12. DEBT AND CREDIT FACILITIES

A. DEBT AND CREDIT FACILITIES

At December 31 our long-term debt consisted of the following (maturities and weighted-average interest rates at December 31, 2011):

(in millions)					2011		2010
Parent
Senior unsecured notes, maturing 2012-2039		6.28	%	$	4,000	$	4,200
Unamortized premium and discount, net					(7)		(6)
Current portion of long-term debt					(450)		(205)
	Long-term debt, net				3,543		3,989

PEC
First mortgage bonds, maturing 2013-2038		5.17	%		3,025		2,525
First mortgage bonds/pollution control obligations, maturing 2017-2024		0.57	%		669		669
Senior unsecured notes, maturing 2012		6.50	%		500		500
Miscellaneous notes		6.00	%		5		5
Unamortized premium and discount, net					(6)		(6)
Current portion of long-term debt					(500)		0
	Long-term debt, net				3,693		3,693

PEF
First mortgage bonds, maturing 2013-2040		5.56	%		4,100		4,100
First mortgage bonds/pollution control obligations, maturing 2018-2027		0.57	%		241		241
Medium-term notes, maturing 2028		6.75	%		150		150
Unamortized premium and discount, net					(9)		(9)
Current portion of long-term debt					0		(300)
	Long-term debt, net				4,482		4,182
	Progress Energy consolidated long-term debt, net			$	11,718	$	11,864

Florida Progress Funding Corporation (See Note 23)
Debt to affiliated trust, maturing 2039		7.10	%	$	309	$	309
Unamortized premium and discount, net					(36)		(36)
	Long-term debt, affiliate			$	273	$	273

On January 21, 2011, the Parent issued $500 million of 4.40% Senior Notes due January 15, 2021. The net proceeds of $495 million, along with available cash on hand, were used to retire the $700 million outstanding aggregate principal balance of our 7.10% Senior Notes due March 1, 2011. Accordingly, we classified $495 million of the Parent's $700 million 7.10% Senior Notes due March 1, 2011 as long-term debt at December 31, 2010.

On July 15, 2011, PEF paid at maturity $300 million of its 6.65% First Mortgage Bonds with proceeds from short-term debt.

On August 18, 2011, PEF issued $300 million 3.10% First Mortgage Bonds due August 15, 2021. The net proceeds were used to repay a portion of outstanding short-term debt, of which $300 million was issued to repay PEF's July 15, 2011 maturity.

On September 15, 2011, PEC issued $500 million 3.00% First Mortgage Bonds due September 15, 2021. A portion of the net proceeds was used to repay outstanding short-term debt and the remainder was used for general corporate purposes, including construction expenditures.

On January 15, 2010, the Parent paid at maturity $100 million of its Series A Floating Rate Notes with a portion of the proceeds from the $950 million of Senior Notes issued on November 19, 2009.

On March 25, 2010, PEF issued $250 million of 4.55% First Mortgage Bonds due April 1, 2020, and $350 million of 5.65% First Mortgage Bonds due April 1, 2040. Proceeds were used to repay the outstanding balance of PEF's notes payable to affiliated companies, to repay the maturity of PEF's $300 million 4.50% First Mortgage Bonds due June 1, 2010, and for general corporate purposes.

At December 31, 2011 and 2010, we had committed lines of credit used to support our commercial paper and other short-term borrowings. At December 31, 2011 and 2010, we had no outstanding borrowings under our revolving credit agreements (RCAs). We are required to pay fees to maintain our credit facilities.

The following tables summarize our RCAs and available capacity at December 31:


(in millions)				Total	Outstanding		Reserved^(a)		Available
2011
Parent		Five-year (expiring 5/3/12)^(b)	$	478	$	0	$	252	$	226
PEC		Three-year (expiring 10/15/13)		750		0		184		566
PEF		Three-year (expiring 10/15/13)		750		0		233		517
	Total credit facilities		$	1,978	$	0	$	669	$	1,309

2010
Parent		Five-year (expiring 5/3/12)	$	500	$	0	$	31	$	469
PEC		Three-year (expiring 10/15/13)		750		0		0		750
PEF		Three-year (expiring 10/15/13)		750		0		0		750
	Total credit facilities		$	2,000	$	0	$	31	$	1,969

^(a)	To the extent amounts are reserved for commercial paper or letters of credit outstanding, they are not available for additional borrowings. At December 31, 2011 and 2010, the Parent had issued $2 million and $31 million, respectively, of letters of credit supported by the RCA. Additionally, on December 31, 2011, the Parent, PEC and PEF had $250 million, $184 million and $233 million, respectively, of outstanding commercial paper supported by the RCA.
^(b)	On February 15, 2012, the Parent’s RCA was amended to extend its expiration date to May 3, 2013.

The combined RCAs of the Parent, PEC and PEF total $1.978 billion and are supported by 23 financial institutions. The RCAs are used to provide liquidity support for issuances of commercial paper and other short-term obligations, and for general corporate purposes. Fees and interest rates under the RCAs are determined based upon the respective credit ratings of the Parent's, PEC's and PEF's long-term unsecured senior noncredit-enhanced debt, as rated by Moody's Investor Services, Inc. (Moody's) and Standard & Poor's Rating Services (S&P). The RCAs do not include material adverse change representations for borrowings or financial covenants for interest coverage.

The Parent entered into a five-year RCA on May 3, 2006. On May 2, 2008, the expiration date of the RCA was extended to May 3, 2012. The Parent ratably reduced the size of the RCA to $500 million on October 15, 2010, and the RCA was further reduced to $478 million on May 3, 2011, following the expiration of one financial institution's credit commitment. On February 15, 2012, the Parent's $478 million RCA was amended to extend the expiration date from May 3, 2012, to May 3, 2013, with its existing syndicate of 14 financial institutions.

PEC and PEF entered into $750 million, three-year RCAs with a syndication of 22 financial institutions on October 15, 2010. The RCAs, which expire October 15, 2013, replaced PEC's and PEF's previous RCAs, which were set to expire on June 28, 2011, and March 28, 2011, respectively.

See “Covenants and Default Provisions” for additional provisions related to the RCAs.

The following table summarizes short-term debt, comprised of outstanding commercial paper and other miscellaneous short-term debt, and related weighted-average interest rates at December 31:

(in millions)		2011				2010
Parent		0.50	%	$	250	0.00	%	$	0
PEC		0.49			188	0.00			0
PEF		0.51			233	0.00			0
	Total	0.50	%	$	671	0.00	%	$	0


Long-term debt maturities during the next five years are as follows:

(in millions)	Progress Energy Consolidated			PEC		PEF
2012	$	950	$	500	$	0
2013		830		405		425
2014		300		0		0
2015		1,000		700		300
2016		300		0		0

B. COVENANTS AND DEFAULT PROVISIONS

FINANCIAL COVENANTS

The Parent's, PEC's and PEF's credit lines contain various terms and conditions that could affect the ability to borrow under these facilities. All of the credit facilities include a defined maximum total debt to total capitalization ratio (leverage). At December 31, 2011, the maximum and calculated ratios for the Progress Registrants, pursuant to the terms of the agreements, were as follows:

Company		Maximum Ratio		Actual Ratio^(a)
Parent		68	%	58	%
PEC		65	%	46	%
PEF		65	%	51	%

^(a)	Indebtedness as defined by the credit agreement includes certain letters of credit, surety bonds and guarantees not recorded on the Consolidated Balance Sheets.

CROSS-DEFAULT PROVISIONS

Each of these credit agreements contains cross-default provisions for defaults of indebtedness in excess of the following thresholds: $50 million for the Parent and $35 million each for PEC and PEF. Under these provisions, if the applicable borrower or certain subsidiaries of the borrower fail to pay various debt obligations in excess of their respective cross-default threshold, the lenders of that credit facility could accelerate payment of any outstanding borrowing and terminate their commitments to the credit facility. The Parent's cross-default provision can be triggered by the Parent and its significant subsidiaries, as defined in the credit agreement. PEC's and PEF's cross-default provisions can be triggered only by defaults of indebtedness by PEC and its subsidiaries and PEF, respectively, not by each other or by other affiliates of PEC and PEF.

Additionally, certain of the Parent's long-term debt indentures contain cross-default provisions for defaults of indebtedness in excess of amounts ranging from $25 million to $50 million; these provisions apply only to other obligations of the Parent, primarily commercial paper issued by the Parent, not its subsidiaries. In the event that these indenture cross-default provisions are triggered, the debt holders could accelerate payment of approximately $4.000 billion in long-term debt. Certain agreements underlying our indebtedness also limit our ability to incur additional liens or engage in certain types of sale and leaseback transactions.

OTHER RESTRICTIONS

Neither the Parent's Articles of Incorporation nor any of its debt obligations contain any restrictions on the payment of dividends, so long as no shares of preferred stock are outstanding. At December 31, 2011, the Parent had no shares of preferred stock outstanding. See Note 2 for information regarding restrictions on dividends relative to the Progress Energy and Duke Energy Agreement and Plan of Merger.

Certain documents restrict the payment of dividends by the Parent's subsidiaries as outlined below.

PEC

PEC's mortgage indenture provides that as long as any first mortgage bonds are outstanding, cash dividends and distributions on its common stock and purchases of its common stock are restricted to aggregate net income available for PEC since December 31, 1948, plus $3 million, less the amount of all preferred stock dividends and distributions, and all common stock purchases, since December 31, 1948. At December 31, 2011, none of PEC's cash dividends or distributions on common stock was restricted.

In addition, PEC's Articles of Incorporation provide that so long as any shares of preferred stock are outstanding, the aggregate amount of cash dividends or distributions on common stock since December 31, 1945, including the amount then proposed to be expended, shall be limited to 75 percent of the aggregate net income available for common stock if common stock equity falls below 25 percent of total capitalization, as defined by PEC's Articles of Incorporation, and to 50 percent if common stock equity falls below 20 percent. PEC's Articles of Incorporation also provide that cash dividends on common stock shall be limited to 75 percent of the current year's net income available for dividends if common stock equity falls below 25 percent of total capitalization, and to 50 percent if common stock equity falls below 20 percent. At December 31, 2011, PEC's common stock equity was approximately 57.6 percent of total capitalization. At December 31, 2011, none of PEC's cash dividends or distributions on common stock was restricted.

PEF

PEF's mortgage indenture provides that as long as any first mortgage bonds are outstanding, it will not pay any cash dividends upon its common stock, or make any other distribution to the stockholders, except a payment or distribution out of net income of PEF subsequent to December 31, 1943. At December 31, 2011, none of PEF's cash dividends or distributions on common stock was restricted.

In addition, PEF's Articles of Incorporation provide that so long as any shares of preferred stock are outstanding, no cash dividends or distributions on common stock shall be paid, if the aggregate amount thereof since April 30, 1944, including the amount then proposed to be expended, plus all other charges to retained earnings since April 30, 1944, exceeds all credits to retained earnings since April 30, 1944, plus all amounts credited to capital surplus after April 30, 1944, arising from the donation to PEF of cash or securities or transfers of amounts from retained earnings to capital surplus. PEF's Articles of Incorporation also provide that cash dividends on common stock shall be limited to 75 percent of the current year's net income available for dividends if common stock equity falls below 25 percent of total capitalization, as defined by PEF's Articles of Incorporation, and to 50 percent if common stock equity falls below 20 percent. On December 31, 2011, PEF's common stock equity was approximately 50.9 percent of total capitalization. At December 31, 2011, none of PEF's cash dividends or distributions on common stock was restricted.

C. COLLATERALIZED OBLIGATIONS

PEC's and PEF's first mortgage bonds, including pollution control obligations, are collateralized by their respective mortgage indentures. Each mortgage constitutes a first lien on substantially all of the fixed properties of the respective company, subject to certain permitted encumbrances and exceptions. Each mortgage also constitutes a lien on subsequently acquired property. At December 31, 2011, PEC and PEF had a total of $3.694 billion and $4.341 billion, respectively, of first mortgage bonds outstanding, including those related to pollution control obligations.

Each mortgage allows the issuance of additional first mortgage bonds based on property additions, retirements of first mortgage bonds and the deposit of cash if certain conditions are satisfied. Most first mortgage bond issuances by PEC and PEF require that adjusted net earnings be at least twice the annual interest requirement for bonds currently outstanding and to be outstanding. PEF's ratio of net earnings to the annual interest requirement for bonds outstanding was below 2.0 times at December 31, 2011. PEF's 2011 net earnings were impacted by a $288 million charge recorded in December 2011 for amounts to be refunded to customers (See Note 8C). Until this ratio, which is calculated based on results for 12 consecutive months, is above 2.0 times, PEF's capacity to issue first mortgage bonds is limited to a portion of retired first mortgage bonds. In the event PEF's long-term debt requirements exceed its first mortgage bond capacity, it could issue unsecured debt.

D. GUARANTEES OF SUBSIDIARY DEBT

See Note 19 on related party transactions for a discussion of obligations guaranteed or secured by affiliates.

E. HEDGING ACTIVITIES

We use interest rate derivatives to adjust the fixed and variable rate components of our debt portfolio and to hedge cash flow risk related to commercial paper and fixed-rate debt to be issued in the future. See Note 18 for a discussion of risk management activities and derivative transactions.

Debt And Credit Facilities Disclosure [Line Items]

Debt and Credit Facilities

12. DEBT AND CREDIT FACILITIES

A. DEBT AND CREDIT FACILITIES

At December 31 our long-term debt consisted of the following (maturities and weighted-average interest rates at December 31, 2011):

(in millions)					2011		2010
Parent
Senior unsecured notes, maturing 2012-2039		6.28	%	$	4,000	$	4,200
Unamortized premium and discount, net					(7)		(6)
Current portion of long-term debt					(450)		(205)
	Long-term debt, net				3,543		3,989

PEC
First mortgage bonds, maturing 2013-2038		5.17	%		3,025		2,525
First mortgage bonds/pollution control obligations, maturing 2017-2024		0.57	%		669		669
Senior unsecured notes, maturing 2012		6.50	%		500		500
Miscellaneous notes		6.00	%		5		5
Unamortized premium and discount, net					(6)		(6)
Current portion of long-term debt					(500)		0
	Long-term debt, net				3,693		3,693

PEF
First mortgage bonds, maturing 2013-2040		5.56	%		4,100		4,100
First mortgage bonds/pollution control obligations, maturing 2018-2027		0.57	%		241		241
Medium-term notes, maturing 2028		6.75	%		150		150
Unamortized premium and discount, net					(9)		(9)
Current portion of long-term debt					0		(300)
	Long-term debt, net				4,482		4,182
	Progress Energy consolidated long-term debt, net			$	11,718	$	11,864

Florida Progress Funding Corporation (See Note 23)
Debt to affiliated trust, maturing 2039		7.10	%	$	309	$	309
Unamortized premium and discount, net					(36)		(36)
	Long-term debt, affiliate			$	273	$	273