Duke Energy 2015 Annual Report Download - page 22

TABLE OF CONTENTS
FORM 10-K FOR THE YEAR ENDED
December 31, 2015
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................................. 13
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 ......... 64
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ..................... 65
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE ............................. 212
9A. CONTROLS AND PROCEDURES ....................................... 212
PART III.
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ........... 213
11. EXECUTIVE COMPENSATION ......................................... 213
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS................. 213
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE................................................... 213
14. PRINCIPAL ACCOUNTING FEES AND SERVICES ........................... 213
PART IV.
15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES........................ 214
SIGNATURES ..................................................... 216
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 and can often be identified by
terms and phrases that include “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,”
“should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,”
“guidance,” “outlook” or other similar terminology. Various factors may cause actual results to be
materially different than the suggested outcomes within forward-looking statements; accordingly,
there is no assurance that such results will be realized. These factors 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 costs and liabilities to comply with federal and state laws,
regulations, and legal requirements related to coal ash remediation, including amounts for
required closure of certain ash impoundments, are uncertain and difficult to estimate;
• The ability to recover eligible costs, including amounts associated with coal ash mitigation
such as coal ash impoundment retirement obligations and cost related to significant weather
events, and earn an adequate return on investment through the regulatory process;
• The costs of decommissioning Crystal River Unit 3 and other nuclear facilities could prove to
be more extensive than amounts estimated and all costs may not be fully recoverable through
the regulatory process;
• Credit ratings of the Duke Energy Registrants may be different from what is expected;
• 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 variations in customer usage patterns, including energy efficiency
efforts and use of alternative energy sources, including self-generation and distributed
generation technologies;
• Federal and state regulations, laws and other efforts designed to promote and expand the
use of energy efficiency measures and distributed generation technologies, such as rooftop
solar and battery storage, in Duke Energy service territories could result in customers leaving
the electric distribution system, excess generation resources as well as stranded costs;
• Advancements in technology;
• Additional competition in electric markets and continued industry consolidation;
• Political, economic and regulatory uncertainty in Brazil and other countries in which
Duke Energy conducts business;
• The influence of weather and other natural phenomena on operations, including the
economic, operational and other effects of severe storms, hurricanes, droughts,
earthquakes and tornadoes;
• The ability to successfully operate electric generating facilities and deliver electricity to
customers including direct or indirect effects to the company resulting from an incident
that affects the U.S. electric grid or generating resources;
• The impact on facilities and business from a terrorist attack, cybersecurity threats, data
security breaches, and other catastrophic events such as fires, explosions, pandemic
health events or other similar occurrences;
• The inherent risks associated with the operation and potential construction of nuclear
facilities, including environmental, health, safety, regulatory and financial 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 financing efforts, including the ability to obtain financing on favorable
terms, which can be affected by various factors, including credit ratings, interest rate
fluctuations and general economic conditions;
• Declines in the market prices of equity and fixed income securities and resultant cash
funding requirements for defined benefit pension plans, other post-retirement benefit
plans, and nuclear decommissioning trust funds;
• Construction and development risks associated with the completion of Duke Energy
Registrants’ capital investment projects, including risks related to financing, 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-efficient basis;
• The expected timing and likelihood of completion of the proposed acquisition of Piedmont
Natural Gas Company, Inc. (Piedmont), including the timing, receipt and terms and
conditions of any required governmental and regulatory approvals of the proposed
acquisition that could reduce anticipated benefits or cause the parties to abandon
the acquisition, and under certain specified circumstance pay a termination fee of
$250 million, as well as the ability to successfully integrate the businesses and realize
anticipated benefits and the risk that the credit ratings of the combined company or its
subsidiaries may be different from what the companies expect; and
• The ability to successfully complete future merger, acquisition or divestiture plans.
Additional risks and uncertainties are identified and discussed in the Duke Energy
Registrants’ reports filed with the SEC and available at the SEC’s website at www.sec.gov. In light
of these risks, uncertainties and assumptions, the events described in the forward-looking state-
ments 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
expressly disclaim an obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.