Progress Energy cuts profit forecast after Florida denies rate increase
Posted January 19, 2010 5:42 p.m. EST
Updated January 19, 2010 6:46 p.m. EST
Raleigh, N.C. — Progress Energy (NYSE: PGN) cut its revenue forecast for 2010 and said it would have to delay projects in its Florida subsidiary following the rejection of a proposed rate increase in the Sunshine State.
Progress reduced its guidance to between $2.85 and $3.05 per share from an earlier estimate of $2.95 to $3.15.
“Given the disappointing regulatory decision in Florida and the lingering effects of the economic recession, we expect 2010 will be an extremely challenging year,” said Bill Johnson, chairman and chief executive officer of Progress, in a statement. “The rate case decision was particularly harmful because it failed to recognize the true costs associated with providing a secure, reliable electricity system. This decision will require us to make a number of tough decisions related to our O&M costs and capital expenditures.”
Progress had wanted a $500 million rate increase. The Florida utilities commission rejected the increase, citing the economic effects of the continuing recession.
Analysts had expected earnings of $3.11 per share.
Progress announces its next quarterly earnings on Feb. 11.
Meanwhile, Duke Energy (NYSE: DUK) is offering buyouts to employees as it consolidates finance, legal and other corporate functions performed in Midwest offices to its Charlotte headquarters.
The consolidation is designed to help the company shave $200 million from operating expenses this year on top of $150 million in cost-cutting in 2009, The Charlotte Observer reported Tuesday.
Duke Energy has maintained regional offices in locations including Cincinnati and Plainfield, Ind., since its 2006 merger with Cincinnati-based Cinergy.
The utility employs about 3,300 workers in Ohio, 2,500 in Indiana and 300 in Kentucky, but the majority of that Midwestern work force won't be affected by the consolidation, Duke Energy said.
The company has not set a target for the staff reductions brought on by lower sales and higher costs, spokesman Tom Williams said.
"We're just trying to tighten up all around in a methodical way," he said. "The whole intent is to contain costs and maintain the financial strength of the company."
Duke Energy on Monday notified employees in selected areas about voluntary buyout offers.
Those workers with five or more years of service who agree to leave by March 31 will get lump-sum payments based on their base pay, years of service and short-term incentive targets. Unionized employees will not be included.