Progress Energy 2010 Annual Report Download - page 37

33
Progress Energy Annual Report 2010
The amount and timing of future sales of debt securities
will depend on market conditions, operating cash flow
and our specific liquidity needs. We may from time to time
sell securities beyond the amount immediately needed
to meet our capital or liquidity requirements in order to
prefund our expected maturity schedule, to allow for the
early redemption of long-term debt, the redemption of
preferred stock, the reduction of short-term debt or for
other corporate purposes.
At December 31, 2010, the current portion of our long-term
debt was $505 million. We expect to fund the Parent’s
$700 million of Senior Notes due March 1, 2011 with a
combination of available cash on hand and net proceeds
of $495 million from the Parent’s issuance of $500 million
of 4.40% Senior Notes on January 21, 2011. Accordingly,
we classified $495 million of the Parent’s $700 million
Senior Notes due March 1, 2011 as long-term debt at
December 31, 2010. We expect to fund PEF’s $300 million
current portion of long-term debt with a combination of
cash from operations, commercial paper borrowings
and/or long-term debt.
REGULATORY MATTERS AND RECOVERY OF COSTS
Regulatory matters, including nuclear cost recovery, as
discussed in Note 7 and “Other Matters – Regulatory
Environment,” and recovery of environmental costs,
as discussed in Note 21 and in “Other Matters –
Environmental Matters,” may impact our future liquidity
and financing activities. The impacts of these matters,
including the timing of recoveries from ratepayers, can be
both a source of and a use of future liquidity resources.
Energy legislation enacted in recent years may impact
our liquidity over the long term, including, among others,
provisions regarding cost recovery, mandated renewable
portfolio standards, DSM and EE.
Regulatory developments expected to have a material
impact on our liquidity are discussed below.
PEC Cost-Recovery Clause
On June 23, 2010, the SCPSC approved PEC’s request
for a decrease in the fuel rate charged to its South
Carolina ratepayers. The $17 million decrease, effective
July 1, 2010, is driven by declining fuel prices.
On November 17, 2010, the NCUC approved PEC’s request
for a decrease in the fuel rate charged to its North
Carolina ratepayers. The $170 million decrease, effective
December 1, 2010, is also driven by declining fuel prices.
Also on November 17, 2010, the NCUC approved PEC’s
request for an increase in the DSM and EE rate charges
to its North Carolina ratepayers. The $31 million increase
was effective December 1, 2010.
PEC Other Matters
The NCUC has issued Certificates of Public Convenience
and Necessity allowing PEC to proceed with plans to
construct an approximately 600-MW generating facility
at its Richmond County generation site projected to
be in service by June 2011; an approximately 950-MW
generating facility at a site in Wayne County, N.C.,
projected to be in service by January 2013; and an
approximately 620-MW generating facility at a site in
New Hanover County, N.C., projected to be in service by
December 2013.
PEF Base Rates
On June 1, 2010, the FPSC approved a settlement
agreement between PEF and the interveners, with
the exception of the Florida Association for Fairness
in Ratemaking, to the 2009 rate case. As part of the
settlement, PEF withdrew its motion for reconsideration
of the rate case order. Among other provisions, under
the terms of the settlement agreement, PEF will maintain
base rates at current levels through the last billing
cycle of 2012. Among other provisions, the settlement
agreement฀also฀authorized฀PEF฀the฀opportunity฀to฀earn฀a฀
return on equity (ROE) of up to 11.5 percent and provides
that if PEF’s actual retail base rate earnings fall below a
9.5 percent ROE on an adjusted or pro forma basis, as
reported on a historical 12-month basis during the term of
the agreement, PEF may seek general, limited or interim
base rate relief, or any combination thereof, subject to
certain conditions. The settlement agreement does not
preclude PEF from requesting the FPSC to approve the
recovery of costs (a) that are of a type which traditionally
and historically would be, have been or are presently
recovered through cost-recovery clauses or surcharges;
or (b) that are incremental costs not currently recovered
in base rates, which the legislature or FPSC determines
are clause recoverable; or (c) which are recoverable
through base rates under the nuclear cost-recovery
legislation or the FPSC’s nuclear cost-recovery rule.
Finally, PEF will be allowed to recover the costs of named
storms on an expedited basis after depletion of the storm
damage reserve. Specifically, 60 days following the filing
of a cost-recovery petition with the FPSC and based on
a 12-month recovery period, PEF can begin recovery,
subject to refund, through a surcharge of up to $4.00 per
1,000 kWh on monthly residential customer bills for storm