Duke Energy 2012 Annual Report Download - page 22

TABLE OF CONTENTS
FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2012
Item Page
PART I.
DUKE ENERGY CORPORATION (DUKE ENERGY)
1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
U.S. FRANCHISED ELECTRIC AND GAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
COMMERCIAL POWER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
INTERNATIONAL ENERGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
OTHER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
GEOGRAPHIC REGIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
EXECUTIVE OFFICERS OF DUKE ENERGY . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
DUKE ENERGY CAROLINAS, LLC (DUKE ENERGY CAROLINAS)
PROGRESS ENERGY, INC. (PROGRESS ENERGY)
CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY CAROLINAS, INC.
(PROGRESS ENERGY CAROLINAS)
FLORIDA POWER CORPORATION d/b/a PROGRESS ENERGY FLORIDA, INC
(PROGRESS ENERGY FLORIDA)
DUKE ENERGY OHIO, INC. (DUKE ENERGY OHIO)
DUKE ENERGY INDIANA, INC. (DUKE ENERGY INDIANA)
1A. RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1B. UNRESOLVED STAFF COMMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4. MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
PART II.
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . . 30
6. SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . . . 67
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . 68
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5
9A. CONTROLS AND PROCEDURES – DUKE ENERGY, DUKE ENERGY CAROLINAS,
PROGRESS ENERGY, PROGRESS ENERGY CAROLINAS, PROGRESS ENERGY
FLORIDA, DUKE ENERGY OHIO AND DUKE ENERGY INDIANA . . . . . . . . . . . . . . . . . 25 5
PART III.
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . . . . . . . 256
11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . 256
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
14. PRINCIPAL ACCOUNTING FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 257
PART IV.
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . 258
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document includes forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements are based on management’s beliefs and assumptions.
These forward-looking statements, which are intended to cover Duke Energy and the applicable
Duke Energy Registrants, are identifi ed by terms and phrases such as “anticipate,” “believe,”
“intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,”
“predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook,” and similar expressions.
Forward-looking statements involve risks and uncertainties that may cause actual results to be
materially different from the results predicted. Factors that could cause actual results to differ
materially from those indicated in any forward-looking statement include, but are not limited to:
• State, federal and foreign legislative and regulatory initiatives, including costs of
compliance with existing and future environmental requirements, as well as rulings that
affect cost and investment recovery or have an impact on rate structures;
• The ability to recover eligible costs and earn an adequate return on investment through
the regulatory process;
• The costs of retiring Progress Energy Florida’s Crystal River Unit 3 could prove to be
more extensive than is currently identifi ed. All costs associated with the retirement
Crystal River Unit 3 asset, including replacement power may not be fully recoverable
through the regulatory process;
• The ability to maintain relationships with customers, employees or suppliers post-merger;
• The ability to successfully integrate the Progress Energy businesses and realize cost
savings and any other synergies expected from the merger;
• The risk that the credit ratings of the combined company or its subsidiaries may be
different from what the companies expect;
• The impact of compliance with material restrictions or conditions related to the Progress
Energy merger imposed by regulators could exceed our expectations;
• Costs and effects of legal and administrative proceedings, settlements, investigations
and claims;
• Industrial, commercial and residential growth or decline in the respective Duke Energy
Registrants’ service territories, customer base or customer usage patterns;
• Additional competition in electric markets and continued industry consolidation;
• Political and regulatory uncertainty in other countries in which Duke Energy conducts
business;
• The infl uence of weather and other natural phenomena on each of the Duke Energy
Registrants’ operations, including the economic, operational and other effects of storms,
hurricanes, droughts and tornadoes;
• The ability to successfully operate electric generating facilities and deliver electricity to
customers;
• The ability to recover, in a timely manner, if at all, costs associated with future
signifi cant weather events through the regulatory process;
• The impact on the Duke Energy Registrants’ facilities and business from a terrorist
attack, cyber security threats and other catastrophic events;
• The inherent risks associated with the operation and potential construction of nuclear
facilities, including environmental, health, safety, regulatory and fi nancial risks;
• The timing and extent of changes in commodity prices, interest rates and foreign
currency exchange rates and the ability to recover such costs through the regulatory
process, where appropriate;
• Unscheduled generation outages, unusual maintenance or repairs and electric
transmission system constraints;
• The performance of electric generation facilities and of projects undertaken by Duke
Energy’s nonregulated businesses;
• The results of fi nancing efforts, including the Duke Energy Registrants’ ability to obtain
fi nancing on favorable terms, which can be affected by various factors, including the
respective Duke Energy Registrants’ credit ratings and general economic conditions;
• Declines in the market prices of equity securities and resultant cash funding
requirements for Duke Energy’s defi ned benefi t pension plans and nuclear
decommissioning trust funds;
• The level of creditworthiness of counterparties to Duke Energy Registrants’ transactions;
• Employee workforce factors, including the potential inability to attract and retain key
personnel;
• Growth in opportunities for the respective Duke Energy Registrants’ business units,
including the timing and success of efforts to develop domestic and international power
and other projects;
• Construction and development risks associated with the completion of Duke
Energy Registrants’ capital investment projects in existing and new generation
facilities, including risks related to fi nancing, obtaining and complying with terms of
permits, meeting construction budgets and schedules, and satisfying operating and
environmental performance standards, as well as the ability to recover costs from
ratepayers in a timely manner or at all;
• The Subsidiary Registrants ability to pay dividends or distributions to Duke Energy
Corporation holding company (the Parent);
• The effect of accounting pronouncements issued periodically by accounting standard-
setting bodies;
• The impact of potential goodwill impairments;
• The ability to reinvest retained earnings of foreign subsidiaries or repatriate such
earnings on a tax free basis; and
• The ability to successfully complete future merger, acquisition or divestiture plans.
In light of these risks, uncertainties and assumptions, the events described in the
forward-looking statements might not occur or might occur to a different extent or at a different
time than Duke Energy has described. The Duke Energy Registrants undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise.