Progress Energy 2006 Annual Report Download - page 25

Progress Energy Annual Report 2006
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Our segments contributed the following profit or loss
from continuing operations:
COST-MANAGEMENT INITIATIVE
On February 28, 2005, we approved a workforce
restructuring that resulted in a reduction of approximately
450 positions. In addition to the workforce restructuring,
the cost-management initiative included a voluntary
enhanced retirement program. In connection with this
initiative, we incurred approximately $164 million of pre-
tax charges for severance and postretirement benefits
during the year ended December 31, 2005. We did not
incur any similar charges during 2006. The severance and
postretirement charges are primarily included in O&M
expense on the Consolidated Statements of Income and
will be paid over time.
Progress Energy Carolinas
PEC contributed segment profits of $454 million,
$490 million and $458 million in 2006, 2005 and 2004,
respectively. The decrease in profits for 2006 as compared
to 2005 is primarily due to the unfavorable impact
of weather, higher O&M expense related to nuclear
outages, the impact of suspending the allocation of the
Parent’s income tax benefit not related to acquisition
interest expense and 2006 capital project write-offs. See
Corporate and Other below for additional information on
the change in the tax benefit allocation in 2006. These
were partially offset by postretirement and severance
expenses incurred in 2005 related to the 2005 cost-
management initiative and increased retail customer
growth and usage.
The increase in profits for 2005 as compared to 2004 is
primarily due to increased revenue from retail customer
growth, the favorable impact of weather, increased
wholesale margins primarily due to an increase in
excess generation revenues and lower depreciation
and amortization expense. These were partially offset
by higher O&M charges primarily due to postretirement
and severance charges related to the cost-management
initiative and an increase in expenses charged to
other, net.
REVENUES
PEC’s electric revenues and the percentage change by
year and by customer class were as follows:
PEC’s electric energy sales and the percentage change
by year and by customer class were as follows:
PEC’s revenues, excluding fuel revenues of $1.314 billion
and $1.186 billion for 2006 and 2005, respectively,
decreased $33 million. The decrease in revenues was
due primarily to the $67 million unfavorable impact of
weather partially offset by a $24 million increase in retail
customer growth and usage. Weather had an unfavorable
impact as cooling degree days were 9 percent below 2005
and heating degree days were 12 percent below 2005. The
(in millions) 2006 Change 2005 Change 2004
PEC $454 $(36) $490 $32 $458
PEF 326 68 258 (75) 333
Coal and Synthetic Fuels (76) (239) 163 73 90
Total segment profit 704 (207) 911 30 881
Corporate and Other (190) – (190) 18 (208)
Total income from
continuing operations 514 (207) 721 48 673
Discontinued operations,
net of tax 57 82 (25) (111) 86
Cumulative effect of
change in accounting
principle –(1) 1 1 –
Net income $571 $(126) $697 $(62) $759
(in millions)
Customer Class 2006 % Change 2005 % Change 2004
Residential $1,462 2.8 $1,422 7.4 $1,324
Commercial 1,004 6.8 940 5.9 888
Industrial 711 3.9 684 3.8 659
Governmental 91 4.6 87 6.1 82
Total retail
revenues 3,268 4.3 3,133 6.1 2,953
Wholesale 720 (5.1) 759 32.0 575
Unbilled (1) – 4 – 10
Miscellaneous 98 4.3 94 4.4 90
Total electric
revenues 4,085 2.4 3,990 10.0 3,628
Less:
Fuel revenues (1,314) – (1,186) – (929)
Revenues
excluding fuel $2,771 (1.2) $2,804 3.9 $2,699
(in thousands of MWh)
Customer Class 2006 % Change 2005 % Change 2004
Residential 16,259 (2.4) 16,664 4.1 16,003
Commercial 13,358 0.3 13,313 2.3 13,019
Industrial 12,393 (2.5) 12,716 (2.5) 13,036
Governmental 1,419 0.6 1,410 (1.5) 1,431
Total retail
energy sales 43,429 (1.5) 44,103 1.4 43,489
Wholesale 14,584 (6.9) 15,673 18.5 13,222
Unbilled (137) – (235) – 91
Total MWh sales 57,876 (2.8) 59,541 4.8 56,802