Duke Energy 2014 Annual Report Download - page 201

181
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)
The following table outlines amounts and expiration dates of the credit facilities.
DERF DEPR DEFR
Credit facility amount (in millions) $ 400 $ 300 $ 225
Expiration date October 2016 December 2016 March 2017
CRC
On a revolving basis, CRC buys certain accounts receivable arising from
the sale of electricity and/or related services from Duke Energy Ohio and Duke
Energy Indiana. Receivables sold are securitized by CRC through a credit facility
managed by two unrelated third parties. The proceeds Duke Energy Ohio and
Duke Energy Indiana receive from the sale of receivables to CRC are typically 75
percent cash and 25 percent in the form of a subordinated note from CRC. The
subordinated note is a retained interest in the receivables sold. Cash collections
from the receivables are the sole source of funds to satisfy the related debt
obligation. Depending on experience with collections, additional equity infusions
to CRC may be required by Duke Energy to maintain a minimum equity balance
of $3 million. There were no infusions to CRC during the years ended December
31, 2014 and 2013. Borrowing availability is limited to the amount of qualifi ed
receivables sold, which is generally expected to be in excess of the credit
facility. The credit facility expires in November 2016 and is refl ected on the
Consolidated Balance Sheets as Long-Term Debt.
CRC is considered a VIE because (i) equity capitalization is insuffi cient
to support its operations, (ii) power to direct the most signifi cant activities that
impact economic performance of the entity are not performed by the equity
holder, Cinergy, and (iii) defi ciencies in net worth of CRC are not funded by
Cinergy, but by Duke Energy. The most signifi cant activity of CRC relates to the
decisions made with respect to the management of delinquent receivables. Duke
Energy consolidates CRC as it makes these decisions. Neither Duke Energy Ohio
nor Duke Energy Indiana consolidate CRC.
Renewables
Certain of Duke Energy’s renewable energy facilities are VIEs due to
long-term fi xed price power purchase agreements. These fi xed price agreements
effectively transfer commodity price risk to the buyer of the power. Certain other
of Duke Energy’s renewable energy facilities are VIEs due to Duke Energy issuing
guarantees for debt service and operations and maintenance reserves in support
of debt fi nancings. For certain VIEs, assets are restricted and cannot be pledged
as collateral or sold to third parties without prior approval of debt holders.
The most signifi cant activities that impact the economic performance of these
renewable energy facilities were decisions associated with siting, negotiating
purchase power agreements, engineering, procurement and construction, and
decisions associated with ongoing operations and maintenance-related activities.
Duke Energy consolidates the entities as it makes all of these decisions.
NON-CONSOLIDATED VIEs
The tables below show VIEs not consolidated and how these entities impact the Consolidated Balance Sheets.
December 31, 2014
Duke Energy
(in millions) Renewables Other Total
Duke
Energy
Ohio
Duke
Energy
Indiana
Receivables $ — $ — $ — $ 91 $113
Investments in equity method unconsolidated affi liates 150 38 188 — —
Investments and other assets —44——
Total assets(a) $ 150 $ 42 $192 $ 91 $113
Other current liabilities —33——
Deferred credits and other liabilities —1414——
Total liabilities $— $17 $17 $— $—
Net assets (liabilities) $ 150 $ 25 $175 $ 91 $113
(a) Duke Energy Ohio recorded a pretax impairment charge of $94 million related to OVEC.