Duke Energy 2012 Annual Report Download - page 246

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PART II
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.
Combined Notes to Consolidated Financial Statements – (Continued)
The discount rate used to determine the current year other post-retirement benefi ts obligation and following year’s other post-retirement benefi ts expense is
based on a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high quality corporate bonds that generate
suffi cient cash fl ow to provide for the projected benefi t payments of the plan. The selected bond portfolio is derived from a universe of non-callable corporate bonds
rated Aa quality or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plan’s projected benefi t
payments discounted at this rate with the market value of the bonds selected.
Assumed Health Care Cost Trend Rate — Duke Energy(a)
December 31,
2012 2011
Health care cost trend rate assumed for next year 8.50 % 8.75 %
Rate to which the cost trend is assumed to decline (the ultimate trend rate) 5.00 % 5.00 %
Year that rate reaches ultimate trend 2020 2020
(a) Applicable to all Subsidiary Registrants.
Sensitivity to Changes in Assumed Health Care Cost Trend Rates
Year Ended December 31, 2012
(in millions) Duke Energy
Duke Energy
Carolinas
Progress
Energy
Progress Energy
Carolinas
Progress
Energy Florida
Duke Energy
Ohio
Duke Energy
Indiana
1-Percentage Point Increase
Effect on total service and interest costs $9 $1 $8 $4 $3 $1 $1
Effect on post-retirement benefi t obligation 164 11 133 72 49 3 8
1-Percentage Point Decrease
Effect on total service and interest costs (7) (1) (6) (3) (2) (1) (1)
Effect on post-retirement benefi t obligation (133) (10) (106) (57) (39) (3) (7)
Expected Benefi t Payments: Other Post-Retirement Benefi t Plans
(in millions) Duke Energy(a)
Duke Energy
Carolinas(b)
Progress
Energy(c)
Progress Energy
Carolinas(d)
Progress
Energy Florida(e)
Duke Energy
Ohio(f)
Duke Energy
Indiana(g)
Years ending December 31,
2013 $ 98 $ 22 $ 48 $ 24 $ 20 $ 4 $12
2014 104 23 51 26 21 4 $12
2015 108 23 55 28 22 4 12
2016 111 24 58 30 23 4 12
2017 114 24 61 32 24 4 12
2018 – 2022 583 112 330 177 125 19 53
(a) Duke Energy expects to receive future subsidies under Medicare Part D of $7 million in each of the years 2013-2015, $8 million in each of the years 2016 and 2017, and a total of $46 million during the years 2018-2022.
(b) Duke Energy Carolinas expects to receive future subsidies under Medicare Part D of $2 million in each of the years 2013-2017 and a total of $8 million during the years 2018-2022.
(c) Progress Energy expects to receive future subsidies under Medicare Part D of $4 million in each of the years 2013-2015, $5 million each of the years 2016-2017, and a total of $34 million during the years 2018-2022.
(d) Progress Energy Carolinas expects to receive future subsidies under Medicare Part D of $2 million in each of the years 2013-2015, $3 million in each of the years 2016-2017, and a total of $19 million during the years 2018-2022.
(e) Progress Energy Florida expects to receive future subsidies under Medicare Part D of $2 million in each of the years 2013-2017, and a total of $12 million during the years 2018-2022.
(f) Duke Energy Ohio does not expect to receive future subsidies under Medicare Part D.
(g) Duke Energy Indiana expects to receive future subsidies under Medicare Part D of $1 million in each of the years 2013-2017 and a total of $5 million during the years 2018-2022.