Financial Risk Management in Duke Energy
| Case Code: FINA014 Case Length: 17 Pages Period: 2003 Pub Date: 2003 Teaching Note: Not Available |
Price: Rs.500 Organization: Duke Energy Industry: Power Countries: USA Themes: Banking and Financial Management, Microfinance |
Abstract Case Intro 1 Excerpts
Excerpts
Background Note
Surgeon W. Gill Wylie founded Catawba Power Company in 1899, which had its first hydroelectric plant in South Carolina on line by 1904. The next year Wylie and James "Buck" Duke (founder of the American Tobacco Company and Duke University's namesake) formed Southern Power Company with Wylie as president. In 1910, Buck Duke became president of Southern Power and organized Mill-Power Supply to sell electric equipment and appliances. He also began investing in electricity-powered textile mills...
Business Segments
Duke had seven business segments - Franchised Electric, Natural Gas Transmission, Field Services (Natural Gas & Natural Gas Liquids), Duke Energy North America, International Energy, Other Energy Services and Duke Ventures. Franchised Electric generated, transmitted, distributed and sold electricity...
Overview of Risks
Duke believed its integrated approach gave it the ability to avoid the market vulnerabilities of merchant generators or pure traders. Duke pursued related lines of business, but believed it had remained close to its roots of energy expertise and experience...
Market Risk Management
Duke was exposed to fluctuations in the prices of natural gas, electricity and other energy-related products. Duke used various commodity derivatives, including forward contracts, futures, swaps and options for trading and hedging purposes...
Credit Risk Management
Duke's principal customers for power and natural gas marketing and transportation services were industrial end-users, marketers, local distribution companies and utilities in USA, Canada, Asia Pacific, Europe and Latin America. Concentrations of receivables among groups of customers such as natural gas and electric utilities and their affiliates might affect Duke's overall credit risk...
Exhibits
Exhibit I: Duke Energy: EBIT by Business Segment
Exhibit II: Duke Energy: Business Segment Highlights
Exhibit III: Duke Energy: Business Segment
Exhibit IV: Duke Energy: Daily Earnings at Risk
Exhibit V: Duke Energy: Changes in Fair Value of Trading Contracts
Exhibit VI: Duke Energy: Fair Value of Trading Contracts
Exhibit VII: Duke Energy: Financial Highlights
Exhibit VIII: Duke Energy: Income Statements
Exhibit IX: Duke Energy: Consolidated Balance Sheets
Exhibit X: Duke Energy: Stock Price Movement Chart
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