Progress Energy 2007 Annual Report Download - page 122

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
120
under these contracts are $631 million, $188 million and
$42 million for 2008 through 2010, respectively.
OTHER PURCHASE OBLIGATIONS
We have entered into various other contractual obligations
primarily related to service contracts for operational
services entered into by PESC, parts and services contracts,
and a PEF service agreement related to the Hines Energy
Complex. Our payments under these agreements were
$97 million, $122 million and $100 million for 2007, 2006 and
2005, respectively.
We have entered into various other contractual obligations
primarily related to capacity and service contracts for
operational services associated with discontinued CCO
operations. Total payments under these contracts were
$8 million, $18 million and $17 million for 2007, 2006 and
2005, respectively. Estimated future payments under these
contracts of $6 million are not reflected in the contractual
cash obligations table above. Included in these contracts
are purchase obligations with a counterparty for pipeline
capacity through 2009.
PEC has various purchase obligations for emission
obligations, limestone supply and the purchase of capital
parts. Total purchases under these contracts were
$21 million, $2 million and $10 million for 2007, 2006 and
2005, respectively. Future obligations under these contracts
are $22 million for 2008, $4 million each for 2009 and 2010,
and $3 million each for 2011 and 2012 and $13 million
thereafter.
PEC has various purchase obligations related to reactor
vessel head replacements, power uprates and spent fuel
storage. Total purchases under these contracts were
$8 million for 2006 and $13 million for 2005, with
no purchases in 2007. Future obligations under
these contracts are for spent fuel storage and total
$5 million, $8 million, $3 million and $1 million for 2008
through 2011, respectively.
PEF has long-term service agreements for the Hines Energy
Complex. Total payments under these contracts were
$11 million, $12 million and $8 million for 2007, 2006 and
2005, respectively. Future obligations under these contracts
are $21 million, $14 million, $19 million, $12 million and
$12 million for 2008 through 2012, respectively, with
approximately $50 million payable thereafter.
PEF has various purchase obligations and contractual
commitments related to the purchase and replacement
of machinery. Total payments under these contracts were
$22 million, $21 million and $34 million for 2007, 2006 and 2005,
respectively. Future obligations under these contracts are
$8 million and $6 million for 2008 and 2009, respectively.
B. Leases
We lease office buildings, computer equipment, vehicles,
railcars and other property and equipment with various
terms and expiration dates. Some rental payments for
transportation equipment include minimum rentals plus
contingent rentals based on mileage. These contingent
rentals are not significant. Our rent expense under
operating leases totaled $40 million, $42 million and
$38 million for 2007, 2006 and 2005, respectively. Our
purchased power expense under agreements classified as
operating leases was approximately $69 million, $60 million
and $14 million in 2007, 2006 and 2005, respectively.
Assets recorded under capital leases at December 31
consisted of:
At December 31, 2007, minimum annual payments, excluding
executory costs such as property taxes, insurance and
maintenance, under long-term noncancelable operating
and capital leases were:
In 2003, we entered into an operating lease for a building for
which minimum annual rental payments are approximately
$7 million. The lease term expires July 2035 and provides
for no rental payments during the last 15 years of the lease,
during which period $53 million of rental expense will be
recorded in the Consolidated Statements of Income.
In 2007, PEF entered into a purchased power agreement,
which is classified as an operating lease. The agreement
calls for minimum annual payments of approximately
$28 million from 2012 through 2027 for a total of approximately
$420 million.
(in millions) 2007 2006
Buildings $267 $84
Less: Accumulated amortization (20) (12)
Total $247 $72
(in millions) Capital Operating
2008 $28 $62
2009 29 41
2010 28 25
2011 28 20
2012 28 38
Thereafter 308 554
Minimum annual payments 449 $740
Less amount representing imputed interest (202)
Present value of net minimum lease
payments under capital leases $247