Duke Energy 2013 Annual Report Download - page 211

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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)
December 31, 2012
(in millions)
Duke
Energy
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
Current post-retirement liability(a) $ 50 $ — $ 47 $ 23 $ 20 $ 2 $ —
Noncurrent post-retirement liability 1,546 182 1,081 589 393 39 119
Total accrued post-retirement liability $ 1,596 $ 182 $ 1,128 $ 612 $ 413 $ 41 $119
Regulatory assets $ 521 $ 17 $ 505 $ 291 $ 170 $ — $ 77
Regulatory liabilities $ 101 $ — $ — $ — $ — $ 18 $ 68
Accumulated other comprehensive (income) loss
Deferred income tax liability $ 2 $ — $ — $ — $ — $ — $ —
Prior service credit (3) — — — — — —
Net actuarial gain (2) — — — — — —
Net amounts recognized in accumulated other comprehensive income $ (3) $ — $ — $ — $ — $ — $ —
(a) Included in Other within Current Liabilities on the Consolidated Balance Sheets.
Assumptions Used for Other Post-Retirement Benefits Accounting
The discount rate used to determine the current year other post-retirement
benefits obligation and following year’s other post-retirement benefits 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 present value of the plan’s
projected benefit payments discounted at this rate with the market value of the
bonds selected.
The following tables present the assumptions used for other post-
retirement benefits accounting. For Progress Energy plans, the assumptions
used in 2012 to determine net periodic other post-retirement benefit 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 % 4.85 %
Net Periodic Benefit Cost
Discount rate 4.10 % 4.60-5.10% 5.00 % 4.10 % 4.60-4.85% 5.70 %
Expected long-term rate of return on plan assets 7.75 % 5.20-8.00% 5.36-8.25% —% N/A-5.00% 5.00 %
Assumed tax rate 35 % 35 % 35 %
Assumed Health Care Cost Trend Rate
December 31,
2013 2012
Health care cost trend rate assumed for next year 8.50 % 8.50 %
Rate to which the cost trend is assumed to decline (the ultimate trend rate) 5.00 % 5.00 %
Year that rate reaches ultimate trend 2021 2020