Progress Energy 2010 Annual Report Download - page 39

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Progress Energy Annual Report 2010
its fuel cost-recovery clause or base rates. PEF accrued
$171 million of replacement power cost reimbursements
after the deductible period, which reduced the portion
of the deferred fuel regulatory asset related to the
extended CR3 outage to $117 million at December 31,
2010. Additional replacement power costs and repair
and maintenance costs incurred until CR3 is returned to
service could be material.
We cannot predict the outcome of this matter.
PEF Demand-Side Management Cost Recovery
On December 30, 2009, the FPSC ordered PEF and
other Florida utilities to adopt DSM goals based on
enhanced measures, which will result in significantly
higher conservation goals. As subsequently revised by
the FPSC, PEF’s aggregate conservation goals over the
next 10 years were: 1,134 Summer MW, 1,058 Winter
MW, and 3,205 gigawatt-hours (GWh). On March 30,
2010, PEF filed a petition for approval of its proposed
DSM฀ plan฀ and฀ to฀ authorize฀ cost฀ recovery฀ through฀ the฀
ECCR. On September 14, 2010, the FPSC held an agenda
conference to approve PEF’s petition for the DSM plan.
The FPSC ruled that while PEF’s proposed DSM plan met
the cumulative, 10-year DSM goals set by the FPSC, the
plan did not meet the annual DSM goals. On October 4,
2010, the FPSC denied PEF’s petition for the DSM plan,
approved PEF’s solar pilot programs, and required PEF to
file a revised proposed DSM plan that meets the annual
goals set by the FPSC. PEF filed a revised proposed DSM
plan on November 29, 2010, which would result in 1,540
GWh of energy savings from 2011-2019, seven times
more than PEF’s historic goals. An agenda conference
has been scheduled by the FPSC for April 5, 2011. We
cannot predict the outcome of this matter.
PEF Other Matters
On November 1, 2010, the FPSC approved PEF’s request
to decrease the ECRC by $37 million, effective January
1, 2011. The decrease in the ECRC is primarily due to the
2010 base rate decision, which reduced the clean air
project depreciation and return rates, and the refund of
a prior period over-recovery as a result of higher than
expected sales in 2010.
CAPITAL EXPENDITURES
We expect to make significant capital investments
to meet anticipated load growth and environmental
standards. We are currently constructing new generating
facilities in the Carolinas and potentially will construct
new baseload generating facilities in the Carolinas and
Florida that will be placed in service toward the middle
of the next decade.
Total cash from operations and proceeds from
long-term debt and equity issuances provided the funding
for our capital expenditures, including environmental
compliance and other utility property additions, nuclear
fuel expenditures and non-utility property additions,
during 2010.
As shown in the table that follows, we expect the majority
of our capital expenditures to be incurred at our regulated
operations. We expect to fund our capital requirements
primarily through a combination of cash from operations
and long-term debt financings. In addition, we have
$2.0 billion in credit facilities that support the issuance
of commercial paper. Access to the commercial paper
market provides additional liquidity to help meet our
working capital requirements. AFUDC – borrowed funds
represents the debt costs of capital funds necessary to
finance the construction of new regulated plant assets.
Actual Forecasted
(in millions) 2010 2011 2012 2013
Regulated capital
expenditures $2,105 $1,965 $1,820 $1,775
Nuclear fuel
expenditures 221 205 225 240
AFUDC – borrowed
funds (30) (30) (30) (20)
Other capital
expenditures 10 30 30 30
Total before
potential nuclear
construction 2,306 2,170 2,045 2,025
Potential nuclear
construction(a) 104 50–100 50–100 200–300
Total $2,410 $2,220–2,270 $2,095–2,145 $2,225–2,325
(a)
Expenditures for potential nuclear construction are net of AFUDC
– borrowed funds.
Regulated capital expenditures for 2011, 2012 and
2013 in the previous table include approximately
$30 million, $15 million and $25 million, respectively,
for environmental compliance capital expenditures.
Forecasted environmental compliance capital
expenditures for 2011, 2012 and 2013 include $20 million,
$15 million and $25 million, respectively, at PEC and
$10 million at PEF for 2011. See “Other Matters –
Environmental Matters” for further discussion of our
environmental compliance costs and related recovery
of costs.
Potential nuclear construction expenditures, which are
primarily for PEF’s Levy project, include development,
engineering, licensing, land acquisition and equipment.