Duke Energy 2015 Annual Report Download - page 26

PART I
6
ITEM 1. BUSINESS
DUKE ENERGY
General
Duke Energy Corporation (collectively with its subsidiaries, Duke Energy)
is an energy company headquartered in Charlotte, North Carolina, subject to
regulation by the Federal Energy Regulatory Commission (FERC). Duke Energy
operates in the United States (U.S.) and Latin America primarily through
its direct and indirect subsidiaries. Duke Energy’s subsidiaries include its
subsidiary registrants (collectively referred to as the Subsidiary Registrants);
Duke Energy Carolinas, LLC (Duke Energy Carolinas); Progress Energy, Inc.
(Progress Energy); Duke Energy Progress, LLC (formerly Duke Energy Progress,
Inc.) (Duke Energy Progress); Duke Energy Florida, LLC (formerly Duke Energy
Florida, Inc.) (Duke Energy Florida); Duke Energy Ohio, Inc. (Duke Energy Ohio);
and Duke Energy Indiana, LLC (formerly Duke Energy Indiana, Inc.) (Duke Energy
Indiana). When discussing Duke Energy’s consolidated financial information, it
necessarily includes the results of its Subsidiary Registrants, which along with
Duke Energy, are collectively referred to as the Duke Energy Registrants.
Duke Energy has entered into an Agreement and Plan of Merger (Merger
Agreement) with Piedmont Natural Gas Company, Inc. (Piedmont), a North
Carolina corporation. Piedmont is an energy services company primarily
engaged in the distribution of natural gas to residential, commercial, industrial
and power generation customers in portions of North Carolina, South Carolina
and Tennessee. Under terms of the Merger Agreement, Duke Energy will acquire
Piedmont for $4.9 billion in cash and Piedmont will become a wholly owned
subsidiary of Duke Energy. Piedmont’s common stock will be delisted from the
New York Stock Exchange (NYSE). Duke Energy and Piedmont target to close the
transaction by the end of 2016 subject to meeting various conditions, including
receipt of required regulatory approvals. For additional information see Note 2 to
the Consolidated Financial Statements, “Acquisitions and Dispositions.”
Duke Energy completed the sale of the nonregulated Midwest generation
business and Duke Energy Retail Sales, LLC (collectively, the Disposal Group)
to Dynegy Inc. (Dynegy) on April 2, 2015, for approximately $2.8 billion in
cash. The Disposal Group primarily included Duke Energy Ohio’s coal-fired
and gas-fired generation assets located in the Midwest region of the United
States and dispatched into the PJM wholesale market. The Disposal Group also
included a retail sales subsidiary of Duke Energy, that served retail electric and
gas customers in Ohio with energy and other energy services at competitive
rates. For additional information see Note 2 to the Consolidated Financial
Statements, “Acquisitions and Dispositions.”
The Duke Energy Registrants electronically file reports with the Securities
and Exchange Commission (SEC), including annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, proxies and
amendments to such reports.
The public may read and copy any materials the Duke Energy Registrants
file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE,
Washington, DC 20549. The public may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
also maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically with
the SEC at http://www.sec.gov. Additionally, information about the Duke Energy
Registrants, including reports filed with the SEC, is available through Duke
Energy’s website at http://www.duke-energy.com. Such reports are accessible
at no charge and are made available as soon as reasonably practicable after
such material is filed with or furnished to the SEC.
Business Segments
Duke Energy conducts its operations in three business segments;
Regulated Utilities, International Energy and Commercial Portfolio (formerly
Commercial Power). The remainder of Duke Energy’s operations are presented
as Other. Duke Energy’s chief operating decision maker regularly reviews
financial information about each of these business segments in deciding how to
allocate resources and evaluate the performance of the business. For additional
information on each of these business segments, including financial and
geographic information, see Note 3 to the Consolidated Financial Statements,
“Business Segments.”
The following sections describe the business and operations of each of
Duke Energy’s reportable business segments, as well as Other.
REGULATED UTILITIES
Regulated Utilities conducts operations primarily through Duke Energy
Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Indiana,
and Duke Energy Ohio. These electric and gas operations are subject to the
rules and regulations of the FERC, the North Carolina Utilities Commission
(NCUC), the Public Service Commission of South Carolina (PSCSC), the
Florida Public Service Commission (FPSC), the Indiana Utility Regulatory
Commission (IURC), the Public Utilities Commission of Ohio (PUCO), and the
Kentucky Public Service Commission (KPSC).
Regulated Utilities serves 7.4 million retail electric customers in six
states in the Southeast and Midwest regions of the U.S. Its service area covers
approximately 95,000 square miles with an estimated population of 24 million
people. Regulated Utilities serves 525,000 retail natural gas customers in
southwestern Ohio and northern Kentucky. Electricity is also sold wholesale to
incorporated municipalities, electric cooperative utilities and other load-serving
entities.
The following table represents the distribution of billed sales by customer class for the year ended December 31, 2015.
Duke
Energy
Carolinas(a)
Duke
Energy
Progress(a)
Duke
Energy
Florida(b)
Duke
Energy
Ohio(c)
Duke
Energy
Indiana(d)
Residential 32% 28% 50% 34% 27%
General service 33% 24% 38% 37% 25%
Industrial 25% 16% 8% 24% 31%
Total retail sales 90% 68% 96% 95% 83%
Wholesale and other sales 10% 32% 4% 5% 17%
Total sales 100% 100% 100% 100% 100%
(a) Primary general service sectors include health care, education, financial services, information technology and military buildings. Primary industrial sectors include textiles, chemicals, rubber and plastics, paper, food and
beverage, and auto manufacturing.
(b) Primary general service sectors include tourism, health care and government facilities and schools. Primary industrial sectors include phosphate rock mining and processing and citrus and other food processing.
(c) Primary general service sectors include health care, education, real estate and rental leasing, financial and insurance services, water/wastewater services, and wholesale trade services. Primary industrial sectors include
primary metals, chemicals, food and beverage, and transportation.
(d) Primary general service sectors include retail, financial, health care and education services. Primary industrial sectors include metals, transportation, building materials, food and beverage, and chemicals.