Duke Energy sees demand declines from COVID-19

Mike Zaccardi, CFA, CMT

Q1 earnings season is in full swing, and there some interesting stories to be told within the utilities space. Duke Energy, the major utility servicing customers across chunks of the eastern third of the United States issued their report last week.

I teach finance at the University of North Florida. I routinely encourage my students to check out company earnings reports, namely the PowerPoint decks. I think there is a lot of great information in an easy to read format.

Duke is the major electric utility for Indiana & southwest Ohio, the Carolinas and much of central and northern Florida.

The elephant in the room is COVID-19 and its impacts to energy demand. The general trend has been less demand during the 6am-9am period with a later morning peak. Loads are then a bit flatter than normal for the remainder of the day compared to normal when usage spikes in the early evening as people come home from work and school.

Duke noted that COVID-19 is having a negative impact to sales. Commercial & industrial demand is down sharply while residential load is actually up as folks work and teach from home while business and schools are temporarily shuttered.

Duke says that for April, residential demand is up 6%, commercial loads are off 10% while industrial usage is lower by a whopping 13% due to COVID-19. Putting it all together, electricity demand was down 5% last month. Full-year volume should be 2-4% above normal for residential and 6-10% reduce for commercial and industrial. Total retail volume may be down 3-5% for 2020, according to Duke.

The company expects commercial and industrial declines to persist into the third quarter, but then a gradual rebound should ensue.

You can check out the entire Duke first quarter earnings report here. Image is sourced from their Q1 investor report. Follow me on Twitter @mikezaccardi