Duke Energy 2013 Annual Report Download - page 58

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PART II
write-off of previously deferred costs related to the vendor not selected
costs for the Crystal River Unit 3 containment repair. These were
partially offset by the prior year reversal of accruals in conjunction with
the placement of Crystal River Unit 3 into extended cold shutdown in
accordance with the 2012 Settlement and higher charges associated
with related settlement matters; and
• A $32 million decrease in impairment charges at Duke Energy Progress
related to the merger with Duke Energy. These charges relate to planned
transmission project costs for which recovery is not expected, and
certain costs associated with mitigation sales pursuant to merger
settlement agreements with the FERC, partially offset by a current year
impairment charge resulting from the decision to suspend the
application for two proposed nuclear units at Harris.
Partially offset by:
• A $212 million increase in impairment and other charges at Duke Energy
Florida. In 2013, Duke Energy Florida recorded charges primarily related
to Crystal River Unit 3 and Levy. In 2012, Duke Energy Florida recorded
impairment and other charges related to the decision to retire Crystal
River Unit 3. See Note 4 to the Consolidated Financial Statements,
“Regulatory Matters,” for additional information; and
• A $138 million increase in depreciation and amortization at Duke Energy
Florida primarily due to higher nuclear cost-recovery amortization
related to Levy and a decrease in the reduction of the cost of removal
component of amortization expense as allowed under the 2012
Settlement.
Other Income and Expenses, net. The variance was primarily due to
lower AFUDC equity resulting from to major projects placed in service in late
2012 and the retirement of Crystal River Unit 3.
Interest Expense. The variance was primarily due to the deferral of debt
costs recorded on the retail portion of the retired Crystal River Unit 3 assets,
partially offset by the charge to interest expense on the redemption of Progress
Energy’s 7.10% Cumulative Quarterly Income Preferred Securities (QUIPS) in
January 2013.
Income Tax Expense from Continuing Operations. The variance was
primarily due to an increase in pretax income. The effective tax rates for the
years ended December 31, 2013 and 2012 were 36.2 percent and 32.7 percent,
respectively. The increase in the effective tax rate is primarily due to the impact
of lower AFUDC equity and the Employee Stock Ownership Plan (ESOP) dividend
deduction being recorded at Duke Energy in 2012.
Discontinued Operations, net of tax. The variance was primarily due
to the impact of the U.S. Global, LLC (Global) settlement in 2012. See Note 5 to
the Consolidated Financial Statements, “Commitments and Contingencies,” for
additional information.
Matters Impacting Future Progress Energy Results
An appeal of a recently approved rate case is pending at the North Carolina
Supreme Court. The NCAG and NC WARN dispute the rate of return, capital
structure and other matters approved by the NCUC. The outcome of this appeal
could have an adverse impact to Progress Energy’s financial position, results of
operations and cash flows. See Note 4 to the Consolidated Financial Statements,
“Regulatory Matters,” for additional information.