XML 194 R12.htm IDEA: XBRL DOCUMENT v2.4.0.8
Business Segments
 6 Months Ended
Jun. 30, 2013
Business Segments [Abstract]  
Business Segments

3. BUSINESS SEGMENTS

Management evaluates segment performance based on Segment Income, which is defined as income from continuing operations net of income attributable to noncontrolling interests. Segment Income, as discussed below, includes intercompany revenues and expenses that are eliminated in the Condensed Consolidated Financial Statements. Certain governance costs are allocated to each of the segments. In addition, direct interest expense and income taxes are included in Segment Income.

Operating segments for each of the Duke Energy Registrants are determined based on information used by the chief operating decision maker in deciding how to allocate resources and evaluate the performance at each of the Duke Energy Registrants.

Products and services are sold between affiliate companies and between reportable segments at cost. Segment assets as presented in the tables that follow exclude all intercompany assets.

DUKE ENERGY

Duke Energy has the following reportable operating segments: USFE&G, Commercial Power and International Energy.

USFE&G generates, transmits, distributes and sells electricity in portions of North Carolina, South Carolina, Florida, Indiana, and Kentucky. USFE&G also transmits and distributes electricity in portions of Ohio. Additionally, USFE&G transports and sells natural gas in portions of Ohio and Kentucky. It conducts operations primarily through Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, certain regulated portions of Duke Energy Ohio, and Duke Energy Indiana. Segment information for USFE&G includes the results of the regulated operations of Duke Energy Progress and Duke Energy Florida beginning July 2, 2012.

Commercial Power operates and manages power plants owned by Duke Energy Ohio and engages in the wholesale marketing and procurement of electricity, fuel and emission allowances related to these plants, as well as other contractual positions. Commercial Power also has a retail sales subsidiary, Duke Energy Retail Sales, LLC (Duke Energy Retail), which is certified by the PUCO as a Competitive Retail Electric Service provider. Through Duke Energy Generation Services, Inc. and its affiliates (DEGS), Commercial Power engages in the development, construction and operation of renewable energy and commercial transmission projects in the U.S.

International Energy principally operates and manages power generation facilities and engages in sales and marketing of electricity and natural gas outside the U.S. It conducts operations primarily through Duke Energy International, LLC and its affiliates and its activities principally target power generation in Latin America. Additionally, International Energy owns a 25 percent interest in National Methanol Company, located in Saudi Arabia, which is a large regional producer of methanol and methyl tertiary butyl ether (MTBE).

The remainder of Duke Energy's operations is presented as Other. While it is not considered an operating segment, Other primarily includes unallocated corporate costs, which primarily consists of interest expense on corporate debt instruments, costs to achieve mergers and divestitures, and costs associated with certain corporate severance programs. It also includes Bison Insurance Company Limited (Bison), a wholly owned, captive insurance subsidiary, Duke Energy's 50 percent interest in DukeNet Communications, LLC (DukeNet) and related telecommunications businesses, and Duke Energy's 60 percent interest in Duke Energy Trading and Marketing, LLC.

                    
  Three Months Ended June 30, 2013
(in millions)USFE&G Commercial Power International Energy Total Reportable Segments Other Eliminations Consolidated
Unaffiliated revenues(a)(b)$ 4,911 $ 547 $ 406 $ 5,864 $ 15 $ ― $ 5,879
Intersegment revenues  9   10   ―   19   21   (40)   ―
 Total revenues$ 4,920 $ 557 $ 406 $ 5,883 $ 36 $ (40) $ 5,879
Segment income(a)(b)(c)(d)(e)$ 353 $ 41 $ 87 $ 481 $ (139) $ ― $ 342
Add back noncontrolling interests component                    3
Loss from discontinued operations, net of tax                    (3)
Net income                  $ 342
Segment assets as of June 30, 2013$ 98,908 $ 6,907 $ 5,480 $ 111,295 $ 2,663 $ 142 $ 114,100
                      
(a)On May 1, 2013, the PUCO approved a Duke Energy Ohio settlement agreement that provides for a net annual increase in electric distribution revenues of $49 million, beginning in May 2013. This rate increase impacts USFE&G.
(b)On May 30, 2013, the NCUC approved a Duke Energy Progress settlement agreement that included a $147 million increase in rates in the first year, beginning on June 1, 2013. This rate increase impacts USFE&G.
(c)USFE&G recorded an after-tax impairment charge of $180 million, net of tax of $115 million, related to Duke Energy Florida's Crystal River Unit 3. See Note 4 for additional information.
(d)USFE&G recorded an after-tax impairment charge of $13 million, net of tax of $9 million, related to the letter Duke Energy Progress filed with the NRC requesting the NRC to suspend its review activities associated with the combined construction and operating license (COL) at the Shearon Harris Nuclear Station (Harris) site. USFE&G also recorded an after-tax impairment charge of $44 million, net of tax of $21 million, related to the write-off of the wholesale portion of Levy investments at Duke Energy Florida in accordance with the 2013 Settlement. See Note 4 for additional information.
(e)Other includes after-tax costs to achieve the merger with Progress Energy of $51 million, net of tax of $31 million. See Note 2 for additional information about the merger.
                      

                      
  Three Months Ended June 30, 2012
(in millions)USFE&G Commercial Power International Energy Total Reportable Segments Other Eliminations Consolidated
Unaffiliated revenues$ 2,688 $ 488 $ 397 $ 3,573 $ 4 $ ― $ 3,577
Intersegment revenues  9   14   ―   23   12   (35)   ―
 Total revenues$ 2,697 $ 502 $ 397 $ 3,596 $ 16 $ (35) $ 3,577
Segment income$ 337 $ 28 $ 105 $ 470 $ (25) $ ― $ 445
Add back noncontrolling interests component                    4
Loss from discontinued operations, net of tax                    (1)
Net income                  $ 448
                      

                    
  Six Months Ended June 30, 2013
(in millions)USFE&G Commercial Power International Energy Total Reportable Segments Other Eliminations Consolidated
Unaffiliated revenues(a)(b)$ 9,963 $ 986 $ 798 $ 11,747 $ 30 $ ― $ 11,777
Intersegment revenues  17   23   ―   40   41   (81)   ―
 Total revenues$ 9,980 $ 1,009 $ 798 $ 11,787 $ 71 $ (81) $ 11,777
Segment income(a)(b)(c)(d)(e)$ 1,009 $ (1) $ 184 $ 1,192 $ (216) $ ― $ 976
Add back noncontrolling interests component                    3
Loss from discontinued operations, net of tax                    (3)
Net income                  $ 976
                      
(a)On May 1, 2013, the PUCO approved a Duke Energy Ohio settlement agreement that provides for a net annual increase in electric distribution revenues of $49 million, beginning in May 2013. This rate increase impacts USFE&G.
(b)On May 30, 2013, the NCUC approved a Duke Energy Progress settlement agreement that included a $147 million increase in rates in the first year, beginning on June 1, 2013. This rate increase impacts USFE&G.
(c)USFE&G recorded an after-tax impairment charge of $180 million, net of tax of $115 million, related to Duke Energy Florida's Crystal River Unit 3. See Note 4 for additional information.
(d)USFE&G recorded an after-tax impairment charge of $13 million, net of tax of $9 million, related to the letter Duke Energy Progress filed with the NRC requesting the NRC to suspend its review activities associated with the combined construction and operating license (COL) at the Shearon Harris Nuclear Station (Harris) site. USFE&G also recorded an after-tax impairment charge of $44 million, net of tax of $21 million, related to the write-off of the wholesale portion of Levy investments at Duke Energy Florida in accordance with the 2013 Settlement. See Note 4 for additional information.
(e)Other includes after-tax costs to achieve the merger with Progress Energy of $85 million, net of tax of $52 million. See Note 2 for additional information about the merger.
                      

                      
  Six Months Ended June 30, 2012
(in millions)USFE&G Commercial Power International Energy Total Reportable Segments Other Eliminations Consolidated
Unaffiliated revenues(a)$ 5,348 $ 1,052 $ 799 $ 7,199 $ 8 $ ― $ 7,207
Intersegment revenues  17   30   ―   47   23   (70)   ―
 Total revenues$ 5,365 $ 1,082 $ 799 $ 7,246 $ 31 $ (70) $ 7,207
Segment income(a)(b)$ 473 $ 59 $ 247 $ 779 $ (41) $ ― $ 738
Add back noncontrolling interests component                    8
Income from discontinued operations, net of tax                    1
Net income                  $ 747
                      
(a)On January 25, 2012 and January 27, 2012, the Duke Energy Carolinas' South Carolina and North Carolina rate case settlement agreements were approved by the PSCSC and NCUC, respectively. Among other things, the rate case settlements included an annual base rate increase of $309 million in North Carolina and a $93 million annual base rate increase in South Carolina, both beginning in February 2012. These rate increases impact USFE&G.
(b)USFE&G recorded an after-tax impairment charge of $268 million, net of tax of $152 million, related to Duke Energy Indiana's Edwardsport Integrated Gasification Combined Cycle (IGCC) project. USFE&G also recorded the reversal of expenses of $60 million, net of tax of $39 million, related to a prior year Voluntary Opportunity Plan in accordance with Duke Energy Carolinas' 2011 rate case.
                      

DUKE ENERGY OHIO

Duke Energy Ohio has two reportable operating segments, Franchised Electric and Gas and Commercial Power.

Franchised Electric and Gas transmits and distributes electricity in portions of Ohio and generates, transmits, distributes and sells electricity in portions of Kentucky. Franchised Electric and Gas also transports and sells natural gas in portions of Ohio and Kentucky.

Commercial Power owns, operates and manages power plants and engages in the wholesale marketing and procurement of electricity, fuel and emission allowances related to these plants, as well as other contractual positions. Duke Energy Ohio's Commercial Power reportable operating segment does not include the operations of DEGS or Duke Energy Retail, which are included in the Commercial Power reportable operating segment at Duke Energy.

The remainder of Duke Energy Ohio's operations is presented as Other. While it is not considered an operating segment, Other primarily includes certain allocated governance costs. See Note 17 for additional information. All of Duke Energy Ohio's revenues are generated domestically and its long-lived assets are all in the U.S.

                  
  Three Months Ended June 30, 2013
(in millions)Franchised Electric and Gas Commercial Power Total Reportable Segments Other Eliminations Consolidated
Unaffiliated revenues(a)$ 404 $ 407 $ 811 $ ― $ ― $ 811
Intersegment revenues  ―   8   8   ―   (8)   ―
 Total revenues$ 404 $ 415 $ 819 $ ― $ (8) $ 811
Segment income / Consolidated net income(a)$ 27 $ 35 $ 62 $ (4) $ ― $ 58
Segment assets as of June 30, 2013$ 6,568 $ 4,116 $ 10,684 $ 100 $ (178) $ 10,606
                   
  Three Months Ended June 30, 2012
(in millions)Franchised Electric and Gas Commercial Power Total Reportable Segments Other Eliminations Consolidated
Unaffiliated revenues$ 387 $ 330 $ 717 $ ― $ ― $ 717
Intersegment revenues  ―   12   12   ―   (12)   ―
 Total revenues$ 387 $ 342 $ 729 $ ― $ (12) $ 717
Segment income / Consolidated net income$ 30 $ 17 $ 47 $ (2) $ ― $ 45
                   
  Six Months Ended June 30, 2013
(in millions)Franchised Electric and Gas Commercial Power Total Reportable Segments Other Eliminations Consolidated
Unaffiliated revenues(a)$ 896 $ 662 $ 1,558 $ ― $ ― $ 1,558
Intersegment revenues  ―   19   19   ―   (19)   ―
 Total revenues$ 896 $ 681 $ 1,577 $ ― $ (19) $ 1,558
Segment income / Consolidated net income(a)$ 80 $ (33) $ 47 $ (10) $ ― $ 37
                   
(a)On May 1, 2013, the PUCO approved a Duke Energy Ohio settlement agreement that provides for a net annual increase in electric distribution revenues of $49 million, beginning in May 2013. This rate increase impacts Franchised Electric and Gas.
                   
  Six Months Ended June 30, 2012
(in millions)Franchised Electric and Gas Commercial Power Total Reportable Segments Other Eliminations Consolidated
Unaffiliated revenues$ 860 $ 769 $ 1,629 $ ― $ ― $ 1,629
Intersegment revenues  ―   27   27   ―   (27)   ―
 Total revenues$ 860 $ 796 $ 1,656 $ ― $ (27) $ 1,629
Segment income / Consolidated net income$ 64 $ 61 $ 125 $ (6) $ ― $ 119
                   

DUKE ENERGY CAROLINAS, PROGRESS ENERGY, DUKE ENERGY PROGRESS, DUKE ENERGY FLORIDA AND DUKE ENERGY INDIANA

Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana each have one reportable operating segment, Franchised Electric, which generates, transmits, distributes and sells electricity. The remainder of each company's operations is classified as Other. While not considered reportable segments for any of these companies, Other consists of each respective company's share of costs to achieve the merger between Duke Energy and Progress Energy, certain corporate severance programs, and certain costs for use of corporate assets as allocated to each company. See Note 17 for additional information. Other for Progress Energy also includes interest expense on corporate debt instruments. The following table summarizes the net loss for Other at each of these registrants.

              
  Three Months Ended June 30,Six Months Ended June 30,
(in millions) 2013 2012 2013 2012
Duke Energy Carolinas $ (25) $ (11) $ (43) $ (18)
Progress Energy   (55)   (58)   (133)   (97)
Duke Energy Progress   (14)   (7)   (20)   (9)
Duke Energy Florida   (7)   (5)   (12)   (7)
Duke Energy Indiana   (4)   (1)   (8)   (5)
              

The Franchised Electric operating segments includes substantially all of Duke Energy Carolinas', Progress Energy's, Duke Energy Progress', Duke Energy Florida's and Duke Energy Indiana's assets.