Progress Energy 2007 Annual Report Download - page 121

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Progress Energy Annual Report 2007
119
power taken under these contracts. Capacity payments are
subject to the QFs meeting certain contract performance
obligations. In most cases, these contracts account for
100 percent of the generating capacity of each of the
facilities. All commitments, except one for 75 MW, have
been approved by the FPSC. Total capacity purchases
under these contracts amounted to $288 million, $277 million
and $262 million for 2007, 2006 and 2005, respectively. At
December 31, 2007, minimum expected future capacity
payments under these contracts were $297 million,
$263 million, $267 million, $281 million and $292 million for
2008 through 2012, respectively, and $3.053 billion thereafter.
The FPSC allows the capacity payments to be recovered
through a capacity cost-recovery clause, which is similar to,
and works in conjunction with, energy payments recovered
through the fuel cost-recovery clause.
In January 2006, PEF entered into a conditional contract
with Gulfstream Natural Gas System, L.L.C. (Gulfstream)
for firm pipeline transportation capacity to augment PEF’s
gas supply needs for the period from September 1, 2008,
through January 1, 2031. The total cost to PEF associated
with this agreement is approximately $777 million. The
transaction is subject to several conditions precedent,
including the completion and commencement of operation
of the necessary related expansions to Gulfstream’s natural
gas pipeline system, 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.
In July 2006, PEF entered into a conditional contract
with Devon Gas Services for the supply of natural gas to
augment PEF’s gas supply needs for the period from May to
September for the years 2008 through 2011. The total cost
to PEF associated with this agreement is approximately
$251 million. The transaction is subject to several conditions
precedent, including the completion and commencement
of operation of necessary related interstate pipeline
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.
In December 2006, PEF entered into a conditional contract
with Cross Timbers Energy Services, Inc. for the supply
of natural gas to augment PEF’s gas supply needs for the
period from June 1, 2008, through May 31, 2013. The total
cost to PEF associated with this agreement is approximately
$1.026 billion. 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.
In December 2006, PEF entered into a conditional contract
with Southeast Supply Header, L.L.C. (SESH) for firm pipeline
transportation capacity to augment PEF’s gas supply needs
for the period from June 1, 2008, through May 31, 2023.
The total cost to PEF associated with this agreement is
approximately $271 million. The transaction is subject to
several conditions precedent, including FPSC approval, the
completion and commencement of operation of the SESH
pipeline project, 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.
In December 2006, PEF entered into a conditional contract
with a private oil and gas company for the supply of natural
gas to augment PEF’s gas supply needs for the period from
June 1, 2008, through March 31, 2013. The total cost to
PEF associated with this agreement is approximately
$146 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.
In January and February 2007, PEF entered into conditional
contracts with Chevron Natural Gas for the supply of natural
gas to augment PEF’s gas supply needs for the period from
June 1, 2008, to May 31, 2013. The total cost to PEF associated
with these agreements is approximately $935 million. The
transactions are subject to several conditions precedent,
including the completion and commencement of operation
of necessary related interstate pipeline expansions, and
other standard closing conditions. Due to the conditions
of these agreements the estimated costs associated with
these agreements 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 $675 million, $365 million and $91 million
for 2007, 2006 and 2005, respectively. Our future obligations
related to Clean Smokestacks Act capital projects are
$84 million for 2008 and $22 million for 2009. We have purchase
obligations related to various capital projects related to
new generation and Florida CAIR. Our future obligations