Duke Energy 2011 Annual Report Download - page 178

PART II
DUKE ENERGY CORPORATION •DUKE ENERGY CAROLINAS, LLC •DUKE ENERGY OHIO, INC. •DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
Additionally, during the year ended December 31, 2009, Duke
Energy Carolinas recorded an approximate $3 million increase in
Member’s Equity as a result of forgiveness of an advance by its
parent, Duke Energy.
Duke Energy Ohio
Duke Energy Ohio engages in related party transactions, which
are generally performed at cost and in accordance with the applicable
state and federal commission regulations. Balances due to or due
from related parties included in the Consolidated Balance Sheets are
as follows:
Assets/(Liabilities)
(in millions)
December 31,
2011(a)
December 31,
2010(a)
Current assets(b) $44 $82
Non-current assets(c) 22 15
Current liabilities(d) (84) (86)
Non-current liabilities(e) —(42)
Net deferred tax liabilities(f) (1,751) (1,579)
(a) Balances exclude assets or liabilities associated with accrued pension and other post-
retirement benefits, CRC and money pool arrangements as discussed below.
(b) Of the balance at December 31, 2011, $15 million is classified as Receivables and
$29 million is classified as Other within Current Assets on the Consolidated Balance
Sheets. Of the balance at December 31, 2010, $24 million is classified as Receivables
and $58 million is classified as Other within Current Assets on the Consolidated
Balance Sheets.
(c) The balances at December 31, 2011 and December 31, 2010 are classified as Other
within Investments and Other Assets on the Consolidated Balance Sheets.
(d) The balance at December 31, 2011, is classified as Accounts payable on the
Consolidated Balance Sheets. Of the balance at December 31, 2010, $(83) million is
classified as Accounts payable and $(3) million is classified as Other within Current
Liabilities on the Consolidated Balance Sheets.
(e) The balance at December 31, 2010, is classified as Other within Deferred Credits and
Other Liabilities on the Consolidated Balance Sheets.
(f) Of the balance at December 31, 2011, $(1,798) million is classified as Deferred
income taxes and $47 million is classified as Other within Current Assets on the
Consolidated Balance Sheets. Of the balance at December 31, 2010, $(1,588) million
is classified as Deferred income taxes and $9 million is classified as Other within
Current Assets on the Consolidated Balance Sheets.
As discussed further in Note 21, Duke Energy Ohio participates
in Duke Energy’s qualified pension plan, non-qualified pension plan
and other post-retirement benefit plans and is allocated its
proportionate share of expenses associated with these plans.
Additionally, Duke Energy Ohio has been allocated accrued pension
and other post-retirement benefit obligations as shown in the
following table:
(in millions)
December 31,
2011
December 31,
2010
Other current liabilities $4 $4
Accrued pension and other post-
retirement benefit costs 166 207
Total allocated accrued pension and
other post-retirement benefit
obligations $170 $211
Other Related Party Amounts
For the Years ended December 31,
(in millions) 2011 2010 2009
Corporate governance and shared
service expenses(a) $401 $369 $401
Indemnification coverages(b) 17 19 17
Rental income and other charged
expenses, net(c) (3) 55
CRC interest income(d) 13 15 15
(a) Duke Energy Ohio is charged its proportionate share of corporate governance and other
costs by an unconsolidated affiliate that is a consolidated affiliate of Duke Energy.
Corporate governance and other shared services costs are primarily related to human
resources, employee benefits, legal and accounting fees, as well as other third party
costs. These amounts are recorded in Operation, Maintenance and Other within
Operating Expenses on the Consolidated Statements of Operations.
(b) Duke Energy Ohio incurs expenses related to certain indemnification coverages through
Bison, Duke Energy’s wholly-owned captive insurance subsidiary. These expenses are
recorded in Operation, Maintenance and Other within Operating Expenses on the
Consolidated Statements of Operations.
(c) Duke Energy Ohio records income associated with the rental of office space to a
consolidated affiliate of Duke Energy, as well as its proportionate share of certain
charged expenses from affiliates of Duke Energy.
(d) As discussed in Note 17, certain trade receivables have been sold by Duke Energy
Ohio to CRC, an unconsolidated entity formed by a subsidiary of Duke Energy. The
proceeds obtained from the sales of receivables are largely cash but do include a
subordinated note from CRC for a portion of the purchase price. The interest income
associated with the subordinated note is recorded in Other Income and Expenses, net
on the Consolidated Statements of Operations.
As discussed further in Note 6, Duke Energy Ohio participates in
a money pool arrangement with Duke Energy and other Duke Energy
subsidiaries. Interest income associated with money pool activity,
which is recorded in Other Income and Expenses, net on the
Consolidated Statements of Operations, was $1 million for the years
ended December 31, 2011 and 2010, and insignificant for the year
ended December 31, 2009. Interest expense associated with money
pool activity, which is recorded in Interest Expense on the
Consolidated Statements of Operations, was insignificant for each of
the years ended December 31, 2011, 2010 and 2009.
Duke Energy Commercial Asset Management (DECAM) is a
non-regulated, direct subsidiary of Duke Energy Ohio. DECAM
conducts business activities including the execution of commodity
transactions and executing third party vendor and supply contracts as
well as service contracts for certain of Duke Energy’s non-regulated
entities. The commodity contracts that DECAM enters either do not
qualify as hedges or have not been designated as hedges (hereinafter
referred to as undersigned contracts), thus the mark-to-market
impacts of these contracts are reflected in Duke Energy Ohio’s
Consolidated Statements of Operations. In addition, equal and
offsetting mark-to-market impacts of intercompany contracts with non
regulated entities are reflected in Duke Energy Ohio’s Consolidated
Statements of Operations representing the pass through of the
economics of the original contracts to non-regulated entities in
accordance with contractual arrangements between Duke Energy
Ohio and non-regulated entities. See Note 14 for additional
information. Because it is not a rated entity, DECAM receives its
credit support from Duke Energy or its non-regulated subsidiaries and
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