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Progress Energy Annual Report 2006
115
The total cost to PEF associated with this agreement is
approximately $128 million. The transaction is subject to
several conditions precedent, including the completion
and commencement of operation of necessary related
interstate natural gas pipeline system expansions, and
other standard closing conditions. Due to the conditions
of this agreement the estimated costs associated with
this agreement are not included in the contractual cash
obligations table above.
CONSTRUCTION OBLIGATIONS
We have purchase obligations related to various capital
construction projects. Our total payments under these
contracts were $365 million, $91 million and $108 million
for 2006, 2005 and 2004, respectively. At December 31,
2006, we had construction obligations related to Clean
Smokestacks Act capital projects of $99 million and
$9 million for 2007 and 2008, respectively, and none
thereafter. We have purchase obligations related to
various plant capital projects related to new generation
and Florida CAIR of $294 million, $188 million, $8 million and
$3 million for 2007 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 $91 million, $82 million and $44 million
for 2006, 2005 and 2004, 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 $18 million, $17 million and
$15 million for 2006, 2005 and 2004, respectively. Estimated
future payments under these contracts of $198 million are
not reflected in the table presented at the beginning of
this footnote. Included in these contracts are purchase
obligations with two counterparties for pipeline
capacity through 2018 and 2028. Payments under these
agreements were $16 million, $15 million and $13 million
for 2006, 2005 and 2004, respectively. Future obligations
under these contracts are approximately $13 million for
2007, $12 million for 2008 through 2011 and approximately
$76 million payable thereafter. We anticipate transferring
the obligations under these contracts to a third party as
part of our disposition strategy.
PEC has various purchase obligations for emission
obligations, limestone supply and the purchase of capital
parts. Total purchases under these contracts were
$2 million, $10 million and $2 million for 2006, 2005 and 2004,
respectively. Future obligations under these contracts
are $21 million each for 2007 and 2008, $3 million each for
2009 through 2011 and $12 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, $13 million for 2005 and $17 million for
2004. We do not have any future purchase obligations
under these contracts.
PEF has long-term service agreements for the
Hines Energy Complex. Total payments under these
contracts were $12 million, $8 million and $11 million
for 2006, 2005 and 2004, respectively. Future obligations
under these contracts are $11 million, $16 million,
$14 million, $19 million and $12 million for 2007
through 2011, respectively, with approximately
$62 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 $21 million for 2006 and $34 million for 2005.
There were no payments under these contracts during
2004. Future obligations under these contracts are
$22 million, $8 million and $6 million for 2007 through
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 $42 million for 2006 and
$38 million each for 2005 and 2004. Our purchased power
expense under agreements classified as operating
leases was approximately $60 million, $14 million and
$25 million in 2006, 2005 and 2004, respectively.
Assets recorded under capital leases at December 31
consisted of:
(in millions) 2006 2005
Buildings $84 $30
Less: Accumulated amortization (12) (12)
Total $72 $18