Duke Energy 2014 Annual Report Download - page 22

TABLE OF CONTENTS
FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2014
Item Page
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
GLOSSARY OF TERMS
PART I.
1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
DUKE ENERGY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
BUSINESS SEGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
GEOGRAPHIC REGIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DUKE ENERGY CAROLINAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
PROGRESS ENERGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DUKE ENERGY PROGRESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DUKE ENERGY FLORIDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DUKE ENERGY OHIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
DUKE ENERGY INDIANA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1A. RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1B. UNRESOLVED STAFF COMMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4. MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
PART II.
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . . . . . 26
6. SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . . . 61
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . 62
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
9A. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
PART III.
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . . . . . . . 214
11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . 214
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
14. PRINCIPAL ACCOUNTING FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
PART IV .
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . 216
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document includes forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-
looking statements are based on management’s beliefs and assumptions. These forward-looking
statements are identifi ed by terms and phrases such as “anticipate,” “believe,” “intend,”
“estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,”
“potential,” “forecast,” “target,” “guidance,” “outlook,” and similar expressions. Forward-
looking statements involve risks and uncertainties that may cause actual results to be materially
different from the results predicted. Factors that could cause actual results to differ materially
from those indicated in any forward-looking statement include, but are not limited to:
• State, federal and foreign legislative and regulatory initiatives, including costs of
compliance with existing and future environmental requirements or climate change,
as well as rulings that affect cost and investment recovery or have an impact on rate
structures or market prices;
• The extent and timing of the costs and liabilities relating to the Dan River ash basin
release and compliance with current and any future regulatory changes related to the
management of coal ash;
• The ability to recover eligible costs, including those associated with future signifi cant
weather events, and earn an adequate return on investment through the regulatory
process;
• The costs of decommissioning nuclear facilities could prove to be more extensive than
are currently identifi ed and all costs may not be fully recoverable through the regulatory
process;
• The risk that the credit ratings of the company or its subsidiaries may be different from
what the companies expect;
• Costs and effects of legal and administrative proceedings, settlements, investigations
and claims;
• Industrial, commercial and residential growth or decline in service territories or customer
bases resulting from customer usage patterns, including energy effi ciency efforts and
use of alternative energy sources, including self-generation and distributed generation
technologies;
• Additional competition in electric markets and continued industry consolidation;
• Political and regulatory uncertainty in other countries in which Duke Energy conducts
business;
• The infl uence of weather and other natural phenomena on operations, including the
economic, operational and other effects of severe storms, hurricanes, droughts and
tornadoes;
• The ability to successfully operate electric generating facilities and deliver electricity to
customers;
• The impact on facilities and business from a terrorist attack, cybersecurity threats, data
security breaches, and other catastrophic events;
• The inherent risks associated with the operation and potential construction of nuclear
facilities, including environmental, health, safety, regulatory and fi nancial risks;
• The timing and extent of changes in commodity prices, interest rates and foreign
currency exchange rates and the ability to recover such costs through the regulatory
process, where appropriate, and their impact on liquidity positions and the value of
underlying assets;
• The results of fi nancing efforts, including the ability to obtain fi nancing on favorable
terms, which can be affected by various factors, including credit ratings and general
economic conditions;
• Declines in the market prices of equity and fi xed income securities and resultant cash
funding requirements for defi ned benefi t pension plans, other post-retirement benefi t
plans, and nuclear decommissioning trust funds;
• Construction and development risks associated with the completion of Duke
Energy Registrants’ capital investment projects in existing and new generation
facilities, including risks related to fi nancing, obtaining and complying with terms of
permits, meeting construction budgets and schedules, and satisfying operating and
environmental performance standards, as well as the ability to recover costs from
customers in a timely manner or at all;
• Changes in rules for regional transmission organizations, including changes in rate
designs and new and evolving capacity markets, and risks related to obligations created
by the default of other participants;
• The ability to control operation and maintenance costs;
• The level of creditworthiness of counterparties to transactions;
• Employee workforce factors, including the potential inability to attract and retain key
personnel;
• The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation
holding company (the Parent);
• The performance of projects undertaken by our nonregulated businesses and the
success of efforts to invest in and develop new opportunities;
• The effect of accounting pronouncements issued periodically by accounting standard-
setting bodies;
• The impact of potential goodwill impairments;
• The ability to reinvest prospective undistributed earnings of foreign subsidiaries or
repatriate such earnings on a tax-effi cient basis; and
• The ability to successfully complete future merger, acquisition or divestiture plans.
In light of these risks, uncertainties and assumptions, the events described in the
forward-looking statements might not occur or might occur to a different extent or at a different
time than described. Forward-looking statements speak only as of the date they are made; the
Duke Energy Registrants undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise that occur after
that date.