Duke Energy 2011 Annual Report Download - page 153

PART II
DUKE ENERGY CORPORATION •DUKE ENERGY CAROLINAS, LLC •DUKE ENERGY OHIO, INC. •DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
held on April 19, 2011. On June 20, 2011, the Supreme Court held
that the Second Court of Appeals decision should be reversed on the
basis that plaintiffs’ claims cannot proceed under federal common
law, which was displaced by the CAA and actual or potential EPA
regulations. The Court’s decision did not address plaintiffs’ state law
claims as those claims had not been presented. On September 2,
2011, plaintiffs notified the Court that they had decided to withdraw
their complaints. On December 2, 2011, the District Court dismissed
plaintiffs’ federal claims and on December 6, 2011, plaintiffs filed
notices of dismissal.
Alaskan Global Warming Lawsuit.
On February 26, 2008, plaintiffs, the governing bodies of an
Inupiat village in Alaska, filed suit in the U.S. Federal Court for the
Northern District of California against Peabody Coal and various oil
and power company defendants, including Duke Energy and certain
of its subsidiaries. Plaintiffs brought the action on their own behalf
and on behalf of the village’s 400 residents. The lawsuit alleges that
defendants’ emissions of CO2contributed to global warming and
constitute a private and public nuisance. Plaintiffs also allege that
certain defendants, including Duke Energy, conspired to mislead the
public with respect to global warming. Plaintiffs seek unspecified
monetary damages, attorney’s fees and expenses. On June 30,
2008, the defendants filed a motion to dismiss on jurisdictional
grounds, together with a motion to dismiss the conspiracy claims. On
October 15, 2009, the District Court granted defendants motion to
dismiss. The plaintiffs filed a notice of appeal and briefing is
complete. By order dated February 23, 2011, the Court stayed oral
argument in this case pending the Supreme Court’s ruling in the CO2
litigation discussed above. Following the Supreme Court’s June 20,
2011 decision the Ninth Circuit Court of Appeals held argument in
the case on November 28, 2011. It is not possible to predict whether
Duke Energy will incur any liability or to estimate the damages, if
any, that Duke Energy might incur in connection with this matter.
Price Reporting Cases.
A total of five lawsuits were filed against Duke Energy affiliates
and other energy companies and remain pending in a consolidated,
single federal court proceeding in Nevada.
In November 2009, the judge granted defendants’ motion for
reconsideration of the denial of defendants’ summary judgment
motion in two of the remaining five cases to which Duke Energy
affiliates are a party. A hearing on that motion occurred on July 15,
2011, and on July 19, 2011, the judge granted the motion for
summary judgment. Plaintiffs have filed a notice of appeal to the U.S.
Court of Appeals for the Ninth Circuit. In December 2009, plaintiffs
in the consolidated cases filed a motion to amend their complaints in
the individual cases to add a claim for treble damages under the
Sherman Act, including additional factual allegations regarding
fraudulent concealment of defendants’ allegedly conspiratorial
conduct. Those motions were denied on October 29, 2010.
Each of these cases contains similar claims, that the respective
plaintiffs, and the classes they claim to represent, were harmed by
the defendants’ alleged manipulation of the natural gas markets by
various means, including providing false information to natural gas
trade publications and entering into unlawful arrangements and
agreements in violation of the antitrust laws of the respective states.
Plaintiffs seek damages in unspecified amounts. It is not possible to
predict whether Duke Energy will incur any liability or to estimate the
damages, if any, that Duke Energy might incur in connection with the
remaining matters. However, based on Duke Energy’s past
experiences with similar cases of this nature, it does not believe its
exposure under these remaining matters is material.
Duke Energy International Paranapanema Lawsuit.
On July 16, 2008, Duke Energy International Geracao
Paranapanema S.A. (DEIGP) filed a lawsuit in the Brazilian federal
court challenging transmission fee assessments imposed under two
new resolutions promulgated by the Brazilian Electricity Regulatory
Agency (ANEEL) (collectively, the Resolutions). The Resolutions
purport to impose additional transmission fees (retroactive to July 1,
2004 and effective through June 30, 2009) on generation
companies located in the State of São Paulo for utilization of the
electric transmission system. The new charges are based upon a
flat-fee that fails to take into account the locational usage by each
generator. DEIGP’s additional assessment under these Resolutions
amounts to approximately $61 million, inclusive of interest, through
December 2011. Based on DEIGP’s continuing refusal to tender
payment of the disputed sums, on April 1, 2009, ANEEL imposed
an additional fine against DEIGP in the amount of $9 million. DEIGP
filed a request to enjoin payment of the fine and for an expedited
decision on the merits or, alternatively, an order requiring that all
disputed sums be deposited in the court’s registry in lieu of direct
payment to the distribution companies.
On June 30, 2009, the court issued a ruling in which it granted
DEIGP’s request for injunction regarding the additional fine, but
denied DEIGP’s request for an expedited decision on the original
assessment or payment into the court registry. Under the court’s
order, DEIGP was required to make installment payments on the
original assessment directly to the distribution companies pending
resolution on the merits. DEIGP filed an appeal and on August 28,
2009, the order was modified to allow DEIGP to deposit the disputed
portion of each installment, which was most of the assessed amount,
into an escrow account pending resolution on the merits. In the
second quarter of 2009, Duke Energy recorded a pre-tax charge of
$33 million associated with this matter.
Brazil Expansion Lawsuit.
On August 9, 2011, the State of São Paulo filed a lawsuit in
Brazilian state court against DEIGP based upon a claim that DEIGP is
under a continuing obligation to expand installed generation capacity
by 15% pursuant to a stock purchase agreement under which DEIGP
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