Progress Energy 2010 Annual Report Download - page 81

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Progress Energy Annual Report 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. An agenda conference has been scheduled by the
FPSC for April 5, 2011. We cannot predict the outcome of
this matter.
On November 1, 2010, the FPSC approved PEF’s request
to increase the ECCR residential rate by $0.29 per 1,000
kWh, or 0.2 percent of the total residential rate, effective
January 1, 2011. The increase in the ECCR is primarily due
to an increase in conservation program costs, including
the costs associated with PEF’s solar pilot, partially offset
by a refund of a prior period over-recovery as a result of
higher than expected sales in 2010.
OTHER MATTERS
On November 1, 2010, the FPSC approved PEF’s request
to decrease the Environmental Cost Recovery Clause
(ECRC) by $37 million, reducing the residential rate by $1.02
per 1,000 kWh, or 0.8 percent, 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. At December 31, 2010, PEF’s over-recovered
deferred ECRC was $45 million.
On March 20, 2009, PEF filed a petition with the FPSC
for expedited approval of the deferral of $53 million in
2009 pension expense. PEF requested that the deferral
of pension expense continue until the recovery of these
costs is provided for in FPSC-approved base rates. On
June 16, 2009, the FPSC approved the deferral of the
retail portion of actual 2009 pension expense. As a result
of the order, PEF deferred pension expense of $34 million
for the year ended December 31, 2009. PEF will not earn a
carrying charge on the deferred pension regulatory asset.
The deferral of pension expense did not result in a change
in PEF’s 2009 retail rates or prices. In accordance with the
order,฀subsequent฀to฀2009฀PEF฀will฀amortize฀the฀deferred฀
pension regulatory asset to the extent that annual pension
expense is less than the $27 million allowance provided
for in the base rates established in the 2010 base rate
proceeding.฀In฀the฀event฀such฀amortization฀is฀insufficient฀
to฀ fully฀ amortize฀ the฀ regulatory฀ asset,฀ PEF฀ can฀ seek฀
recovery฀of฀the฀remaining฀unamortized฀amount฀in฀a฀base฀
rate proceeding no earlier than 2015. As of December 31,
2010,฀PEF฀ has฀ not฀recorded฀any฀ amortization฀related฀to฀
the deferred pension regulatory asset.
D. Nuclear License Renewals
PEC’s nuclear units are currently operating under licenses
that expire between 2030 and 2046. The NRC operating
license held by PEF for CR3 currently expires in December
2016. On December 18, 2008, PEF filed an application for
a 20-year renewal from the NRC on the operating license
for CR3, which would extend the operating license
through 2036, if approved. PEF anticipates a decision
from the NRC in 2011.
8. GOODWILL
Goodwill is required to be tested for impairment at
least annually and more frequently when indicators
of impairment exist. All of our goodwill is allocated to
our utility reporting units and our goodwill impairment
tests are performed at the utility reporting unit level. At
December 31, 2010 and 2009, our carrying amount of
goodwill was $3.655 billion, with $1.922 billion assigned
to PEC and $1.733 billion assigned to PEF. The amounts
assigned to PEC and PEF are recorded in our Corporate
and Other business segment. As discussed in Note 1D,
during 2010 we changed the annual testing date for
our annual goodwill impairment tests from April 1 to
October 31 of each year. As a result, we performed goodwill
impairment tests as of April 1, 2010 and October 31, 2010,
and concluded there was no impairment of the carrying
value of the goodwill.
9. EQUITY
A. Common Stock
At December 31, 2010 and 2009, we had 500 million shares
of฀common฀stock฀authorized฀under฀our฀charter,฀of฀which฀
293 million and 281 million shares were outstanding,
respectively. We periodically issue shares of common
stock through the Progress Energy 401(k) Savings &
Stock Ownership Plan (401(k)), the Progress Energy
Investor Plus Plan (IPP) and other benefit plans.
There are various provisions limiting the use of retained
earnings for the payment of dividends under certain
circumstances. At December 31, 2010, there were no
significant restrictions on the use of retained earnings
(See Note 11B and Note 25).