Progress Energy 2004 Annual Report Download - page 49

on June 1, 2005, or at such time when the City is able to
provide retail service. At this time, whether and when
there will be further proceedings regarding the City of
Winter Park cannot be determined.
Arbitration with the 2,500-customer Town of Belleair was
completed in June 2003. In September 2003, the
arbitration panel issued an award in that case setting the
value of the electric distribution system within the Town
at approximately $6 million. The panel further required
the Town to pay to PEF its requested $1 million in
separation and reintegration costs and $2 million in
stranded costs. The Town has not yet decided whether it
will attempt to acquire the system; however, on
January 18, 2005, it issued a request for proposals for
wholesale power supply and to operate and maintain the
distribution system. Proposals are due in early
March 2005. In February 2005, the Town Commission also
voted to put the issue of whether to acquire the
distribution system to a voter referendum on or before
October 2, 2005. At this time, whether and when there will
be further proceedings regarding the Town of Belleair
cannot be determined.
Arbitration in the remaining city’s litigation (the 1,500-
customer City of Edgewood) has not yet been scheduled.
On February 17, 2005, the parties filed a joint motion to
stay the litigation for a 90-day period during which the
parties will discuss potential settlement.
A fourth city (the 7,000-customer City of Maitland) is
contemplating municipalization and has indicated its
intent to proceed with arbitration to determine the value
of PEF’s electric distribution system within the City.
Maitland’s franchise expires in August 2005. At this time,
whether and when there will be further proceedings
regarding the City of Maitland cannot be determined.
As part of the above litigation, two appellate courts
reached opposite conclusions regarding whether PEF
must continue to collect from its customers and remit to
the cities “franchise fees” under the expired franchise
ordinances. PEF filed an appeal with the Florida Supreme
Court to resolve the conflict between the two appellate
courts. On October 28, 2004, the Court issued a decision
holding that PEF must collect from its customers and
remit to the cities franchise fees during the interim period
when the city exercises its purchase option or executes
a new franchise. The Court’s decision should not have a
material impact on the Company.
Legal
The Company is subject to federal, state and local
legislation and court orders. These matters are
discussed in detail in Note 23E. This discussion identifies
specific issues, the status of the issues, accruals
associated with issue resolutions and the associated
exposures to the Company.
Nuclear
Nuclear generating units are regulated by the NRC. In the
event of noncompliance, the NRC has the authority to
impose fines, set license conditions, shut down a nuclear
unit or some combination of these, depending upon its
assessment of the severity of the situation, until
compliance is achieved. The nuclear units are
periodically removed from service to accommodate
normal refueling and maintenance outages, repairs and
certain other modifications (See Notes 6 and 23E).
Environmental Matters
The Company is subject to federal, state and local
regulations addressing air and water quality, hazardous
and solid waste management and other environmental
matters. These environmental matters are discussed in
detail in Note 22. This discussion identifies specific
environmental issues, the status of the issues, accruals
associated with issue resolutions and the associated
exposures to the Company. The Company accrues costs
to the extent they are probable and can be reasonably
estimated. It is reasonably possible that additional losses,
which could be material, may be incurred in the future.
New Accounting Standards
See Note 2 for a discussion of the impact of new
accounting standards.
47
Progress Energy Annual Report 2004