Progress Energy 2007 Annual Report Download - page 87

Progress Energy Annual Report 2007
85
C. Joint Ownership of Generating Facilities
PEC and PEF hold ownership interests in certain jointly
owned generating facilities. Each is entitled to shares of
the generating capability and output of each unit equal
to their respective ownership interests. Each also pays
its ownership share of additional construction costs,
fuel inventory purchases and operating expenses,
except in certain instances where agreements have
been executed to limit certain joint owners’ maximum
exposure to the additional costs (See Note 21B). Each
of the Utilities’ share of operating costs of the above
jointly owned generating facilities is included within
the corresponding line in the Consolidated Statements
of Income. The co-owner of Intercession City Unit P11
has exclusive rights to the output of the unit during the
months of June through September. PEF has that right
for the remainder of the year. PEC’s and PEF’s ownership
interests in the jointly owned generating facilities are
listed below with related information at December 31:
In the tables above, plant investment and accumulated
depreciation are not reduced by the regulatory
disallowances related to the Shearon Harris Nuclear
Plant (Harris), which are not applicable to the joint owner’s
ownership interest in Harris.
D. Asset Retirement Obligations
At December 31, 2007 and 2006, the asset retirement
costs, included in utility plant, related to nuclear
decommissioning of irradiated plant, net of
accumulated depreciation, totaled $150 million and
$156 million, respectively. The fair value of funds set aside
in the Utilities’ nuclear decommissioning trust funds for the
nuclear decommissioning liability totaled $1.384 billion and
$1.287 billion at December 31, 2007 and 2006, respectively.
Net nuclear decommissioning trust unrealized gains are
included in regulatory liabilities (See Note 7A).
Our nuclear decommissioning cost provisions, which are
included in depreciation and amortization expense, were
$31 million each in 2007, 2006 and 2005. Management
believes that nuclear decommissioning costs that have
been and will be recovered through rates by PEC and
PEF will be sufficient to provide for the costs of
decommissioning. Expenses recognized for the
disposal or removal of utility assets that are not
SFAS No. 143 AROs, which are included in depreciation
and amortization expense, were $126 million,
$123 million and $168 million in 2007, 2006 and 2005,
respectively.
During 2005, PEF performed a depreciation study as
required by the FPSC no less than every four years.
Implementation of the depreciation study decreased the
rates used to calculate cost of removal expense with a
resulting decrease of approximately $55 million in 2006.
The Utilities recognize removal, nonirradiated
decommissioning and dismantlement of fossil generation
plant costs in regulatory liabilities on the Consolidated
Balance Sheets (See Note 7A). At December 31, such
costs consisted of:
2007
(in millions)
Subsidiary Facility
Company Ownership
Interest Plant Investment
Accumulated
Depreciation
Construction Work
in Progress
PEC Mayo 83.83% $519 $270 $128
PEC Harris 83.83% 3,175 1,581 21
PEC Brunswick 81.67% 1,647 959 16
PEC Roxboro Unit 4 87.06% 634 164 39
PEF Crystal River Unit 3 91.78% 817 450 177
PEF Intercession City Unit P11 66.67% 23 9 –
2006
(in millions)
Subsidiary Facility
Company Ownership
Interest Plant Investment
Accumulated
Depreciation
Construction Work
in Progress
PEC Mayo 83.83% $517 $263 $–
PEC Harris 83.83% 3,159 1,489 18
PEC Brunswick 81.67% 1,632 941 15
PEC Roxboro Unit 4 87.06% 356 163 1
PEF Crystal River Unit 3 91.78% 811 452 76
PEF Intercession City Unit P11 66.67% 23 7 –