Duke Energy 2014 Annual Report Download - page 156

136
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)
impact on Duke Energy Ohio’s results of operations, cash fl ows or fi nancial
position of these cases to date has not been material. Based on estimates under
varying assumptions concerning uncertainties, such as, among others: (i) the
number of contractors potentially exposed to asbestos during construction or
maintenance of Duke Energy Ohio generating plants, (ii) the possible incidence
of various illnesses among exposed workers, and (iii) the potential settlement
costs without federal or other legislation that addresses asbestos tort actions,
Duke Energy Ohio estimates that the range of reasonably possible exposure
in existing and future suits over the foreseeable future is not material. This
assessment may change as additional settlements occur, claims are made, and
more case law is established.
Duke Energy Indiana
Edwardsport IGCC
On December 11, 2012, Duke Energy Indiana fi led an arbitration action
against General Electric Company and Bechtel Corporation in connection
with their work at the Edwardsport IGCC facility. Duke Energy Indiana is
seeking damages equaling some or all of the additional costs incurred in the
construction of the project not recovered at the IURC. The arbitration hearing
concluded December 15, 2014. The parties will submit post hearing briefs. Duke
Energy Indiana cannot predict the outcome of this matter.
Other Litigation and Legal Proceedings
The Duke Energy Registrants are involved in other legal, tax and regulatory
proceedings arising in the ordinary course of business, some of which involve
signifi cant amounts. The Duke Energy Registrants believe the fi nal disposition of
these proceedings will not have a material effect on their results of operations,
cash fl ows or fi nancial position.
The table below presents recorded reserves based on management’s
best estimate of probable loss for legal matters discussed above, excluding
asbestos related reserves. Reserves are classifi ed on the Consolidated
Balance Sheets in Other within Deferred Credits and Other Liabilities and
Accounts payable and Other within Current Liabilities. The reasonably
possible range of loss for all non-asbestos related matters in excess of
recorded reserves is not material.
December 31,
(in millions) 2014 2013
Reserves for Legal Matters
Duke Energy $323 $ 204
Duke Energy Carolinas 72 —
Progress Energy 93 78
Duke Energy Progress 37 10
Duke Energy Florida 36 43
OTHER COMMITMENTS AND CONTINGENCIES
General
As part of their normal business, the Duke Energy Registrants are party
to various fi nancial guarantees, performance guarantees, and other contractual
commitments to extend guarantees of credit and other assistance to various
subsidiaries, investees, and other third parties. These guarantees involve
elements of performance and credit risk, which are not fully recognized on the
Consolidated Balance Sheets and have unlimited maximum potential payments.
However, the Duke Energy Registrants do not believe these guarantees will have
a material effect on their results of operations, cash fl ows or fi nancial position.
Purchase Obligations
Purchased Power
Duke Energy Progress and Duke Energy Florida have ongoing purchased power
contracts, including renewable energy contracts, with other utilities, wholesale
marketers, co-generators, and qualifi ed facilities. These purchased power contracts
generally provide for capacity and energy payments. In addition, Duke Energy Progress
and Duke Energy Florida have various contracts to secure transmission rights.
The following table presents executory purchased power contracts,
excluding contracts classifi ed as leases. All contracts represent 100 percent of
net plant output.
Minimum Purchase Amount at December 31, 2014
(in millions)
Contract
Expiration 2015 2016 2017 2018 2019 Thereafter Total
Duke Energy Progress 2019-2022 $ 59 $ 60 $ 61 $ 62 $ 63 $ 93 $ 398
Duke Energy Florida 2023-2043 244 273 291 306 322 1,907 3,343
Operating and Capital Lease Commitments
The Duke Energy Registrants lease office buildings, railcars, vehicles,
computer equipment and other property and equipment with various terms
and expiration dates. Additionally, Duke Energy Progress has a capital
lease related to firm gas pipeline transportation capacity. Duke Energy
Progress and Duke Energy Florida have entered into certain purchased
power agreements, which are classified as leases. Consolidated capitalized
lease obligations are classified as Long-Term Debt or Other within Current
Liabilities on the Consolidated Balance Sheets. Amortization of assets
recorded under capital leases is included in Depreciation and amortization
and Fuel used in electric generation – regulated on the Consolidated
Statements of Operations.
The following table presents rental expense for operating leases. These
amounts are included in Operation, maintenance and other on the Consolidated
Statements of Operations.
Years Ended December 31,
(in millions) 2014 2013 2012
Duke Energy $355 $321 $232
Duke Energy Carolinas 41 39 38
Progress Energy 257 225 232
Duke Energy Progress 161 153 164
Duke Energy Florida 96 72 68
Duke Energy Ohio 17 14 14
Duke Energy Indiana 21 22 20