Duke Energy 2012 Annual Report Download - page 153

133
PART II
Combined Notes to Consolidated Financial Statements – (Continued)
DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. • CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY
CAROLINAS, INC. • FLORIDA POWER CORPORATION d/b/a PROGRESS ENERY FLORIDA, INC. • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC.
is required to pay dividends solely out of retained earnings and to maintain a
minimum of 35% equity in its capital structure.
Duke Energy Indiana
Under the Cinergy Merger Conditions, Duke Energy Indiana shall limit
cumulative distributions paid subsequent to the merger to (i) the amount of
retained earnings on the day prior to the closing of the merger plus (ii) any
future earnings recorded by Duke Energy Indiana subsequent to the merger. In
addition, Duke Energy Indiana will not declare and pay dividends out of capital
or unearned surplus without prior authorization of the IURC.
The following table includes information regarding the Subsidiary
Registrants and other Duke Energy subsidiaries’ restricted net assets at
December 31, 2012.
(in billions)
Total Duke
Energy
Subsidiaries
Duke
Energy
Carolinas
Progress
Energy
Progress
Energy
Carolinas
Duke
Energy
Ohio(a)
Duke
Energy
Indiana
Amounts that may
not be transferred
to Duke Energy
without appropriate
approval based on
above mentioned
Merger Conditions $10.3 $2.8 $2.0 $1.9 $3.9 $1.4
(a) As of December 31, 2012, the equity balance available for payment of dividends, based on the FERC and
PUCO order discussed above, was $1.3 billion.
Rate Related Information
The NCUC, PSCSC, FPSC, IURC, PUCO and KPSC approve rates for
retail electric and gas services within their states. Nonregulated sellers of gas
and electric generation are also allowed to operate in Ohio once certifi ed by
the PUCO. The FERC approves rates for electric sales to wholesale customers
served under cost-based rates, as well as sales of transmission service.
Duke Energy Carolinas
2013 North Carolina Rate Case.
On February 4, 2013, Duke Energy Carolinas fi led an application with the
NCUC for an increase in base rates of approximately $446 million, or an average
9.7% increase in retail revenues. The request for increase is based upon an
11.25% return on equity and a capital structure of 53% equity and 47% long-
term debt. The rate increase is designed primarily to recover the cost of plant
modernization, environmental compliance and the capital additions.
Duke Energy Carolinas expects revised rates, if approved, to go into effect
late third quarter of 2013.
2011 North Carolina Rate Case.
On January 27, 2012, the NCUC approved a settlement agreement
between Duke Energy Carolinas and the North Carolina Utilities Public Staff
(Public Staff). The terms of the agreement include an average 7.2% increase in
retail revenues, or approximately $309 million annually beginning in February
2012. The agreement includes a 10.5% return on equity and a capital structure
of 53% equity and 47% long-term debt.
On March 28, 2012, the North Carolina Attorney General fi led a notice of
appeal with the NCUC challenging the rate of return approved in the agreement.
On April 17, 2012, the NCUC denied Duke Energy Carolinas’ request to dismiss
the notice of appeal. Briefs were fi led on August 22, 2012 by the North Carolina
Attorney General and the AARP with the North Carolina Supreme Court, which is
hearing the appeal. Duke Energy Carolinas fi led a motion to dismiss the appeal
on August 31, 2012 and the North Carolina Attorney General fi led a response
to that motion on September 13, 2012. Briefs by the appellees, Duke Energy
Carolinas and the Public Staff, were fi led on September 21, 2012. The North
Carolina Supreme Court denied Duke Energy Carolinas’ motion to dismiss on
procedural grounds and oral arguments were held on November 13, 2012.
Duke Energy Carolinas is awaiting an order.
2011 South Carolina Rate Case.
On January 25, 2012, the PSCSC approved a settlement agreement
between Duke Energy Carolinas and the ORS, Wal-Mart Stores East, LP, and
Sam’s East, Inc. The Commission of Public Works for the city of Spartanburg,
South Carolina and the Spartanburg Sanitary Sewer District were not parties
to the agreement; however, they did not object to the agreement. The terms of
the agreement include an average 5.98% increase in retail and commercial
revenues, or approximately $93 million annually beginning February 6, 2012.
The agreement includes a 10.5% return on equity, a capital structure of 53%
equity and 47% long-term debt.
Cliffside Unit 6.
On March 21, 2007, the NCUC issued an order allowing Duke Energy
Carolinas to build an 800 MW coal-fi red unit. Following fi nal equipment
selection and the completion of detailed engineering, Cliffside Unit 6 has a
net output of 825 MW. On January 31, 2008, Duke Energy Carolinas fi led its
updated cost estimate of $1.8 billion (excluding AFUDC of $600 million) for
Cliffside Unit 6. In March 2010, Duke Energy Carolinas fi led an update to
the cost estimate of $1.8 billion (excluding AFUDC) with the NCUC where it
reduced the estimated AFUDC fi nancing costs to $400 million as a result of the
December 2009 rate case settlement with the NCUC that allowed the inclusion
of construction work in progress in rate base prospectively. Cliffside Unit 6
began commercial operation in the fourth quarter of 2012.
Dan River Combined Cycle Facility.
In June 2008, the NCUC issued its order approving the Certifi cate of
Public Convenience and Necessity (CPCN) applications to construct a 620 MW
combined cycle natural gas fi red generating facility at Duke Energy Carolinas’
existing Dan River Steam Station. The Division of Air Quality (DAQ) issued a
fi nal air permit authorizing construction of the Dan River combined cycle natural
gas-fi red generating unit in August 2009. Dan River began commercial operation
in the fourth quarter of 2012.
William States Lee III Nuclear Station.
In December 2007, Duke Energy Carolinas fi led an application with the
NRC, which has been docketed for review, for a combined Construction and
Operating License (COL) for two Westinghouse AP1000 (advanced passive)
reactors for the proposed William States Lee III Nuclear Station (Lee Nuclear
Station) at a site in Cherokee County, South Carolina. Each reactor is capable
of producing 1,117 MW. Submitting the COL application does not commit Duke
Energy Carolinas to build nuclear units. Through several separate orders, the
NCUC and PSCSC have concurred with the prudency of Duke Energy incurring
project development and pre-construction costs.