Duke Energy 2013 Annual Report Download - page 202

184
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)
December 31, 2012
(in millions)
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Prefunded pension(a) $ 163 $123 $ — $ 25 $ — $ — $ —
Noncurrent pension liability $ 439 $ — $ 221 $ — $ 159 $ 81 $ 57
Net asset (liability) recognized $ (276) $123 $ (221) $ 25 $(159) $ (81) $ (57)
Regulatory assets $2,387 $582 $1,079 $ 472 $ 541 $144 $246
Accumulated other comprehensive (income) loss
Deferred income tax asset $ (59) $ — $ (9) $ — $ — $ — $ —
Prior service credit (4) — — — — — —
Net actuarial loss 166 — 26 — — — —
Net amounts recognized in accumulated other comprehensive loss(b) $ 103 $ — $ 17 $ — $ — $ — $ —
(a) Included in Other within Investments and Other Assets on the Consolidated Balance Sheets.
(b) Excludes accumulated other comprehensive income of $16 million and $9 million as of 2013 and 2012, respectively, net of tax, associated with a Brazilian retirement plan.
Information for Plans with Accumulated Benefit Obligation in Excess of Plan Assets
As of December 31, 2013, no qualified pension plans had an accumulated benefit obligation in excess of plan assets.
December 31, 2012
(in millions)
Duke
Energy
Progress
Energy
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Projected benefit obligation $5,396 $2,868 $1,309 $ 527 $684
Accumulated benefit obligation 5,201 2,820 1,261 501 653
Fair value of plan assets 4,957 2,647 1,150 446 627
Assumptions Used for Pension Benefits Accounting
The discount rate used to determine the current year pension obligation
and following year’s pension 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 sufficient cash flow to
provide for projected benefit 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 benefit payments
discounted at this rate with the market value of the bonds selected.
The average remaining service period of active covered employees is
nine years for Duke Energy, Duke Energy Carolinas, Duke Energy Ohio and Duke
Energy Indiana and eight years for Progress Energy, Duke Energy Progress and
Duke Energy Florida.
The following tables present the assumptions used for pension benefit
accounting. For Progress Energy plans, the assumptions used in 2012 to
determine net periodic pension cost reflect remeasurement as of July 1, 2012,
due to the merger between Duke Energy and Progress Energy.
Duke Energy Progress Energy
December 31, December 31,
2013 2012 2011 2013 2012 2011
Benefit Obligations
Discount rate 4.70 % 4.10 % 5.10 % 4.70 % 4.10 % 4.75 %
Salary increase 4.40 % 4.30 % 4.40 % 4.00 % 4.00 % 4.00 %
Net Periodic Benefit Cost
Discount rate 4.10 % 4.60-5.10% 5.00 % 4.10 % 4.60-4.75% 5.55 %
Salary increase 4.30 % 4.40 % 4.10 % 4.00 % 4.00 % 4.50 %
Expected long-term rate of return on plan assets 7.75 % 8.00 % 8.25 % 7.75 % 8.00-8.25% 8.50 %