The recent downturn in energy prices notwithstanding, Duke Energy Corp. will stay the course of building new power plants and other energy infrastructure, CEO Rick Priory said Thursday.
Priory said on a conference call the company will continue to experience “good growth” and its strategic direction remains unchanged. “The fundamentals are still sound in the business,” he said. “We won’t let short-term market perturbations change our long-term plans.”
With its integrated energy businesses, Duke can “prosper” during the ups and downs of the market, he said, compared to a pure play generator or trading company.
Duke, Charlotte, NC, updated the financial community on the company’s strategy given the recent pessimism in the market related to falling forward electricity and gas prices. Priory reassured analysts Duke will still deliver an average of 10-15% earnings growth over the next several years.
Duke has integrated its businesses around pipeline, processing and storage, generation, and marketing activities. Its joint venture Duke/Flour Daniel is building about one-third of all the new power plants in the US.
Its close ties to the engineering and construction side of the generation business is providing feedback that not all power plants planned for construction will be built within the announced time frame because of labor constraints, Priory said.
“There is an absolute maximum of 35,000 Mw of generation that can be built in the US in a year,” he said. “Even if you wanted to build flat out, labor constraints wouldn’t allow it.”
Priory said there is a very tight skilled labor market many observers have not taken into account when analyzing the amount of new electricity supply coming on line. Duke itself will complete 6 new power plants in 2002 and 20 in 2003-2004, he said.
Priory said he isn’t worried about obtaining enough supply to fuel all his new power gas-fired power plants. Price will bring gas out of the ground, even though there may be some ups and downs in both price and gas supply, he said.
Duke will not make the mistake of trying to acquire fuel in the ground as it did in past decades, Priory asserted. Duke purchased a coal mine and uranium deposits when it was said the world was running out of natural resources. “Believe me that uranium is still in the ground out there and elsewhere,” he said.