to a strong start. Strong start on the economic rebound, strong start on maintaining our focus on O&M, delivering on our key milestones around regulatory approvals, et cetera. So I'm pleased with where we are and also pleased to see the economic recovery. Those strong results in commercial and industrial are indicative of the economy opening up, and I think that's a good thing.

Great. Just one quick question. Regarding the annual savings you mentioned for the office reconfiguration, is the $25 million to $30 million figure a pretax or after-tax amount?

That's a pretax number, Jonathan.

Lynn and Steve, I believe this question has come up before, but I would like to clarify how we should view what's included in your current capital plan compared to what might be additional, or is it primarily focused on the period after the current capital plan?

So Steve, the capital plan is basically the base of the IRP. And so you should think about it that way. The six scenarios, as you move further to the right and you introduce additional technologies in the time frame, that's where the legislation begins to come in, giving us some flexibility to move more rapidly on some of the retirements, et cetera. So when we talk about the implications of how IRP fits with the legislation, we've got a clear line of sight 2021 to 2025 based on present law, based on the present processes, present regulatory processes. And the opportunity really exists in the back half of the decade. So that's how I would respond. I don't know, Steve, if you'd add anything to that.

Yes. So I think as you move towards a more rapid decarbonization number, then the capital increases. I think within our current 5-year plan, the upside would be at the back end of things. I would give that texture to it.

Most of my questions have been answered. Lynn, can you share your perspective along with some of the other utility leaders on what is happening in Washington regarding the infrastructure bill being debated today and the reconciliation bill as we approach year-end? What are the top two or three developments you anticipate that could impact the sector before the year's end?

Yes, Durgesh, I believe the infrastructure bill will continue to progress. We support a bipartisan approach. As an infrastructure builder, our success over the years has been rooted in a bipartisan framework. We are encouraged by the emphasis on electric vehicles and their infrastructure, which has been a priority for Duke. We have allocated around $100 million for this investment and see a strong potential for growth. The President has also pushed for 40% to 50% of vehicles to be electric by 2030. We are pleased to observe investments in zero and low-carbon technologies, such as advanced nuclear, hydrogen, and carbon capture, which we think are vital for achieving net zero emissions. Regarding infrastructure, I can also mention that discussions are ongoing about the reconciliation process, tax policy, and climate legislation. It's still too early to determine how these will unfold. However, we are actively collaborating with the administration and Congress to explore the tools that would support our clean energy strategy and anticipate some alignment over time. Yet, in a closely divided Senate and House, it can sometimes be difficult to navigate the right course. Nonetheless, we remain engaged.

Just want to start off here. When thinking about the energy transition kind of from a different perspective, I know Duke has some irons in the fire with regards to RNG investments. But do you see any potential to kind of upsize this, increase this over time? Are there policies out there at the federal state level that could be helpful in these efforts?

We are getting started, I would say, Jeremy, on RNG. It's consistent with our overall climate targets. Certainly, our goals, 100% methane goal, et cetera, and are working actively to learn more about the technology, learn more about how it impacts our system and have made some very strategic investments. And so I do think there's an opportunity for it to develop over time. And the team is working actively with policymakers, with the communities, and suppliers that would be relevant to this. And I think it will be a bigger story as we move forward.

Got it. That's helpful. And then could you give any more color, just kind of pivoting here, on what we should be looking for with the IRP filing in Indiana later this year? What are some of the considerations versus maybe what we saw coming out of the Carolinas last year?

That's a great question, Jeremy. We are currently engaging with stakeholders in Indiana, including the environmental community, our major customers, regulators, and other key policymakers. Our primary objectives are decarbonization and diversification. In our recent Integrated Resource Plan filed in Indiana, we indicated the addition of about 2,300 to 2,400 megawatts of solar starting in 2023, and we expect that number to increase. We still have a few months to continue the stakeholder process, but we see this as a significant step forward, especially since we have accelerated the retirement dates of coal plants in the rate case. The IRP allows us to broaden the discussion about the clean energy transition for the next 20 years. This conversation is essential for Indiana as it prepares for growth in clean energy. We will have more updates as we approach November, including insights from the third quarter poll and EEI.

Got it. That's very helpful. Just a real quick last one for me. We very recently seen some utility peers beef up their corporate governance with certain actions. I was just wondering if Duke has considered taking actions like this.

I think Duke has a strong track record on governance, Jeremy. If you were to look back at the feedback we've received from shareholders and the additional disclosures and adoption of certain practices that we followed, we have been very open-minded about these and we'll continue to do so. So that becomes a key focus here in the fall as we engage with shareholders, specifically focused on ESG topics. Our Corporate Governance Committee is very involved in that. The Board is very involved in some of the conversations with shareholders as well. So you can expect us to continue to be responsive to our shareholders in this regard.

Lynn, just curious, how are you all thinking about the commercial power business and what the growth profile of that business looks like over the next couple of years relative to investing in renewables in the regulated business? I guess to simplify, what's a better return on capital, investing in renewables outside of the regulated utility or within the regulated utility if you could allocate capital only to one of those alternatives?

Michael, it's a really good question because we do a lot of work around capital allocation. Of course, what meets the needs of our customers, what fits the policy of our state, what delivers the highest return, those are all key considerations. And our Commercial Renewables business has performed well against our benchmarks of what we expect from that business in terms of returns. But what you're suggesting is, as we see more opportunity in the regulated business, how will that impact commercial, and I would say that will be very closely reviewed as part of our capital allocation plan going forward. I think you also know that we entered a joint venture with John Hancock on the commercial renewable business, recycling that capital in the way that it's been quite effective, and those are the types of transactions we will also evaluate over time. We like the business in the context of our ongoing ESG story and our pursuit of carbon reduction, but we'll closely scrutinize how capital is allocated.

Got it. Also, one follow-up. A number of your peers, including some of the other large companies, have made investments similar to venture capital in various clean energy-related firms, some of which have gone public in the last 6 to 12 months. I'm just curious if Duke has made similar investments and whether you have disclosed any of them. Are any of these investments significant enough to appear in the income statement over time?

So Michael, we are active in this area and do make investments. Let me ask Steve to comment. We look at it from a couple of perspectives. Certainly, there's an opportunity to earn a return. But as importantly, there's an opportunity to learn about what's going on in various technology developments and various methods of technologies to serve customers, technologies that could advance carbon reduction. And as part of our treasury corporate development organization, we are focused on investment in that area in a way that complements our business.

Yes. I would add that we have made investments in various venture funds, and we work closely with the fund managers to understand what the investment profile is. And as Lynn said, it's aligned with our strategy. It looks at things like EVs and new technologies. And we also ensure that there is communication among our operating folks with the funds and the companies that we invest in. So we can transfer learnings there. And we've had some good success there. It's not been material, but we're certainly learning a lot from them.

Lynn, Steve, I have a quick question. Earlier this year, Duke was able to resolve rate cases in North Carolina and Florida, and I believe you also resolved one in Indiana last year. Are there any other Duke properties or utilities that are underperforming and possibly creating more challenges than you anticipated when the year began? I think you provided some insight in the fourth quarter slide deck regarding adjusted book ROEs going into the year. Is everyone on track, or are some performing better or worse than you expected?

Anthony, they're performing well. We do look over time at our allowed returns. And we've got a good history across our footprint of earning at or even above our allowed returns. And they'll move around a bit as you're building a rate base for an upcoming rate case. So you'll see some movement around a return based upon some of those profiles. But we feel good about our regulatory cadence and our investments around that cadence. And the execution has been good. The Indiana case and the Carolinas case are coming through nicely. And we're preparing for the future cases that Lynn was discussing. And we think that process is working well.

And Anthony, I would just add that Steve runs a tight process around optimizing capital to make sure it's getting spent at a time that matches with that regulatory calendar. So we do all that we know to do to minimize lag. And the result of that is that we have a good track record of earning our return.

Great. And just a last one for me. You may have touched on it earlier, Lynn, on a question, I think, on maybe some stuff going on in Washington. There's talk of maybe a nuclear legislation or some maybe subsidy for nuclear plants. You're talking about license extension on Oconee. Just any thoughts to maybe your view on nuclear legislation that may be part of the infrastructure bill. And would it impact Duke?

So Anthony, we are strong supporters of nuclear, as you know. And I think, as you look here in the Carolinas, in particular, 50% of the power comes from nuclear across the entire enterprise. 80% of our carbon-free generation is from nuclear. So we are very active. We intend to pursue second license renewal as you indicated. And the discussion in Washington has really centered more around the plants that are exposed to markets, commercial markets. So think about plants in PJM and otherwise. But we have had discussions with a number of people about the importance of nuclear in the transition, and I do believe it is being recognized by the administration and by Congress. And so that's an important area of advocacy for us, not only in existing plants but on new technologies that would keep nuclear as part of the solution set for the clean energy transition.

Well, thank you, Cody, and thanks to all of you who participated today for your interest and investment in Duke Energy. And as always, we're available for further discussion, the IR team, Steve and I as well. So thanks again for participating.