Duke Energy 2013 Annual Report Download - page 144

126
PART II
DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. •
DUKE ENERGY PROGRESS, INC. • DUKE ENERGY FLORIDA, INC. • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
planning purposes, the Duke Energy Registrants currently estimate the cost of
new control equipment that may need to be installed on existing power plants
to comply with these EPA regulations could total $4.5 billion to $5.5 billion,
excluding AFUDC, over the next 10 years. The table below includes estimated
costs for new control equipment necessary to comply with the MATS rule, which
is the only rule that has been nalized.
(in millions)
Duke Energy $525 to $625
Duke Energy Carolinas 40 to 50
Progress Energy 25 to 40
Duke Energy Progress 10 to 15
Duke Energy Florida 15 to 25
Duke Energy Ohio 35 to 50
Duke Energy Indiana 425 to 485
The Duke Energy Registrants also expect to incur increased fuel,
purchased power, operation and maintenance, and other expenses, and costs
for replacement generation for potential coal-red power plant retirements as
a result of these EPA regulations. The actual compliance costs incurred may be
materially different from these estimates based on the timing and requirements
of the nal EPA regulations. The Duke Energy Registrants intend to seek rate
recovery of amounts incurred associated with regulated operations in complying
with these regulations. Refer to Note 4 for further information regarding potential
plant retirements and regulatory lings related to the Duke Energy Registrants.
LITIGATION
Duke Energy
Dan River Ash Basin Release
On February 2, 2014, a break in a stormwater pipe beneath an ash basin
at Duke Energy Carolinas’ retired Dan River steam station caused a release of
ash basin water and ash into the Dan River. On February 8, 2014, a permanent
plug was installed in the stormwater pipe stopping the release of materials into
the river. Duke Energy Carolinas estimates 30,000 to 39,000 tons of ash and
24 million to 27 million gallons of basin water were released into the river. Duke
Energy Carolinas continues to work with local and state ofcials responding
to this event. On February 10, 2014, Duke Energy received a subpoena for the
production of documents, issued by the United States Attorney for the Eastern
District of North Carolina in connection with a criminal investigation related to
the release. A second subpoena was issued by the same United States Attorney
on February 18, 2014, which expanded the document production to cover all
fourteen of the North Carolina facilities with coal ash ponds.
It is not possible to predict whether Duke Energy will incur any liability or
to estimate the damages, if any, it might incur in connection with these matters.
Progress Energy Merger Shareholder Litigation
On May 31, 2013, the Delaware Chancery Court consolidated four
shareholder derivative lawsuits led in 2012. The Court also appointed a lead
plaintiff and counsel for plaintiffs and designated the case as In Re Duke Energy
Corporation Derivative Litigation. The lawsuit names as defendants eleven
members of the Duke Energy board of directors who were also members of the
pre-merger Duke Energy board of directors (Legacy Duke Energy Directors).
Duke Energy is named as a nominal defendant. The case alleges claims for
breach of duciary duties of loyalty and care in connection with the post-merger
change in CEO. The case is stayed pending resolution of the Nieman v. Duke
Energy Corporation, et al. case in North Carolina.
On August 3, 2012, Duke Energy was served with a shareholder Derivative
Complaint, which was transferred to the North Carolina Business Court (Krieger
v. Johnson, et al.). The lawsuit names as defendants, William D. Johnson
and the Legacy Duke Energy Directors. Duke Energy is named as a nominal
defendant. The lawsuit alleges claims for breach of duciary duty in granting
excessive compensation to Mr. Johnson. A decision on a motion to dismiss made
by the Legacy Duke Energy Directors remains pending.
Two shareholder Derivative Complaints, led in 2012 in federal district
court in Delaware, were consolidated as Tansey v. Rogers, et al. The case
alleges claims for breach of duciary duty and waste of corporate assets,
as well as claims under Section 14(a) and 20(a) of the Exchange Act. Duke
Energy is named as a nominal defendant. On May 17, 2013, the judge granted
defendants’ motion to stay the litigation until a decision is rendered on the
motion to dismiss in the Nieman v. Duke Energy Corporation, et al. case in
North Carolina.
Duke Energy, the Legacy Duke Energy Directors and certain Duke Energy
ofcers are also defendants in a purported securities class action lawsuit
(Nieman v. Duke Energy Corporation, et al). This lawsuit consolidates three
lawsuits originally led in July 2012, and is pending in the United States District
Court for the Western District of North Carolina. The plaintiffs allege federal
Securities Act and Exchange Act claims based on allegations of materially false
and misleading representations and omissions in the Registration Statement
led on July 7, 2011, and purportedly incorporated into other documents, all
in connection with the post-merger change in CEO. The claims are purportedly
brought on behalf of a class of all persons who purchased or otherwise acquired
Duke Energy securities between June 11, 2012 and July 9, 2012. On July 26,
2013, the Magistrate Judge recommended the District Court Judge deny the
defendants’ motion to dismiss. On October 2, 2013, the District Judge heard
defendants’ objections to this recommendation. A decision is pending on the
motion to dismiss.
It is not possible to predict whether Duke Energy will incur any liability or
to estimate the damages, if any, it might incur in connection with these lawsuits.
Alaskan Global Warming Lawsuit
On February 26, 2008, the governing bodies of an Inupiat village in Alaska,
led suit in the U.S. Federal Court for the Northern District of California against
various defendants including Duke Energy. On May 20, 2013, the plaintiffs’
Petition for Certiorari to the Supreme Court was denied, ending the case.
Price Reporting Cases
A total of ve lawsuits were led against Duke Energy afliates and other
energy companies and remain pending in a consolidated, single federal court
proceeding in Nevada.
Each of these cases contain similar claims, that defendants’ allegedly
manipulated natural gas markets by various means, including providing
false information to natural gas trade publications and entering into unlawful
arrangements and agreements in violation of the antitrust laws of the respective
states. Plaintiffs seek damages in unspecied amounts.
On July 19, 2011, the judge granted a defendant’s motion for summary
judgment in two of the remaining ve cases to which Duke Energy afliates are
a party. The U.S. Court of Appeals for the Ninth Circuit subsequently reversed
the lower court’s decision. On August 26, 2013, the defendants, including
Duke Energy, led a petition for certiorari to the U.S. Supreme Court, which
remains pending.