Progress Energy 2007 Annual Report Download - page 38

MANAGEMENT’S DISCUSSION AND ANALYSIS
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The prepayment covered approximately two years of
electricity service and included a prepayment discount
of approximately $16 million.
In 2007 and 2006, the Utilities filed requests with their
respective state commissions seeking rate increases for
fuel cost recovery, including amounts for previous under-
recoveries. In 2005, PEF received approval from the FPSC
authorizing PEF to recover $245 million over a two-year
period, including interest, of the costs it incurred and
previously deferred related to PEF’s restoration of power
to customers associated with the four hurricanes in 2004.
See “Future Liquidity and Capital Resources” and Note 7C
for additional information.
INVESTING ACTIVITIES
Net cash (used) provided by investing activities for the
three years ended December 31, 2007, 2006 and 2005,
was $(1.457) billion, $127 million and $(1.144) billion,
respectively.
Property additions at the Utilities, including nuclear fuel,
were $2.199 billion and $1.546 billion in 2007 and 2006,
respectively, or approximately 100 percent of consolidated
capital expenditures for continuing operations in both 2007
and 2006. Capital expenditures at the Utilities are primarily
for capacity expansion and normal construction activity
and ongoing capital expenditures related to environmental
compliance programs.
Excluding proceeds from sales of discontinued operations
and other assets, net of cash divested of $675 million in 2007
and $1.657 billion in 2006, cash used in investing activities
increased by $602 million. The increase in 2007 was primarily
due to a $539 million increase in gross property additions
at the Utilities, primarily at PEF, and a $114 million increase
in nuclear fuel additions, partially offset by a decrease
in property additions at our diversified businesses, most
of which have been discontinued or abandoned. At PEC,
utility property additions primarily related to an increase in
spending for compliance with the Clean Smokestacks Act.
At PEF, the increase in utility property additions is primarily
due to environmental compliance projects, repowering
the Bartow Plant to more efficient natural gas-burning
technology, which will not be completed until 2009, and
nuclear and transmission projects, partially offset by lower
spending on energy system distribution projects and at the
Hines Unit 4 facility.
Excluding proceeds from sales of discontinued operations
and other assets, net of cash divested of $1.657 billion
in 2006 and $475 million in 2005, cash used in investing
activities decreased by $89 million in 2006 when compared
with 2005. The decrease in 2006 was primarily due to a
$319 million increase in net proceeds from available-
for-sale securities and other investments, a $12 million
decrease in nuclear fuel additions, and a $17 million
decrease in other investing activities, largely offset by
a $333 million increase in capital expenditures for utility
property. At PEC, the increase in utility property was
primarily due to environmental compliance and mobile
meter reading project expenditures. At PEF, the increase
in utility property was primarily due to repowering the
Bartow Plant to more efficient natural gas-burning
technology, which will not be completed until 2009; various
distribution, transmission and steam production projects;
and higher spending at the Hines Unit 4 facility, partially
offset by lower spending at the Hines Unit 3 facility.
The increase in utility property additions was partially
offset by an $84 million decrease related to diversified
businesses, which have primarily been discontinued
or abandoned. Available-for-sale securities and other
investments include marketable debt and equity securities
and investments held in nuclear decommissioning and
benefit investment trusts.
During 2007, proceeds from sales of discontinued
operations and other assets, net of cash divested, primarily
included approximately $615 million from the sale of PVI’s
CCO generation assets (See Note 3A), working capital
adjustments for Gas, and the sale of poles at Progress
Telecommunications Corporation.
During 2006, proceeds from sales of discontinued
operations and other assets, net of cash divested,
primarily included approximately $1.1 billion from the sale
of Gas (See Note 3C), $405 million from the sale of DeSoto
and Rowan (See Note 3D), approximately $70 million from
the sale of PT LLC (See Note 3E), approximately $27 million
from the sale of certain net assets of the coal mining
business (See Note 3G), and approximately $16 million
from the sale of Dixie Fuels (See Note 3F).
During 2005, proceeds from sales of discontinued
operations and other assets, net of cash divested, primarily
included $405 million in proceeds from the sale of Progress
Rail in March 2005 (See Note 3H) and $42 million in
proceeds from the sale of Winter Park distribution assets
in June 2005 (See Notes 3K and 7C).