Duke Energy

Duke Energy's power plants provide electricity to North Carolina, South Carolina, Kentucky, Ohio, and Indiana. The company also has assets in Canada and Latin America, but it is Duke Energy's ability to leverage its nuclear, coal-based, and hydroelectric generating plants that sets the company apart.

In April 2007, the company lost a long-running lawsuit with the Environmental Protection Agency over compliance with the Clean Air Act. The unanimous verdict struck a severe blow to the company's carbon emitting coal power plants, but Duke Energy's experience running a number of nuclear power stations puts the company in an excellent position going forward.

Since March of 2006, Duke Energy has been working on a new nuclear power plant in Cherokee County. In recent years, nuclear power has appeared to be a dying technology. Aggressive environmental regulations have effectively killed any proposed nuclear power plants for the last thirty years. But now that increased awareness of the threat posed by global warming has turned nuclear power into a new "green" alternative.

Electric power generating utilities are heavily regulated by the government. Profits tend to be limited by a popular unwillingness to pay high rates for electricity. Yet the government effectively guarantees a reasonable level of profit to generators.

Electricity demand has been rising for years and Duke Energy is well-positioned to make effective new investments in nuclear power plants. The entire energy sector is in the midst of a tremendous cyclic boom and while utilities aren't going to be able to access the windfall profits that oil refiners and drillers will earn, the industry is immune to downward volatility and Duke Energy's conventional alternatives to oil and gas will benefit from increased government interest. Duke Energy is a long-term buy, but fresh investment capital could likely be invested more profitably elsewhere in the energy sector.