Duke Energy 2013 Annual Report Download - page 161

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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)
The following table presents Duke Energy’s investments in unconsolidated affiliates accounted for under the equity method, as well as the respective equity in
earnings, by segment.
Years Ended December 31,
2013 2012 2011
(in millions) Investments Equity in earnings Investments Equity in earnings Equity in earnings
Regulated Utilities $ 4 $ (1) $ 5 $ (5) $ —
International Energy 82 110 81 134 145
Commercial Power 252 7 219 14 6
Other 52 6 178 5 9
Total $ 390 $ 122 $ 483 $ 148 $ 160
During the years ended December 31, 2013, 2012 and 2011, Duke Energy
received distributions from equity investments of $144 million, $183 million and
$149 million, respectively, which are included in Other assets within Cash Flows
from Operating Activities on the Consolidated Statements of Cash Flows.
Significant investments in affiliates accounted for under the equity
method are discussed below.
International Energy
Duke Energy owns a 25 percent indirect interest in NMC, which owns and
operates a methanol and MTBE business in Jubail, Saudi Arabia.
Commercial Power
Investments accounted for under the equity method primarily consist of
Duke Energy’s approximate 50 percent ownership interest in the five Catamount
Sweetwater, LLC wind farm projects (Phase I-V), INDU Solar Holdings, LLC and
DS Cornerstone, LLC. All of these entities own solar or wind power projects
in the United States. Duke Energy also owns a 50 percent interest in Duke
American Transmission Co., LLC which builds, owns and operates electric
transmission facilities in North America.
Other
As of December 31, 2012, investments accounted for under the equity
method primarily included a 50 percent ownership interest in DukeNet, which
owns and operates telecommunications businesses. On December 31, 2013,
Duke Energy completed the sale of its ownership interest in DukeNet to
Time Warner Cable, Inc. After retiring existing DukeNet debt and payment of
transactions expenses, Duke Energy received $215 million in cash proceeds and
recorded a $105 million pretax gain in the fourth quarter of 2013.
13. RELATED PARTY TRANSACTIONS
The Subsidiary Registrants engage in related party transactions, which are
generally performed at cost and in accordance with the applicable state and federal
commission regulations. Refer to the Consolidated Balance Sheets of the Subsidiary
Registrants for balances due to or due from related parties. Amounts related
to transactions with related parties included in the Consolidated Statements of
Operations and Comprehensive Income are presented in the following table.
Years Ended December 31,
(in millions) 2013 2012 2011
Duke Energy Carolinas
Corporate governance and shared service expenses(a) $ 927 $1,112 $1,009
Indemnification coverages(b) 22 21 21
Joint Dispatch Agreement (JDA) revenue(c) 121 18 —
Joint Dispatch Agreement (JDA) expense(c) 116 91 —
Progress Energy
Corporate governance and shared services provided
by Duke Energy(a) $ 290 $ 63 $ —
Corporate governance and shared services provided
to Duke Energy(d) 96 47 —
Indemnification coverages(b) 34 17 —
JDA revenue(c) 116 91 —
JDA expense(c) 121 18 —
Duke Energy Progress
Corporate governance and shared service expenses(a) $ 266 $ 254 $ 203
Indemnification coverages(b) 20 8 —
JDA revenue(c) 116 91 —
JDA expense(c) 121 18 —
Duke Energy Florida
Corporate governance and shared service expenses(a) $ 182 $ 186 $ 160
Indemnification coverages(b) 14 8 —
Duke Energy Ohio
Corporate governance and shared service expenses(a) $ 347 $ 358 $ 401
Indemnification coverages(b) 15 15 17
Duke Energy Indiana
Corporate governance and shared service expenses(a) $ 422 $ 419 $ 415
Indemnification coverages(b) 14 8 7
(a) The Subsidiary Registrants are charged their proportionate share of corporate governance and other costs by
unconsolidated affiliates that are consolidated affiliates of Duke Energy and Progress Energy. Corporate governance
and other shared services costs are primarily related to human resources, employee benefits, legal and accounting
fees, as well as other third-party costs. These amounts are recorded in Operation, maintenance and other on the
Consolidated Statements of Operations and Comprehensive Income. See Note 21 for additional information.
(b) The Subsidiary Registrants incur expenses related to certain indemnification coverages through Bison,
Duke Energy’s wholly owned captive insurance subsidiary. These expenses are recorded in Operation,
maintenance and other on the Consolidated Statements of Operations and Comprehensive Income.
(c) Effective with the consummation of the merger between Duke Energy and Progress Energy, Duke Energy
Carolinas and Duke Energy Progress began to participate in a JDA. The JDA allows the collective dispatch
of power plants between service territories to reduce customer rates. Revenues from the sale of power
under the JDA are recorded in Operating Revenues and expenses from the purchase of power under the
JDA are recorded in Fuel used in electric generation and purchased power on the Consolidated Statements
of Operations and Comprehensive Income.
(d) Progress Energy charges a proportionate share of corporate governance and other costs to unconsolidated
affiliates that are consolidated affiliates of Duke Energy. Corporate governance and other shared costs
are primarily related to human resources, employee benefits, legal and accounting fees, as well as other
third-party costs. These charges are recorded as an offset to Operation, maintenance and other in the
Statements of Operations and Comprehensive Income.