Duke Energy 2015 Annual Report Download - page 175

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PART II
DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • PROGRESS ENERGY, INC. •
DUKE ENERGY PROGRESS, LLC • DUKE ENERGY FLORIDA, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
13. RELATED PARTY TRANSACTIONS
The Subsidiary Registrants engage in related party transactions in accordance
with the applicable state and federal commission regulations. Refer to the
Consolidated Balance Sheets of the Subsidiary Registrants for balances due to or
due from related parties. Material amounts related to transactions with related
parties included in the Consolidated Statements of Operations and Comprehensive
Income are presented in the following table.
Years Ended December 31,
(in millions) 2015 2014 2013
Duke Energy Carolinas
Corporate governance and shared service expenses(a) $ 914 $ 851 $ 927
Indemnification coverages(b) 24 21 22
JDA revenue(c) 51 133 121
JDA expense(c) 183 198 116
Progress Energy
Corporate governance and shared services provided
by Duke Energy(a) $ 712 $ 732 $ 290
Corporate governance and shared services provided
to Duke Energy(d) —— 96
Indemnification coverages(b) 38 33 34
JDA revenue(c) 183 198 116
JDA expense(c) 51 133 121
Duke Energy Progress
Corporate governance and shared service expenses(a) $ 403 $ 386 $ 266
Indemnification coverages(b) 16 17 20
JDA revenue(c) 183 198 116
JDA expense(c) 51 133 121
Duke Energy Florida
Corporate governance and shared service expenses(a) $ 309 $ 346 $ 182
Indemnification coverages(b) 22 16 14
Duke Energy Ohio
Corporate governance and shared service expenses(a) $ 342 $ 316 $ 347
Indemnification coverages(b) 613 15
Duke Energy Indiana
Corporate governance and shared service expenses(a) $ 349 $ 384 $ 422
Indemnification coverages(b) 911 14
(a) The Subsidiary Registrants are charged their proportionate share of corporate governance and other
shared services costs, primarily related to human resources, employee benefits, legal and accounting
fees, as well as other third-party costs. These amounts are recorded in Operation, maintenance and other
on the Consolidated Statements of Operations and Comprehensive Income.
(b) The Subsidiary Registrants incur expenses related to certain indemnification coverages through Bison,
Duke Energy’s wholly owned captive insurance subsidiary. These expenses are recorded in Operation,
maintenance and other on the Consolidated Statements of Operations and Comprehensive Income.
(c) Duke Energy Carolinas and Duke Energy Progress participate in a JDA which allows the collective dispatch
of power plants between the service territories to reduce customer rates. Revenues from the sale of
power under the JDA are recorded in Operating Revenues on the Consolidated Statements of Operations
and Comprehensive Income. Expenses from the purchase of power under the JDA are recorded in Fuel
used in electric generation and purchased power on the Consolidated Statements of Operations and
Comprehensive Income.
(d) In 2013, Progress Energy Service Company (PESC), a consolidated subsidiary of Progress Energy, charged
a proportionate share of corporate governance and other costs to consolidated affiliates of Duke Energy.
Corporate governance and other shared costs were primarily related to human resources, employee
benefits, legal and accounting fees, as well as other third-party costs. These charges were recorded
as an offset to Operation, maintenance and other in the Consolidated Statements of Operations and
Comprehensive Income. Effective January 1, 2014, PESC was contributed to Duke Energy Corporate
Services (DECS), a consolidated subsidiary of Duke Energy, and these costs were no longer charged out of
Progress Energy. Progress Energy recorded a non-cash after-tax equity transfer related to the contribution
of PESC to DECS in its Consolidated Statements of Changes in Common Stockholder’s Equity.
In addition to the amounts presented above, the Subsidiary Registrants
record the impact on net income of other affiliate transactions, including rental
of office space, participation in a money pool arrangement, other operational
transactions and their proportionate share of certain charged expenses. See
Note 6 for more information regarding money pool. The net impact of these
transactions was not material for the years ended December 31, 2015, 2014
and 2013 for the Subsidiary Registrants.
As discussed in Note 17, certain trade receivables have been sold by Duke
Energy Ohio and Duke Energy Indiana to CRC, an affiliate formed by a subsidiary of
Duke Energy. The proceeds obtained from the sales of receivables are largely cash
but do include a subordinated note from CRC for a portion of the purchase price.
Duke Energy Ohio’s nonregulated indirect subsidiary, Duke Energy
Commercial Asset Management (DECAM), owned generating plants included
in the Disposal Group sold to Dynegy on April 2, 2015. On April 1, 2015, Duke
Energy Ohio distributed its indirect ownership interest in DECAM to a Duke
Energy subsidiary and non-cash settled DECAM’s intercompany loan payable
of $294 million. The intercompany loan payable recorded in Notes payable to
affiliated companies on Duke Energy Ohio’s Consolidated Balance Sheets was
$459 million as of December 31, 2014.
Refer to Note 2 for further information on the sale of the Disposal Group.
Intercompany Income Taxes
Duke Energy and its subsidiaries file a consolidated federal income tax
return and other state and jurisdictional returns. The Subsidiary Registrants
have a tax sharing agreement with Duke Energy for the allocation of
consolidated tax liabilities and benefits. Income taxes recorded represent
amounts the Subsidiary Registrants would incur as separate C-Corporations.
The following table includes the balance of intercompany income tax receivables
for the subsidiary registrants.
(in millions)
Duke
Energy
Carolinas
Progress
Energy
Duke
Energy
Progress
Duke
Energy
Florida
Duke
Energy
Ohio
Duke
Energy
Indiana
December 31, 2015
Intercompany income
tax receivable $122 $120 $104 $ — $ 54 $—
Intercompany income
tax payable — — — 96 — 47
December 31, 2014
Intercompany income
tax receivable
$ 43 $713 $267 $174 $ 39 $ 95