Duke Energy 2013 Annual Report Download - page 60

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PART II
DUKE ENERGY FLORIDA
Introduction
Management’s Discussion and Analysis should be read in conjunction with
the accompanying Consolidated Financial Statements and Notes for the years
ended December 31, 2013, 2012, and 2011.
Basis of Presentation
The results of operations and variance discussion for Duke Energy
Florida is presented in a reduced disclosure format in accordance with General
Instruction (I)(2)(a) of Form 10-K.
Results of Operations
Years Ended December 31,
(in millions) 2013 2012 Variance
Operating Revenues $4,527 $4,689 $ (162)
Operating Expenses 3,840 4,062 (222)
Gains on Sales of Other Asset and Other, net 12 (1)
Operating Income 688 629 59
Other Income and Expense, net 30 39 (9)
Interest Expense 180 255 (75)
Income Before Income Taxes 538 413 125
Income Tax Expense 213 147 66
Net Income 325 266 59
Preferred Stock Dividend Requirement –2 (2)
Net Income Attributable to Parent $ 325 $ 264 $ 61
The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Florida. The below percentages for retail
customer classes represent billed sales only. Wholesale power sales include both billed and unbilled sales. Total sales includes billed and unbilled retail sales, and
wholesale sales to incorporated municipalities and to public and private utilities and power marketers. Amounts are not weather normalized.
Increase (decrease) over prior year 2013 2012
Residential sales 1.4% (5.1)%
General service sales (0.5)% (1.0)%
Industrial sales 1.5% (2.5)%
Wholesale power sales (13.8)% (34.2)%
Total sales (1.2)% (2.9)%
Average number of customers 1.1% 0.8%
Year Ended December 31, 2013 as Compared to 2012
Operating Revenues. The variance was primarily due to:
• A $387 million decrease in retail fuel revenues primarily due to the
impact of lower residential fuel rates and a decrease in GWh retail sales
due to weather and lower usage.
Partially offset by:
• A $167 million increase in base revenues as allowed by the 2012
Settlement, and
• A $57 million increase in nuclear cost-recovery clause revenue due to
an increase in recovery rates primarily related to the Crystal River Unit 3
uprate project, a prior period true-up and Levy as allowed by the 2012
Settlement.
Operating Expenses. The variance was primarily due to:
• A $482 million decrease in retail fuel expense primarily due to the
application of the NEIL settlement proceeds including amortization
associated with the 2012 Settlement, lower system requirements, and
the prior year establishment of a regulatory liability for replacement
power in accordance with the 2012 Settlement, and
• A $71 million decrease in operations and maintenance expenses
primarily due to the deferral of Crystal River Unit 3-related expenses
in accordance with the 2012 Settlement, lower costs associated with
the merger with Duke Energy, and the prior year write-off of previously
deferred costs related to the vendor not selected 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.
Partially offset by:
• A $212 million increase in impairment and other charges. In 2013, Duke
Energy Florida recorded impairment and other 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 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.