Progress Energy 2010 Annual Report Download - page 15

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Progress Energy Annual Report 2010
structure of refinancing the Parent’s credit facility and
filing the combined shelf registration statement with the
SEC will be evaluated as more definitive timelines for
the Merger and integration are developed (see “Future
Liquidity and Capital Resources – Credit Facilities and
Registration Statements” below).
Certain substantial changes in ownership of Progress
Energy, including the Merger, can impact the timing of the
utilization฀of฀tax฀credit฀carry฀forwards฀and฀net฀operating฀
loss carry forwards (See Note 14).
The companies are targeting for the Merger to close
by the end of 2011. Until the Merger has received all
necessary approvals and has closed, the companies will
continue to operate as separate entities. Accordingly,
the information presented in this Form 10-K is presented
on a pre-merger basis.
Strategy
We are an integrated energy company primarily focused
on the end-use electricity markets. We own two electric
utilities that operate in regulated retail utility markets
in North Carolina, South Carolina and Florida and have
access to attractive wholesale markets in the eastern
United States. The Utilities have more than 22,000
megawatts (MW) of regulated electric generation
capacity and serve approximately 3.1 million retail electric
customers as well as other load-serving entities.
We have a strong track record of meeting our financial
commitments. We have maintained liquidity and financial
stability and sustained our dividend rate during the current
economic downturn, and we believe that we have good
prospects for growth once the economy begins to recover.
In terms of our priorities for Progress Energy as a whole,
we first focus on excelling in the fundamentals of our
business. These fundamentals include safety, operational
excellence, customer service, consistently achieving our
financial objectives, maintaining constructive relations
with regulators, political leaders and the general public
as well as an internal focus on strong leadership that fully
engages our workforce for high performance. In addition
to excelling in these fundamentals, management has the
following four focus areas for 2011:
•฀ Improve฀the฀performance฀of฀our฀nuclear฀fleet฀
•฀ Accelerate฀Continuous฀Business฀Excellence
•฀ Optimize฀our฀balanced฀solution฀strategy
•฀ Achieve฀ effective฀ integration฀ planning฀ and฀ timely฀
merger approvals
IMPROVE NUCLEAR FLEET PERFORMANCE
We are implementing a comprehensive improvement plan
designed to strengthen and align the performance of our
nuclear fleet. We are committed to raising our nuclear
fleet performance to a consistently high level of safety,
reliability and value. To do that, we have made a number
of฀organizational฀changes฀and฀have฀intensified฀our฀focus฀
on plant operations, outage planning and execution, and
continuous improvement. We are also leveraging the
expertise and capabilities of our company as a whole to
meet these nuclear fleet objectives.
CONTINUOUS BUSINESS EXCELLENCE
For the past several years, we have been applying a
continuous improvement framework to our operations
through our Continuous Business Excellence initiative.
Through a disciplined approach to identifying and
eliminating waste and continuously improving our
business, we are developing sustainable process
improvements. We are gaining a clearer understanding
of our cost drivers and of the dynamics shaping our
near- and longer-term workforce planning needs. In
addition, we have been applying the “Lean” process
to our operations (Lean is a set of principles, tools, and
techniques for improving the operating performance
of any business). During 2010, we held more than 200
Lean events, a 50 percent increase over the prior year.
The process changes resulting from these events are
improving our safety and operational performance,
enhancing the productivity and engagement of our
employees, managing our rising costs and, ultimately,
increasing customer satisfaction.
BALANCED SOLUTION STRATEGY
Our balanced solution strategy is a portfolio of investments
and initiatives to meet future customer needs and evolving
public policies in a way that creates long-term value for
our customers and shareholders. The strategy is focused
on expanding the diversity of our resources, including
energy efficiency, alternative energy and a state-of-the-
art power system. Expenditures to achieve our balanced
solution are anticipated to be recoverable under base
rates or cost-recovery mechanisms implemented by our
state jurisdictions. Updates on our implementation of this
strategy are discussed below.
First, we are continuing to expand and enhance our
demand-side management (DSM), energy-efficiency
(EE) and energy-conservation programs. We have
implemented customer energy-saving programs, provided
customers with incentives for efficiency improvements