WEBVTT - Chief Future Officer: Brian Savoy, Duke Energy

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<v Speaker 1>They're at the vanguard of a green transition. They're delivering locally.

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<v Speaker 1>In a time of global energy turmoil, utility companies are

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<v Speaker 1>having their moment in the sun. Energy us on everyone's

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<v Speaker 1>mind around the world. Energy independence, energy prices, energy availability.

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<v Speaker 1>Utilities historically have been viewed as stodgy and slow moving.

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<v Speaker 1>I would not be here if it were anything like that.

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<v Speaker 1>The youtub is that they're going to thrive in this

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<v Speaker 1>environment are the ones who have a diversified energy mix,

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<v Speaker 1>particularly the ones who have higher percential of clean energy

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<v Speaker 1>resources that is reliable, such as nuclear as well as

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<v Speaker 1>wind and solar and gas in the mix to beck

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<v Speaker 1>those up. Duke Energy, providing regulated gas and electric services

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<v Speaker 1>to about ten million customers in seven U S States,

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<v Speaker 1>has flourished in the spotlight. Revenues have rebounded since COVID

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<v Speaker 1>rocked the industry in the volatility that's driven profits has

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<v Speaker 1>also created pressures. Were in a period of inflation. We're

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<v Speaker 1>in a period where commodity prices are high. So every

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<v Speaker 1>season of leadership is going to have some particular challenge,

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<v Speaker 1>and Duke will meet these challenges with fresh leadership. After

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<v Speaker 1>almost a decade at the helm of Finance, Steve Young

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<v Speaker 1>decided to step away from the role in September. Company

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<v Speaker 1>veteran Brian's avoid became CFO. Why now retire from your

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<v Speaker 1>position a CFO? I thought it was time. It made

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<v Speaker 1>a lot of sense. Brian was ready. Succession planning is

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<v Speaker 1>something that is ongoing at Duke Energy, and this gave

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<v Speaker 1>us an opportunity to promote Brian, someone who has great

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<v Speaker 1>financial background, good market and economic background, who also has

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<v Speaker 1>led businesses so understands P and L and so it

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<v Speaker 1>just felt like the right time to begin that transition.

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<v Speaker 1>That transition in the C suite comes as Duke and

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<v Speaker 1>barks and a transformation of its business aiming to retire

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<v Speaker 1>all cold by achieved net zero carbon emissions by and

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<v Speaker 1>reshape its portfolio around natural gas, nuclear power and renewables

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<v Speaker 1>where we're basically rebuilding generation and transmission and distribution to

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<v Speaker 1>meet the needs of the future. We're going to invest

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<v Speaker 1>at billion over a decade. That is a staggering amount

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<v Speaker 1>of money, which means it's a staggering amount of things.

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<v Speaker 1>We've got to go by, replace, install, make work, and

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<v Speaker 1>do it in an affordable way for our customers. That's

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<v Speaker 1>a tall order. It's a team effort. So boy, we'll

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<v Speaker 1>have plenty of support from Young who's now Duke's Chief

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<v Speaker 1>Commercial officer, and Lynn Good, who was once Dukes CFO herself.

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<v Speaker 1>Any advice you want to give him from your your

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<v Speaker 1>CFO hat CEO hat you can't give advice the CFO hat.

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<v Speaker 1>The advice I gave him was, you know, jump in

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<v Speaker 1>with all fours and make this job as big as

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<v Speaker 1>you can, because you said, at the nexus of so

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<v Speaker 1>many things in the chief financial officer role, the business,

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<v Speaker 1>the regulation, the finance, delivering value to investors into customers,

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<v Speaker 1>and I think Brian is very capable of doing that.

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<v Speaker 1>It's an amazing time to be in this role in

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<v Speaker 1>this moment, extremely and daunting. There's a lot going on,

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<v Speaker 1>but I wouldn't have it any other way. Here's what

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<v Speaker 1>Duke's power generation mix looked like with coal and oil

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<v Speaker 1>nearly a quarter of the portfolio. Here's how it should

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<v Speaker 1>look by renewables will more than triple as a share

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<v Speaker 1>of the company's power output. We have been putting pieces

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<v Speaker 1>in place in our regulated business for several years to

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<v Speaker 1>really accelerate this clean energy transition. Renewables bring um price

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<v Speaker 1>stability because there's no fuel right to either the sunshine

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<v Speaker 1>or the wind. There's typically a significant capital of front investment,

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<v Speaker 1>but it's predictable. Natural gas is needed to balance the

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<v Speaker 1>grid and the reliability needs because the wind doesn't blow

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<v Speaker 1>all the time and the sun doesn't shine all the time,

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<v Speaker 1>and batteries can't bridge the gap enough right UM so

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<v Speaker 1>our plan is to reduce natural gas over time, but

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<v Speaker 1>use it as a bridge fuel as we proliferate renewables

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<v Speaker 1>and nuclear has been just a tremendous benefit for our

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<v Speaker 1>customers and we see promise in future nuclear in the

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<v Speaker 1>twenty thirties as we moved to the transition, that's not

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<v Speaker 1>the only transition. Brian Savoy will manage. Duke wants to

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<v Speaker 1>focus its time, money and resources, and it's regulated businesses

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<v Speaker 1>and it's looking for a buyer for its commercial renewable

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<v Speaker 1>energy holdings. Our commercial business is one that I ran,

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<v Speaker 1>so I'm very familiar with UM and it served us

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<v Speaker 1>very well. But it is only five percent of our

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<v Speaker 1>company right and and our regulated business has a clear

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<v Speaker 1>path to growth, and the competition for capitals fierce inside

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<v Speaker 1>our company, and there are a lot of a lot

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<v Speaker 1>of interests. There's a lot of money wanting to invest

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<v Speaker 1>in green energy. They are from a strategic review right

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<v Speaker 1>now of this business, and I think it makes sense

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<v Speaker 1>to do so because in the U. Tudor space, to

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<v Speaker 1>really get credit in evaluation for a non regulated business

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<v Speaker 1>such as renewable generation, right, you have to do it

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<v Speaker 1>at the much larger scale, and it does make sense

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<v Speaker 1>to take a closer look at maybe somebody else is

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<v Speaker 1>a better story of capital here and recycled capital to

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<v Speaker 1>redirect that into the regulated business. Duke forecast earnings growth

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<v Speaker 1>the five to seven percent through driven by a lot

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<v Speaker 1>of capital investment. The company intends to spend a whopping

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<v Speaker 1>one forty five billion dollars in the next decade, with

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<v Speaker 1>the Lion share going to changing its energy mix and

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<v Speaker 1>modernizing its grid. Brian Savoy is in charge of deploying

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<v Speaker 1>this capital under highly challenging conditions, including the highest inflation

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<v Speaker 1>and most volatile energy prices in decades. When you get

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<v Speaker 1>a surprise like hal fuel prices, we need to adjust

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<v Speaker 1>things like O and M, and so we work with

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<v Speaker 1>operations and and the relationships I have throughout the company

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<v Speaker 1>are positioning me well to help influence our operators to

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<v Speaker 1>adjust their cost as we need to for customers. Do

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<v Speaker 1>you feel that reducing costs right now while also increasing

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<v Speaker 1>spending is different than in the past because of the

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<v Speaker 1>inflationary pressures, because of the energy transition. I would say yes,

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<v Speaker 1>there are a lot of pressures on the business that

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<v Speaker 1>we might have had in short spells in the past,

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<v Speaker 1>but it feels more systemic that we're going to see,

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<v Speaker 1>you know, inflation for some time, higher commodity prices, with

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<v Speaker 1>the kind of volatility. If someone comes to you and say, hey, Brian,

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<v Speaker 1>so I need some more money from my division to

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<v Speaker 1>do this, are you like the no guy or or

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<v Speaker 1>are you able to be really nimble and make sure

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<v Speaker 1>you can be the yes guy? I would say I'm

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<v Speaker 1>the how can we go? Okay? Um? But if we

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<v Speaker 1>say yes to a request that was emergent, we've got

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<v Speaker 1>to say notice some other things. So how do we

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<v Speaker 1>prioritize and make it all work? CEO and former CFO

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<v Speaker 1>and good knows how hard this balancing act can be.

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<v Speaker 1>I think any time you're trying to balance, you get

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<v Speaker 1>pulled in various directions. Um, there will be a pull

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<v Speaker 1>to build more renewables by certain of our stakeholders. There

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<v Speaker 1>will also be a pull not to go that fast

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<v Speaker 1>because it could be too expensive. Maybe our industrial customers

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<v Speaker 1>are worried about price. Vulnerable customers worried about price. So

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<v Speaker 1>trying to strike that right balance with policymakers, with customers,

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<v Speaker 1>with investors is a challenge in any moment, and there

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<v Speaker 1>will be a challenge in this one. And take me

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<v Speaker 1>inside some of the conversation you guys are having to

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<v Speaker 1>do right now. So you and Lynn and and other

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<v Speaker 1>CS executives sitting around the table when you guys talk

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<v Speaker 1>about most right now. Supply chain has been a moving

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<v Speaker 1>target of issues right um last year at this time

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<v Speaker 1>we were looking at solar panels and how do we

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<v Speaker 1>lock in our solar panels that we need for the

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<v Speaker 1>next several years to ensure we can execute the clean

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<v Speaker 1>energy transition. It has moved to different components like transformers,

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<v Speaker 1>which are essential for the grid. Interest rates and the

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<v Speaker 1>pace at which the FED is moving interest rates is

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<v Speaker 1>something we talk about each and every week and when

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<v Speaker 1>will that flatten out and how will that impact our business.

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<v Speaker 1>We are a very large debt issuer, so we watched

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<v Speaker 1>this extremely closely because it affects our call structure. Do

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<v Speaker 1>you want to wait until interest rates level off and

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<v Speaker 1>then does that delay your capital raising to deploy your plan.

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<v Speaker 1>We don't wait, but we do plan. You know, when

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<v Speaker 1>there's opportunistic times to to issue debt, we will go

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<v Speaker 1>with larger, larger pieces or versus smaller um and we

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<v Speaker 1>can work with the length of the debt. Right if

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<v Speaker 1>tenure is price more attractive than twenty or thirty, we'll

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<v Speaker 1>we'll use the tenor to optimize the interest. That's all

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<v Speaker 1>I knew. Yeah, yes, Brian Savoy is taking on a

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<v Speaker 1>new challenge as he steps into the CFO position at

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<v Speaker 1>Duke Energy. It's really just his latest challenge. He's touched

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<v Speaker 1>virtually every area of the company over the last two decades.

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<v Speaker 1>I started my career Duke in Houston in our trading

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<v Speaker 1>business UM and I was with Deloitte twos before I

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<v Speaker 1>joined because one of my clients. You know, what I

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<v Speaker 1>saw in Brian was tremendous enthusiasm and energy. He was

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<v Speaker 1>ready to take on new assignments. He was thinking about

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<v Speaker 1>advancing the ball for the corporation as opposed to any

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<v Speaker 1>personal goals and that and that came through. He helped

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<v Speaker 1>us on a number of complex projects and the more

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<v Speaker 1>we gave him the more he continued to grow. I've

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<v Speaker 1>had five different roles in ten years, and I've seen

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<v Speaker 1>different parts of the company from you know, transformation, leading

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<v Speaker 1>natural gas and commercial strategy. This has prepared me for

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<v Speaker 1>the role I have today. What's the advice that you've

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<v Speaker 1>given him? You know, I've I've told him a couple

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<v Speaker 1>of times, You're not going to get a home run

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<v Speaker 1>at every avat. There's gonna be days where things go

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<v Speaker 1>wrong the patient, be calm, keep your eye on the

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<v Speaker 1>ball for the future. That the thing you want to

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<v Speaker 1>get to. Eventually you'll have bumps in the road. Fixing

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<v Speaker 1>things that go wrong and smoothing out bumps in the

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<v Speaker 1>road is what customers expect from energy providers, and for

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<v Speaker 1>Duke's Renewable Assets, that process is overseen from one room

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<v Speaker 1>in an office building in Charlotte, North Carolina. Bryan's a

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<v Speaker 1>voice showed me around the company's renewable control center. This

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<v Speaker 1>is where operators are monitoring and managing over five thousand

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<v Speaker 1>megawatts of renewables across the United States. How would this

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<v Speaker 1>differ from like a conventional asset monitoring center, Yeah, so assets.

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<v Speaker 1>Historically they would have the monitoring center on site so

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<v Speaker 1>you might have an operator with screens. But at the

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<v Speaker 1>site whereas this we can do ninety sites, there's offshore wind,

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<v Speaker 1>onshore wind, solar, and they're looking for the smallest change

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<v Speaker 1>in output because every megawatt hour is money. You put

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<v Speaker 1>an asset in. Let's say it's a hunter megawatts, you

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<v Speaker 1>expect to get a hundred mega ontes each and every

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<v Speaker 1>hour that the resources there. The resource could be sunshine

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<v Speaker 1>or it could be wind, and when you get ninety

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<v Speaker 1>or eighty, you're you're not producing what you can and

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<v Speaker 1>it can be because the asset isn't isn't working properly.

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<v Speaker 1>Maybe maybe something hit the turbine blade on the wind

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<v Speaker 1>for maybe the solar panel has debris on it, or

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<v Speaker 1>it could be the solar intensity is not quite there.

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<v Speaker 1>When one of these assets isn't producing full capacity, we're

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<v Speaker 1>putting another resource on and we're having to toggle this

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<v Speaker 1>on a consistent basis, and in this as clouds come,

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<v Speaker 1>it's this is by the minute, this is not or

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<v Speaker 1>the hour it's off now it's by the minute, and

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<v Speaker 1>then it'll fall will come back, and we have assets

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<v Speaker 1>that follow this digitally as well, so that we can

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<v Speaker 1>keep a consistent flow of electrons on the grid. The

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<v Speaker 1>operators in this room can respond to incoming data with

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<v Speaker 1>immediate action, remotely controlling wind turbines, solar panels, and batteries.

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<v Speaker 1>It's an other example of using digital and technology tools

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<v Speaker 1>to make us more efficient, to make us more productive,

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<v Speaker 1>minimizing the amount of people we have to have running

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<v Speaker 1>around and observing and giving us the statistics to really

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<v Speaker 1>be able to maintain a monitor those facilities. So we

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<v Speaker 1>couldn't see degradation and output as fast as we do

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<v Speaker 1>now with the technology and the digitalization of the system. Now,

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<v Speaker 1>we still need technicians nearby, and so we use traveling

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<v Speaker 1>crews that can go um say sites in Kansas versus

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<v Speaker 1>sites in in South Texas versus Central Texas and across

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<v Speaker 1>the West. We have around the clock shifts, but about

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<v Speaker 1>twenty people rotate through these shifts and again recovering ninety sites.

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<v Speaker 1>We've got about half a dozen people here at any

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<v Speaker 1>given time managing it. You could think that would scale

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<v Speaker 1>at overtime as renewables grow in the United States. So

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<v Speaker 1>would you say that as you invest more renewables it's

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<v Speaker 1>a hardware thing or a software thing, Like where do

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<v Speaker 1>you think you're gonna spend the most money doing that. Obviously,

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<v Speaker 1>the software will continue to improve over time, and the

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<v Speaker 1>innswers on the equipment are very important to again identify

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<v Speaker 1>those degradations and output. But it's deploying the hardware, deploying

0:13:08.600 --> 0:13:11.840
<v Speaker 1>the assets on the ground, getting the sites ready, connecting

0:13:11.960 --> 0:13:15.640
<v Speaker 1>to the to the grid is a huge lift. Duke's

0:13:15.679 --> 0:13:19.240
<v Speaker 1>hardware and software mix keeps evolving and so does its workforce.

0:13:19.559 --> 0:13:23.760
<v Speaker 1>Retooling also means retraining. We've moved people to the renewable space.

0:13:24.080 --> 0:13:26.920
<v Speaker 1>Some of these folks used to be in coal. We've

0:13:26.960 --> 0:13:29.520
<v Speaker 1>moved people to cybersecurity, which is a growing area that

0:13:29.600 --> 0:13:32.040
<v Speaker 1>we need more and more because as everything gets digitized,

0:13:32.320 --> 0:13:35.079
<v Speaker 1>there's more opportunities for bad actors to penetrate. So we

0:13:35.160 --> 0:13:37.640
<v Speaker 1>need high cyber security skills and when you match that

0:13:37.760 --> 0:13:41.000
<v Speaker 1>with operating skills, you really have a beautiful mix that

0:13:41.120 --> 0:13:45.839
<v Speaker 1>makes a strong strong operator. Operators here have plenty of

0:13:45.920 --> 0:13:48.319
<v Speaker 1>micro details to keep track of, but there's a macro

0:13:48.520 --> 0:13:51.839
<v Speaker 1>factor on their minds as well. That's the weather. We

0:13:52.000 --> 0:13:54.600
<v Speaker 1>have maps the United States just to going to give

0:13:54.880 --> 0:13:57.600
<v Speaker 1>the operators bearing of what's going on in the country,

0:13:57.760 --> 0:14:01.240
<v Speaker 1>and we have plotted on it where our renewable sites

0:14:01.360 --> 0:14:04.200
<v Speaker 1>are so they know if if there's a weather pattern,

0:14:04.280 --> 0:14:07.840
<v Speaker 1>weather system coming, I expect that in that in that area.

0:14:07.960 --> 0:14:10.360
<v Speaker 1>How do you manage extreme weather? So let's say we

0:14:10.480 --> 0:14:13.120
<v Speaker 1>have a wind farm in the west and the windstorm

0:14:13.240 --> 0:14:17.960
<v Speaker 1>is coming. You know, the assets will turn off when

0:14:18.120 --> 0:14:22.800
<v Speaker 1>the wind speeds exceed a certain level automatically because there's

0:14:22.840 --> 0:14:27.240
<v Speaker 1>there's risk of of breakage of the blades and damage

0:14:27.280 --> 0:14:31.600
<v Speaker 1>to people and assets and stuff. We know windstorms coming

0:14:31.640 --> 0:14:36.720
<v Speaker 1>that that might damage the solar or hail storm for instance. Right, Um,

0:14:37.040 --> 0:14:39.040
<v Speaker 1>we can watch those assets closer. We can put a

0:14:39.080 --> 0:14:42.080
<v Speaker 1>crew on site, but this team would be dispatching those

0:14:42.120 --> 0:14:44.920
<v Speaker 1>crews on onto the location. And that's where like the

0:14:45.000 --> 0:14:47.320
<v Speaker 1>weather map and the team like really works. Yeah, that's right.

0:14:47.680 --> 0:14:50.560
<v Speaker 1>From hurricanes in the southeast to wildfires in the west,

0:14:50.840 --> 0:14:53.960
<v Speaker 1>extreme weather events are becoming more prevalent and more intense.

0:14:54.360 --> 0:14:57.840
<v Speaker 1>Utility companies are bracing for greater risk. When we think

0:14:57.880 --> 0:15:01.320
<v Speaker 1>about the impacts of extreme their events on the grid,

0:15:01.640 --> 0:15:04.640
<v Speaker 1>large group connect and resources would still such as large

0:15:04.680 --> 0:15:07.240
<v Speaker 1>scale solar farms and large scale wind fronts would still

0:15:07.280 --> 0:15:10.520
<v Speaker 1>rely on the centralized grid to deliver electricity to the

0:15:10.600 --> 0:15:13.800
<v Speaker 1>load centers. So to the extent of the grid is

0:15:13.840 --> 0:15:17.080
<v Speaker 1>knocked out by a hurricane, those assets would go offline

0:15:17.080 --> 0:15:20.520
<v Speaker 1>as well. So, in addition to invest in in green

0:15:20.640 --> 0:15:24.480
<v Speaker 1>generation resources is extremely important, and companies pay attention to

0:15:24.680 --> 0:15:27.960
<v Speaker 1>Greek hardening measures. We're seeing more of it, more frequency

0:15:28.200 --> 0:15:32.240
<v Speaker 1>of of severe events and how we predict those, monitor

0:15:32.280 --> 0:15:36.520
<v Speaker 1>those and and estimate the damage using data analytics and

0:15:36.640 --> 0:15:39.480
<v Speaker 1>machine learning to say how many customers might be out

0:15:39.520 --> 0:15:42.240
<v Speaker 1>if this happens, what generators are at risk, and all

0:15:42.360 --> 0:15:45.120
<v Speaker 1>that That modeling goes into our planning for what we

0:15:45.200 --> 0:15:48.040
<v Speaker 1>put our investments. We talked about the capital plan earlier.

0:15:48.240 --> 0:15:52.120
<v Speaker 1>All those investments are informed by the climate trends that

0:15:52.200 --> 0:15:55.400
<v Speaker 1>we see across our system. The next decade for Duke

0:15:55.520 --> 0:16:00.160
<v Speaker 1>Energy is pretty clearly mapped out. Raise and spend million

0:16:00.240 --> 0:16:03.360
<v Speaker 1>dollars on a massive clean energy transition, put the bulk

0:16:03.440 --> 0:16:07.040
<v Speaker 1>of those investments into regulated businesses, while investigating the sale

0:16:07.080 --> 0:16:09.920
<v Speaker 1>of non core assets to fund that push. It'll all

0:16:10.000 --> 0:16:12.680
<v Speaker 1>be up to new CFO Brian Savoy to execute this

0:16:12.800 --> 0:16:16.480
<v Speaker 1>plan and make sure it delivers optimal financial growth. The

0:16:16.600 --> 0:16:21.160
<v Speaker 1>motion is adopted. Congress passed the Inflation Reduction Act in August,

0:16:21.360 --> 0:16:24.560
<v Speaker 1>putting provisions in place that make his task more manageable.

0:16:24.760 --> 0:16:29.160
<v Speaker 1>The Inflation Reduction Act provides incentives for renewables, it provides

0:16:29.200 --> 0:16:33.080
<v Speaker 1>incentives for battery storage, and it provides incentives for nuclear.

0:16:33.200 --> 0:16:36.000
<v Speaker 1>All of those incentives for a regulated company go right

0:16:36.040 --> 0:16:39.120
<v Speaker 1>to our customers. They reduce directly the price of our product.

0:16:39.640 --> 0:16:42.000
<v Speaker 1>So when I build a renewable product, it's gonna cost

0:16:42.040 --> 0:16:44.320
<v Speaker 1>me less and will cost my customers less. It's gonna

0:16:44.360 --> 0:16:48.640
<v Speaker 1>help our renewable transition. For example, one thousand megawats of

0:16:48.680 --> 0:16:52.880
<v Speaker 1>solar equates to about sixty million in annual production tax credits.

0:16:53.560 --> 0:16:56.760
<v Speaker 1>We're gonna have thirty thousand megawatts of renewables on our

0:16:56.800 --> 0:17:01.520
<v Speaker 1>system by The Inflation Reduction Act has been a very

0:17:01.640 --> 0:17:04.760
<v Speaker 1>important piece of legislation. It's not only that it creates

0:17:04.840 --> 0:17:07.439
<v Speaker 1>a number of incentives for a variety of assets, right.

0:17:07.760 --> 0:17:11.000
<v Speaker 1>It also is very durable and long term. So instead

0:17:11.040 --> 0:17:13.560
<v Speaker 1>of a patchwork of different tax credits that we've seen

0:17:13.600 --> 0:17:16.120
<v Speaker 1>in the past, it actually creates a glidepath going well

0:17:16.160 --> 0:17:20.000
<v Speaker 1>into twenty thirties for this long term transition on the grid.

0:17:20.359 --> 0:17:24.200
<v Speaker 1>Political winds may shift, and regulations are always subject to change.

0:17:24.520 --> 0:17:28.639
<v Speaker 1>For the moment, policy in Washington aligns with Duke's strategic goals,

0:17:29.400 --> 0:17:31.520
<v Speaker 1>but they feel like there's a paral partnership. Now we

0:17:31.640 --> 0:17:34.240
<v Speaker 1>have um a voice at the table. I have a

0:17:34.280 --> 0:17:37.560
<v Speaker 1>lot of conversations with the Treasury Department about about tax

0:17:37.640 --> 0:17:41.040
<v Speaker 1>policy and and as they define the rules around the

0:17:41.160 --> 0:17:44.960
<v Speaker 1>i ra A, they will seek input from people like

0:17:45.160 --> 0:17:46.920
<v Speaker 1>us and we will weigh in. This is what you

0:17:46.920 --> 0:17:48.840
<v Speaker 1>should think about as you write the detailed rules to

0:17:48.920 --> 0:17:51.480
<v Speaker 1>implement this this act. When it comes to the relationship

0:17:51.520 --> 0:17:54.600
<v Speaker 1>between utility and policy makers and regulators, those have always

0:17:54.640 --> 0:17:58.200
<v Speaker 1>been extremely important. Those dudes that cultivate have cultivated those

0:17:58.280 --> 0:18:01.440
<v Speaker 1>relationships in the constructive US and whether they've been good

0:18:01.520 --> 0:18:05.560
<v Speaker 1>stewards of capital and operated the system well and tonto

0:18:05.640 --> 0:18:09.119
<v Speaker 1>consideration interests of various stakeholders in addition to you know,

0:18:09.280 --> 0:18:12.119
<v Speaker 1>the equity and dead investors. Of course, UH, those of

0:18:12.200 --> 0:18:15.520
<v Speaker 1>yous enjoy con relationships with the regulators in our experience

0:18:15.680 --> 0:18:19.040
<v Speaker 1>right and that over time translates into constructive rate outcomes

0:18:19.600 --> 0:18:23.520
<v Speaker 1>and UH and better recovery mechanism. Recovery mechanisms are set

0:18:23.560 --> 0:18:26.639
<v Speaker 1>at the state level. They also help companies and customers

0:18:26.720 --> 0:18:30.359
<v Speaker 1>absorb the capital costs of the clean energy transition. We

0:18:30.480 --> 0:18:33.960
<v Speaker 1>cannot adjust our price without working. The regulators and modern

0:18:34.000 --> 0:18:37.600
<v Speaker 1>recovery mechanisms allow us to adjust price more frequently and

0:18:37.720 --> 0:18:42.280
<v Speaker 1>align with our investments so that when the investments start

0:18:43.200 --> 0:18:47.119
<v Speaker 1>causing expenses, revenues follow and then there's alignment. Otherwise, we

0:18:47.240 --> 0:18:49.720
<v Speaker 1>call it regulatory lag, where you have expenses before we

0:18:49.840 --> 0:18:53.720
<v Speaker 1>can earn revenues on those assets. Historically, would we would

0:18:53.720 --> 0:18:57.000
<v Speaker 1>build up investments, then have what's called the rate case

0:18:57.400 --> 0:19:00.840
<v Speaker 1>and have a large increase in one one slog. The

0:19:00.920 --> 0:19:05.240
<v Speaker 1>modern recovery mechanisms place assets and service each year essentially,

0:19:05.680 --> 0:19:09.040
<v Speaker 1>so you're smoothing rate increases over time. So customers can

0:19:09.080 --> 0:19:12.679
<v Speaker 1>plan better and we can plan better. Even with meticulous

0:19:12.720 --> 0:19:17.360
<v Speaker 1>planning and regulatory tail winds, us utilities must proceed with caution.

0:19:17.920 --> 0:19:21.560
<v Speaker 1>Europe's energy crisis highlights the fight between green energy and

0:19:21.800 --> 0:19:25.560
<v Speaker 1>energy security, raising questions about how fast and hard the

0:19:25.640 --> 0:19:28.560
<v Speaker 1>world can pivot. There's been criticisms say in Europe that

0:19:28.640 --> 0:19:32.399
<v Speaker 1>they were trying to go too fast into renewables, for example,

0:19:32.480 --> 0:19:34.359
<v Speaker 1>and therefore they left out nuclear and they sort of

0:19:34.400 --> 0:19:36.399
<v Speaker 1>shuttered coal plants and now they're paying the price in

0:19:36.440 --> 0:19:40.560
<v Speaker 1>that respect. Um, what's the right pace? I think the

0:19:40.680 --> 0:19:44.360
<v Speaker 1>pace is maintaining balance with a reliability and affordability. That's

0:19:44.359 --> 0:19:48.080
<v Speaker 1>the only way we know to to gauge pace. We

0:19:48.200 --> 0:19:50.119
<v Speaker 1>will not put a plan together that we don't have

0:19:50.160 --> 0:19:52.480
<v Speaker 1>a high degree of confidence. We can serve our customers

0:19:52.560 --> 0:19:55.080
<v Speaker 1>every hour, every season, and we have to keep an

0:19:55.080 --> 0:19:58.760
<v Speaker 1>eye on affordability. We call it a responsible balance transition.

0:19:58.840 --> 0:20:02.000
<v Speaker 1>The transition away from fossil fuels is coming. I mean

0:20:02.320 --> 0:20:04.719
<v Speaker 1>is think about coal. Five years ago, you could get

0:20:04.720 --> 0:20:07.080
<v Speaker 1>as much coal as you want. Now coal is constrained

0:20:07.280 --> 0:20:10.240
<v Speaker 1>and it's going to become even more constrained. So operating

0:20:10.320 --> 0:20:12.359
<v Speaker 1>coal assets is not even going to be an option

0:20:12.560 --> 0:20:15.840
<v Speaker 1>as we move through time. So um, the convergence of

0:20:16.040 --> 0:20:19.960
<v Speaker 1>energy independence and security I believe is coming soon. That's

0:20:20.000 --> 0:20:22.560
<v Speaker 1>the state of play for Brian Savoy as he starts

0:20:22.680 --> 0:20:25.560
<v Speaker 1>his tenure as Duke's CFO. I asked him what he

0:20:25.680 --> 0:20:29.560
<v Speaker 1>sees when he looks ahead. What is the biggest opportunity

0:20:29.640 --> 0:20:31.440
<v Speaker 1>over the next ten year. It's a CFO that you're

0:20:31.520 --> 0:20:34.359
<v Speaker 1>most excited about over the next decade. I feel like

0:20:34.640 --> 0:20:39.240
<v Speaker 1>utilities have a moment to really make a mark on society.

0:20:40.040 --> 0:20:44.400
<v Speaker 1>And again it's long lasting. It's gonna be for our grandkids,

0:20:44.440 --> 0:20:49.520
<v Speaker 1>and their grandkids. So putting the utility sector in prominence

0:20:49.840 --> 0:20:52.600
<v Speaker 1>of the world, that's what I want to do. What's

0:20:52.600 --> 0:20:54.639
<v Speaker 1>the biggest challenge? What are you most worried about the

0:20:54.720 --> 0:20:56.760
<v Speaker 1>next ten years and doing your job? I think the

0:20:56.800 --> 0:21:01.119
<v Speaker 1>biggest challenge is balancing invest the investments we need to

0:21:01.160 --> 0:21:03.080
<v Speaker 1>make and the transition in front of us with the

0:21:03.160 --> 0:21:06.800
<v Speaker 1>cost to customers, because the oversight by regulators is only

0:21:06.840 --> 0:21:09.280
<v Speaker 1>getting more and more and more right, and we've got

0:21:09.359 --> 0:21:11.520
<v Speaker 1>to be more clear on the customer benefits of every

0:21:11.560 --> 0:21:15.200
<v Speaker 1>dollar we spend that turns into value for customers. And

0:21:15.920 --> 0:21:19.240
<v Speaker 1>I can see this playing out in just hand to

0:21:19.280 --> 0:21:21.840
<v Speaker 1>hand combat over the next decade, and we will work

0:21:21.920 --> 0:21:25.000
<v Speaker 1>it and we believe the investments we're making will will

0:21:25.080 --> 0:21:27.680
<v Speaker 1>meet that bar. What is a skill that you have

0:21:27.880 --> 0:21:31.520
<v Speaker 1>as CFO that you think will help that. I'm wired

0:21:31.600 --> 0:21:35.880
<v Speaker 1>for value. I don't like waste at all, and when

0:21:35.920 --> 0:21:39.960
<v Speaker 1>I see things that we need to change, I have

0:21:40.040 --> 0:21:42.880
<v Speaker 1>the courage to make it happen. And as CFO, I'm

0:21:43.000 --> 0:21:46.159
<v Speaker 1>in a position to really move that. And Duke, and

0:21:46.240 --> 0:21:48.720
<v Speaker 1>what's a new skill set of knowledge that you're excited

0:21:48.720 --> 0:21:50.520
<v Speaker 1>about it over the next ten years? I would say

0:21:50.560 --> 0:21:55.560
<v Speaker 1>the new skill set would be how to balance all

0:21:55.640 --> 0:21:58.800
<v Speaker 1>of the external views of the company with the internal

0:21:59.680 --> 0:22:03.320
<v Speaker 1>I've I've worked inside this company and have great influence,

0:22:03.840 --> 0:22:08.320
<v Speaker 1>but ensuring that a similar level of influence is out

0:22:08.359 --> 0:22:11.400
<v Speaker 1>in the external world. What's the best advice you've you've

0:22:11.440 --> 0:22:15.320
<v Speaker 1>received coming into CFO. You know, I will go back

0:22:16.240 --> 0:22:19.920
<v Speaker 1>um many years ago, over over ten years ago. I

0:22:20.080 --> 0:22:25.359
<v Speaker 1>was working for Lynn and she told me, Brian, the

0:22:25.440 --> 0:22:28.560
<v Speaker 1>skills you have positioned you for a wide range of roles.

0:22:29.400 --> 0:22:31.840
<v Speaker 1>I had no idea what that meant then. This was

0:22:31.920 --> 0:22:34.840
<v Speaker 1>like two thousand nine, But as I've looked at my

0:22:34.960 --> 0:22:38.800
<v Speaker 1>career and she has moved me to gain experience across

0:22:39.000 --> 0:22:44.240
<v Speaker 1>Duke in the right areas of operations and strategy. That

0:22:44.359 --> 0:22:48.560
<v Speaker 1>advice back then I didn't appreciate, but I appreciate it

0:22:48.680 --> 0:22:52.520
<v Speaker 1>now more than ever. I'm Alex Steele. This is Bloomberg

0:23:00.240 --> 0:23:03.040
<v Speaker 1>SI