Duke Energy 2013 Annual Report Download - page 154

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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)
Duke Energy has guaranteed certain issuers of surety bonds, obligating
itself to make payment upon the failure of a wholly owned and former non-
wholly owned entity to honor its obligations to a third party. Under these
arrangements, Duke Energy has payment obligations that are triggered by a
draw by the third party or customer due to the failure of the wholly owned
or former non-wholly owned entity to perform according to the terms of its
underlying contract. At December 31, 2013, Duke Energy had guaranteed
$92 million of outstanding surety bonds. Of this amount, $54 million, expire in
2014, the remaining expires between 2015 – 2021.
At December 31, 2013, Duke Energy had $457 million of unused bank-
issued stand-by letters of credit to secure the performance of wholly owned and
non-wholly owned entities to a third party or customer.
Duke Energy and Progress Energy have issued indemnications
for certain asset performance, legal, tax and environmental matters to
third parties, including indemnications made in connection with sales of
businesses. At December 31, 2013, the estimated maximum exposure for these
indemnications was $117 million, the majority of which expires in 2017. Of this
amount, $7 million has no contractual expiration. For certain matters for which
Progress Energy receives timely notice, indemnity obligations may extend beyond
the notice period. Certain indemnications related to discontinued operations
have no limitations as to time or maximum potential future payments.
The following table includes the liabilities recognized for the guarantees
discussed above. These amounts are primarily recorded in Other within Deferred
Credits and other Liabilities on the Consolidated Balance Sheets. As current
estimates change, additional losses related to guarantees and indemnications
to third parties, which could be material, may be recorded by the Duke Energy
Registrants in the future. The decrease in 2013 was mainly due the expiration of
guarantees. Accruals and expenditures were not material.
December 31,
2013 2012
Duke Energy $24 $41
Progress Energy 925
Duke Energy Florida 317
8. JOINT OWNERSHIP OF GENERATING
AND TRANSMISSION FACILITIES
The Duke Energy Registrants hold ownership interests in certain jointly
owned generating and transmission facilities. The Duke Energy Registrants are
entitled to shares of the generating capacity and output of each unit equal to
their respective ownership interests. The Duke Energy Registrants pay their
ownership share of additional construction costs, fuel inventory purchases and
operating expenses, except in certain instances where agreements have been
executed to limit certain joint owners’ maximum exposure to the additional
costs. The Duke Energy Registrants share of revenues and operating costs of
the jointly owned generating facilities is included within the corresponding line
in the Consolidated Statements of Operations. Each participant in the jointly
owned facilities must provide its own nancing, except in certain instances
where agreements have been executed to limit certain joint owners’ maximum
exposure to the additional costs.