Duke Energy 2011 Annual Report Download - page 168

PART II
DUKE ENERGY CORPORATION •DUKE ENERGY CAROLINAS, LLC •DUKE ENERGY OHIO, INC. •DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
without an associated legal retirement obligation, which are included
in Other Deferred Credits and Other Liabilities on the Consolidated
Balance Sheets as of December 31, 2011 and 2010.
Nuclear Decommissioning Costs.
In 2009 and 2010, the NCUC and PSCSC, respectively
approved a $48 million annual amount for contributions and
expense levels for decommissioning. In each of the years ended
December 31, 2011, 2010 and 2009, Duke Energy Carolinas
expensed $48 million and contributed cash of $48 million to the
NDTF for decommissioning costs. These amounts are presented in
the Consolidated Statements of Cash Flows in Purchases of
Available-For-Sale Securities within Net Cash Used in Investing
Activities. The entire amount of these contributions were to the funds
reserved for contaminated costs as contributions to the funds reserved
for non-contaminated costs have been discontinued since the current
estimates indicate existing funds to be sufficient to cover projected
future costs. Both the NCUC and the PSCSC have allowed Duke
Energy Carolinas to recover estimated decommissioning costs through
retail rates over the expected remaining service periods of Duke
Energy Carolinas’ nuclear stations. Duke Energy Carolinas believes
that the decommissioning costs being recovered through rates, when
coupled with expected fund earnings, will be sufficient to provide for
the cost of future decommissioning.
The following table includes information related to Duke Energy
Carolinas’ NDTF investments.
December 31,
(in millions) 2011 2010
NDTF investments(a) $2,060 $2,014
Fair value of assets legally restricted for the purpose
of settling assets retirement obligations
associated with nuclear decommissioning(b) 1,797 1,744
(a) Amounts are recorded within Investments and Other Assets in the Consolidated
Balance Sheets. The increase in the value of the NDTF during 2011 is due to annual
contributions made to the funds offset by losses in debt and equity markets in 2011.
(b) Use of the NDTF funds is restricted to nuclear decommissioning activities and the
NDTF is managed and invested in accordance with applicable requirements of various
regulatory bodies, including the NRC, the FERC, the NCUC, and the Internal Revenue
Service (IRS).
AstheNCUCandthePSCSCrequirethatDukeEnergy
Carolinas update its cost estimate for decommissioning its nuclear
plants every five years, new site-specific nuclear decommissioning
cost studies were completed in January 2009 that showed total
estimated nuclear decommissioning costs, including the cost to
decommission plant components not subject to radioactive
contamination, of $3 billion in 2008 dollars. This estimate includes
Duke Energy Carolinas’ 19.25% ownership interest in the Catawba
Nuclear Station. The other joint owners of Catawba Nuclear Station
are responsible for decommissioning costs related to their ownership
interests in the station. The previous study, completed in 2004,
estimated total nuclear decommissioning costs, including the cost to
decommission plant components not subject to radioactive
contamination, of $2.3 billion in 2003 dollars.
Duke Energy Carolinas filed these site-specific nuclear
decommissioning cost studies with the NCUC and the PSCSC in
conjunction with various rate case filings. In addition to the
decommissioning cost studies, a new funding study was completed
and indicates the current annual funding requirement of $48 million
is sufficient to cover the estimated decommissioning costs.
The operating licenses for Duke Energy Carolinas’ nuclear units
are subject to extension. The following table includes the current
expiration of Duke Energy Carolinas nuclear operating licenses.
Unit Year of Expiration
Catawba Unit 1 2043
Catawba Unit 2 2043
McGuire Unit 1 2041
McGuire Unit 2 2043
Oconee Unit 1 2033
Oconee Unit 2 2033
Oconee Unit 3 2034
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