Progress Energy 2010 Annual Report Download - page 23

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Progress Energy Annual Report 2010
PEF’s miscellaneous revenues increased $27 million
in 2010 primarily due to $20 million higher transmission
revenues driven by favorable weather and $8 million
higher right-of-use revenues related to the use of
easements and land.
PEF’s total Base Revenues were $1.661 billion and
$1.575 billion for 2009 and 2008, respectively. The
$86 million increase in Base Revenues was due primarily
to the $79 million favorable impact of interim and limited
base rate relief and the $36 million favorable impact of
weather, partially offset by the $41 million unfavorable
impact of retail customer growth and usage. The interim
and limited base rate relief was approved by the FPSC
effective July 1, 2009. Of the $79 million interim and limited
base rate relief, $7 million related to interim rate relief,
which was in effect for only 2009, and $72 million related
to limited rate relief, which continued in accordance
with the base rate proceeding with an annual revenue
requirement of $132 million. The favorable impact of
weather was primarily driven by 14 percent higher
heating-degree days and 6 percent higher cooling-degree
days than 2008. Heating-degree days were 4 percent
lower than normal in 2009 and 16 percent lower than
normal in 2008. In addition to lower average usage per
customer, PEF’s average number of customers for 2009,
compared to 2008, decreased a net 8,000 customers.
PEF’s clause-recoverable regulatory returns increased
$76 million in 2009 primarily due to higher revenues
related to nuclear cost recovery and ECRC assets of
$61 million and $15 million, respectively. As a result of
an FPSC regulatory order effective in January 2009, PEF
is allowed to earn returns on certain costs related to
nuclear construction.
PEF’s electric energy sales in kWh and the percentage
change by customer class and by year were as follows:
(in millions of kWh)
Customer Class 2010 % Change 2009 % Change 2008
Residential 20,524 5.8 19,399 0.4 19,328
Commercial 11,896 0.1 11,884 (2.1) 12,139
Industrial 3,219 (2.0) 3,285 (13.2) 3,786
Governmental 3,286 0.9 3,256 (1.4) 3,302
Unbilled 458 – 131 – (99)
Total retail kWh
sales 39,383 3.8 37,955 (1.3) 38,456
Wholesale 3,857 0.6 3,835 (43.1) 6,734
Total kWh sales 43,240 3.5 41,790 (7.5) 45,190
The increase in retail kWh sales in 2010 was primarily
due to favorable weather as previously discussed.
Wholesale kWh sales have increased in 2010 primarily
due to favorable weather, which resulted in increased
deliveries under a certain capacity contract that has high
demand and low energy charges. Despite the increase
in sales, wholesale base revenues have decreased
primarily due to a contract amendment as previously
discussed.
Wholesale base revenues increased in 2009, despite
decreased wholesale kWh sales in 2009, primarily due to
committed capacity revenues. The wholesale kWh sales
decreased primarily due to market conditions in which
wholesale customers fulfilled a portion of their system
requirements from other sources. Many of the new and
amended capacity contracts entered into in 2008 expired
by the end of 2009.
Retail base revenues increased in 2009, despite a
decrease in kWh sales for the same period, primarily
due to the impact of interim and limited base rate relief
approved by the FPSC in 2009.
EXPENSES
Fuel and Purchased Power
Fuel and purchased power costs represent the costs of
generation, which include fuel purchases for generation
and energy purchased in the market to meet customer
load. Fuel and a portion of purchased power expenses
are recovered primarily through cost-recovery clauses,
and as such, changes in these expenses do not have a
material impact on earnings. The difference between
fuel and purchased power costs incurred and associated
fuel revenues that are subject to recovery is deferred
for future collection from or refund to customers and is
recorded as deferred fuel expense, which is included
in fuel used in electric generation on the Consolidated
Statements of Income.
Fuel and purchased power expenses totaled $2.591 billion
in 2010, which represents a $163 million decrease
compared to 2009. This decrease was primarily due to
lower deferred fuel expense of $520 million resulting
from lower fuel rates, which assumed the Crystal River
Unit No. 3 Nuclear Plant (CR3) outage was completed in
2009, partially offset by increased current year fuel and
purchased power costs of $189 million and an increase in
the recovery of deferred capacity costs of $167 million. The