Commission File Number
|
Exact name of registrants as specified in their charters, states of incorporation, addresses of principal executive offices,
and telephone numbers
|
I.R.S. Employer Identification Number
|
1-15929
|
Progress Energy, Inc.
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
Telephone: (919) 546-6111
State of Incorporation: North Carolina
|
56-2155481
|
1-3382
|
Carolina Power & Light Company
d/b/a Progress Energy Carolinas, Inc.
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
Telephone: (919) 546-6111
State of Incorporation: North Carolina
|
56-0165465
|
1-3274
|
Florida Power Corporation
d/b/a Progress Energy Florida, Inc.
299 First Avenue North
St. Petersburg, Florida 33701
Telephone: (727) 820-5151
State of Incorporation: Florida
|
59-0247770
|
Progress Energy, Inc. (Progress Energy)
|
Yes
|
x
|
No
|
o
|
Carolina Power & Light Company (PEC)
|
Yes
|
x
|
No
|
o
|
Florida Power Corporation (PEF)
|
Yes
|
o
|
No
|
x
|
Progress Energy
|
Yes
|
x
|
No
|
o
|
PEC
|
Yes
|
x
|
No
|
o
|
PEF
|
Yes
|
x
|
No
|
o
|
Progress Energy
|
Large accelerated filer
|
x
|
Accelerated filer
|
o
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
o
|
|
PEC
|
Large accelerated filer
|
o
|
Accelerated filer
|
o
|
Non-accelerated filer
|
x
|
Smaller reporting company
|
o
|
|
PEF
|
Large accelerated filer
|
o
|
Accelerated filer
|
o
|
Non-accelerated filer
|
x
|
Smaller reporting company
|
o
|
Progress Energy
|
Yes
|
o
|
No
|
x
|
PEC
|
Yes
|
o
|
No
|
x
|
PEF
|
Yes
|
o
|
No
|
x
|
Registrant
|
Description
|
Shares
|
Progress Energy
|
Common Stock (Without Par Value)
|
294,602,077
|
PEC
|
Common Stock (Without Par Value)
|
159,608,055 (all of which were held directly by Progress Energy, Inc.)
|
PEF
|
Common Stock (Without Par Value)
|
100 (all of which were held indirectly by Progress Energy, Inc.)
|
TABLE OF CONTENTS
|
||
2
|
||
5
|
||
PART I. FINANCIAL INFORMATION
|
||
ITEM 1.
|
7
|
|
Unaudited Condensed Interim Financial Statements
|
||
Progress Energy, Inc. (Progress Energy)
|
||
7
|
||
8
|
||
9
|
||
Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. (PEC)
|
||
10
|
||
11
|
||
12
|
||
Florida Power Corporation d/b/a Progress Energy Florida, Inc. (PEF)
|
||
13
|
||
14
|
||
15
|
||
16
|
||
ITEM 2.
|
69
|
|
ITEM 3.
|
105
|
|
ITEM 4.
|
109
|
|
PART II. OTHER INFORMATION
|
||
ITEM 1.
|
110
|
|
ITEM 1A.
|
110
|
|
ITEM 2.
|
110
|
|
ITEM 6.
|
113
|
|
114
|
TERM
|
DEFINITION
|
2010 Form 10-K
|
Progress Registrants’ annual report on Form 10-K for the fiscal year ended December 31, 2010
|
401(k)
|
Progress Energy 401(k) Savings & Stock Ownership Plan
|
AFUDC
|
Allowance for funds used during construction
|
ARO
|
Asset retirement obligation
|
ASC
|
FASB Accounting Standards Codification
|
ASLB
|
Atomic Safety and Licensing Board
|
the Asset Purchase Agreement
|
Agreement by and among Global, Earthco and certain affiliates, and the Progress Affiliates as amended on August 23, 2000
|
ASU
|
Accounting Standards Update
|
Audit Committee
|
Audit and Corporate Performance Committee of Progress Energy’s board of directors
|
BART
|
Best Available Retrofit Technology
|
Base Revenues
|
Non-GAAP measure defined as operating revenues excluding clause recoverable regulatory returns, miscellaneous revenues and fuel and other pass-through revenues
|
Brunswick
|
PEC’s Brunswick Nuclear Plant
|
Btu
|
British thermal unit
|
CAA
|
Clean Air Act
|
CAIR
|
Clean Air Interstate Rule
|
CAMR
|
Clean Air Mercury Rule
|
CAVR
|
Clean Air Visibility Rule
|
CCRC
|
Capacity Cost-Recovery Clause
|
CERCLA or Superfund
|
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended
|
Clean Smokestacks Act
|
North Carolina Clean Smokestacks Act
|
the Code
|
Internal Revenue Code
|
CO2
|
Carbon dioxide
|
COL
|
Combined license
|
Corporate and Other
|
Corporate and Other segment primarily includes the Parent, PESC and miscellaneous other nonregulated businesses
|
CR1 and CR2
|
PEF’s Crystal River Units No. 1 and No. 2 coal-fired steam turbines
|
CR3
|
PEF’s Crystal River Unit No. 3 Nuclear Plant
|
CR4 and CR5
|
PEF’s Crystal River Units No. 4 and No. 5 coal-fired steam turbines
|
CSAPR
|
Cross-State Air Pollution Rule
|
CVO
|
Contingent value obligation
|
D.C. Court of Appeals
|
U.S. Court of Appeals for the District of Columbia Circuit
|
DOE
|
U.S. Department of Energy
|
DOJ
|
U.S. Department of Justice
|
DSM
|
Demand-side management
|
Duke Energy
|
Duke Energy Corporation
|
Earthco
|
Four coal-based solid synthetic fuels limited liability companies of which three were wholly owned
|
ECCR
|
Energy Conservation Cost Recovery Clause
|
ECRC
|
Environmental Cost Recovery Clause
|
EE
|
Energy efficiency
|
EGU MACT
|
MACT standards for coal-fired and oil-fired electric steam generating units
|
EIP
|
Equity Incentive Plan
|
EPA
|
U.S. Environmental Protection Agency
|
EPC
|
Engineering, procurement and construction
|
ESOP
|
Employee Stock Ownership Plan
|
FASB
|
Financial Accounting Standards Board
|
FDEP
|
Florida Department of Environmental Protection
|
FERC
|
Federal Energy Regulatory Commission
|
FGT
|
Florida Gas Transmission Company, LLC
|
Fitch
|
Fitch Ratings
|
the Florida Global Case
|
U.S. Global, LLC v. Progress Energy, Inc. et al.
|
Florida Progress
|
Florida Progress Corporation
|
FPSC
|
Florida Public Service Commission
|
Funding Corp.
|
Florida Progress Funding Corporation, a wholly owned subsidiary of Florida Progress
|
GAAP
|
Accounting principles generally accepted in the United States of America
|
GHG
|
Greenhouse gas
|
Global
|
U.S. Global, LLC
|
GWh
|
Gigawatt-hours
|
Harris
|
PEC’s Shearon Harris Nuclear Plant
|
IPP
|
Progress Energy Investor Plus Plan
|
kV
|
Kilovolt
|
kVA
|
Kilovolt-ampere
|
kWh
|
Kilowatt-hours
|
Levy
|
PEF’s proposed Levy Units No. 1 and No. 2 Nuclear Plants
|
LIBOR
|
London Inter Bank Offered Rate
|
MACT
|
Maximum achievable control technology
|
MD&A
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in PART I, Item 2 of this Form 10-Q
|
Medicare Act
|
Medicare Prescription Drug, Improvement and Modernization Act of 2003
|
the Merger
|
Proposed merger between Progress Energy and Duke Energy
|
the Merger Agreement
|
Agreement and Plan of Merger, dated as of January 8, 2011, by and among Progress Energy and Duke Energy
|
MGP
|
Manufactured gas plant
|
MW
|
Megawatts
|
MWh
|
Megawatt-hours
|
Moody’s
|
Moody’s Investors Service, Inc.
|
NAAQS
|
National Ambient Air Quality Standards
|
NC REPS
|
North Carolina Renewable Energy and Energy Efficiency Portfolio Standard
|
NCUC
|
North Carolina Utilities Commission
|
NDT
|
Nuclear decommissioning trust
|
NEIL
|
Nuclear Electric Insurance Limited
|
NERC
|
North American Electric Reliability Corporation
|
North Carolina Global Case
|
Progress Synfuel Holdings, Inc. et al. v. U.S. Global, LLC
|
NOx
|
Nitrogen oxides
|
NRC
|
Nuclear Regulatory Commission
|
O&M
|
Operation and maintenance expense
|
OATT
|
Open Access Transmission Tariff
|
OCI
|
Other comprehensive income
|
Ongoing Earnings
|
Non-GAAP financial measure defined as GAAP net income attributable to controlling interests less discontinued operations and the effects of certain identified gains and charges
|
OPEB
|
Postretirement benefits other than pensions
|
the Parent
|
Progress Energy, Inc. holding company on an unconsolidated basis
|
PEC
|
Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc.
|
PEF
|
Florida Power Corporation d/b/a Progress Energy Florida, Inc.
|
PESC
|
Progress Energy Service Company, LLC
|
Power Agency
|
North Carolina Eastern Municipal Power Agency
|
PPACA
|
Patient Protection and Affordable Care Act and the related Health Care and Education Reconciliation Act
|
Preferred Securities
|
7.10% Cumulative Quarterly Income Preferred Securities due 2039, Series A issued by the Trust
|
Preferred Securities Guarantee
|
Florida Progress’ guarantee of all distributions related to the Preferred Securities
|
Progress Affiliates
|
Five affiliated coal-based solid synthetic fuels facilities
|
Progress Energy
|
Progress Energy, Inc. and subsidiaries on a consolidated basis
|
Progress Registrants
|
The reporting registrants within the Progress Energy consolidated group. Collectively, Progress Energy, Inc., PEC and PEF
|
PRP
|
Potentially responsible party, as defined in CERCLA
|
PSSP
|
Performance Share Sub-Plan
|
QF
|
Qualifying facility
|
RCA
|
Revolving credit agreement
|
Reagents
|
Commodities such as ammonia and limestone used in emissions control technologies
|
REPS
|
Renewable energy portfolio standard
|
the Registration Statement
|
The registration statement filed on Form S-4 by Duke Energy related to the Merger
|
Robinson
|
PEC’s Robinson Nuclear Plant
|
ROE
|
Return on equity
|
RSU
|
Restricted stock unit
|
SCPSC
|
Public Service Commission of South Carolina
|
Section 29
|
Section 29 of the Code
|
Section 29/45K
|
General business tax credits earned after December 31, 2005 for synthetic fuels production in accordance with Section 29
|
Section 45K
|
Section 45K of the Code
|
Section 316(b)
|
Section 316(b) of the Clean Water Act
|
(See Note/s “#”)
|
For all sections, this is a cross-reference to the Combined Notes to the Financial Statements contained in PART I, Item 1 of this Form 10-Q
|
SERC
|
SERC Reliability Corporation
|
S&P
|
Standard & Poor’s Rating Services
|
SO2
|
Sulfur dioxide
|
SOx
|
Sulfur oxides
|
Subordinated Notes
|
7.10% Junior Subordinated Deferrable Interest Notes due 2039 issued by Funding Corp.
|
Tax Agreement
|
Intercompany Income Tax Allocation Agreement
|
the Trust
|
FPC Capital I
|
the Utilities
|
Collectively, PEC and PEF
|
VIE
|
Variable interest entity
|
Ward
|
Ward Transformer site located in Raleigh, N.C.
|
Ward OU1
|
Operable unit for stream segments downstream from the Ward site
|
Ward OU2
|
Operable unit for further investigation at the Ward facility and certain adjacent areas
|
·
|
our ability to obtain the approvals required to complete the Merger and the impact of compliance with material restrictions or conditions potentially imposed by our regulators;
|
·
|
the risk that the Merger is terminated prior to completion and results in significant transaction costs to us;
|
·
|
our ability to achieve the anticipated results and benefits of the Merger;
|
·
|
the impact of business uncertainties and contractual restrictions while the Merger is pending;
|
·
|
the scope of necessary repairs of the delamination of PEF’s Crystal River Unit No. 3 Nuclear Plant (CR3) could prove more extensive than is currently identified, such repairs could prove not to be feasible, the costs of repair and/or replacement power could exceed our estimates and insurance coverage or may not be recoverable through the regulatory process;
|
·
|
the impact of fluid and complex laws and regulations, including those relating to the environment and energy policy;
|
·
|
our ability to recover eligible costs and earn an adequate return on investment through the regulatory process;
|
·
|
the ability to successfully operate electric generating facilities and deliver electricity to customers;
|
·
|
the impact on our facilities and businesses from a terrorist attack, cyber security threats and other catastrophic events;
|
·
|
the ability to meet the anticipated future need for additional baseload generation and associated transmission facilities in our regulated service territories and the accompanying regulatory and financial risks;
|
·
|
our ability to meet current and future renewable energy requirements;
|
·
|
the inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks;
|
·
|
the financial resources and capital needed to comply with environmental laws and regulations;
|
·
|
risks associated with climate change;
|
·
|
weather and drought conditions that directly influence the production, delivery and demand for electricity;
|
·
|
recurring seasonal fluctuations in demand for electricity;
|
·
|
the ability to recover in a timely manner, if at all, costs associated with future significant weather events through the regulatory process;
|
·
|
fluctuations in the price of energy commodities and purchased power and our ability to recover such costs through the regulatory process;
|
·
|
the Progress Registrants’ ability to control costs, including operations and maintenance expense (O&M) and large construction projects;
|
·
|
the ability of our subsidiaries to pay upstream dividends or distributions to Progress Energy, Inc. holding company (the Parent);
|
·
|
current economic conditions;
|
·
|
the ability to successfully access capital markets on favorable terms;
|
·
|
the stability of commercial credit markets and our access to short- and long-term credit;
|
·
|
the impact that increases in leverage or reductions in cash flow may have on each of the Progress Registrants;
|
·
|
the Progress Registrants’ ability to maintain their current credit ratings and the impacts in the event their credit ratings are downgraded;
|
·
|
the investment performance of our nuclear decommissioning trust (NDT) funds;
|
·
|
the investment performance of the assets of our pension and benefit plans and resulting impact on future funding requirements;
|
·
|
the impact of potential goodwill impairments;
|
·
|
our ability to fully utilize tax credits generated from the previous production and sale of qualifying synthetic fuels under Internal Revenue Code (the Code) Section 29/45K (Section 29/45K); and
|
·
|
the outcome of any ongoing or future litigation or similar disputes and the impact of any such outcome or related settlements.
|
ITEM 1. | FINANCIAL STATEMENTS |
PROGRESS ENERGY, INC.
|
||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
||||||||||||||||
June 30, 2011
|
||||||||||||||||
|
|
|
|
|
||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of INCOME
|
||||||||||||||||
|
Three months ended June 30
|
Six months ended June 30
|
||||||||||||||
(in millions except per share data)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Operating revenues
|
$ | 2,256 | $ | 2,372 | $ | 4,423 | $ | 4,907 | ||||||||
Operating expenses
|
||||||||||||||||
Fuel used in electric generation
|
674 | 743 | 1,392 | 1,639 | ||||||||||||
Purchased power
|
329 | 315 | 549 | 578 | ||||||||||||
Operation and maintenance
|
510 | 505 | 1,004 | 985 | ||||||||||||
Depreciation, amortization and accretion
|
179 | 233 | 333 | 479 | ||||||||||||
Taxes other than on income
|
134 | 133 | 274 | 287 | ||||||||||||
Other
|
2 | 3 | (8 | ) | 5 | |||||||||||
Total operating expenses
|
1,828 | 1,932 | 3,544 | 3,973 | ||||||||||||
Operating income
|
428 | 440 | 879 | 934 | ||||||||||||
Other income
|
||||||||||||||||
Interest income
|
- | 1 | 1 | 3 | ||||||||||||
Allowance for equity funds used during construction
|
26 | 25 | 55 | 46 | ||||||||||||
Other, net
|
7 | 5 | 10 | - | ||||||||||||
Total other income, net
|
33 | 31 | 66 | 49 | ||||||||||||
Interest charges
|
||||||||||||||||
Interest charges
|
189 | 199 | 388 | 390 | ||||||||||||
Allowance for borrowed funds used during construction
|
(9 | ) | (7 | ) | (18 | ) | (16 | ) | ||||||||
Total interest charges, net
|
180 | 192 | 370 | 374 | ||||||||||||
Income from continuing operations before income tax
|
281 | 279 | 575 | 609 | ||||||||||||
Income tax expense
|
101 | 98 | 208 | 237 | ||||||||||||
Income from continuing operations before cumulative effect
of change in accounting principle
|
180 | 181 | 367 | 372 | ||||||||||||
Discontinued operations, net of tax
|
(2 | ) | (1 | ) | (4 | ) | - | |||||||||
Cumulative effect of change in accounting principle, net of tax
|
- | - | - | (2 | ) | |||||||||||
Net income
|
178 | 180 | 363 | 370 | ||||||||||||
Net income attributable to noncontrolling interests, net of tax
|
(2 | ) | - | (3 | ) | - | ||||||||||
Net income attributable to controlling interests
|
$ | 176 | $ | 180 | $ | 360 | $ | 370 | ||||||||
Average common shares outstanding – basic
|
296 | 290 | 295 | 287 | ||||||||||||
Basic and diluted earnings per common share
|
||||||||||||||||
Income from continuing operations attributable to controlling
interests, net of tax
|
$ | 0.60 | $ | 0.62 | $ | 1.23 | $ | 1.29 | ||||||||
Discontinued operations attributable to controlling interests,
net of tax
|
- | - | (0.01 | ) | - | |||||||||||
Net income attributable to controlling interests
|
$ | 0.60 | $ | 0.62 | $ | 1.22 | $ | 1.29 | ||||||||
Dividends declared per common share
|
$ | 0.620 | $ | 0.620 | $ | 1.240 | $ | 1.240 | ||||||||
Amounts attributable to controlling interests
|
||||||||||||||||
Income from continuing operations, net of tax
|
$ | 178 | $ | 181 | $ | 364 | $ | 370 | ||||||||
Discontinued operations, net of tax
|
(2 | ) | (1 | ) | (4 | ) | - | |||||||||
Net income attributable to controlling interests
|
$ | 176 | $ | 180 | $ | 360 | $ | 370 | ||||||||
|
||||||||||||||||
See Notes to Progress Energy, Inc. Unaudited Condensed Consolidated Interim Financial Statements.
|
PROGRESS ENERGY, INC.
|
||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
(in millions)
|
June 30, 2011
|
December 31, 2010
|
||||||
ASSETS
|
|
|
||||||
Utility plant
|
|
|
||||||
Utility plant in service
|
$ | 30,675 | $ | 29,708 | ||||
Accumulated depreciation
|
(11,778 | ) | (11,567 | ) | ||||
Utility plant in service, net
|
18,897 | 18,141 | ||||||
Other utility plant, net
|
222 | 220 | ||||||
Construction work in progress
|
1,982 | 2,205 | ||||||
Nuclear fuel, net of amortization
|
648 | 674 | ||||||
Total utility plant, net
|
21,749 | 21,240 | ||||||
Current assets
|
||||||||
Cash and cash equivalents
|
52 | 611 | ||||||
Receivables, net
|
1,041 | 1,033 | ||||||
Inventory
|
1,354 | 1,226 | ||||||
Regulatory assets
|
198 | 176 | ||||||
Derivative collateral posted
|
122 | 164 | ||||||
Prepayments and other current assets
|
249 | 266 | ||||||
Total current assets
|
3,016 | 3,476 | ||||||
Deferred debits and other assets
|
||||||||
Regulatory assets
|
2,268 | 2,374 | ||||||
Nuclear decommissioning trust funds
|
1,686 | 1,571 | ||||||
Miscellaneous other property and investments
|
418 | 413 | ||||||
Goodwill
|
3,655 | 3,655 | ||||||
Other assets and deferred debits
|
328 | 325 | ||||||
Total deferred debits and other assets
|
8,355 | 8,338 | ||||||
Total assets
|
$ | 33,120 | $ | 33,054 | ||||
CAPITALIZATION AND LIABILITIES
|
||||||||
Common stock equity
|
||||||||
Common stock without par value, 500 million shares authorized, 295
million and 293 million shares issued and outstanding, respectively
|
$ | 7,390 | $ | 7,343 | ||||
Accumulated other comprehensive loss
|
(142 | ) | (125 | ) | ||||
Retained earnings
|
2,798 | 2,805 | ||||||
Total common stock equity
|
10,046 | 10,023 | ||||||
Noncontrolling interests
|
3 | 4 | ||||||
Total equity
|
10,049 | 10,027 | ||||||
Preferred stock of subsidiaries
|
93 | 93 | ||||||
Long-term debt, affiliate
|
273 | 273 | ||||||
Long-term debt, net
|
11,418 | 11,864 | ||||||
Total capitalization
|
21,833 | 22,257 | ||||||
Current liabilities
|
||||||||
Current portion of long-term debt
|
750 | 505 | ||||||
Short-term debt
|
314 | - | ||||||
Accounts payable
|
920 | 994 | ||||||
Interest accrued
|
207 | 216 | ||||||
Dividends declared
|
185 | 184 | ||||||
Customer deposits
|
337 | 324 | ||||||
Derivative liabilities
|
214 | 259 | ||||||
Accrued compensation and other benefits
|
139 | 175 | ||||||
Other current liabilities
|
391 | 298 | ||||||
Total current liabilities
|
3,457 | 2,955 | ||||||
Deferred credits and other liabilities
|
||||||||
Noncurrent income tax liabilities
|
1,902 | 1,696 | ||||||
Accumulated deferred investment tax credits
|
106 | 110 | ||||||
Regulatory liabilities
|
2,585 | 2,635 | ||||||
Asset retirement obligations
|
1,235 | 1,200 | ||||||
Accrued pension and other benefits
|
1,305 | 1,514 | ||||||
Derivative liabilities
|
237 | 278 | ||||||
Other liabilities and deferred credits
|
460 | 409 | ||||||
Total deferred credits and other liabilities
|
7,830 | 7,842 | ||||||
Commitments and contingencies (Notes 12 and 13)
|
||||||||
Total capitalization and liabilities
|
$ | 33,120 | $ | 33,054 | ||||
|
|
|||||||
See Notes to Progress Energy, Inc. Unaudited Condensed Consolidated Interim Financial Statements.
|
PROGRESS ENERGY, INC.
|
||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS
|
||||||||
(in millions)
|
|
|
||||||
Six months ended June 30
|
2011
|
2010
|
||||||
Operating activities
|
|
|
||||||
Net income
|
$ | 363 | $ | 370 | ||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||
Depreciation, amortization and accretion
|
425 | 555 | ||||||
Deferred income taxes and investment tax credits, net
|
178 | 117 | ||||||
Deferred fuel credit
|
(29 | ) | (137 | ) | ||||
Allowance for equity funds used during construction
|
(55 | ) | (46 | ) | ||||
Other adjustments to net income
|
167 | 136 | ||||||
Cash (used) provided by changes in operating assets and liabilities
|
||||||||
Receivables
|
(5 | ) | (126 | ) | ||||
Inventory
|
(127 | ) | 87 | |||||
Derivative collateral posted
|
43 | (40 | ) | |||||
Other assets
|
(27 | ) | (13 | ) | ||||
Income taxes, net
|
56 | 152 | ||||||
Accounts payable
|
1 | 110 | ||||||
Accrued pension and other benefits
|
(259 | ) | (44 | ) | ||||
Other liabilities
|
49 | 38 | ||||||
Net cash provided by operating activities
|
780 | 1,159 | ||||||
Investing activities
|
||||||||
Gross property additions
|
(1,004 | ) | (1,116 | ) | ||||
Nuclear fuel additions
|
(93 | ) | (119 | ) | ||||
Purchases of available-for-sale securities and other investments
|
(3,387 | ) | (3,815 | ) | ||||
Proceeds from available-for-sale securities and other investments
|
3,364 | 3,792 | ||||||
Other investing activities
|
82 | 14 | ||||||
Net cash used by investing activities
|
(1,038 | ) | (1,244 | ) | ||||
Financing activities
|
||||||||
Issuance of common stock, net
|
26 | 405 | ||||||
Dividends paid on common stock
|
(366 | ) | (354 | ) | ||||
Net increase (decrease) in short-term debt
|
314 | (140 | ) | |||||
Proceeds from issuance of long-term debt, net
|
494 | 591 | ||||||
Retirement of long-term debt
|
(700 | ) | (400 | ) | ||||
Other financing activities
|
(69 | ) | (52 | ) | ||||
Net cash (used) provided by financing activities
|
(301 | ) | 50 | |||||
Net decrease in cash and cash equivalents
|
(559 | ) | (35 | ) | ||||
Cash and cash equivalents at beginning of period
|
611 | 725 | ||||||
Cash and cash equivalents at end of period
|
$ | 52 | $ | 690 | ||||
Supplemental disclosures
|
||||||||
Significant noncash transactions
|
||||||||
Accrued property additions
|
$ | 256 | $ | 274 | ||||
|
||||||||
See Notes to Progress Energy, Inc. Unaudited Condensed Consolidated Interim Financial Statements.
|
CAROLINA POWER & LIGHT COMPANY
|
||||||||||||||||
d/b/a PROGRESS ENERGY CAROLINAS, INC.
|
||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
||||||||||||||||
June 30, 2011
|
||||||||||||||||
|
|
|
|
|
||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of INCOME
|
||||||||||||||||
|
Three months ended June 30
|
Six months ended June 30
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Operating revenues
|
$ | 1,060 | $ | 1,117 | $ | 2,193 | $ | 2,380 | ||||||||
Operating expenses
|
||||||||||||||||
Fuel used in electric generation
|
326 | 375 | 689 | 858 | ||||||||||||
Purchased power
|
73 | 76 | 140 | 126 | ||||||||||||
Operation and maintenance
|
293 | 300 | 588 | 585 | ||||||||||||
Depreciation, amortization and accretion
|
126 | 120 | 250 | 238 | ||||||||||||
Taxes other than on income
|
50 | 51 | 106 | 111 | ||||||||||||
Other
|
- | (1 | ) | - | - | |||||||||||
Total operating expenses
|
868 | 921 | 1,773 | 1,918 | ||||||||||||
Operating income
|
192 | 196 | 420 | 462 | ||||||||||||
Other income (expense)
|
||||||||||||||||
Interest income
|
1 | 1 | 1 | 2 | ||||||||||||
Allowance for equity funds used during construction
|
18 | 15 | 38 | 28 | ||||||||||||
Other, net
|
1 | 4 | (1 | ) | (3 | ) | ||||||||||
Total other income, net
|
20 | 20 | 38 | 27 | ||||||||||||
Interest charges
|
||||||||||||||||
Interest charges
|
54 | 53 | 104 | 103 | ||||||||||||
Allowance for borrowed funds used during construction
|
(6 | ) | (5 | ) | (11 | ) | (9 | ) | ||||||||
Total interest charges, net
|
48 | 48 | 93 | 94 | ||||||||||||
Income before income tax
|
164 | 168 | 365 | 395 | ||||||||||||
Income tax expense
|
57 | 57 | 127 | 146 | ||||||||||||
Income before cumulative effect of change in accounting principle
|
107 | 111 | 238 | 249 | ||||||||||||
Cumulative effect of change in accounting principle, net of tax
|
- | - | - | (2 | ) | |||||||||||
Net income
|
107 | 111 | 238 | 247 | ||||||||||||
Net loss attributable to noncontrolling interests, net of tax
|
- | 1 | - | 3 | ||||||||||||
Net income attributable to controlling interests
|
107 | 112 | 238 | 250 | ||||||||||||
Preferred stock dividend requirement
|
- | - | (1 | ) | (1 | ) | ||||||||||
Net income available to parent
|
$ | 107 | $ | 112 | $ | 237 | $ | 249 | ||||||||
|
||||||||||||||||
See Notes to Progress Energy Carolinas, Inc. Unaudited Condensed Consolidated Interim Financial Statements.
|
CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY CAROLINAS, INC.
|
||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
(in millions)
|
June 30, 2011
|
December 31, 2010
|
||||||
ASSETS
|
|
|
||||||
Utility plant
|
|
|
||||||
Utility plant in service
|
$ | 17,198 | $ | 16,388 | ||||
Accumulated depreciation
|
(7,434 | ) | (7,324 | ) | ||||
Utility plant in service, net
|
9,764 | 9,064 | ||||||
Other utility plant, net
|
186 | 184 | ||||||
Construction work in progress
|
975 | 1,233 | ||||||
Nuclear fuel, net of amortization
|
442 | 480 | ||||||
Total utility plant, net
|
11,367 | 10,961 | ||||||
Current assets
|
||||||||
Cash and cash equivalents
|
18 | 230 | ||||||
Receivables, net
|
462 | 519 | ||||||
Receivables from affiliated companies
|
27 | 44 | ||||||
Inventory
|
711 | 590 | ||||||
Deferred fuel cost
|
61 | 71 | ||||||
Income taxes receivable
|
22 | 90 | ||||||
Prepayments and other current assets
|
106 | 112 | ||||||
Total current assets
|
1,407 | 1,656 | ||||||
Deferred debits and other assets
|
||||||||
Regulatory assets
|
1,002 | 987 | ||||||
Nuclear decommissioning trust funds
|
1,097 | 1,017 | ||||||
Miscellaneous other property and investments
|
186 | 183 | ||||||
Other assets and deferred debits
|
95 | 95 | ||||||
Total deferred debits and other assets
|
2,380 | 2,282 | ||||||
Total assets
|
$ | 15,154 | $ | 14,899 | ||||
CAPITALIZATION AND LIABILITIES
|
||||||||
Common stock equity
|
||||||||
Common stock without par value, 200 million shares authorized, 160
million shares issued and outstanding
|
$ | 2,141 | $ | 2,130 | ||||
Accumulated other comprehensive loss
|
(36 | ) | (33 | ) | ||||
Retained earnings
|
3,045 | 3,083 | ||||||
Total common stock equity
|
5,150 | 5,180 | ||||||
Preferred stock
|
59 | 59 | ||||||
Long-term debt, net
|
3,693 | 3,693 | ||||||
Total capitalization
|
8,902 | 8,932 | ||||||
Current liabilities
|
||||||||
Short-term debt
|
198 | - | ||||||
Accounts payable
|
476 | 534 | ||||||
Payables to affiliated companies
|
81 | 109 | ||||||
Interest accrued
|
75 | 74 | ||||||
Customer deposits
|
114 | 106 | ||||||
Derivative liabilities
|
45 | 53 | ||||||
Accrued compensation and other benefits
|
80 | 99 | ||||||
Other current liabilities
|
145 | 81 | ||||||
Total current liabilities
|
1,214 | 1,056 | ||||||
Deferred credits and other liabilities
|
||||||||
Noncurrent income tax liabilities
|
1,754 | 1,608 | ||||||
Accumulated deferred investment tax credits
|
101 | 104 | ||||||
Regulatory liabilities
|
1,544 | 1,461 | ||||||
Asset retirement obligations
|
875 | 849 | ||||||
Accrued pension and other benefits
|
576 | 723 | ||||||
Other liabilities and deferred credits
|
188 | 166 | ||||||
Total deferred credits and other liabilities
|
5,038 | 4,911 | ||||||
Commitments and contingencies (Notes 12 and 13)
|
||||||||
Total capitalization and liabilities
|
$ | 15,154 | $ | 14,899 | ||||
|
|
|||||||
See Notes to Progress Energy Carolinas, Inc. Unaudited Condensed Consolidated Interim Financial Statements.
|
CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY CAROLINAS, INC.
|
||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS
|
||||||||
(in millions)
|
|
|
||||||
Six months ended June 30
|
2011
|
2010
|
||||||
Operating activities
|
|
|
||||||
Net income
|
$ | 238 | $ | 247 | ||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||
Depreciation, amortization and accretion
|
322 | 294 | ||||||
Deferred income taxes and investment tax credits, net
|
119 | 55 | ||||||
Deferred fuel cost
|
10 | 21 | ||||||
Allowance for equity funds used during construction
|
(38 | ) | (28 | ) | ||||
Other adjustments to net income
|
45 | 47 | ||||||
Cash provided (used) by changes in operating assets and liabilities
|
||||||||
Receivables
|
52 | (39 | ) | |||||
Receivables from affiliated companies
|
17 | 18 | ||||||
Inventory
|
(121 | ) | 85 | |||||
Other assets
|
(8 | ) | (18 | ) | ||||
Income taxes, net
|
78 | 12 | ||||||
Accounts payable
|
(30 | ) | 20 | |||||
Payables to affiliated companies
|
(28 | ) | 15 | |||||
Accrued pension and other benefits
|
(164 | ) | (16 | ) | ||||
Other liabilities
|
44 | 4 | ||||||
Net cash provided by operating activities
|
536 | 717 | ||||||
Investing activities
|
||||||||
Gross property additions
|
(579 | ) | (580 | ) | ||||
Nuclear fuel additions
|
(80 | ) | (106 | ) | ||||
Purchases of available-for-sale securities and other investments
|
(286 | ) | (252 | ) | ||||
Proceeds from available-for-sale securities and other investments
|
262 | 227 | ||||||
Changes in advances to affiliated companies
|
2 | 202 | ||||||
Other investing activities
|
9 | - | ||||||
Net cash used by investing activities
|
(672 | ) | (509 | ) | ||||
Financing activities
|
||||||||
Dividends paid on preferred stock
|
(1 | ) | (1 | ) | ||||
Dividends paid to parent
|
(275 | ) | (50 | ) | ||||
Net increase in short-term debt
|
198 | - | ||||||
Contributions from parent
|
- | 14 | ||||||
Other financing activities
|
2 | - | ||||||
Net cash used by financing activities
|
(76 | ) | (37 | ) | ||||
Net (decrease) increase in cash and cash equivalents
|
(212 | ) | 171 | |||||
Cash and cash equivalents at beginning of period
|
230 | 35 | ||||||
Cash and cash equivalents at end of period
|
$ | 18 | $ | 206 | ||||
Supplemental disclosures
|
||||||||
Significant noncash transactions
|
||||||||
Accrued property additions
|
$ | 181 | $ | 158 | ||||
|
||||||||
See Notes to Progress Energy Carolinas, Inc. Unaudited Condensed Consolidated Interim Financial Statements.
|
FLORIDA POWER CORPORATION
|
||||||||||||||||
d/b/a PROGRESS ENERGY FLORIDA, INC.
|
||||||||||||||||
UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS
|
||||||||||||||||
June 30, 2011
|
||||||||||||||||
|
|
|
|
|
||||||||||||
UNAUDITED CONDENSED STATEMENTS of INCOME
|
||||||||||||||||
|
Three months ended June 30
|
Six months ended June 30
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Operating revenues
|
$ | 1,193 | $ | 1,252 | $ | 2,225 | $ | 2,522 | ||||||||
Operating expenses
|
||||||||||||||||
Fuel used in electric generation
|
348 | 368 | 703 | 781 | ||||||||||||
Purchased power
|
256 | 239 | 409 | 452 | ||||||||||||
Operation and maintenance
|
224 | 208 | 434 | 413 | ||||||||||||
Depreciation, amortization and accretion
|
48 | 110 | 73 | 234 | ||||||||||||
Taxes other than on income
|
83 | 83 | 168 | 176 | ||||||||||||
Other
|
- | - | (12 | ) | - | |||||||||||
Total operating expenses
|
959 | 1,008 | 1,775 | 2,056 | ||||||||||||
Operating income
|
234 | 244 | 450 | 466 | ||||||||||||
Other income
|
||||||||||||||||
Interest income
|
- | 1 | - | 1 | ||||||||||||
Allowance for equity funds used during construction
|
8 | 10 | 17 | 18 | ||||||||||||
Other, net
|
1 | 1 | 4 | 3 | ||||||||||||
Total other income, net
|
9 | 12 | 21 | 22 | ||||||||||||
Interest charges
|
||||||||||||||||
Interest charges
|
68 | 70 | 137 | 134 | ||||||||||||
Allowance for borrowed funds used during construction
|
(3 | ) | (2 | ) | (7 | ) | (7 | ) | ||||||||
Total interest charges, net
|
65 | 68 | 130 | 127 | ||||||||||||
Income before income tax
|
178 | 188 | 341 | 361 | ||||||||||||
Income tax expense
|
65 | 69 | 126 | 140 | ||||||||||||
Net income
|
113 | 119 | 215 | 221 | ||||||||||||
Preferred stock dividend requirement
|
- | - | (1 | ) | (1 | ) | ||||||||||
Net income available to parent
|
$ | 113 | $ | 119 | $ | 214 | $ | 220 | ||||||||
|
||||||||||||||||
See Notes to Progress Energy Florida, Inc. Unaudited Condensed Interim Financial Statements.
|
FLORIDA POWER CORPORATION d/b/a PROGRESS ENERGY FLORIDA, INC.
|
||||||||
UNAUDITED CONDENSED BALANCE SHEETS
|
||||||||
(in millions)
|
June 30, 2011
|
December 31, 2010
|
||||||
ASSETS
|
|
|
||||||
Utility plant
|
|
|
||||||
Utility plant in service
|
$ | 13,312 | $ | 13,155 | ||||
Accumulated depreciation
|
(4,267 | ) | (4,168 | ) | ||||
Utility plant in service, net
|
9,045 | 8,987 | ||||||
Held for future use
|
36 | 36 | ||||||
Construction work in progress
|
1,007 | 972 | ||||||
Nuclear fuel, net of amortization
|
206 | 194 | ||||||
Total utility plant, net
|
10,294 | 10,189 | ||||||
Current assets
|
||||||||
Cash and cash equivalents
|
18 | 249 | ||||||
Receivables, net
|
556 | 496 | ||||||
Receivables from affiliated companies
|
18 | 11 | ||||||
Inventory
|
644 | 636 | ||||||
Regulatory assets
|
137 | 105 | ||||||
Derivative collateral posted
|
104 | 140 | ||||||
Deferred tax assets
|
70 | 77 | ||||||
Prepayments and other current assets
|
30 | 29 | ||||||
Total current assets
|
1,577 | 1,743 | ||||||
Deferred debits and other assets
|
||||||||
Regulatory assets
|
1,266 | 1,387 | ||||||
Nuclear decommissioning trust funds
|
589 | 554 | ||||||
Miscellaneous other property and investments
|
47 | 43 | ||||||
Other assets and deferred debits
|
134 | 140 | ||||||
Total deferred debits and other assets
|
2,036 | 2,124 | ||||||
Total assets
|
$ | 13,907 | $ | 14,056 | ||||
CAPITALIZATION AND LIABILITIES
|
||||||||
Common stock equity
|
||||||||
Common stock without par value, 60 million shares authorized,
100 shares issued and outstanding
|
$ | 1,754 | $ | 1,750 | ||||
Accumulated other comprehensive loss
|
(9 | ) | (4 | ) | ||||
Retained earnings
|
2,958 | 3,144 | ||||||
Total common stock equity
|
4,703 | 4,890 | ||||||
Preferred stock
|
34 | 34 | ||||||
Long-term debt, net
|
4,182 | 4,182 | ||||||
Total capitalization
|
8,919 | 9,106 | ||||||
Current liabilities
|
||||||||
Current portion of long-term debt
|
300 | 300 | ||||||
Short-term debt
|
67 | - | ||||||
Notes payable to affiliated companies
|
6 | 9 | ||||||
Accounts payable
|
424 | 439 | ||||||
Payables to affiliated companies
|
44 | 60 | ||||||
Interest accrued
|
79 | 83 | ||||||
Customer deposits
|
223 | 218 | ||||||
Derivative liabilities
|
160 | 188 | ||||||
Accrued compensation and other benefits
|
35 | 47 | ||||||
Other current liabilities
|
251 | 121 | ||||||
Total current liabilities
|
1,589 | 1,465 | ||||||
Deferred credits and other liabilities
|
||||||||
Noncurrent income tax liabilities
|
1,190 | 1,065 | ||||||
Regulatory liabilities
|
953 | 1,084 | ||||||
Asset retirement obligations
|
360 | 351 | ||||||
Accrued pension and other benefits
|
441 | 522 | ||||||
Capital lease obligations
|
195 | 199 | ||||||
Derivative liabilities
|
155 | 190 | ||||||
Other liabilities and deferred credits
|
105 | 74 | ||||||
Total deferred credits and other liabilities
|
3,399 | 3,485 | ||||||
Commitments and contingencies (Notes 12 and 13)
|
||||||||
Total capitalization and liabilities
|
$ | 13,907 | $ | 14,056 | ||||
|
|
|||||||
See Notes to Progress Energy Florida, Inc. Unaudited Condensed Interim Financial Statements.
|
FLORIDA POWER CORPORATION d/b/a PROGRESS ENERGY FLORIDA, INC.
|
||||||||
UNAUDITED CONDENSED STATEMENTS of CASH FLOWS
|
||||||||
(in millions)
|
|
|
||||||
Six months ended June 30
|
2011
|
2010
|
||||||
Operating activities
|
|
|
||||||
Net income
|
$ | 215 | $ | 221 | ||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||
Depreciation, amortization and accretion
|
84 | 244 | ||||||
Deferred income taxes and investment tax credits, net
|
115 | 138 | ||||||
Deferred fuel credit
|
(39 | ) | (158 | ) | ||||
Allowance for equity funds used during construction
|
(17 | ) | (18 | ) | ||||
Other adjustments to net income
|
105 | 62 | ||||||
Cash (used) provided by changes in operating assets and liabilities
|
||||||||
Receivables
|
(50 | ) | (87 | ) | ||||
Receivables from affiliated companies
|
(7 | ) | 2 | |||||
Inventory
|
(8 | ) | 1 | |||||
Derivative collateral posted
|
36 | (27 | ) | |||||
Other assets
|
(5 | ) | (10 | ) | ||||
Income taxes, net
|
73 | 122 | ||||||
Accounts payable
|
31 | 98 | ||||||
Payables to affiliated companies
|
(16 | ) | (6 | ) | ||||
Accrued pension and other benefits
|
(89 | ) | (21 | ) | ||||
Other liabilities
|
39 | 49 | ||||||
Net cash provided by operating activities
|
467 | 610 | ||||||
Investing activities
|
||||||||
Gross property additions
|
(419 | ) | (543 | ) | ||||
Nuclear fuel additions
|
(13 | ) | (13 | ) | ||||
Purchases of available-for-sale securities and other investments
|
(3,091 | ) | (3,505 | ) | ||||
Proceeds from available-for-sale securities and other investments
|
3,092 | 3,508 | ||||||
Other investing activities
|
73 | 15 | ||||||
Net cash used by investing activities
|
(358 | ) | (538 | ) | ||||
Financing activities
|
||||||||
Dividends paid on preferred stock
|
(1 | ) | (1 | ) | ||||
Dividends paid to parent
|
(400 | ) | (50 | ) | ||||
Net increase in short-term debt
|
67 | - | ||||||
Proceeds from issuance of long-term debt, net
|
- | 591 | ||||||
Retirement of long-term debt
|
- | (300 | ) | |||||
Changes in advances from affiliated companies
|
(3 | ) | (214 | ) | ||||
Other financing activities
|
(3 | ) | (2 | ) | ||||
Net cash (used) provided by financing activities
|
(340 | ) | 24 | |||||
Net (decrease) increase in cash and cash equivalents
|
(231 | ) | 96 | |||||
Cash and cash equivalents at beginning of period
|
249 | 17 | ||||||
Cash and cash equivalents at end of period
|
$ | 18 | $ | 113 | ||||
Supplemental disclosures
|
||||||||
Significant noncash transactions
|
||||||||
Accrued property additions
|
$ | 73 | $ | 113 | ||||
|
||||||||
See Notes to Progress Energy Florida, Inc. Unaudited Condensed Interim Financial Statements.
|
Registrant
|
Applicable Notes
|
PEC
|
1 through 10, 12 and 13
|
PEF
|
1 through 10, 12 and 13
|
1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
A. | ORGANIZATION |
B. | BASIS OF PRESENTATION |
|
Three months ended June 30
|
Six months ended June 30
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Progress Energy
|
$ | 76 | $ | 81 | $ | 149 | $ | 164 | ||||||||
PEC
|
25 | 27 | 53 | 57 | ||||||||||||
PEF
|
51 | 54 | 96 | 107 |
(in millions)
|
June 30, 2011
|
December 31, 2010
|
||||||
Miscellaneous other property and investments
|
$ | 12 | $ | 12 | ||||
Other assets and deferred debits
|
1 | 1 | ||||||
Accounts payable
|
- | 5 |
2. | MERGER AGREEMENT |
·
|
On July 7, 2011, the SEC declared effective the registration statement on Form S-4 (the Registration Statement) containing a joint proxy statement for a special meeting of each company’s shareholders to vote on the Merger. The joint proxy statement was mailed to shareholders of both companies beginning July 11, 2011. Shareholder meetings for Progress Energy and Duke Energy have been set for August 23, 2011.
|
·
|
On March 28, 2011, Progress Energy and Duke Energy submitted their Hart-Scott-Rodino filing with the U.S. Department of Justice (DOJ) for review under U.S. antitrust laws. The 30-day waiting period required by the Hart-Scott-Rodino Act expired without Progress Energy or Duke Energy having received requests for additional information. Progress Energy and Duke Energy have met their obligations under the Hart-Scott-Rodino Act.
|
·
|
On March 30, 2011, Progress Energy and Duke Energy made filings with the NRC for approval for transfer of control of licenses for Progress Energy’s nuclear facilities to include Duke Energy as the ultimate parent corporation on these licenses. NRC approval is expected to take six to nine months.
|
·
|
On April 4, 2011, Progress Energy and Duke Energy made joint filings with the FERC, which assesses market power-related issues. The first filing is a Joint Dispatch Agreement, pursuant to which PEC and Duke Energy Carolinas will agree to jointly dispatch their generation facilities in order to achieve certain of the operating efficiencies expected to result from the Merger. The second filing is a joint open access transmission tariff pursuant to which PEC and Duke Energy Carolinas will agree to provide transmission service over their transmission facilities under a single transmission rate. The intervention period at FERC expired June 3, 2011.
|
·
|
On April 4, 2011, Progress Energy and Duke Energy filed a merger approval application and an application for approval of a Joint Dispatch Agreement between PEC and Duke Energy Carolinas with the NCUC. Procedural hearings have been scheduled for September 20, 2011.
|
·
|
On April 25, 2011, Progress Energy and Duke Energy filed a merger-related filing and an application for approval of a Joint Dispatch Agreement between PEC and Duke Energy Carolinas with the SCPSC. Procedural hearings have not been scheduled.
|
·
|
On July 27, 2011, the Federal Communications Commission approved the Assignment of Authorization filings to transfer control of certain licenses.
|
·
|
On August 2, 2011, the Kentucky Public Service Commission approved Progress Energy and Duke Energy’s merger-related settlement agreement with the Attorney General of the Commonwealth of Kentucky. The order approving the settlement agreement is subject to Progress Energy and Duke Energy's approval.
|
3. | NEW ACCOUNTING STANDARDS |
4. | REGULATORY MATTERS |
A. | PEC RETAIL RATE MATTERS |
B. | PEF RETAIL RATE MATTERS |
(in millions)
|
Replacement
Power Costs
|
Repair Costs
|
||||||
Spent to date
|
$ | 396 | $ | 203 | ||||
NEIL proceeds received to date
|
(162 | ) | (103 | ) | ||||
Insurance receivable at June 30, 2011
|
(115 | ) | (54 | ) | ||||
Balance for recovery
|
$ | 119 | $ | 46 |
5. | EQUITY AND COMPREHENSIVE INCOME |
A. | EARNINGS PER COMMON SHARE |
B. | RECONCILIATION OF TOTAL EQUITY |
(in millions)
|
Total Common
Stock Equity
|
Noncontrolling
Interests
|
Total Equity
|
|||||||||
Balance, December 31, 2010
|
$ | 10,023 | $ | 4 | $ | 10,027 | ||||||
Net income(a)
|
360 | 1 | 361 | |||||||||
Other comprehensive loss
|
(17 | ) | - | (17 | ) | |||||||
Issuance of shares through offerings and stock-
based compensation plans (See Note 5D)
|
47 | - | 47 | |||||||||
Dividends declared
|
(367 | ) | - | (367 | ) | |||||||
Distributions to noncontrolling interests
|
- | (2 | ) | (2 | ) | |||||||
Balance, June 30, 2011
|
$ | 10,046 | $ | 3 | $ | 10,049 | ||||||
|
|
|
|
|||||||||
Balance, December 31, 2009
|
$ | 9,449 | $ | 6 | $ | 9,455 | ||||||
Net income(a)
|
370 | (2 | ) | 368 | ||||||||
Other comprehensive loss
|
(44 | ) | - | (44 | ) | |||||||
Issuance of shares through offerings and stock-
based compensation plans (See Note 5D)
|
443 | - | 443 | |||||||||
Dividends declared
|
(361 | ) | - | (361 | ) | |||||||
Distributions to noncontrolling interests
|
- | (2 | ) | (2 | ) | |||||||
Balance, June 30, 2010
|
$ | 9,857 | $ | 2 | $ | 9,859 |
(a)
|
For the six months ended June 30, 2011, consolidated net income of $363 million includes $2 million attributable to preferred shareholders of subsidiaries. For the six months ended June 30, 2010, consolidated net income of $370 million includes $2 million attributable to preferred shareholders of subsidiaries. Income attributable to preferred shareholders of subsidiaries is not a component of total equity and is excluded from the table above.
|
C. | COMPREHENSIVE INCOME |
PROGRESS ENERGY
|
|
|||||||
|
Three months ended June 30
|
|||||||
(in millions)
|
2011
|
2010
|
||||||
Net income
|
$ | 178 | $ | 180 | ||||
Other comprehensive income (loss)
|
||||||||
Reclassification adjustments included in net income
|
||||||||
Change in cash flow hedges (net of tax expense of $1 and $1)
|
2 | 2 | ||||||
Change in unrecognized items for pension and other postretirement benefits
(net of tax expense of $1 and $-)
|
1 | 1 | ||||||
Net unrealized losses on cash flow hedges (net of tax benefit of $10 and $28)
|
(16 | ) | (44 | ) | ||||
Net unrecognized items on pension and other postretirement benefits (net of
tax benefit of $5)
|
(8 | ) | - | |||||
Other (net of tax expense of $-)
|
- | 1 | ||||||
Other comprehensive loss
|
(21 | ) | (40 | ) | ||||
Comprehensive income
|
157 | 140 | ||||||
Comprehensive income attributable to noncontrolling interests
|
(2 | ) | - | |||||
Comprehensive income attributable to controlling interests
|
$ | 155 | $ | 140 | ||||
|
|
|||||||
|
Six months ended June 30
|
|||||||
(in millions)
|
2011 | 2010 | ||||||
Net income
|
$ | 363 | $ | 370 | ||||
Other comprehensive income (loss)
|
||||||||
Reclassification adjustments included in net income
|
||||||||
Change in cash flow hedges (net of tax expense of $2 and $2)
|
3 | 3 | ||||||
Change in unrecognized items for pension and other postretirement benefits
(net of tax expense of $2 and $1)
|
2 | 2 | ||||||
Net unrealized losses on cash flow hedges (net of tax benefit of $9 and $32)
|
(14 | ) | (50 | ) | ||||
Net unrecognized items on pension and other postretirement benefits (net of
tax benefit of $5)
|
(8 | ) | - | |||||
Other (net of tax expense of $-)
|
- | 1 | ||||||
Other comprehensive loss
|
(17 | ) | (44 | ) | ||||
Comprehensive income
|
346 | 326 | ||||||
Comprehensive income attributable to noncontrolling interests
|
(3 | ) | - | |||||
Comprehensive income attributable to controlling interests
|
$ | 343 | $ | 326 |
PEC
|
|
|||||||
|
Three months ended June 30
|
|||||||
(in millions)
|
2011
|
2010
|
||||||
Net income
|
$ | 107 | $ | 111 | ||||
Other comprehensive income (loss)
|
||||||||
Reclassification adjustments included in net income
|
||||||||
Change in cash flow hedges (net of tax expense of $- and $1)
|
1 | 1 | ||||||
Net unrealized losses on cash flow hedges (net of tax benefit of $4 and $10)
|
(6 | ) | (15 | ) | ||||
Other comprehensive loss
|
(5 | ) | (14 | ) | ||||
Comprehensive income
|
102 | 97 | ||||||
Comprehensive loss attributable to noncontrolling interests
|
- | 1 | ||||||
Comprehensive income attributable to controlling interests
|
$ | 102 | $ | 98 |
|
Six months ended June 30
|
|||||||
(in millions)
|
2011
|
2010
|
||||||
Net income
|
$ | 238 | $ | 247 | ||||
Other comprehensive income (loss)
|
||||||||
Reclassification adjustments included in net income
|
||||||||
Change in cash flow hedges (net of tax expense of $1 and $1)
|
2 | 2 | ||||||
Net unrealized losses on cash flow hedges (net of tax benefit of $3 and $10)
|
(5 | ) | (16 | ) | ||||
Other comprehensive loss
|
(3 | ) | (14 | ) | ||||
Comprehensive income
|
235 | 233 | ||||||
Comprehensive loss attributable to noncontrolling interests
|
- | 3 | ||||||
Comprehensive income attributable to controlling interests
|
$ | 235 | $ | 236 |
PEF
|
|
|||||||
|
Three months ended June 30
|
|||||||
(in millions)
|
2011
|
2010
|
||||||
Net income
|
$ | 113 | $ | 119 | ||||
Other comprehensive loss
|
||||||||
Net unrealized losses on cash flow hedges (net of tax benefit of $3 and $4)
|
(5 | ) | (7 | ) | ||||
Other comprehensive loss
|
(5 | ) | (7 | ) | ||||
Comprehensive income
|
$ | 108 | $ | 112 | ||||
|
|
|||||||
|
Six months ended June 30
|
|||||||
(in millions)
|
2011 | 2010 | ||||||
Net income
|
$ | 215 | $ | 221 | ||||
Other comprehensive loss
|
||||||||
Net unrealized losses on cash flow hedges (net of tax benefit of $3 and $7)
|
(5 | ) | (10 | ) | ||||
Other comprehensive loss
|
(5 | ) | (10 | ) | ||||
Comprehensive income
|
$ | 210 | $ | 211 |
D. | COMMON STOCK |
2011
|
2010
|
|||||||||||||||
(in millions)
|
Shares
|
Net
Proceeds
|
Shares
|
Net
Proceeds
|
||||||||||||
Three months ended June 30
|
|
|
|
|
||||||||||||
Total issuances
|
0.4 | $ | 18 | 5.4 | $ | 208 | ||||||||||
Issuances through 401(k) and/or IPP
|
- | - | 5.4 | 208 | ||||||||||||
Six months ended June 30
|
||||||||||||||||
Total issuances
|
1.4 | $ | 26 | 11.5 | $ | 405 | ||||||||||
Issuances through 401(k) and/or IPP
|
- | 1 | 10.7 | 405 |
6. | PREFERRED STOCK OF SUBSIDIARIES |
7. | DEBT AND CREDIT FACILITIES |
8. | FAIR VALUE DISCLOSURES |
A. | DEBT AND INVESTMENTS |
(in millions)
|
Fair Value
|
Unrealized
Losses
|
Unrealized
Gains
|
|||||||||
June 30, 2011
|
|
|
|
|||||||||
Common stock equity
|
$ | 1,098 | $ | 13 | $ | 462 | ||||||
Preferred stock and other equity
|
53 | - | 12 | |||||||||
Corporate debt
|
94 | - | 5 | |||||||||
U.S. state and municipal debt
|
109 | 2 | 3 | |||||||||
U.S. and foreign government debt
|
249 | - | 11 | |||||||||
Money market funds and other
|
95 | - | 1 | |||||||||
Total
|
$ | 1,698 | $ | 15 | $ | 494 | ||||||
|
||||||||||||
December 31, 2010
|
||||||||||||
Common stock equity
|
$ | 1,021 | $ | 13 | $ | 408 | ||||||
Preferred stock and other equity
|
28 | - | 11 | |||||||||
Corporate debt
|
90 | - | 6 | |||||||||
U.S. state and municipal debt
|
132 | 4 | 3 | |||||||||
U.S. and foreign government debt
|
264 | 2 | 10 | |||||||||
Money market funds and other
|
52 | - | 1 | |||||||||
Total
|
$ | 1,587 | $ | 19 | $ | 439 |
(in millions)
|
|
|||
Due in one year or less
|
$ | 54 | ||
Due after one through five years
|
132 | |||
Due after five through 10 years
|
205 | |||
Due after 10 years
|
68 | |||
Total
|
$ | 459 |
|
Three months ended June 30
|
Six months ended June 30
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Proceeds
|
$ | 1,448 | $ | 1,755 | $ | 3,192 | $ | 3,692 | ||||||||
Realized gains
|
6 | 6 | 14 | 10 | ||||||||||||
Realized losses
|
6 | 10 | 10 | 16 |
|
|
|||||||||||
(in millions) | Fair Value |
Unrealized
Losses
|
Unrealized
Gains
|
|||||||||
June 30, 2011
|
|
|
|
|||||||||
Common stock equity
|
$ | 706 | $ | 11 | $ | 293 | ||||||
Preferred stock and other equity
|
17 | - | 8 | |||||||||
Corporate debt
|
77 | - | 4 | |||||||||
U.S. state and municipal debt
|
47 | - | 1 | |||||||||
U.S. and foreign government debt
|
207 | - | 10 | |||||||||
Money market funds and other
|
44 | - | 1 | |||||||||
Total
|
$ | 1,098 | $ | 11 | $ | 317 | ||||||
|
||||||||||||
December 31, 2010
|
||||||||||||
Common stock equity
|
$ | 652 | $ | 10 | $ | 256 | ||||||
Preferred stock and other equity
|
14 | - | 6 | |||||||||
Corporate debt
|
72 | - | 5 | |||||||||
U.S. state and municipal debt
|
51 | 1 | 1 | |||||||||
U.S. and foreign government debt
|
199 | 1 | 9 | |||||||||
Money market funds and other
|
42 | - | 1 | |||||||||
Total
|
$ | 1,030 | $ | 12 | $ | 278 |
(in millions)
|
|
|||
Due in one year or less
|
$ | 19 | ||
Due after one through five years
|
128 | |||
Due after five through 10 years
|
133 | |||
Due after 10 years
|
58 | |||
Total
|
$ | 338 |
|
Three months ended June 30
|
Six months ended June 30
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Proceeds
|
$ | 119 | $ | 115 | $ | 250 | $ | 222 | ||||||||
Realized gains
|
3 | 3 | 6 | 6 | ||||||||||||
Realized losses
|
4 | 7 | 5 | 12 |
(in millions) |
Fair Value
|
Unrealized
Losses
|
Unrealized
Gains
|
|||||||||
June 30, 2011
|
|
|
|
|||||||||
Common stock equity
|
$ | 392 | $ | 2 | $ | 169 | ||||||
Preferred stock and other equity
|
36 | - | 4 | |||||||||
Corporate debt
|
17 | - | 1 | |||||||||
U.S. state and municipal debt
|
62 | 2 | 2 | |||||||||
U.S. and foreign government debt
|
42 | - | 1 | |||||||||
Money market funds and other
|
44 | - | - | |||||||||
Total
|
$ | 593 | $ | 4 | $ | 177 |
(in millions) |
Fair Value
|
Unrealized
Losses
|
Unrealized
Gains
|
|||||||||
|
|
|
|
|||||||||
December 31, 2010
|
|
|
|
|||||||||
Common stock equity
|
$ | 369 | $ | 3 | $ | 152 | ||||||
Preferred stock and other equity
|
14 | - | 5 | |||||||||
Corporate debt
|
14 | - | 1 | |||||||||
U.S. state and municipal debt
|
81 | 3 | 2 | |||||||||
U.S. and foreign government debt
|
62 | 1 | 1 | |||||||||
Money market funds and other
|
10 | - | - | |||||||||
Total
|
$ | 550 | $ | 7 | $ | 161 |
(in millions)
|
|
|||
Due in one year or less
|
$ | 35 | ||
Due after one through five years
|
4 | |||
Due after five through 10 years
|
72 | |||
Due after 10 years
|
10 | |||
Total
|
$ | 121 |
|
Three months ended June 30
|
Six months ended June 30
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Proceeds
|
$ | 1,329 | $ | 1,624 | $ | 2,935 | $ | 3,414 | ||||||||
Realized gains
|
3 | 3 | 8 | 4 | ||||||||||||
Realized losses
|
2 | 3 | 5 | 4 |
B. | FAIR VALUE MEASUREMENTS |
PROGRESS ENERGY
|
|
|
|
|
||||||||||||
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
June 30, 2011
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
||||||||||||
Nuclear decommissioning trust funds
|
|
|
|
|
||||||||||||
Common stock equity
|
$ | 1,098 | $ | - | $ | - | $ | 1,098 | ||||||||
Preferred stock and other equity
|
26 | 27 | - | 53 | ||||||||||||
Corporate debt
|
- | 93 | - | 93 | ||||||||||||
U.S. state and municipal debt
|
- | 110 | - | 110 | ||||||||||||
U.S. and foreign government debt
|
100 | 149 | - | 249 | ||||||||||||
Money market funds and other
|
2 | 81 | - | 83 | ||||||||||||
Total nuclear decommissioning trust funds
|
1,226 | 460 | - | 1,686 | ||||||||||||
Derivatives
|
||||||||||||||||
Commodity forward contracts
|
- | 18 | - | 18 | ||||||||||||
Interest rate contracts
|
- | 1 | - | 1 | ||||||||||||
Other marketable securities
|
||||||||||||||||
Money market and other
|
21 | 7 | - | 28 | ||||||||||||
Total assets
|
$ | 1,247 | $ | 486 | $ | - | $ | 1,733 | ||||||||
|
||||||||||||||||
Liabilities
|
||||||||||||||||
Derivatives
|
||||||||||||||||
Commodity forward contracts
|
$ | - | $ | 376 | $ | 36 | $ | 412 | ||||||||
Interest rate contracts
|
- | 35 | - | 35 | ||||||||||||
Contingent value obligations
|
- | 11 | - | 11 | ||||||||||||
Total liabilities
|
$ | - | $ | 422 | $ | 36 | $ | 458 |
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
December 31, 2010
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
||||||||||||
Nuclear decommissioning trust funds
|
|
|
|
|
||||||||||||
Common stock equity
|
$ | 1,021 | $ | - | $ | - | $ | 1,021 | ||||||||
Preferred stock and other equity
|
22 | 6 | - | 28 | ||||||||||||
Corporate debt
|
- | 86 | - | 86 | ||||||||||||
U.S. state and municipal debt
|
- | 132 | - | 132 | ||||||||||||
U.S. and foreign government debt
|
79 | 182 | - | 261 | ||||||||||||
Money market funds and other
|
1 | 42 | - | 43 | ||||||||||||
Total nuclear decommissioning trust funds
|
1,123 | 448 | - | 1,571 | ||||||||||||
Derivatives
|
||||||||||||||||
Commodity forward contracts
|
- | 15 | - | 15 | ||||||||||||
Interest rate contracts
|
- | 4 | - | 4 | ||||||||||||
Other marketable securities
|
||||||||||||||||
Corporate debt
|
- | 4 | - | 4 | ||||||||||||
U.S. and foreign government debt
|
- | 3 | - | 3 | ||||||||||||
Money market and other
|
18 | - | - | 18 | ||||||||||||
Total assets
|
$ | 1,141 | $ | 474 | $ | - | $ | 1,615 | ||||||||
|
||||||||||||||||
Liabilities
|
||||||||||||||||
Derivatives
|
||||||||||||||||
Commodity forward contracts
|
$ | - | $ | 458 | $ | 36 | $ | 494 | ||||||||
Interest rate contracts
|
- | 39 | - | 39 | ||||||||||||
Contingent value obligations
|
- | 15 | - | 15 | ||||||||||||
Total liabilities
|
$ | - | $ | 512 | $ | 36 | $ | 548 |
PEC
|
|
|
|
|
||||||||||||
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
June 30, 2011
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
||||||||||||
Nuclear decommissioning trust funds
|
|
|
|
|
||||||||||||
Common stock equity
|
$ | 706 | $ | - | $ | - | $ | 706 | ||||||||
Preferred stock and other equity
|
17 | - | - | 17 | ||||||||||||
Corporate debt
|
- | 76 | - | 76 | ||||||||||||
U.S. state and municipal debt
|
- | 47 | - | 47 | ||||||||||||
U.S. and foreign government debt
|
88 | 119 | - | 207 | ||||||||||||
Money market funds and other
|
1 | 43 | - | 44 | ||||||||||||
Total nuclear decommissioning trust funds
|
812 | 285 | - | 1,097 | ||||||||||||
Derivatives
|
||||||||||||||||
Commodity forward contracts
|
- | 1 | - | 1 | ||||||||||||
Interest rate contracts
|
- | 1 | - | 1 | ||||||||||||
Other marketable securities
|
5 | - | - | 5 | ||||||||||||
Total assets
|
$ | 817 | $ | 287 | $ | - | $ | 1,104 | ||||||||
|
||||||||||||||||
Liabilities
|
||||||||||||||||
Derivatives
|
||||||||||||||||
Commodity forward contracts
|
$ | - | $ | 75 | $ | 36 | $ | 111 | ||||||||
Interest rate contracts
|
- | 11 | - | 11 | ||||||||||||
Total liabilities
|
$ | - | $ | 86 | $ | 36 | $ | 122 | ||||||||
|
||||||||||||||||
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
December 31, 2010
|
||||||||||||||||
Assets
|
||||||||||||||||
Nuclear decommissioning trust funds
|
||||||||||||||||
Common stock equity
|
$ | 652 | $ | - | $ | - | $ | 652 | ||||||||
Preferred stock and other equity
|
14 | - | - | 14 | ||||||||||||
Corporate debt
|
- | 72 | - | 72 | ||||||||||||
U.S. state and municipal debt
|
- | 51 | - | 51 | ||||||||||||
U.S. and foreign government debt
|
76 | 123 | - | 199 | ||||||||||||
Money market funds and other
|
1 | 28 | - | 29 | ||||||||||||
Total nuclear decommissioning trust funds
|
743 | 274 | - | 1,017 | ||||||||||||
Derivatives
|
||||||||||||||||
Commodity forward contracts
|
- | 2 | - | 2 | ||||||||||||
Interest rate contracts
|
- | 3 | - | 3 | ||||||||||||
Other marketable securities
|
4 | - | - | 4 | ||||||||||||
Total assets
|
$ | 747 | $ | 279 | $ | - | $ | 1,026 | ||||||||
|
||||||||||||||||
Liabilities
|
||||||||||||||||
Derivatives
|
||||||||||||||||
Commodity forward contracts
|
$ | - | $ | 87 | $ | 36 | $ | 123 | ||||||||
Interest rate contracts
|
- | 11 | - | 11 | ||||||||||||
Total liabilities
|
$ | - | $ | 98 | $ | 36 | $ | 134 |
PEF
|
|
|
|
|
||||||||||||
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
June 30, 2011
|
|
|
|
|
||||||||||||
Assets
|
|
|
|
|
||||||||||||
Nuclear decommissioning trust funds
|
|
|
|
|
||||||||||||
Common stock equity
|
$ | 392 | $ | - | $ | - | $ | 392 | ||||||||
Preferred stock and other equity
|
9 | 27 | - | 36 | ||||||||||||
Corporate debt
|
- | 17 | - | 17 | ||||||||||||
U.S. state and municipal debt
|
- | 63 | - | 63 | ||||||||||||
U.S. and foreign government debt
|
12 | 30 | - | 42 | ||||||||||||
Money market funds and other
|
1 | 38 | - | 39 | ||||||||||||
Total nuclear decommissioning trust funds
|
414 | 175 | - | 589 | ||||||||||||
Derivatives
|
||||||||||||||||
Commodity forward contracts
|
- | 17 | - | 17 | ||||||||||||
Other marketable securities
|
2 | - | - | 2 | ||||||||||||
Total assets
|
$ | 416 | $ | 192 | $ | - | $ | 608 | ||||||||
|
||||||||||||||||
Liabilities
|
||||||||||||||||
Derivatives
|
||||||||||||||||
Commodity forward contracts
|
$ | - | $ | 301 | $ | - | $ | 301 | ||||||||
Interest rate contracts
|
- | 14 | - | 14 | ||||||||||||
Total liabilities
|
$ | - | $ | 315 | $ | - | $ | 315 | ||||||||
|
||||||||||||||||
(in millions)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
December 31, 2010
|
||||||||||||||||
Assets
|
||||||||||||||||
Nuclear decommissioning trust funds
|
||||||||||||||||
Common stock equity
|
$ | 369 | $ | - | $ | - | $ | 369 | ||||||||
Preferred stock and other equity
|
8 | 6 | - | 14 | ||||||||||||
Corporate debt
|
- | 14 | - | 14 | ||||||||||||
U.S. state and municipal debt
|
- | 81 | - | 81 | ||||||||||||
U.S. and foreign government debt
|
3 | 59 | - | 62 | ||||||||||||
Money market funds and other
|
- | 14 | - | 14 | ||||||||||||
Total nuclear decommissioning trust funds
|
380 | 174 | - | 554 | ||||||||||||
Derivatives
|
||||||||||||||||
Commodity forward contracts
|
- | 13 | - | 13 | ||||||||||||
Other marketable securities
|
1 | - | - | 1 | ||||||||||||
Total assets
|
$ | 381 | $ | 187 | $ | - | $ | 568 | ||||||||
|
||||||||||||||||
Liabilities
|
||||||||||||||||
Derivatives
|
||||||||||||||||
Commodity forward contracts
|
$ | - | $ | 371 | $ | - | $ | 371 | ||||||||
Interest rate contracts
|
- | 7 | - | 7 | ||||||||||||
Total liabilities
|
$ | - | $ | 378 | $ | - | $ | 378 |
PROGRESS ENERGY
|
||||||||||||||||
|
Three months ended June 30
|
Six months ended June 30
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Derivatives, net at beginning of period
|
$ | 32 | $ | 52 | $ | 36 | $ | 39 | ||||||||
Total losses, realized and unrealized
|
||||||||||||||||
deferred as regulatory assets and liabilities, net
|
5 | 10 | 1 | 23 | ||||||||||||
Derivatives, net at end of period
|
$ | 37 | $ | 62 | $ | 37 | $ | 62 |
PEC
|
||||||||||||||||
|
Three months ended June 30
|
Six months ended June 30
|
||||||||||||||
(in millions)
|
2011 | 2010 | 2011 | 2010 | ||||||||||||
Derivatives, net at beginning of period
|
$ | 32 | $ | 36 | $ | 36 | $ | 27 | ||||||||
Total losses, realized and unrealized
|
||||||||||||||||
deferred as regulatory assets and liabilities, net
|
5 | 6 | 1 | 15 | ||||||||||||
Derivatives, net at end of period
|
$ | 37 | $ | 42 | $ | 37 | $ | 42 |
PEF
|
||||||||||||||||
|
Three months ended June 30
|
Six months ended June 30
|
||||||||||||||
(in millions)
|
2011 | 2010 | 2011 | 2010 | ||||||||||||
Derivatives, net at beginning of period
|
$ | - | $ | 16 | $ | - | $ | 12 | ||||||||
Total losses, realized and unrealized
|
||||||||||||||||
deferred as regulatory assets and liabilities, net
|
- | 4 | - | 8 | ||||||||||||
Derivatives, net at end of period
|
$ | - | $ | 20 | $ | - | $ | 20 |
9. | BENEFIT PLANS |
PROGRESS ENERGY
|
|
|
||||||||||||||
Pension Benefits
|
OPEB
|
|||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Service cost
|
$ | 14 | $ | 12 | $ | 3 | $ | 2 | ||||||||
Interest cost
|
35 | 35 | 10 | 8 | ||||||||||||
Expected return on plan assets
|
(45 | ) | (39 | ) | - | (1 | ) | |||||||||
Amortization of actuarial loss(a)
|
18 | 12 | 3 | - | ||||||||||||
Other amortization, net (a)
|
1 | 2 | 1 | 1 | ||||||||||||
Net periodic cost
|
$ | 23 | $ | 22 | $ | 17 | $ | 10 |
(a)
|
Adjusted to reflect PEF’s rate treatment. See Note 16B in the 2010 Form 10-K.
|
PEC
|
|
|
||||||||||||||
Pension Benefits
|
OPEB
|
|||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Service cost
|
$ | 6 | $ | 5 | $ | 2 | $ | 1 | ||||||||
Interest cost
|
16 | 16 | 5 | 4 | ||||||||||||
Expected return on plan assets
|
(23 | ) | (19 | ) | - | - | ||||||||||
Amortization of actuarial loss
|
7 | 4 | 1 | - | ||||||||||||
Other amortization, net
|
1 | 1 | - | - | ||||||||||||
Net periodic cost
|
$ | 7 | $ | 7 | $ | 8 | $ | 5 |
PEF
|
|
|
||||||||||||||
Pension Benefits
|
OPEB
|
|||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Service cost
|
$ | 6 | $ | 5 | $ | 1 | $ | - | ||||||||
Interest cost
|
15 | 15 | 4 | 3 | ||||||||||||
Expected return on plan assets
|
(20 | ) | (17 | ) | - | - | ||||||||||
Amortization of actuarial loss
|
9 | 7 | 2 | - | ||||||||||||
Other amortization, net
|
- | - | 1 | 1 | ||||||||||||
Net periodic cost
|
$ | 10 | $ | 10 | $ | 8 | $ | 4 |
PROGRESS ENERGY
|
|
|
||||||||||||||
Pension Benefits
|
OPEB
|
|||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Service cost
|
$ | 27 | $ | 23 | $ | 6 | $ | 4 | ||||||||
Interest cost
|
70 | 70 | 20 | 16 | ||||||||||||
Expected return on plan assets
|
(91 | ) | (78 | ) | (1 | ) | (2 | ) | ||||||||
Amortization of actuarial loss(a)
|
33 | 25 | 6 | 1 | ||||||||||||
Other amortization, net (a)
|
3 | 3 | 3 | 2 | ||||||||||||
Net periodic cost
|
$ | 42 | $ | 43 | $ | 34 | $ | 21 |
(a)
|
Adjusted to reflect PEF’s rate treatment. See Note 16B in the 2010 Form 10-K.
|
PEC
|
|
|
||||||||||||||
Pension Benefits
|
OPEB
|
|||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Service cost
|
$ | 11 | $ | 9 | $ | 2 | $ | 2 | ||||||||
Interest cost
|
31 | 32 | 10 | 8 | ||||||||||||
Expected return on plan assets
|
(46 | ) | (38 | ) | - | (1 | ) | |||||||||
Amortization of actuarial loss
|
13 | 8 | 2 | - | ||||||||||||
Other amortization, net
|
3 | 3 | 1 | 1 | ||||||||||||
Net periodic cost
|
$ | 12 | $ | 14 | $ | 15 | $ | 10 |
PEF
|
|
|
||||||||||||||
Pension Benefits
|
OPEB
|
|||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Service cost
|
$ | 12 | $ | 10 | $ | 2 | $ | 1 | ||||||||
Interest cost
|
30 | 29 | 9 | 6 | ||||||||||||
Expected return on plan assets
|
(39 | ) | (34 | ) | (1 | ) | (1 | ) | ||||||||
Amortization of actuarial loss
|
17 | 15 | 4 | - | ||||||||||||
Other amortization, net
|
- | - | 2 | 2 | ||||||||||||
Net periodic cost
|
$ | 20 | $ | 20 | $ | 16 | $ | 8 |
10. | RISK MANAGEMENT ACTIVITIES AND DERIVATIVE TRANSACTIONS |
A. | COMMODITY DERIVATIVES |
B. | INTEREST RATE DERIVATIVES – FAIR VALUE OR CASH FLOW HEDGES |
C. | CONTINGENT FEATURES |
D. | DERIVATIVE INSTRUMENT AND HEDGING ACTIVITY INFORMATION |
The following table presents the fair value of derivative instruments at June 30, 2011 and December 31, 2010:
|
||||||||||||||||
|
|
|
|
|||||||||||||
Instrument / Balance sheet location
|
June 30, 2011
|
December 31, 2010
|
||||||||||||||
(in millions)
|
Asset
|
Liability
|
Asset
|
Liability
|
||||||||||||
Derivatives designated as hedging instruments
|
||||||||||||||||
Interest rate derivatives
|
|
|
|
|
||||||||||||
Prepayments and other current assets
|
$ | - |
|
$ | 1 |
|
||||||||||
Other assets and deferred debits
|
1 |
|
3 |
|
||||||||||||
Derivative liabilities, current
|
$ | 24 | $ | 32 | ||||||||||||
Derivative liabilities, long-term
|
11 | 7 | ||||||||||||||
Total derivatives designated as hedging instruments
|
1 | 35 | 4 | 39 | ||||||||||||
Derivatives not designated as hedging instruments
|
||||||||||||||||
Commodity derivatives(a)
|
||||||||||||||||
Prepayments and other current assets
|
15 | 11 | ||||||||||||||
Other assets and deferred debits
|
3 | 4 | ||||||||||||||
Derivative liabilities, current
|
189 | 226 | ||||||||||||||
Derivative liabilities, long-term
|
223 | 268 | ||||||||||||||
CVOs(b)
|
||||||||||||||||
Other liabilities and deferred credits
|
11 | 15 | ||||||||||||||
Fair value of derivatives not designated as hedging instruments
|
18 | 423 | 15 | 509 | ||||||||||||
Fair value loss transition adjustment(c)
|
||||||||||||||||
Derivative liabilities, current
|
1 | 1 | ||||||||||||||
Derivative liabilities, long-term
|
3 | 3 | ||||||||||||||
Total derivatives not designated as hedging instruments
|
18 | 427 | 15 | 513 | ||||||||||||
Total derivatives
|
$ | 19 | $ | 462 | $ | 19 | $ | 552 |
(a)
|
Substantially all of these contracts receive regulatory treatment.
|
||||||||||||
(b)
|
As discussed in Note 15 of the 2010 Form 10-K, the Parent issued 98.6 million CVOs in connection with the acquisition of Florida Progress during 2000.
|
||||||||||||
(c)
|
In 2003, PEC recorded a $38 million pre-tax ($23 million after-tax) fair value loss transition adjustment pursuant to the adoption of new accounting guidance for derivatives. The related liability is being amortized to earnings over the term of the related contracts.
|
Derivatives Designated as Hedging Instruments
|
||||||||||||||||||||||||
Instrument
|
Amount of Gain or
(Loss) Recognized in
OCI, Net of Tax on
Derivatives(a)
|
Amount of Gain or
(Loss), Net of Tax
Reclassified from
Accumulated OCI into
Income(a)
|
Amount of Pre-tax Gain
or (Loss) Recognized in
Income on
Derivatives(b)
|
|||||||||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||||
Interest rate derivatives(c) (d)
|
$ | (16 | ) | $ | (44 | ) | $ | (2 | ) | $ | (2 | ) | $ | - | $ | - |
(a)
|
Effective portion.
|
|||||||||||||||||
(b)
|
Related to ineffective portion and amount excluded from effectiveness testing.
|
|||||||||||||||||
(c)
|
Amounts in accumulated OCI related to terminated hedges are reclassified to earnings as the interest expense is recorded. The effective portion of the hedges will be amortized to interest expense over the term of the related debt.
|
|||||||||||||||||
(d)
|
Amounts recorded in the Consolidated Statements of Income are classified in interest charges.
|
Derivatives Not Designated as Hedging Instruments
|
||||||||||||||||
Instrument
|
Realized Gain or (Loss)(a)
|
Unrealized Gain or (Loss)(b)
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Commodity derivatives
|
$ | (76 | ) | $ | (91 | ) | $ | (68 | ) | $ | (2 | ) |
(a)
|
After settlement of the derivatives and the fuel is consumed, gains or losses are passed through the fuel cost-recovery clause.
|
|||||||||||
(b)
|
Amounts are recorded in regulatory liabilities and assets, respectively, on the Consolidated Balance Sheets until derivatives are settled.
|
Instrument
|
Amount of Gain or (Loss) Recognized in Income on Derivatives
|
|||||||
(in millions)
|
2011
|
2010
|
||||||
Commodity derivatives(a)
|
$ | 1 | $ | 1 | ||||
CVOs(a)
|
4 | - | ||||||
Total
|
$ | 5 | $ | 1 |
(a)
|
Amounts recorded in the Consolidated Statements of Income are classified in other, net.
|
Derivatives Designated as Hedging Instruments
|
||||||||||||||||||||||||
Instrument
|
Amount of Gain or
(Loss) Recognized in
OCI, Net of Tax on
Derivatives(a)
|
Amount of Gain or
(Loss), Net of Tax
Reclassified from
Accumulated OCI into
Income(a)
|
Amount of Pre-tax Gain
or (Loss) Recognized in
Income on
Derivatives(b)
|
|||||||||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||||
Interest rate derivatives(c) (d)
|
$ | (14 | ) | $ | (50 | ) | $ | (3 | ) | $ | (3 | ) | $ | (2 | ) | $ | - |
(a)
|
Effective portion.
|
|||||||||||||||||
(b)
|
Related to ineffective portion and amount excluded from effectiveness testing.
|
|||||||||||||||||
(c)
|
Amounts in accumulated OCI related to terminated hedges are reclassified to earnings as the interest expense is recorded. The effective portion of the hedges will be amortized to interest expense over the term of the related debt.
|
|||||||||||||||||
(d)
|
Amounts recorded in the Consolidated Statements of Income are classified in interest charges.
|
Derivatives Not Designated as Hedging Instruments
|
||||||||||||||||
Instrument
|
Realized Gain or (Loss)(a)
|
Unrealized Gain or (Loss)(b)
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Commodity derivatives
|
$ | (128 | ) | $ | (150 | ) | $ | (44 | ) | $ | (236 | ) |
(a)
|
After settlement of the derivatives and the fuel is consumed, gains or losses are passed through the fuel cost-recovery clause.
|
|||||||||||
(b)
|
Amounts are recorded in regulatory liabilities and assets, respectively, on the Consolidated Balance Sheets until derivatives are settled.
|
Instrument
|
Amount of Gain or (Loss)
Recognized in Income on
Derivatives
|
|||||||
(in millions)
|
2011
|
2010
|
||||||
Commodity derivatives(a)
|
$ | 1 | $ | - | ||||
CVOs(a)
|
4 | - | ||||||
Total
|
$ | 5 | $ | - |
(a)
|
Amounts recorded in the Consolidated Statements of Income are classified in other, net.
|
|
|
|
|
|||||||||||||
Instrument / Balance sheet location
|
June 30, 2011
|
December 31, 2010
|
||||||||||||||
(in millions)
|
Asset
|
Liability
|
Asset
|
Liability
|
||||||||||||
Derivatives designated as hedging instruments
|
||||||||||||||||
Interest rate derivatives
|
|
|
|
|
||||||||||||
Other assets and deferred debits
|
$ | 1 |
|
$ | 3 |
|
||||||||||
Derivative liabilities, current
|
$ | 2 | $ | 7 | ||||||||||||
Other liabilities and deferred credits
|
9 | 4 | ||||||||||||||
Total derivatives designated as hedging instruments
|
1 | 11 | 3 | 11 | ||||||||||||
Derivatives not designated as hedging instruments
|
||||||||||||||||
Commodity derivatives(a)
|
||||||||||||||||
Prepayments and other current assets
|
1 | 1 | ||||||||||||||
Other assets and deferred debits
|
- | 1 | ||||||||||||||
Derivative liabilities, current
|
42 | 45 | ||||||||||||||
Other liabilities and deferred credits
|
69 | 78 | ||||||||||||||
Fair value of derivatives not designated as hedging instruments
|
1 | 111 | 2 | 123 | ||||||||||||
Fair value loss transition adjustment(b)
|
||||||||||||||||
Derivative liabilities, current
|
1 | 1 | ||||||||||||||
Other liabilities and deferred credits
|
3 | 3 | ||||||||||||||
Total derivatives not designated as hedging instruments
|
1 | 115 | 2 | 127 | ||||||||||||
Total derivatives
|
$ | 2 | $ | 126 | $ | 5 | $ | 138 |
(a)
|
Substantially all of these contracts receive regulatory treatment.
|
||||||||||||
(b)
|
In 2003, PEC recorded a $38 million pre-tax ($23 million after-tax) fair value loss transition adjustment pursuant to the adoption of new accounting guidance for derivatives. The related liability is being amortized to earnings over the term of the related contracts.
|
|
|
|
||||||||||||||||||||||
Derivatives Designated as Hedging Instruments
|
||||||||||||||||||||||||
Instrument
|
Amount of Gain or
(Loss) Recognized in
OCI, Net of Tax on
Derivatives(a)
|
Amount of Gain or
(Loss), Net of Tax
Reclassified from
Accumulated OCI into
Income(a)
|
Amount of Pre-tax Gain
or (Loss) Recognized in
Income on
Derivatives(b)
|
|||||||||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||||
Interest rate derivatives(c) (d)
|
$ | (6 | ) | $ | (15 | ) | $ | (1 | ) | $ | (1 | ) | $ | - | $ | - |
(a)
|
Effective portion.
|
|||||||||||||||||
(b)
|
Related to ineffective portion and amount excluded from effectiveness testing.
|
|||||||||||||||||
(c)
|
Amounts in accumulated OCI related to terminated hedges are reclassified to earnings as the interest expense is recorded. The effective portion of the hedges will be amortized to interest expense over the term of the related debt.
|
|||||||||||||||||
(d)
|
Amounts recorded in the Consolidated Statements of Income are classified in interest charges.
|
Derivatives Not Designated as Hedging Instruments
|
||||||||||||||||
Instrument
|
Realized Gain or (Loss)(a)
|
Unrealized Gain or (Loss)(b)
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Commodity derivatives
|
$ | (12 | ) | $ | (12 | ) | $ | (19 | ) | $ | (2 | ) |
(a)
|
After settlement of the derivatives and the fuel is consumed, gains or losses are passed through the fuel cost-recovery clause.
|
|||||||||||
(b)
|
Amounts are recorded in regulatory liabilities and assets, respectively, on the Consolidated Balance Sheets until derivatives are settled.
|
Instrument
|
Amount of Gain or (Loss)
Recognized in Income on
Derivatives
|
|||||||
(in millions)
|
2011
|
2010
|
||||||
Commodity derivatives(a)
|
$ | 1 | $ | 1 |
(a)
|
Amounts recorded in the Consolidated Statements of Income are classified in other, net.
|
|
|
|
||||||||||||||||||||||
Derivatives Designated as Hedging Instruments
|
||||||||||||||||||||||||
Instrument
|
Amount of Gain or
(Loss) Recognized
in OCI, Net of Tax
on Derivatives(a)
|
Amount of Gain or
(Loss), Net of Tax
Reclassified from
Accumulated OCI
into Income(a)
|
Amount of Pre-tax
Gain or (Loss)
Recognized in
Income on
Derivatives(b)
|
|||||||||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||||
Interest rate derivatives(c) (d)
|
$ | (5 | ) | $ | (16 | ) | $ | (2 | ) | $ | (2 | ) | $ | - | $ | - |
(a)
|
Effective portion.
|
|||||||||||||||||
(b)
|
Related to ineffective portion and amount excluded from effectiveness testing.
|
|||||||||||||||||
(c)
|
Amounts in accumulated OCI related to terminated hedges are reclassified to earnings as the interest expense is recorded. The effective portion of the hedges will be amortized to interest expense over the term of the related debt.
|
|||||||||||||||||
(d)
|
Amounts recorded in the Consolidated Statements of Income are classified in interest charges.
|
Derivatives Not Designated as Hedging Instruments
|
||||||||||||||||
Instrument
|
Realized Gain or (Loss)(a)
|
Unrealized Gain or (Loss)(b)
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Commodity derivatives
|
$ | (22 | ) | $ | (19 | ) | $ | (13 | ) | $ | (44 | ) |
(a)
|
After settlement of the derivatives and the fuel is consumed, gains or losses are passed through the fuel cost-recovery clause.
|
|||||||||||
(b)
|
Amounts are recorded in regulatory liabilities and assets, respectively, on the Consolidated Balance Sheets until derivatives are settled.
|
Instrument
|
Amount of Gain or (Loss)
Recognized in Income on
Derivatives
|
|||||||
(in millions)
|
2011
|
2010
|
||||||
Commodity derivatives(a)
|
$ | 1 | $ | - |
(a)
|
Amounts recorded in the Consolidated Statements of Income are classified in other, net.
|
PEF
|
|
|
|
|
||||||||||||
|
|
|
|
|||||||||||||
The following table presents the fair value of derivative instruments at June 30, 2011 and December 31, 2010:
|
||||||||||||||||
|
|
|
|
|||||||||||||
Instrument / Balance sheet location
|
June 30, 2011
|
December 31, 2010
|
||||||||||||||
(in millions)
|
Asset
|
Liability
|
Asset
|
Liability
|
||||||||||||
Derivatives designated as hedging instruments
|
||||||||||||||||
Interest rate derivatives
|
|
|
|
|
||||||||||||
Derivative liabilities, current
|
|
$ | 13 |
|
$ | 7 | ||||||||||
Derivative liabilities, long-term
|
|
1 |
|
- | ||||||||||||
Total derivatives designated as hedging instruments
|
14 | 7 | ||||||||||||||
Derivatives not designated as hedging instruments
|
||||||||||||||||
Commodity derivatives(a)
|
||||||||||||||||
Prepayments and other current assets
|
$ | 14 | $ | 10 | ||||||||||||
Other assets and deferred debits
|
3 | 3 | ||||||||||||||
Derivative liabilities, current
|
147 | 181 | ||||||||||||||
Derivative liabilities, long-term
|
154 | 190 | ||||||||||||||
Total derivatives not designated as hedging instruments
|
17 | 301 | 13 | 371 | ||||||||||||
Total derivatives
|
$ | 17 | $ | 315 | $ | 13 | $ | 378 |
(a)
|
Substantially all of these contracts receive regulatory treatment.
|
|
|
|
||||||||||||||||||||||
Derivatives Designated as Hedging Instruments
|
||||||||||||||||||||||||
Instrument
|
Amount of Gain or
(Loss) Recognized in
OCI, Net of Tax on
Derivatives(a)
|
Amount of Gain or
(Loss), Net of Tax
Reclassified from
Accumulated OCI into
Income(a)
|
Amount of Pre-tax Gain
or (Loss) Recognized in
Income on
Derivatives(b)
|
|||||||||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
2011
|
2010
|
||||||||||||||||||
Interest rate derivatives(c) (d)
|
$ | (5 | ) | $ | (7 | ) | $ | - | $ | - | $ | - | $ | - |
(a)
|
Effective portion.
|
|||||||||||||||||
(b)
|
Related to ineffective portion and amount excluded from effectiveness testing.
|
|||||||||||||||||
(c)
|
Amounts in accumulated OCI related to terminated hedges are reclassified to earnings as the interest expense is recorded. The effective portion of the hedges will be amortized to interest expense over the term of the related debt.
|
|||||||||||||||||
(d)
|
Amounts recorded in the Statements of Income are classified in interest charges.
|
Derivatives Not Designated as Hedging Instruments
|
||||||||||||||||
Instrument
|
Realized Gain or (Loss)(a)
|
Unrealized Gain or (Loss)(b)
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Commodity derivatives
|
$ | (64 | ) | $ | (79 | ) | $ | (49 | ) | $ | - |
(a)
|
After settlement of the derivatives and the fuel is consumed, gains or losses are passed through the fuel cost-recovery clause.
|
|||||||||||
(b)
|
Amounts are recorded in regulatory liabilities and assets, respectively, on the Balance Sheets until derivatives are settled.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Derivatives Designated as Hedging Instruments
|
||||||||||||||||||
Instrument
|
Amount of Gain or
(Loss) Recognized in
OCI, Net of Tax on
Derivatives(a)
|
|
Amount of Gain or
(Loss), Net of Tax
Reclassified from
Accumulated OCI into
Income(a)
|
|
Amount of Pre-tax Gain
or (Loss) Recognized in
Income on
Derivatives(b)
|
|||||||||||||
(in millions)
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
Interest rate derivatives(c) (d)
|
$
|
(5)
|
|
$
|
(10)
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
(a)
|
Effective portion.
|
|||||||||||||||||
(b)
|
Related to ineffective portion and amount excluded from effectiveness testing.
|
|||||||||||||||||
(c)
|
Amounts in accumulated OCI related to terminated hedges are reclassified to earnings as the interest expense is recorded. The effective portion of the hedges will be amortized to interest expense over the term of the related debt.
|
|||||||||||||||||
(d)
|
Amounts recorded in the Consolidated Statements of Income are classified in interest charges.
|
Derivatives Not Designated as Hedging Instruments
|
||||||||||||||||
Instrument
|
Realized Gain or (Loss)(a)
|
Unrealized Gain or (Loss)(b)
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Commodity derivatives
|
$ | (106 | ) | $ | (131 | ) | $ | (31 | ) | $ | (192 | ) |
(a)
|
After settlement of the derivatives and the fuel is consumed, gains or losses are passed through the fuel cost-recovery clause.
|
|||||||||||
(b)
|
Amounts are recorded in regulatory liabilities and assets, respectively, on the Balance Sheets until derivatives are settled.
|
11. | FINANCIAL INFORMATION BY BUSINESS SEGMENT |
(in millions)
|
PEC
|
PEF
|
Corporate
and Other
|
Eliminations
|
Totals
|
|||||||||||||||
At and for the three months ended June 30, 2011
|
|
|
|
|||||||||||||||||
Revenues
|
|
|
|
|
|
|||||||||||||||
Unaffiliated
|
$ | 1,060 | $ | 1,193 | $ | 3 | $ | - | $ | 2,256 | ||||||||||
Intersegment
|
- | - | 60 | (60 | ) | - | ||||||||||||||
Total revenues
|
1,060 | 1,193 | 63 | (60 | ) | 2,256 | ||||||||||||||
Ongoing Earnings
|
112 | 141 | (42 | ) | - | 211 | ||||||||||||||
Total Assets
|
15,154 | 13,907 | 20,631 | (16,572 | ) | 33,120 | ||||||||||||||
|
||||||||||||||||||||
For the three months ended June 30, 2010
|
||||||||||||||||||||
Revenues
|
||||||||||||||||||||
Unaffiliated
|
$ | 1,117 | $ | 1,252 | $ | 3 | $ | - | $ | 2,372 | ||||||||||
Intersegment
|
- | - | 53 | (53 | ) | - | ||||||||||||||
Total revenues
|
1,117 | 1,252 | 56 | (53 | ) | 2,372 | ||||||||||||||
Ongoing Earnings
|
112 | 119 | (50 | ) | - | 181 | ||||||||||||||
|
|
|||||||||||||||||||
At and for the six months ended June 30, 2011
|
||||||||||||||||||||
Revenues
|
||||||||||||||||||||
Unaffiliated
|
$ | 2,193 | $ | 2,224 | $ | 6 | $ | - | $ | 4,423 | ||||||||||
Intersegment
|
- | 1 | 134 | (135 | ) | - | ||||||||||||||
Total revenues
|
2,193 | 2,225 | 140 | (135 | ) | 4,423 | ||||||||||||||
Ongoing Earnings
|
251 | 252 | (90 | ) | - | 413 | ||||||||||||||
Total Assets
|
15,154 | 13,907 | 20,631 | (16,572 | ) | 33,120 | ||||||||||||||
|
||||||||||||||||||||
For the six months ended June 30, 2010
|
||||||||||||||||||||
Revenues
|
||||||||||||||||||||
Unaffiliated
|
$ | 2,380 | $ | 2,522 | $ | 5 | $ | - | $ | 4,907 | ||||||||||
Intersegment
|
- | - | 114 | (114 | ) | - | ||||||||||||||
Total revenues
|
2,380 | 2,522 | 119 | (114 | ) | 4,907 | ||||||||||||||
Ongoing Earnings
|
260 | 232 | (97 | ) | - | 395 |
|
For the three months ended June 30
|
|||||||
(in millions)
|
2011
|
2010
|
||||||
Ongoing Earnings
|
$ | 211 | $ | 181 | ||||
Tax levelization
|
(4 | ) | - | |||||
CVO mark-to-market (Note 10D)
|
4 | - | ||||||
Impairment, net of tax benefit of $1
|
- | (1 | ) | |||||
Plant retirement adjustment, net of tax expense of $-
|
- | 1 | ||||||
Merger and integration costs, net of tax benefit of $4 (Note 2)
|
(7 | ) | - | |||||
CR3 indemnification charge, net of tax benefit of $18 (Note 13B)
|
(26 | ) | - | |||||
Continuing income attributable to noncontrolling interests, net of tax
|
2 | - | ||||||
Income from continuing operations before cumulative effect of change in
accounting principle
|
180 | 181 | ||||||
Discontinued operations, net of tax
|
(2 | ) | (1 | ) | ||||
Net income attributable to noncontrolling interests, net of tax
|
(2 | ) | - | |||||
Net income attributable to controlling interests
|
$ | 176 | $ | 180 | ||||
|
||||||||
|
For the six months ended June 30
|
|||||||
(in millions)
|
2011 | 2010 | ||||||
Ongoing Earnings
|
$ | 413 | $ | 395 | ||||
Tax levelization
|
(6 | ) | (2 | ) | ||||
CVO mark-to-market (Note 10D)
|
4 | - | ||||||
Impairment, net of tax benefit of $1
|
- | (2 | ) | |||||
Plant retirement adjustment, net of tax expense of $1
|
- | 1 | ||||||
Change in tax treatment of the Medicare Part D subsidy (Note 9)
|
- | (22 | ) | |||||
Merger and integration costs, net of tax benefit of $4 (Note 2)
|
(21 | ) | - | |||||
CR3 indemnification charge, net of tax benefit of $18 (Note 13B)
|
(26 | ) | - | |||||
Continuing income attributable to noncontrolling interests, net of tax
|
3 | 2 | ||||||
Income from continuing operations before cumulative effect of change in
accounting principle
|
367 | 372 | ||||||
Discontinued operations, net of tax
|
(4 | ) | - | |||||
Cumulative effect of change in accounting principle, net of tax
|
- | (2 | ) | |||||
Net income attributable to noncontrolling interests, net of tax
|
(3 | ) | - | |||||
Net income attributable to controlling interests
|
$ | 360 | $ | 370 |
12. | ENVIRONMENTAL MATTERS |
A. | HAZARDOUS AND SOLID WASTE |
PROGRESS ENERGY
|
|
|
|
|||||||||
(in millions)
|
MGP and
Other Sites
|
Remediation
of Distribution
and Substation Transformers
|
Total
|
|||||||||
Balance, December 31, 2010
|
$ | 20 | $ | 15 | $ | 35 | ||||||
Amount accrued for environmental loss contingencies(a)
|
- | 3 | 3 | |||||||||
Expenditures for environmental loss contingencies(b)
|
(2 | ) | (9 | ) | (11 | ) | ||||||
Balance, June 30, 2011(c)
|
$ | 18 | $ | 9 | $ | 27 | ||||||
Balance, December 31, 2009
|
$ | 22 | $ | 20 | $ | 42 | ||||||
Amount accrued for environmental loss contingencies(a)
|
4 | 10 | 14 | |||||||||
Expenditures for environmental loss contingencies(b)
|
(7 | ) | (9 | ) | (16 | ) | ||||||
Balance, June 30, 2010(c)
|
$ | 19 | $ | 21 | $ | 40 |
(a)
|
Amounts accrued are for the six months ended June 30, 2011 and 2010. For the three months ended June 30, 2011, our accruals for environmental loss contingencies were not material. For the three months ended June 30, 2010, our accruals were $2 million for the remediation of MGP and other sites and were $8 million for the remediation of distribution and substation transformers.
|
||||||||
(b)
|
Expenditures are for the six months ended June 30, 2011 and 2010. For the three months ended June 30, 2011, our expenditures for environmental loss contingencies were not material. For the three months ended June 30, 2010, our expenditures were $5 million for the remediation of MGP and other sites and were $5 million for the remediation of distribution and substation transformers.
|
||||||||
(c)
|
Expected to be paid out over one to 15 years.
|
PEC
|
|
|||
(in millions)
|
MGP and
Other Sites
|
|||
Balance, December 31, 2010
|
$ | 12 | ||
Amount accrued for environmental loss contingencies(a)
|
- | |||
Expenditures for environmental loss contingencies(b)
|
- | |||
Balance, June 30, 2011(c)
|
$ | 12 | ||
Balance, December 31, 2009
|
$ | 13 | ||
Amount accrued for environmental loss contingencies(a)
|
2 | |||
Expenditures for environmental loss contingencies(b)
|
(3 | ) | ||
Balance, June 30, 2010(c)
|
$ | 12 |
(a)
|
Amounts accrued are for the six months ended June 30, 2011 and 2010. For the three months ended June 30, 2011 and 2010, PEC's accruals for the remediation of MGP and other sites were not material.
|
||||||||
(b)
|
Expenditures are for the six months ended June 30, 2011 and 2010. For the three months ended June 30, 2011 and 2010, PEC's expenditures for the remediation of MGP and other sites were not material.
|
||||||||
(c)
|
Expected to be paid out over one to five years.
|
|
|
|
|
|
|
|
|
PEF
|
|
|
|
|||||||||
(in millions)
|
MGP and
Other Sites
|
Remediation
of Distribution
and Substation
Transformers
|
Total
|
|||||||||
Balance, December 31, 2010
|
$ | 8 | $ | 15 | $ | 23 | ||||||
Amount accrued for environmental loss contingencies(a)
|
- | 3 | 3 | |||||||||
Expenditures for environmental loss contingencies(b)
|
(2 | ) | (9 | ) | (11 | ) | ||||||
Balance, June 30, 2011(c)
|
$ | 6 | $ | 9 | $ | 15 | ||||||
Balance, December 31, 2009
|
$ | 9 | $ | 20 | $ | 29 | ||||||
Amount accrued for environmental loss contingencies(a)
|
2 | 10 | 12 | |||||||||
Expenditures for environmental loss contingencies(b)
|
(4 | ) | (9 | ) | (13 | ) | ||||||
Balance, June 30, 2010(c)
|
$ | 7 | $ | 21 | $ | 28 |
(a)
|
Amounts accrued are for the six months ended June 30, 2011 and 2010. For the three months ended June 30, 2011, PEF's accruals for environmental loss contingencies were not material. For the three months ended June 30, 2010, PEF's accruals were $2 million for the remediation of MGP and other sites and were $8 million for the remediation of distribution and substation transformers.
|
||||||||
(b)
|
Expenditures are for the six months ended June 30, 2011 and 2010. For the three months ended June 30, 2011, PEF's expenditures for environmental loss contingencies were not material. For the three months ended June 30, 2010, PEF's expenditures were $4 million for the remediation of MGP and other sites and were $5 million for the remediation of distribution and substation transformers.
|
||||||||
(c)
|
Expected to be paid out over one to 15 years.
|
|
|
|
|
|
|
|
|
B. | AIR AND WATER QUALITY |
13. | COMMITMENTS AND CONTINGENCIES |
A. | PURCHASE OBLIGATIONS |
B. | GUARANTEES |
14. | CONDENSED CONSOLIDATING STATEMENTS |
Condensed Consolidating Statement of Income
|
||||||||||||||||||||
Three months ended June 30, 2011
|
||||||||||||||||||||
(in millions)
|
Parent
|
Subsidiary
Guarantor
|
Non-
Guarantor
Subsidiaries
|
Other
|
Progress
Energy,
Inc.
|
|||||||||||||||
Operating revenues
|
|
|
|
|
|
|||||||||||||||
Operating revenues
|
$ | - | $ | 1,196 | $ | 1,060 | $ | - | $ | 2,256 | ||||||||||
Affiliate revenues
|
- | - | 61 | (61 | ) | - | ||||||||||||||
Total operating revenues
|
- | 1,196 | 1,121 | (61 | ) | 2,256 | ||||||||||||||
Operating expenses
|
||||||||||||||||||||
Fuel used in electric generation
|
- | 348 | 326 | - | 674 | |||||||||||||||
Purchased power
|
- | 256 | 73 | - | 329 | |||||||||||||||
Operation and maintenance
|
1 | 223 | 343 | (57 | ) | 510 | ||||||||||||||
Depreciation, amortization and accretion
|
- | 48 | 131 | - | 179 | |||||||||||||||
Taxes other than on income
|
- | 83 | 51 | - | 134 | |||||||||||||||
Other
|
- | 2 | - | - | 2 | |||||||||||||||
Total operating expenses
|
1 | 960 | 924 | (57 | ) | 1,828 | ||||||||||||||
Operating (loss) income
|
(1 | ) | 236 | 197 | (4 | ) | 428 | |||||||||||||
Other income (expense)
|
||||||||||||||||||||
Allowance for equity funds used during construction
|
- | 8 | 18 | - | 26 | |||||||||||||||
Other, net
|
4 | 1 | - | 2 | 7 | |||||||||||||||
Total other income, net
|
4 | 9 | 18 | 2 | 33 | |||||||||||||||
Interest charges
|
||||||||||||||||||||
Interest charges
|
63 | 73 | 53 | - | 189 | |||||||||||||||
Allowance for borrowed funds used during construction
|
- | (3 | ) | (6 | ) | - | (9 | ) | ||||||||||||
Total interest charges, net
|
63 | 70 | 47 | - | 180 | |||||||||||||||
(Loss) income from continuing operations before
income tax and equity in earnings of consolidated
subsidiaries
|
(60 | ) | 175 | 168 | (2 | ) | 281 | |||||||||||||
Income tax (benefit) expense
|
(24 | ) | 64 | 60 | 1 | 101 | ||||||||||||||
Equity in earnings of consolidated subsidiaries
|
212 | - | - | (212 | ) | - | ||||||||||||||
Income from continuing operations
|
176 | 111 | 108 | (215 | ) | 180 | ||||||||||||||
Discontinued operations, net of tax
|
- | (2 | ) | - | - | (2 | ) | |||||||||||||
Net income
|
176 | 109 | 108 | (215 | ) | 178 | ||||||||||||||
Net income attributable to noncontrolling
interests, net of tax
|
- | (1 | ) | - | (1 | ) | (2 | ) | ||||||||||||
Net income attributable to controlling interests
|
$ | 176 | $ | 108 | $ | 108 | $ | (216 | ) | $ | 176 |
Condensed Consolidating Statement of Income
|
||||||||||||||||||||
Three months ended June 30, 2010
|
||||||||||||||||||||
(in millions)
|
Parent
|
Subsidiary
Guarantor
|
Non-
Guarantor
Subsidiaries
|
Other
|
Progress
Energy,
Inc.
|
|||||||||||||||
Operating revenues
|
|
|
|
|
|
|||||||||||||||
Operating revenues
|
$ | - | $ | 1,255 | $ | 1,117 | $ | - | $ | 2,372 | ||||||||||
Affiliate revenues
|
- | - | 52 | (52 | ) | - | ||||||||||||||
Total operating revenues
|
- | 1,255 | 1,169 | (52 | ) | 2,372 | ||||||||||||||
Operating expenses
|
||||||||||||||||||||
Fuel used in electric generation
|
- | 368 | 375 | - | 743 | |||||||||||||||
Purchased power
|
- | 239 | 76 | - | 315 | |||||||||||||||
Operation and maintenance
|
- | 208 | 347 | (50 | ) | 505 | ||||||||||||||
Depreciation, amortization and accretion
|
- | 110 | 123 | - | 233 | |||||||||||||||
Taxes other than on income
|
- | 83 | 51 | (1 | ) | 133 | ||||||||||||||
Other
|
- | 3 | - | - | 3 | |||||||||||||||
Total operating expenses
|
- | 1,011 | 972 | (51 | ) | 1,932 | ||||||||||||||
Operating income
|
- | 244 | 197 | (1 | ) | 440 | ||||||||||||||
Other income (expense)
|
||||||||||||||||||||
Interest income
|
2 | - | 2 | (3 | ) | 1 | ||||||||||||||
Allowance for equity funds used during construction
|
- | 10 | 15 | - | 25 | |||||||||||||||
Other, net
|
- | - | 3 | 2 | 5 | |||||||||||||||
Total other income, net
|
2 | 10 | 20 | (1 | ) | 31 | ||||||||||||||
Interest charges
|
||||||||||||||||||||
Interest charges
|
72 | 75 | 54 | (2 | ) | 199 | ||||||||||||||
Allowance for borrowed funds used during construction
|
- | (2 | ) | (5 | ) | - | (7 | ) | ||||||||||||
Total interest charges, net
|
72 | 73 | 49 | (2 | ) | 192 | ||||||||||||||
(Loss) income from continuing operations before
income tax and equity in earnings of consolidated
subsidiaries
|
(70 | ) | 181 | 168 | - | 279 | ||||||||||||||
Income tax (benefit) expense
|
(28 | ) | 67 | 57 | 2 | 98 | ||||||||||||||
Equity in earnings of consolidated subsidiaries
|
222 | - | - | (222 | ) | - | ||||||||||||||
Income from continuing operations
|
180 | 114 | 111 | (224 | ) | 181 | ||||||||||||||
Discontinued operations, net of tax
|
- | - | (1 | ) | - | (1 | ) | |||||||||||||
Net income
|
180 | 114 | 110 | (224 | ) | 180 | ||||||||||||||
Net (income) loss attributable to noncontrolling
interests, net of tax
|
- | (1 | ) | 1 | - | - | ||||||||||||||
Net income attributable to controlling interests
|
$ | 180 | $ | 113 | $ | 111 | $ | (224 | ) | $ | 180 |
Condensed Consolidating Statement of Income
|
||||||||||||||||||||
Six months ended June 30, 2011
|
||||||||||||||||||||
(in millions)
|
Parent
|
Subsidiary
Guarantor
|
Non-
Guarantor
Subsidiaries
|
Other
|
Progress
Energy,
Inc.
|
|||||||||||||||
Operating revenues
|
|
|
|
|
|
|||||||||||||||
Operating revenues
|
$ | - | $ | 2,230 | $ | 2,193 | $ | - | $ | 4,423 | ||||||||||
Affiliate revenues
|
- | - | 135 | (135 | ) | - | ||||||||||||||
Total operating revenues
|
- | 2,230 | 2,328 | (135 | ) | 4,423 | ||||||||||||||
Operating expenses
|
||||||||||||||||||||
Fuel used in electric generation
|
- | 703 | 689 | - | 1,392 | |||||||||||||||
Purchased power
|
- | 409 | 140 | - | 549 | |||||||||||||||
Operation and maintenance
|
4 | 434 | 694 | (128 | ) | 1,004 | ||||||||||||||
Depreciation, amortization and accretion
|
- | 73 | 260 | - | 333 | |||||||||||||||
Taxes other than on income
|
- | 168 | 110 | (4 | ) | 274 | ||||||||||||||
Other
|
- | (8 | ) | - | - | (8 | ) | |||||||||||||
Total operating expenses
|
4 | 1,779 | 1,893 | (132 | ) | 3,544 | ||||||||||||||
Operating (loss) income
|
(4 | ) | 451 | 435 | (3 | ) | 879 | |||||||||||||
Other income (expense)
|
||||||||||||||||||||
Interest income
|
- | 1 | - | - | 1 | |||||||||||||||
Allowance for equity funds used during construction
|
- | 17 | 38 | - | 55 | |||||||||||||||
Other, net
|
4 | 6 | (2 | ) | 2 | 10 | ||||||||||||||
Total other income, net
|
4 | 24 | 36 | 2 | 66 | |||||||||||||||
Interest charges
|
||||||||||||||||||||
Interest charges
|
136 | 148 | 104 | - | 388 | |||||||||||||||
Allowance for borrowed funds used during construction
|
- | (7 | ) | (11 | ) | - | (18 | ) | ||||||||||||
Total interest charges, net
|
136 | 141 | 93 | - | 370 | |||||||||||||||
(Loss) income from continuing operations before
income tax and equity in earnings of consolidated
subsidiaries
|
(136 | ) | 334 | 378 | (1 | ) | 575 | |||||||||||||
Income tax (benefit) expense
|
(55 | ) | 124 | 140 | (1 | ) | 208 | |||||||||||||
Equity in earnings of consolidated subsidiaries
|
441 | - | - | (441 | ) | - | ||||||||||||||
Income from continuing operations
|
360 | 210 | 238 | (441 | ) | 367 | ||||||||||||||
Discontinued operations, net of tax
|
- | (3 | ) | (1 | ) | - | (4 | ) | ||||||||||||
Net income
|
360 | 207 | 237 | (441 | ) | 363 | ||||||||||||||
Net income attributable to noncontrolling
interests, net of tax
|
- | (2 | ) | - | (1 | ) | (3 | ) | ||||||||||||
Net income attributable to controlling interests
|
$ | 360 | $ | 205 | $ | 237 | $ | (442 | ) | $ | 360 |
Condensed Consolidating Statement of Income
|
||||||||||||||||||||
Six months ended June 30, 2010
|
||||||||||||||||||||
(in millions)
|
Parent
|
Subsidiary
Guarantor
|
Non-
Guarantor
Subsidiaries
|
Other
|
Progress
Energy,
Inc.
|
|||||||||||||||
Operating revenues
|
|
|
|
|
|
|||||||||||||||
Operating revenues
|
$ | - | $ | 2,527 | $ | 2,380 | $ | - | $ | 4,907 | ||||||||||
Affiliate revenues
|
- | - | 113 | (113 | ) | - | ||||||||||||||
Total operating revenues
|
- | 2,527 | 2,493 | (113 | ) | 4,907 | ||||||||||||||
Operating expenses
|
||||||||||||||||||||
Fuel used in electric generation
|
- | 781 | 858 | - | 1,639 | |||||||||||||||
Purchased power
|
- | 452 | 126 | - | 578 | |||||||||||||||
Operation and maintenance
|
3 | 413 | 676 | (107 | ) | 985 | ||||||||||||||
Depreciation, amortization and accretion
|
- | 234 | 245 | - | 479 | |||||||||||||||
Taxes other than on income
|
- | 176 | 115 | (4 | ) | 287 | ||||||||||||||
Other
|
- | 5 | - | - | 5 | |||||||||||||||
Total operating expenses
|
3 | 2,061 | 2,020 | (111 | ) | 3,973 | ||||||||||||||
Operating (loss) income
|
(3 | ) | 466 | 473 | (2 | ) | 934 | |||||||||||||
Other income (expense)
|
||||||||||||||||||||
Interest income
|
4 | - | 3 | (4 | ) | 3 | ||||||||||||||
Allowance for equity funds used during construction
|
- | 18 | 28 | - | 46 | |||||||||||||||
Other, net
|
(1 | ) | 3 | (4 | ) | 2 | - | |||||||||||||
Total other income, net
|
3 | 21 | 27 | (2 | ) | 49 | ||||||||||||||
Interest charges
|
||||||||||||||||||||
Interest charges
|
143 | 145 | 106 | (4 | ) | 390 | ||||||||||||||
Allowance for borrowed funds used during construction
|
- | (7 | ) | (9 | ) | - | (16 | ) | ||||||||||||
Total interest charges, net
|
143 | 138 | 97 | (4 | ) | 374 | ||||||||||||||
(Loss) income from continuing operations before
income tax and equity in earnings of consolidated
subsidiaries
|
(143 | ) | 349 | 403 | - | 609 | ||||||||||||||
Income tax (benefit) expense
|
(58 | ) | 136 | 154 | 5 | 237 | ||||||||||||||
Equity in earnings of consolidated subsidiaries
|
455 | - | - | (455 | ) | - | ||||||||||||||
Income from continuing operations before
cumulative effect of changes in accounting principle
|
370 | 213 | 249 | (460 | ) | 372 | ||||||||||||||
Discontinued operations, net of tax
|
- | 1 | (1 | ) | - | - | ||||||||||||||
Cumulative effect of changes in accounting principle,
net of tax
|
- | - | (2 | ) | - | (2 | ) | |||||||||||||
Net income
|
370 | 214 | 246 | (460 | ) | 370 | ||||||||||||||
Net (income) loss attributable to noncontrolling
interests, net of tax
|
- | (2 | ) | 3 | (1 | ) | - | |||||||||||||
Net income attributable to controlling interests
|
$ | 370 | $ | 212 | $ | 249 | $ | (461 | ) | $ | 370 |
Condensed Consolidating Balance Sheet
|
||||||||||||||||||||
June 30, 2011
|
||||||||||||||||||||
|
Parent
|
Subsidiary
Guarantor
|
Non-
Guarantor
Subsidiaries
|
Other
|
Progress
Energy,
Inc.
|
|||||||||||||||
(in millions)
|
||||||||||||||||||||
ASSETS
|
|
|
|
|
|
|||||||||||||||
Utility plant, net
|
$ | - | $ | 10,294 | $ | 11,367 | $ | 88 | $ | 21,749 | ||||||||||
Current assets
|
||||||||||||||||||||
Cash and cash equivalents
|
- | 33 | 19 | - | 52 | |||||||||||||||
Receivables, net
|
- | 556 | 485 | - | 1,041 | |||||||||||||||
Notes receivable from affiliated companies
|
94 | 27 | 75 | (196 | ) | - | ||||||||||||||
Regulatory assets
|
- | 137 | 61 | - | 198 | |||||||||||||||
Derivative collateral posted
|
- | 104 | 18 | - | 122 | |||||||||||||||
Prepayments and other current assets
|
42 | 769 | 982 | (190 | ) | 1,603 | ||||||||||||||
Total current assets
|
136 | 1,626 | 1,640 | (386 | ) | 3,016 | ||||||||||||||
Deferred debits and other assets
|
||||||||||||||||||||
Investment in consolidated subsidiaries
|
14,096 | - | - | (14,096 | ) | - | ||||||||||||||
Regulatory assets
|
- | 1,266 | 1,002 | - | 2,268 | |||||||||||||||
Goodwill
|
- | - | - | 3,655 | 3,655 | |||||||||||||||
Nuclear decommissioning trust funds
|
- | 589 | 1,097 | - | 1,686 | |||||||||||||||
Other assets and deferred debits
|
141 | 236 | 896 | (527 | ) | 746 | ||||||||||||||
Total deferred debits and other assets
|
14,237 | 2,091 | 2,995 | (10,968 | ) | 8,355 | ||||||||||||||
Total assets
|
$ | 14,373 | $ | 14,011 | $ | 16,002 | $ | (11,266 | ) | $ | 33,120 | |||||||||
CAPITALIZATION AND LIABILITIES
|
||||||||||||||||||||
Equity
|
||||||||||||||||||||
Common stock equity
|
$ | 10,046 | $ | 4,769 | $ | 5,654 | $ | (10,423 | ) | $ | 10,046 | |||||||||
Noncontrolling interests
|
- | 3 | - | - | 3 | |||||||||||||||
Total equity
|
10,046 | 4,772 | 5,654 | (10,423 | ) | 10,049 | ||||||||||||||
Preferred stock of subsidiaries
|
- | 34 | 59 | - | 93 | |||||||||||||||
Long-term debt, affiliate
|
- | 309 | - | (36 | ) | 273 | ||||||||||||||
Long-term debt, net
|
3,543 | 4,182 | 3,693 | - | 11,418 | |||||||||||||||
Total capitalization
|
13,589 | 9,297 | 9,406 | (10,459 | ) | 21,833 | ||||||||||||||
Current liabilities
|
||||||||||||||||||||
Current portion of long-term debt
|
450 | 300 | - | - | 750 | |||||||||||||||
Short-term debt
|
49 | 67 | 198 | - | 314 | |||||||||||||||
Notes payable to affiliated companies
|
- | 191 | 5 | (196 | ) | - | ||||||||||||||
Derivative liabilities
|
9 | 160 | 45 | - | 214 | |||||||||||||||
Other current liabilities
|
250 | 1,057 | 1,059 | (187 | ) | 2,179 | ||||||||||||||
Total current liabilities
|
758 | 1,775 | 1,307 | (383 | ) | 3,457 | ||||||||||||||
Deferred credits and other liabilities
|
||||||||||||||||||||
Noncurrent income tax liabilities
|
- | 653 | 1,754 | (505 | ) | 1,902 | ||||||||||||||
Regulatory liabilities
|
- | 953 | 1,544 | 88 | 2,585 | |||||||||||||||
Other liabilities and deferred credits
|
26 | 1,333 | 1,991 | (7 | ) | 3,343 | ||||||||||||||
Total deferred credits and other liabilities
|
26 | 2,939 | 5,289 | (424 | ) | 7,830 | ||||||||||||||
Total capitalization and liabilities
|
$ | 14,373 | $ | 14,011 | $ | 16,002 | $ | (11,266 | ) | $ | 33,120 |
Condensed Consolidating Balance Sheet
|
||||||||||||||||||||
December 31, 2010
|
||||||||||||||||||||
|
Parent
|
Subsidiary
Guarantor
|
Non-
Guarantor
Subsidiaries
|
Other
|
Progress
Energy,
Inc.
|
|||||||||||||||
(in millions)
|
||||||||||||||||||||
ASSETS
|
|
|
|
|
|
|||||||||||||||
Utility plant, net
|
$ | - | $ | 10,189 | $ | 10,961 | $ | 90 | $ | 21,240 | ||||||||||
Current assets
|
||||||||||||||||||||
Cash and cash equivalents
|
110 | 270 | 231 | - | 611 | |||||||||||||||
Receivables, net
|
- | 497 | 536 | - | 1,033 | |||||||||||||||
Notes receivable from affiliated companies
|
14 | 48 | 115 | (177 | ) | - | ||||||||||||||
Regulatory assets
|
- | 105 | 71 | - | 176 | |||||||||||||||
Derivative collateral posted
|
- | 140 | 24 | - | 164 | |||||||||||||||
Prepayments and other current assets
|
30 | 751 | 984 | (273 | ) | 1,492 | ||||||||||||||
Total current assets
|
154 | 1,811 | 1,961 | (450 | ) | 3,476 | ||||||||||||||
Deferred debits and other assets
|
||||||||||||||||||||
Investment in consolidated subsidiaries
|
14,316 | - | - | (14,316 | ) | - | ||||||||||||||
Regulatory assets
|
- | 1,387 | 987 | - | 2,374 | |||||||||||||||
Goodwill
|
- | - | - | 3,655 | 3,655 | |||||||||||||||
Nuclear decommissioning trust funds
|
- | 554 | 1,017 | - | 1,571 | |||||||||||||||
Other assets and deferred debits
|
75 | 238 | 894 | (469 | ) | 738 | ||||||||||||||
Total deferred debits and other assets
|
14,391 | 2,179 | 2,898 | (11,130 | ) | 8,338 | ||||||||||||||
Total assets
|
$ | 14,545 | $ | 14,179 | $ | 15,820 | $ | (11,490 | ) | $ | 33,054 | |||||||||
CAPITALIZATION AND LIABILITIES
|
||||||||||||||||||||
Equity
|
||||||||||||||||||||
Common stock equity
|
$ | 10,023 | $ | 4,957 | $ | 5,686 | $ | (10,643 | ) | $ | 10,023 | |||||||||
Noncontrolling interests
|
- | 4 | - | - | 4 | |||||||||||||||
Total equity
|
10,023 | 4,961 | 5,686 | (10,643 | ) | 10,027 | ||||||||||||||
Preferred stock of subsidiaries
|
- | 34 | 59 | - | 93 | |||||||||||||||
Long-term debt, affiliate
|
- | 309 | - | (36 | ) | 273 | ||||||||||||||
Long-term debt, net
|
3,989 | 4,182 | 3,693 | - | 11,864 | |||||||||||||||
Total capitalization
|
14,012 | 9,486 | 9,438 | (10,679 | ) | 22,257 | ||||||||||||||
Current liabilities
|
||||||||||||||||||||
Current portion of long-term debt
|
205 | 300 | - | - | 505 | |||||||||||||||
Notes payable to affiliated companies
|
- | 175 | 3 | (178 | ) | - | ||||||||||||||
Derivative liabilities
|
18 | 188 | 53 | - | 259 | |||||||||||||||
Other current liabilities
|
278 | 1,002 | 1,184 | (273 | ) | 2,191 | ||||||||||||||
Total current liabilities
|
501 | 1,665 | 1,240 | (451 | ) | 2,955 | ||||||||||||||
Deferred credits and other liabilities
|
||||||||||||||||||||
Noncurrent income tax liabilities
|
3 | 528 | 1,608 | (443 | ) | 1,696 | ||||||||||||||
Regulatory liabilities
|
- | 1,084 | 1,461 | 90 | 2,635 | |||||||||||||||
Other liabilities and deferred credits
|
29 | 1,416 | 2,073 | (7 | ) | 3,511 | ||||||||||||||
Total deferred credits and other liabilities
|
32 | 3,028 | 5,142 | (360 | ) | 7,842 | ||||||||||||||
Total capitalization and liabilities
|
$ | 14,545 | $ | 14,179 | $ | 15,820 | $ | (11,490 | ) | $ | 33,054 |
Condensed Consolidating Statement of Cash Flows
|
||||||||||||||||||||
Six months ended June 30, 2011
|
||||||||||||||||||||
(in millions)
|
Parent
|
Subsidiary
Guarantor
|
Non-
Guarantor
Subsidiaries
|
Other
|
Progress
Energy,
Inc.
|
|||||||||||||||
Net cash provided by operating activities
|
$ | 477 | $ | 413 | $ | 567 | $ | (677 | ) | $ | 780 | |||||||||
Investing activities
|
||||||||||||||||||||
Gross property additions
|
- | (419 | ) | (585 | ) | - | (1,004 | ) | ||||||||||||
Nuclear fuel additions
|
- | (13 | ) | (80 | ) | - | (93 | ) | ||||||||||||
Purchases of available-for-sale securities and other
investments
|
- | (3,093 | ) | (294 | ) | - | (3,387 | ) | ||||||||||||
Proceeds from available-for-sale securities and other
investments
|
- | 3,095 | 269 | - | 3,364 | |||||||||||||||
Changes in advances to affiliated companies
|
(80 | ) | 22 | 40 | 18 | - | ||||||||||||||
Contributions to consolidated subsidiaries
|
(10 | ) | - | - | 10 | - | ||||||||||||||
Other investing activities
|
- | 74 | 8 | - | 82 | |||||||||||||||
Net cash used by investing activities
|
(90 | ) | (334 | ) | (642 | ) | 28 | (1,038 | ) | |||||||||||
Financing activities
|
||||||||||||||||||||
Issuance of common stock, net
|
26 | - | - | - | 26 | |||||||||||||||
Dividends paid on common stock
|
(366 | ) | - | - | - | (366 | ) | |||||||||||||
Dividends paid to parent
|
- | (403 | ) | (275 | ) | 678 | - | |||||||||||||
Net increase in short-term debt
|
49 | 67 | 198 | - | 314 | |||||||||||||||
Proceeds from issuance of long-term debt, net
|
494 | - | - | - | 494 | |||||||||||||||
Retirement of long-term debt
|
(700 | ) | - | - | - | (700 | ) | |||||||||||||
Changes in advances from affiliated companies
|
- | 16 | 3 | (19 | ) | - | ||||||||||||||
Contributions from parent
|
- | 10 | - | (10 | ) | - | ||||||||||||||
Other financing activities
|
- | (6 | ) | (63 | ) | - | (69 | ) | ||||||||||||
Net cash used by financing activities
|
(497 | ) | (316 | ) | (137 | ) | 649 | (301 | ) | |||||||||||
Net decrease in cash and cash equivalents
|
(110 | ) | (237 | ) | (212 | ) | - | (559 | ) | |||||||||||
Cash and cash equivalents at beginning of period
|
110 | 270 | 231 | - | 611 | |||||||||||||||
Cash and cash equivalents at end of period
|
$ | - | $ | 33 | $ | 19 | $ | - | $ | 52 |
Condensed Consolidating Statement of Cash Flows
|
||||||||||||||||||||
Six months ended June 30, 2010
|
||||||||||||||||||||
(in millions)
|
Parent
|
Subsidiary
Guarantor
|
Non-
Guarantor
Subsidiaries
|
Other
|
Progress
Energy,
Inc.
|
|||||||||||||||
Net cash provided by operating activities
|
$ | 54 | $ | 582 | $ | 694 | $ | (171 | ) | $ | 1,159 | |||||||||
Investing activities
|
||||||||||||||||||||
Gross property additions
|
- | (543 | ) | (598 | ) | 25 | (1,116 | ) | ||||||||||||
Nuclear fuel additions
|
- | (13 | ) | (106 | ) | - | (119 | ) | ||||||||||||
Purchases of available-for-sale securities and other
investments
|
- | (3,507 | ) | (308 | ) | - | (3,815 | ) | ||||||||||||
Proceeds from available-for-sale securities and other
investments
|
- | 3,509 | 283 | - | 3,792 | |||||||||||||||
Changes in advances to affiliated companies
|
(103 | ) | (5 | ) | 294 | (186 | ) | - | ||||||||||||
Return of investment in consolidated subsidiaries
|
54 | - | - | (54 | ) | - | ||||||||||||||
Contributions to consolidated subsidiaries
|
(56 | ) | - | - | 56 | - | ||||||||||||||
Other investing activities
|
- | 14 | - | - | 14 | |||||||||||||||
Net cash used by investing activities
|
(105 | ) | (545 | ) | (435 | ) | (159 | ) | (1,244 | ) | ||||||||||
Financing activities
|
||||||||||||||||||||
Issuance of common stock, net
|
405 | - | - | - | 405 | |||||||||||||||
Dividends paid on common stock
|
(354 | ) | - | - | - | (354 | ) | |||||||||||||
Dividends paid to parent
|
- | (102 | ) | (50 | ) | 152 | - | |||||||||||||
Dividends paid to parent in excess of retained earnings
|
- | - | (54 | ) | 54 | - | ||||||||||||||
Net decrease in short-term debt
|
(140 | ) | - | - | - | (140 | ) | |||||||||||||
Proceeds from issuance of long-term debt, net
|
- | 591 | - | - | 591 | |||||||||||||||
Retirement of long-term debt
|
(100 | ) | (300 | ) | - | - | (400 | ) | ||||||||||||
Changes in advances from affiliated companies
|
- | (210 | ) | 24 | 186 | - | ||||||||||||||
Contributions from parent
|
- | 33 | 37 | (70 | ) | - | ||||||||||||||
Other financing activities
|
- | (6 | ) | (54 | ) | 8 | (52 | ) | ||||||||||||
Net cash (used) provided by financing activities
|
(189 | ) | 6 | (97 | ) | 330 | 50 | |||||||||||||
Net (decrease) increase in cash and cash equivalents
|
(240 | ) | 43 | 162 | - | (35 | ) | |||||||||||||
Cash and cash equivalents at beginning of period
|
606 | 72 | 47 | - | 725 | |||||||||||||||
Cash and cash equivalents at end of period
|
$ | 366 | $ | 115 | $ | 209 | $ | - | $ | 690 |
·
|
On July 7, 2011, the SEC declared effective the registration statement on Form S-4 (the Registration Statement) containing a joint proxy statement for a special meeting of each company’s shareholders to vote on the Merger. The joint proxy statement was mailed to shareholders of both companies beginning July 11, 2011. Shareholder meetings for Progress Energy and Duke Energy have been set for August 23, 2011.
|
·
|
On March 28, 2011, Progress Energy and Duke Energy submitted their Hart-Scott-Rodino filing with the U.S. Department of Justice (DOJ) for review under U.S. antitrust laws. The 30-day waiting period required by the Hart-Scott-Rodino Act expired without Progress Energy or Duke Energy having received requests for additional information. Progress Energy and Duke Energy have met their obligations under the Hart-Scott-Rodino Act.
|
·
|
On March 30, 2011, Progress Energy and Duke Energy made filings with the NRC for approval for transfer of control of licenses for Progress Energy’s nuclear facilities to include Duke Energy as the ultimate parent corporation on these licenses. NRC approval is expected to take six to nine months.
|
·
|
On April 4, 2011, Progress Energy and Duke Energy made joint filings with the FERC, which assesses market power-related issues. The first filing is a Joint Dispatch Agreement, pursuant to which PEC and Duke Energy Carolinas will agree to jointly dispatch their generation facilities in order to achieve certain of the operating efficiencies expected to result from the Merger. The second filing is a joint open access transmission tariff pursuant to which PEC and Duke Energy Carolinas will agree to provide transmission service over their transmission facilities under a single transmission rate. The intervention period at FERC expired June 3, 2011.
|
·
|
On April 4, 2011, Progress Energy and Duke Energy filed a merger approval application and an application for approval of a Joint Dispatch Agreement between PEC and Duke Energy Carolinas with the NCUC. Procedural hearings have been scheduled for September 20, 2011.
|
·
|
On April 25, 2011, Progress Energy and Duke Energy filed a merger-related filing and an application for approval of a Joint Dispatch Agreement between PEC and Duke Energy Carolinas with the SCPSC. Procedural hearings have not been scheduled.
|
·
|
On July 27, 2011, the Federal Communications Commission approved the Assignment of Authorization filings to transfer control of certain licenses.
|
·
|
On August 2, 2011, the Kentucky Public Service Commission approved Progress Energy and Duke Energy’s merger-related settlement agreement with the Attorney General of the Commonwealth of Kentucky. The order approving the settlement agreement is subject to Progress Energy and Duke Energy's acceptance. |
(in millions except per share data)
|
PEC
|
PEF
|
Corporate
and Other
|
Total
|
Per
Share
|
|||||||||||||||
Three months ended June 30, 2011
|
|
|
|
|
|
|||||||||||||||
Ongoing Earnings
|
$ | 112 | $ | 141 | $ | (42 | ) | $ | 211 | $ | 0.71 | |||||||||
Tax levelization
|
(1 | ) | 1 | (4 | ) | (4 | ) | (0.01 | ) | |||||||||||
CVO mark-to-market
|
- | - | 4 | 4 | 0.01 | |||||||||||||||
Merger and integration costs, net of tax(a)
|
(4 | ) | (3 | ) | - | (7 | ) | (0.02 | ) | |||||||||||
CR3 indemnification charge, net of tax(a)
|
- | (26 | ) | - | (26 | ) | (0.09 | ) | ||||||||||||
Discontinued operations attributable to
controlling interests, net of tax
|
- | - | (2 | ) | (2 | ) | - | |||||||||||||
Net income (loss) attributable to controlling interests
|
$ | 107 | $ | 113 | $ | (44 | ) | $ | 176 | $ | 0.60 | |||||||||
Three months ended June 30, 2010
|
||||||||||||||||||||
Ongoing Earnings
|
$ | 112 | $ | 119 | $ | (50 | ) | $ | 181 | $ | 0.63 | |||||||||
Impairment, net of tax(a)
|
(1 | ) | - | - | (1 | ) | (0.01 | ) | ||||||||||||
Plant retirement adjustment, net of tax(a)
|
1 | - | - | 1 | - | |||||||||||||||
Discontinued operations attributable to controlling
interests, net of tax
|
- | - | (1 | ) | (1 | ) | - | |||||||||||||
Net income (loss) attributable to controlling interests
|
$ | 112 | $ | 119 | $ | (51 | ) | $ | 180 | $ | 0.62 | |||||||||
|
||||||||||||||||||||
Six months ended June 30, 2011
|
||||||||||||||||||||
Ongoing Earnings
|
$ | 251 | $ | 252 | $ | (90 | ) | $ | 413 | $ | 1.40 | |||||||||
Tax levelization
|
(3 | ) | (2 | ) | (1 | ) | (6 | ) | (0.02 | ) | ||||||||||
CVO mark-to-market
|
- | - | 4 | 4 | 0.01 | |||||||||||||||
Merger and integration costs, net of tax(a)
|
(11 | ) | (10 | ) | - | (21 | ) | (0.07 | ) | |||||||||||
CR3 indemnification charge, net of tax(a)
|
- | (26 | ) | - | (26 | ) | (0.09 | ) | ||||||||||||
Discontinued operations attributable to controlling
interests, net of tax
|
- | - | (4 | ) | (4 | ) | (0.01 | ) | ||||||||||||
Net income (loss) attributable to controlling interests(b)
|
$ | 237 | $ | 214 | $ | (91 | ) | $ | 360 | $ | 1.22 | |||||||||
Six months ended June 30, 2010
|
||||||||||||||||||||
Ongoing Earnings
|
$ | 260 | $ | 232 | $ | (97 | ) | $ | 395 | $ | 1.37 | |||||||||
Tax levelization
|
2 | (2 | ) | (2 | ) | (2 | ) | - | ||||||||||||
Impairment, net of tax(a)
|
(2 | ) | - | - | (2 | ) | - | |||||||||||||
Plant retirement adjustment, net of tax(a)
|
1 | - | - | 1 | - | |||||||||||||||
Change in the tax treatment of the Medicare Part D
subsidy
|
(12 | ) | (10 | ) | - | (22 | ) | (0.08 | ) | |||||||||||
Net income (loss) attributable to controlling interests(b)
|
$ | 249 | $ | 220 | $ | (99 | ) | $ | 370 | $ | 1.29 |
(a)
|
Calculated using assumed tax rate of 40 percent to the extent items are tax deductible.
|
||||||||||||||
(b)
|
Net income attributable to controlling interests is shown net of preferred stock dividend requirement of $(1) million at both PEC and PEF.
|
·
|
Crystal River Unit No. 3 Nuclear Plant (CR3) indemnification charge for estimated future years’ joint owner replacement power costs at PEF (Ongoing Earnings adjustment) and
|
·
|
merger and integration costs related to the Merger (Ongoing Earnings adjustment).
|
·
|
lower depreciation and amortization expense at PEF.
|
·
|
less favorable impact of weather at the Utilities;
|
·
|
CR3 indemnification charge for estimated future years’ joint owner replacement power costs at PEF (Ongoing Earnings adjustment);
|
·
|
merger and integration costs related to the Merger (Ongoing Earnings adjustment); and
|
·
|
lower wholesale revenues at PEF.
|
·
|
lower depreciation and amortization expense at PEF;
|
·
|
lower income tax expense due to the change in the tax treatment of the Medicare Part D subsidy in 2010 (Ongoing Earnings adjustment); and
|
·
|
favorable allowance for funds used during construction (AFUDC) equity at PEC.
|
(in millions)
|
|
|||||||||||||||
Customer Class
|
2011
|
Change
|
% Change
|
2010
|
||||||||||||
Residential
|
$ | 248 | $ | 11 | 4.6 | $ | 237 | |||||||||
Commercial
|
174 | 4 | 2.4 | 170 | ||||||||||||
Industrial
|
88 | - | - | 88 | ||||||||||||
Governmental
|
15 | 1 | 7.1 | 14 | ||||||||||||
Unbilled
|
7 | (36 | ) |
NM
|
43 | |||||||||||
Total retail base revenues
|
532 | (20 | ) | (3.6 | ) | 552 | ||||||||||
Wholesale base revenues
|
71 | 2 | 2.9 | 69 | ||||||||||||
Total Base Revenues
|
603 | (18 | ) | (2.9 | ) | 621 | ||||||||||
Clause-recoverable regulatory revenues
|
7 | 4 | 133.3 | 3 | ||||||||||||
Miscellaneous
|
32 | 2 | 6.7 | 30 | ||||||||||||
Fuel and other pass-through revenues
|
418 | (45 | ) |
NM
|
463 | |||||||||||
Total operating revenues
|
$ | 1,060 | $ | (57 | ) | (5.1 | ) | $ | 1,117 | |||||||
NM - not meaningful
|
(in millions of kWh)
|
|
|
|
|
||||||||||||
Customer Class
|
2011
|
Change
|
% Change
|
2010
|
||||||||||||
Residential
|
3,907 | 200 | 5.4 | 3,707 | ||||||||||||
Commercial
|
3,440 | 103 | 3.1 | 3,337 | ||||||||||||
Industrial
|
2,682 | 8 | 0.3 | 2,674 | ||||||||||||
Governmental
|
374 | 5 | 1.4 | 369 | ||||||||||||
Unbilled
|
74 | (638 | ) |
NM
|
712 | |||||||||||
Total retail kWh sales
|
10,477 | (322 | ) | (3.0 | ) | 10,799 | ||||||||||
Wholesale
|
2,969 | (188 | ) | (6.0 | ) | 3,157 | ||||||||||
Total kWh sales
|
13,446 | (510 | ) | (3.7 | ) | 13,956 |
(in millions)
|
|
|||||||||||||||
Customer Class
|
2011
|
Change
|
% Change
|
2010
|
||||||||||||
Residential
|
$ | 580 | $ | (13 | ) | (2.2 | ) | $ | 593 | |||||||
Commercial
|
341 | (2 | ) | (0.6 | ) | 343 | ||||||||||
Industrial
|
171 | 3 | 1.8 | 168 | ||||||||||||
Governmental
|
30 | 2 | 7.1 | 28 | ||||||||||||
Unbilled
|
(28 | ) | (37 | ) |
NM
|
9 | ||||||||||
Total retail base revenues
|
1,094 | (47 | ) | (4.1 | ) | 1,141 | ||||||||||
Wholesale base revenues
|
144 | - | - | 144 | ||||||||||||
Total Base Revenues
|
1,238 | (47 | ) | (3.7 | ) | 1,285 | ||||||||||
Clause-recoverable regulatory revenues
|
14 | 10 | 250.0 | 4 | ||||||||||||
Miscellaneous
|
63 | (3 | ) | (4.5 | ) | 66 | ||||||||||
Fuel and other pass-through revenues
|
878 | (147 | ) |
NM
|
1,025 | |||||||||||
Total operating revenues
|
$ | 2,193 | $ | (187 | ) | (7.9 | ) | $ | 2,380 |
(in millions of kWh)
|
|
|
|
|
||||||||||||
Customer Class
|
2011
|
Change
|
% Change
|
2010
|
||||||||||||
Residential
|
9,346 | (249 | ) | (2.6 | ) | 9,595 | ||||||||||
Commercial
|
6,727 | (31 | ) | (0.5 | ) | 6,758 | ||||||||||
Industrial
|
5,170 | 51 | 1.0 | 5,119 | ||||||||||||
Governmental
|
760 | 16 | 2.2 | 744 | ||||||||||||
Unbilled
|
(595 | ) | (677 | ) |
NM
|
82 | ||||||||||
Total retail kWh sales
|
21,408 | (890 | ) | (4.0 | ) | 22,298 | ||||||||||
Wholesale
|
6,178 | (791 | ) | (11.4 | ) | 6,969 | ||||||||||
Total kWh sales
|
27,586 | (1,681 | ) | (5.7 | ) | 29,267 |
(in millions)
|
|
|||||||||||||||
Customer Class
|
2011
|
Change
|
% Change
|
2010
|
||||||||||||
Residential
|
$ | 240 | $ | 4 | 1.7 | $ | 236 | |||||||||
Commercial
|
91 | 3 | 3.4 | 88 | ||||||||||||
Industrial
|
19 | (1 | ) | (5.0 | ) | 20 | ||||||||||
Governmental
|
23 | - | - | 23 | ||||||||||||
Unbilled
|
27 | (1 | ) |
NM
|
28 | |||||||||||
Total retail base revenues
|
400 | 5 | 1.3 | 395 | ||||||||||||
Wholesale base revenues
|
29 | (9 | ) | (23.7 | ) | 38 | ||||||||||
Total Base Revenues
|
429 | (4 | ) | (0.9 | ) | 433 | ||||||||||
Clause-recoverable regulatory returns
|
46 | 4 | 9.5 | 42 | ||||||||||||
Miscellaneous
|
56 | 3 | 5.7 | 53 | ||||||||||||
Fuel and other pass-through revenues
|
662 | (62 | ) |
NM
|
724 | |||||||||||
Total operating revenues
|
$ | 1,193 | $ | (59 | ) | (4.7 | ) | $ | 1,252 |
(in millions of kWh)
|
|
|
|
|
||||||||||||
Customer Class
|
2011
|
Change
|
% Change
|
2010
|
||||||||||||
Residential
|
4,681 | 83 | 1.8 | 4,598 | ||||||||||||
Commercial
|
3,032 | 93 | 3.2 | 2,939 | ||||||||||||
Industrial
|
849 | (18 | ) | (2.1 | ) | 867 | ||||||||||
Governmental
|
822 | (2 | ) | (0.2 | ) | 824 | ||||||||||
Unbilled
|
664 | (136 | ) |
NM
|
800 | |||||||||||
Total retail kWh sales
|
10,048 | 20 | 0.2 | 10,028 | ||||||||||||
Wholesale
|
808 | (223 | ) | (21.6 | ) | 1,031 | ||||||||||
Total kWh sales
|
10,856 | (203 | ) | (1.8 | ) | 11,059 |
(in millions)
|
|
|||||||||||||||
Customer Class
|
2011
|
Change
|
% Change
|
2010
|
||||||||||||
Residential
|
$ | 459 | $ | (38 | ) | (7.6 | ) | $ | 497 | |||||||
Commercial
|
169 | - | - | 169 | ||||||||||||
Industrial
|
37 | (1 | ) | (2.6 | ) | 38 | ||||||||||
Governmental
|
43 | (1 | ) | (2.3 | ) | 44 | ||||||||||
Unbilled
|
12 | (15 | ) |
NM
|
27 | |||||||||||
Total retail base revenues
|
720 | (55 | ) | (7.1 | ) | 775 | ||||||||||
Wholesale base revenues
|
55 | (26 | ) | (32.1 | ) | 81 | ||||||||||
Total Base Revenues
|
775 | (81 | ) | (9.5 | ) | 856 | ||||||||||
Clause-recoverable regulatory returns
|
91 | 11 | 13.8 | 80 | ||||||||||||
Miscellaneous
|
106 | - | - | 106 | ||||||||||||
Fuel and other pass-through revenues
|
1,253 | (227 | ) |
NM
|
1,480 | |||||||||||
Total operating revenues
|
$ | 2,225 | $ | (297 | ) | (11.8 | ) | $ | 2,522 |
(in millions of kWh)
|
|
|
|
|
||||||||||||
Customer Class
|
2011
|
Change
|
% Change
|
2010
|
||||||||||||
Residential
|
8,962 | (762 | ) | (7.8 | ) | 9,724 | ||||||||||
Commercial
|
5,578 | 42 | 0.8 | 5,536 | ||||||||||||
Industrial
|
1,621 | (14 | ) | (0.9 | ) | 1,635 | ||||||||||
Governmental
|
1,549 | (9 | ) | (0.6 | ) | 1,558 | ||||||||||
Unbilled
|
309 | (421 | ) |
NM
|
730 | |||||||||||
Total retail kWh sales
|
18,019 | (1,164 | ) | (6.1 | ) | 19,183 | ||||||||||
Wholesale
|
1,286 | (748 | ) | (36.8 | ) | 2,034 | ||||||||||
Total kWh sales
|
19,305 | (1,912 | ) | (9.0 | ) | 21,217 |
|
Three months ended June 30,
|
Six months ended June 30,
|
||||||||||||||
(in millions)
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Other interest expense
|
$ | (68 | ) | $ | (75 | ) | $ | (147 | ) | $ | (149 | ) | ||||
Other income tax benefit
|
27 | 26 | 59 | 58 | ||||||||||||
Other expense
|
(1 | ) | (1 | ) | (2 | ) | (6 | ) | ||||||||
Ongoing Earnings
|
(42 | ) | (50 | ) | (90 | ) | (97 | ) | ||||||||
Tax levelization
|
(4 | ) | - | (1 | ) | (2 | ) | |||||||||
CVO mark-to-market
|
4 | - | 4 | - | ||||||||||||
Discontinued operations attributable to
controlling interests, net of tax
|
(2 | ) | (1 | ) | (4 | ) | - | |||||||||
Net loss attributable to controlling interests
|
$ | (44 | ) | $ | (51 | ) | $ | (91 | ) | $ | (99 | ) |
(in millions)
|
Replacement
Power Costs
|
Repair Costs
|
||||||
Spent to date
|
$ | 396 | $ | 203 | ||||
NEIL proceeds received
|
(162 | ) | (103 | ) | ||||
Insurance receivable at June 30, 2011
|
(115 | ) | (54 | ) | ||||
Balance for recovery
|
$ | 119 | $ | 46 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Cash Flow Hedges (dollars in millions)
|
Notional
Amount
|
Mandatory
Settlement
|
Pay
|
Receive (a)
|
Fair
Value
|
Exposure (b)
|
|||||||||||||||
Parent
|
|||||||||||||||||||||
Risk hedged at June 30, 2011
|
|||||||||||||||||||||
Anticipated 10-year debt issue
|
$ | 200 | 2012 | 4.20 | % |
3-month LIBOR
|
$ | (9 | ) | $ | (4 | ) | |||||||||
Risk hedged at December 31, 2010
|
|||||||||||||||||||||
Anticipated 10-year debt issue
|
$ | 300 | 2011 | 4.15 | % |
3-month LIBOR
|
$ | (18 | ) | $ | (7 | ) | |||||||||
Anticipated 10-year debt issue
|
$ | 200 | 2012 | 4.20 | % |
3-month LIBOR
|
$ | (3 | ) | $ | (4 | ) | |||||||||
PEC
|
|||||||||||||||||||||
Risk hedged at June 30, 2011
|
|||||||||||||||||||||
Anticipated 10-year debt issue
|
$ | 200 | 2011 | 3.60 | % |
3-month LIBOR
|
$ | (2 | ) | $ | (4 | ) | |||||||||
Anticipated 10-year debt issue
|
$ | 200 | 2012 | 4.27 | % |
3-month LIBOR
|
$ | (8 | ) | $ | (4 | ) | |||||||||
Anticipated 10-year debt issue
|
$ | 50 | 2013 | 4.43 | % |
3-month LIBOR
|
$ | (1 | ) | $ | (1 | ) | |||||||||
Risk hedged at December 31, 2010
|
|||||||||||||||||||||
Anticipated 10-year debt issue
|
$ | 100 | 2011 | 4.31 | % |
3-month LIBOR
|
$ | (7 | ) | $ | (2 | ) | |||||||||
Anticipated 10-year debt issue
|
$ | 200 | 2012 | 4.27 | % |
3-month LIBOR
|
$ | (2 | ) | $ | (4 | ) | |||||||||
Anticipated 10-year debt issue
|
$ | 50 | 2013 | 4.43 | % |
3-month LIBOR
|
$ | - | $ | (1 | ) | ||||||||||
PEF
|
|||||||||||||||||||||
Risk hedged at June 30, 2011
|
|||||||||||||||||||||
Anticipated 10-year debt issue
|
$ | 225 | 2011 | 3.93 | % |
3-month LIBOR
|
$ | (13 | ) | $ | (5 | ) | |||||||||
Anticipated 10-year debt issue
|
$ | 50 | 2013 | 4.30 | % |
3-month LIBOR
|
$ | (1 | ) | $ | (1 | ) | |||||||||
Risk hedged at December 31, 2010
|
|||||||||||||||||||||
Anticipated 10-year debt issue
|
$ | 150 | 2011 | 4.18 | % |
3-month LIBOR
|
$ | (6 | ) | $ | (3 | ) | |||||||||
Anticipated 10-year debt issue
|
$ | 50 | 2013 | 4.30 | % |
3-month LIBOR
|
$ | - | $ | (1 | ) | ||||||||||
(a)
|
3-month London Inter Bank Offered Rate (LIBOR) was 0.25% at June 30, 2011 and 0.30% at December 31, 2010.
|
(b)
|
Exposure indicates change in value due to 25 basis point unfavorable shift in interest rates.
|
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS |
(a)
|
Securities Delivered. On May 9, 2011 and May 26, 2011, 23,750 shares and 106 shares, respectively, of our common stock were delivered to certain employees pursuant to the terms of the Progress Energy 2002 and 2007 Equity Incentive Plans (individually and collectively, the EIP) which have been approved by Progress Energy’s shareholders. Additionally, on June 16, 2011 and June 29, 2011, 242 shares and 350 shares, respectively, of our common stock were delivered to
|
|
certain former employees pursuant to the terms of the EIP. The shares of common stock delivered pursuant to the EIP were newly issued shares of Progress Energy.
|
(b)
|
Underwriters and Other Purchasers. No underwriters were used in connection with the delivery of our common stock described above.
|
(c)
|
Consideration. The restricted stock unit awards were granted to provide an incentive to the employees and former employees to exert their utmost efforts on Progress Energy’s behalf and thus enhance our performance while aligning the employees’ interest with those of our shareholders.
|
(d)
|
Exemption from Registration Claimed. The common shares described in this Item were delivered pursuant to a broad-based involuntary, non-contributory employee benefit plan, and thus did not involve an offer to sell or sale of securities within the meaning of Section 2(3) of the Securities Act of 1933. Receipt of the shares of our common stock required no investment decision on the part of the recipient.
|
(a)
|
Securities Delivered. On April 1, 2011, 2,499 shares of our common stock were delivered to certain former employees pursuant to the terms of the EIP. The shares of common stock delivered pursuant to the EIP were newly issued shares of Progress Energy.
|
(b)
|
Underwriters and Other Purchasers. No underwriters were used in connection with the delivery of our common stock described above.
|
(c)
|
Consideration. The performance share awards were granted to provide an incentive to the former employees to exert their utmost efforts on our behalf and thus enhance our performance while aligning the employees’ interests with those of our shareholders.
|
(d)
|
Exemption from Registration Claimed. The common shares described in this Item were delivered pursuant to a broad-based involuntary, non-contributory employee benefit plan, and thus did not involve an offer to sell or sale of securities within the meaning of Section 2(3) of the Securities Act of 1933. Receipt of the shares of our common stock required no investment decision on the part of the recipient.
|
Period
|
(a)
Total
Number of
Shares
(or Units)
Purchased
(1)(2)(3)(4)(5)
|
(b)
Average
Price
Paid
Per
Share
(or Unit)
|
(c)
Total Number of
Shares (or Units)
Purchased as Part
of Publicly
Announced Plans
or Programs
(1)
|
(d)
Maximum Number (or
Approximate Dollar Value)
of Shares (or Units)
that May Yet Be
Purchased Under the
Plans or Programs
(1)
|
||||||||||||
April 1 – April 30
|
211,601 | $ | 46.5491 | N/A | N/A | |||||||||||
May 1 – May 31
|
338,159 | 47.8388 | N/A | N/A | ||||||||||||
June 1 – June 30
|
342,670 | 47.2297 | N/A | N/A | ||||||||||||
Total
|
892,430 | $ | 47.2991 | N/A | N/A |
(1)
|
At June 30, 2011, Progress Energy does not have any publicly announced plans or programs to purchase shares of its common stock.
|
(2)
|
The plan administrator purchased 396,800 shares of our common stock in open-market transactions to meet share delivery obligations under the Progress Energy 401(k) Savings & Stock Ownership Plan.
|
(3)
|
The plan administrator purchased 234,995 shares of our common stock in open-market transactions to meet share delivery obligations under the Savings Plan for Employees of Florida Progress Corporation.
|
(4)
|
The plan administrator purchased 241,490 shares of our common stock in open-market transactions to meet share delivery obligations under the Progress Energy Investor Plus Plan.
|
(5)
|
Progress Energy withheld 19,145 shares of our common stock during the second quarter of 2011 to pay taxes due upon the payout of certain Restricted Stock awards, Restricted Stock Unit awards and Performance Share Sub-Plan awards pursuant to the terms of the 2002 and 2007 EIPs. Progress Energy withheld 120 shares of our common stock at an average price of $45.21 per share during the first quarter of 2011 to pay taxes due upon the vesting of certain Restricted Stock Unit awards that inadvertently were not included in the amounts we reported for the first quarter. Those shares are not reflected in the table above.
|
ITEM 6. | EXHIBITS |
(a)
|
Exhibits
|
Exhibit Number
|
Description
|
Progress
Energy
|
PEC
|
PEF
|
31(a)
|
302 Certifications of Chief Executive Officer
|
X
|
||
31(b)
|
302 Certifications of Chief Financial Officer
|
X
|
||
31(c)
|
302 Certifications of Chief Executive Officer
|
X
|
||
31(d)
|
302 Certifications of Chief Financial Officer
|
X
|
||
31(e)
|
302 Certifications of Chief Executive Officer
|
X
|
||
31(f)
|
302 Certifications of Chief Financial Officer
|
X
|
||
32(a)
|
906 Certifications of Chief Executive Officer
|
X
|
32(b)
|
906 Certifications of Chief Financial Officer
|
X
|
||
32(c)
|
906 Certifications of Chief Executive Officer
|
X
|
||
32(d)
|
906 Certifications of Chief Financial Officer
|
X
|
||
32(e)
|
906 Certifications of Chief Executive Officer
|
X
|
||
32(f)
|
906 Certifications of Chief Financial Officer
|
X
|
||
101.INS
|
XBRL Instance Document*
|
X
|
X
|
X
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
X
|
X
|
X
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase Document
|
X
|
X
|
X
|
101.LAB
|
XBRL Taxonomy Label Linkbase Document
|
X
|
X
|
X
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase Document
|
X
|
X
|
X
|
PROGRESS ENERGY, INC.
|
|
CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY CAROLINAS, INC.
|
|
FLORIDA POWER CORPORATION d/b/a PROGRESS ENERGY FLORIDA, INC.
|
|
Date: August 8, 2011
|
(Registrants)
|
By: /s/ Mark F. Mulhern
|
|
Mark F. Mulhern
|
|
Senior Vice President and Chief Financial Officer
|
|
By: /s/ Jeffrey M. Stone
|
|
Jeffrey M. Stone
|
|
Chief Accounting Officer and Controller
|
|
Progress Energy, Inc.
|
|
Chief Accounting Officer
|
|
Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc.
|
|
Florida Power Corporation d/b/a Progress Energy Florida, Inc.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Progress Energy, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 8, 2011
|
By: /s/ William D. Johnson
|
William D. Johnson
|
|
Chairman, President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Progress Energy, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 8, 2011
|
By: /s/ Mark F. Mulhern
|
Mark F. Mulhern
|
|
Senior Vice President and Chief Financial Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Carolina Power & Light Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 8, 2011
|
By: /s/ Lloyd M. Yates
|
Lloyd M. Yates
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Carolina Power & Light Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 8, 2011
|
By: /s/ Mark F. Mulhern
|
Mark F. Mulhern
|
|
Senior Vice President and Chief Financial Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Florida Power Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 8, 2011
|
By: /s/ Vincent M. Dolan
|
Vincent M. Dolan
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Florida Power Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 8, 2011
|
By: /s/ Mark F. Mulhern
|
Mark F. Mulhern
|
|
Senior Vice President and Chief Financial Officer
|
Environmental Matters (Details) (USD $)
In Millions |
6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2010
MGP And Other Sites
|
Jun. 30, 2011
MGP And Other Sites
|
Jun. 30, 2010
MGP And Other Sites
|
Jun. 30, 2010
Remediation Of Distribution And Substation Transformers
|
Jun. 30, 2011
Remediation Of Distribution And Substation Transformers
|
Jun. 30, 2010
Remediation Of Distribution And Substation Transformers
|
Jun. 30, 2011
PEC
|
Dec. 31, 2010
PEC
|
Jun. 30, 2011
PEC
Sulfur Dioxide
|
Dec. 31, 2010
PEC
Sulfur Dioxide
|
Jun. 30, 2011
PEF
Nitrogen Oxides
|
Dec. 31, 2010
PEF
Nitrogen Oxides
|
Jun. 30, 2011
PEF
Sulfur Dioxide
|
Dec. 31, 2010
PEF
Sulfur Dioxide
|
|
Disclosure Environmental Matters Details [Line Items] | ||||||||||||||||
Beginning Balance | $ 35 | $ 42 | $ 20 | $ 22 | $ 15 | $ 20 | ||||||||||
Amount accrued for environmental loss contingencies | 3 | 14 | 2 | 0 | 4 | 8 | 3 | 10 | ||||||||
Expenditures for environmental loss contingencies | (11) | (16) | (5) | (2) | (7) | (5) | (9) | (9) | ||||||||
Ending Balance | 27 | 40 | 19 | 18 | 19 | 21 | 9 | 21 | ||||||||
(Ward) site recorded liability | 5 | 5 | ||||||||||||||
Site contingency, loss exposure not accrued | 6 | |||||||||||||||
Site contingency, loss exposure not accrued, reimbursement | 1 | |||||||||||||||
Emission Allowances Inventory [Line Items] | ||||||||||||||||
Emission allowances inventory | $ 5 | $ 8 | $ 25 | $ 28 | $ 5 | $ 5 |
Unaudited Condensed Consolidated Balance Sheets (Parentheticals)
|
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Balance Sheets Parentheticals [Line Items] | ||
Common shares, authorized | 500,000,000 | 500,000,000 |
Common shares, issued | 295,000,000 | 293,000,000 |
Common shares, outstanding | 295,000,000 | 293,000,000 |
PEC
|
||
Balance Sheets Parentheticals [Line Items] | ||
Common shares, authorized | 200,000,000 | 200,000,000 |
Common shares, issued | 160,000,000 | 160,000,000 |
Common shares, outstanding | 160,000,000 | 160,000,000 |
PEF
|
||
Balance Sheets Parentheticals [Line Items] | ||
Common shares, authorized | 60,000,000 | 60,000,000 |
Common shares, issued | 100 | 100 |
Common shares, outstanding | 100 | 100 |
Other Commitments and Contingencies (Details) (USD $)
|
12 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
Spent nuclear fuel matters
|
Dec. 31, 2009
Synthetic fuels matters
|
Jun. 30, 2011
Merger matters
|
Jun. 30, 2011
CVO holder matters
|
|
Gain Contingencies [Line Items] | ||||
Gain contingency, asserted damage | $ 91,000,000 | |||
Gain contingency, unrecorded amount | 83,000,000 | |||
Loss Contingencies [Line Items] | ||||
Maximum legal fee reimbursement | 550,000 | |||
Judgment award | 78,000,000 | |||
Prejudgment interest | 55,000,000 | |||
Total judgment | 133,000,000 | |||
After-tax loss contingency, loss in period | 74,000,000 | |||
Judgment payment | 154,000,000 | |||
Contingent payment sought amount | $ 42,000,000 |
Equity (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
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Equity Tables Abstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock |
|
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Comprehensive income |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of total equity |
|
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Aug. 04, 2011
|
|
Document and Entity Information [Line Items] | ||
Entity registrant name | PROGRESS ENERGY INC | |
Entity central index key | 0001094093 | |
Document type | 10-Q | |
Document period end date | Jun. 30, 2011 | |
Amendment flag | false | |
Entity current reporting status | Yes | |
Entity voluntary filers | No | |
Current fiscal year end date | --12-31 | |
Entity filer category | Large Accelerated Filer | |
Entity well known seasoned issuer | Yes | |
Entity common stock shares outstanding | 294,602,077 | |
Document fiscal year focus | 2011 | |
Document fiscal period focus | Q2 | |
PEC
|
||
Document and Entity Information [Line Items] | ||
Entity registrant name | Carolina Power & Light Co | |
Entity central index key | 0000017797 | |
Current fiscal year end date | --12-31 | |
Entity filer category | Non-accelerated Filer | |
PEF
|
||
Document and Entity Information [Line Items] | ||
Entity registrant name | Florida Power Corp | |
Entity central index key | 0000037637 | |
Current fiscal year end date | --12-31 | |
Entity filer category | Non-accelerated Filer |
Risk Management Activities and Derivative Transactions (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
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Risk Management Activities And Derivative Transactions Tables Abstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of derivative instruments |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of derivative instruments on other comprehensive income - derivatives designated as hedging instruments |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of derivative instruments on regulatory assets and liabilities - derivatives not designated as hedging instruments |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of derivative instruments on income - derivatives not designated as hedging instruments |
|
Financial Information by Business Segment (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Segment Reporting Information [Line Items] | ||||
Unaffiliated | $ 2,256 | $ 2,372 | $ 4,423 | $ 4,907 |
Intersegment | 0 | 0 | 0 | 0 |
Total revenues | 2,256 | 2,372 | 4,423 | 4,907 |
Depreciation, amortization and accretion | 179 | 233 | 333 | 479 |
Interest income | 0 | 1 | 1 | 3 |
Total interest charges, net | 180 | 192 | 370 | 374 |
Ongoing Earnings | 211 | 181 | 413 | 395 |
Total assets | 33,120 | 33,120 | ||
PEC
|
||||
Segment Reporting Information [Line Items] | ||||
Unaffiliated | 1,060 | 1,117 | 2,193 | 2,380 |
Intersegment | 0 | 0 | 0 | 0 |
Total revenues | 1,060 | 1,117 | 2,193 | 2,380 |
Ongoing Earnings | 112 | 112 | 251 | 260 |
Total assets | 15,154 | 15,154 | ||
PEF
|
||||
Segment Reporting Information [Line Items] | ||||
Unaffiliated | 1,193 | 1,252 | 2,224 | 2,522 |
Intersegment | 0 | 0 | 1 | 0 |
Total revenues | 1,193 | 1,252 | 2,225 | 2,522 |
Ongoing Earnings | 141 | 119 | 252 | 232 |
Total assets | 13,907 | 13,907 | ||
Corporate and Other
|
||||
Segment Reporting Information [Line Items] | ||||
Unaffiliated | 3 | 3 | 6 | 5 |
Intersegment | 60 | 53 | 134 | 114 |
Total revenues | 63 | 56 | 140 | 119 |
Ongoing Earnings | (42) | (50) | (90) | (97) |
Total assets | 20,631 | 20,631 | ||
Eliminations
|
||||
Segment Reporting Information [Line Items] | ||||
Unaffiliated | 0 | 0 | 0 | 0 |
Intersegment | (60) | (53) | (135) | (114) |
Total revenues | (60) | (53) | (135) | (114) |
Ongoing Earnings | 0 | 0 | 0 | 0 |
Total assets | $ (16,572) | $ (16,572) |
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Debt and Credit Facilities
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6 Months Ended |
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Jun. 30, 2011
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Debt And Credit Facilities Disclosure [Line Items] | |
Debt and Credit Facilities | 7. DEBT AND CREDIT FACILITIES Material changes, if any, to Progress Energy's, PEC's and PEF's debt and credit facilities and financing activities since December 31, 2010, are as follows. On January 21, 2011, the Parent issued $500 million of 4.40% Senior Notes due 2021. The net proceeds, 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. On May 3, 2011, $22 million of the Parent's $500 million revolving credit agreement (RCA) expired, leaving the Parent with total credit commitments of $478 million supported by 14 financial institutions. After the $22 million expiration, our combined credit commitments for the Parent, PEC and PEF are $1.978 billion, supported by 23 financial institutions. On July 15, 2011, PEF paid at maturity $300 million of its 6.65% First Mortgage Bonds with proceeds from commercial paper borrowings. |
PEC
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Debt And Credit Facilities Disclosure [Line Items] | |
Debt and Credit Facilities | 7. DEBT AND CREDIT FACILITIES Material changes, if any, to Progress Energy's, PEC's and PEF's debt and credit facilities and financing activities since December 31, 2010, are as follows. On January 21, 2011, the Parent issued $500 million of 4.40% Senior Notes due 2021. The net proceeds, 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. On May 3, 2011, $22 million of the Parent's $500 million revolving credit agreement (RCA) expired, leaving the Parent with total credit commitments of $478 million supported by 14 financial institutions. After the $22 million expiration, our combined credit commitments for the Parent, PEC and PEF are $1.978 billion, supported by 23 financial institutions. On July 15, 2011, PEF paid at maturity $300 million of its 6.65% First Mortgage Bonds with proceeds from commercial paper borrowings. |
PEF
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Debt And Credit Facilities Disclosure [Line Items] | |
Debt and Credit Facilities | 7. DEBT AND CREDIT FACILITIES Material changes, if any, to Progress Energy's, PEC's and PEF's debt and credit facilities and financing activities since December 31, 2010, are as follows. On January 21, 2011, the Parent issued $500 million of 4.40% Senior Notes due 2021. The net proceeds, 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. On May 3, 2011, $22 million of the Parent's $500 million revolving credit agreement (RCA) expired, leaving the Parent with total credit commitments of $478 million supported by 14 financial institutions. After the $22 million expiration, our combined credit commitments for the Parent, PEC and PEF are $1.978 billion, supported by 23 financial institutions. On July 15, 2011, PEF paid at maturity $300 million of its 6.65% First Mortgage Bonds with proceeds from commercial paper borrowings. |
Financial Information by Business Segment (Tables)
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Jun. 30, 2011
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Disclosure Financial Information By Business Segment Tables Abstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment [Tables] |
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Ongoing to Net Income Attributable to Controlling Interests [Tables] |
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Benefit Plans - Costs of Benefit Plans (Details) (USD $)
In Millions |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2011
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Jun. 30, 2010
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Jun. 30, 2011
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Jun. 30, 2010
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Other pension information | ||||
Income tax expense due to patient protection and affordable care act | $ 0 | $ 0 | $ 0 | $ 22 |
Pension Benefits
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Defined benefit plan disclosure | ||||
Service cost | 14 | 12 | 27 | 23 |
Interest cost | 35 | 35 | 70 | 70 |
Expected return on plan assets | (45) | (39) | (91) | (78) |
Amortization of actuarial loss | 18 | 12 | 33 | 25 |
Other amortization, net | 1 | 2 | 3 | 3 |
Net periodic cost before deferral | 23 | 22 | 42 | 43 |
Other Postretirement Benefits
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Defined benefit plan disclosure | ||||
Service cost | 3 | 2 | 6 | 4 |
Interest cost | 10 | 8 | 20 | 16 |
Expected return on plan assets | 0 | (1) | (1) | (2) |
Amortization of actuarial loss | 3 | 0 | 6 | 1 |
Other amortization, net | 1 | 1 | 3 | 2 |
Net periodic cost before deferral | $ 17 | $ 10 | $ 34 | $ 21 |
Preferred Stock of Subsidiaries (Details) (USD $)
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Jun. 30, 2011
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Disclosure Preferred Stock Of Subsidiaries Details Abstract | |
Preferred stock liquidation preference per share | $ 100 |
Benefit Plans (Tables)
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Benefit Plans Tables Abstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined benefit plan net periodic benefit cost [Tables] | The components of the net periodic benefit cost for the respective Progress Registrants for the three months ended June 30 were:
The components of the net periodic benefit cost for the respective Progress Registrants for the six months ended June 30 were:
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Enviromental Matters
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Enviromental Matters Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Matters | 12. ENVIRONMENTAL MATTERS We are subject to regulation by various federal, state and local authorities in the areas of air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. We believe that we are in substantial compliance with those environmental regulations currently applicable to our business and operations and believe we have all necessary permits to conduct such operations. Environmental laws and regulations frequently change and the ultimate costs of compliance cannot always be precisely estimated. A. HAZARDOUS AND SOLID WASTE The provisions of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA), authorize the U.S. Environmental Protection Agency (EPA) to require the cleanup of hazardous waste sites. This statute imposes retroactive joint and several liabilities. Some states, including North Carolina, South Carolina and Florida, have similar types of statutes. We are periodically notified by regulators, including the EPA and various state agencies, of our involvement or potential involvement in sites that may require investigation and/or remediation. There are presently several sites with respect to which we have been notified of our potential liability by the EPA, the state of North Carolina, the state of Florida, or potentially responsible party (PRP) groups as described below in greater detail. Various organic materials associated with the production of manufactured gas, generally referred to as coal tar, are regulated under federal and state laws. PEC and PEF are each PRPs at several manufactured gas plant (MGP) sites. We are also currently in the process of assessing potential costs and exposures at other sites. These costs are eligible for regulatory recovery through either base rates or cost-recovery clauses. Both PEC and PEF evaluate potential claims against other PRPs and insurance carriers and plan to submit claims for cost recovery where appropriate. The outcome of potential and pending claims cannot be predicted. A discussion of sites by legal entity follows. The EPA and a number of states are considering additional regulatory measures that may affect management, treatment, marketing and disposal of coal combustion residues, primarily ash, from each of the Utilities' coal-fired plants. Revised or new laws or regulations under consideration may impose changes in solid waste classifications or groundwater protection environmental controls. In June 2010, the EPA proposed two options for new rules to regulate coal combustion residues. The first option would create a comprehensive program of federally enforceable requirements for coal combustion residues management and disposal as hazardous waste. The other option would have the EPA set performance standards for coal combustion residues management facilities and regulate disposal of coal combustion residues as nonhazardous waste. The EPA did not identify a preferred option. Under both options, the EPA may leave in place a regulatory exemption for approved beneficial uses of coal combustion residues that are recycled. A final rule is expected in 2012. Compliance plans and estimated costs to meet the requirements of new regulations will be determined when any new regulations are finalized. We are also evaluating the effect on groundwater quality from past and current operations, which may result in operational changes and additional measures under existing regulations. These issues are also under evaluation by state agencies. Certain regulated chemicals have been measured in wells near our ash ponds at levels above groundwater quality standards. Additional monitoring and investigation will be conducted. Detailed plans and cost estimates will be determined if these evaluations reveal that corrective actions are necessary. We cannot predict the outcome of this matter. We measure our liability for environmental sites based on available evidence, including our experience in investigating and remediating environmentally impaired sites. The process often involves assessing and developing cost-sharing arrangements with other PRPs. For all sites, as assessments are developed and analyzed, we will accrue costs for the sites in O&M expense on the Income Statements to the extent our liability is probable and the costs can be reasonably estimated. Because the extent of environmental impact, allocation among PRPs for all sites, remediation alternatives (which could involve either minimal or significant efforts), and concurrence of the regulatory authorities have not yet reached the stage where a reasonable estimate of the remediation costs can be made, we cannot determine the total costs that may be incurred in connection with the remediation of all sites at this time. It is probable that current estimates will change and additional losses, which could be material, may be incurred in the future. The following tables contain information about accruals for probable and estimable costs related to various environmental sites, which were included in other current liabilities and other liabilities and deferred credits on the Balance Sheets:
PROGRESS ENERGY In addition to the Utilities' sites discussed under “PEC” and “PEF” below, we incurred indemnity obligations related to certain pre-closing liabilities of divested subsidiaries, including certain environmental matters (See discussion under Guarantees in Note 13B). PEC PEC has recorded a minimum estimated total remediation cost for all of its remaining MGP sites based upon its historical experience with remediation of several of its MGP sites. The maximum amount of the range for all the sites cannot be determined at this time. Actual experience may differ from current estimates, and it is probable that estimates will continue to change in the future. In 2004, the EPA advised PEC that it had been identified as a PRP at the Ward Transformer site in Raleigh, N.C. (Ward). The EPA offered PEC and a number of other PRPs the opportunity to negotiate the removal action for the Ward site and reimbursement to the EPA for the EPA's past expenditures in addressing conditions at the Ward site. Subsequently, PEC and other PRPs signed a settlement agreement, which requires the participating PRPs to remediate the Ward site. At June 30, 2011 and December 31, 2010, PEC's recorded liability for the site was approximately $5 million. In 2008 and 2009, PEC filed civil actions against PRPs seeking contribution for and recovery of costs incurred in remediating the Ward site, as well as a declaratory judgment that defendants are jointly and severally liable for response costs at the site. PEC has settled with a number of the PRPs and is in active settlement negotiations with others. In March 2010, the federal district court in which this matter is pending denied motions to dismiss filed by a number of defendants, but granted several other motions filed by state agencies and successor entities. The court also set a trial date for May 7, 2012. In June 2010, the court entered a case management order and discovery is proceeding. The outcome of these matters cannot be predicted. In 2008, the EPA issued a Record of Decision for the operable unit for stream segments downstream from the Ward site (Ward OU1) and advised 61 parties, including PEC, of their identification as PRPs for Ward OU1 and for the operable unit for further investigation at the Ward facility and certain adjacent areas (Ward OU2). The EPA's estimate for the selected remedy for Ward OU1 is approximately $6 million. The EPA offered PEC and the other PRPs the opportunity to negotiate implementation of a response action for Ward OU1 and a remedial investigation and feasibility study for Ward OU2, as well as reimbursement to the EPA of approximately $1 million for the EPA's past expenditures in addressing conditions at the site. In 2009, PEC and several of the other participating PRPs at the Ward site submitted a letter containing a good faith response to the EPA's special notice letter. Another group of PRPs separately submitted a good faith response, which the EPA advised would be used to negotiate implementation of the required actions. The other PRPs' good faith response was subsequently withdrawn. Discussions among representatives of certain PRPs, including PEC, and the EPA are ongoing. Although a loss is considered probable, an agreement among the PRPs for these matters has not been reached; consequently, it is not possible at this time to reasonably estimate the total amount of PEC's obligation, if any, for Ward OU1 and Ward OU2. PEF The accruals for PEF's MGP and other sites relate to two former MGP sites and other sites associated with PEF that have required, or are anticipated to require, investigation and/or remediation. The maximum amount of the range for all the sites cannot be determined at this time. Actual experience may differ from current estimates, and it is probable that estimates will continue to change in the future. PEF has received approval from the FPSC for recovery through the Environmental Cost Recovery Clause (ECRC) of the majority of costs associated with the remediation of a population of distribution and substation transformers. Under agreements with the Florida Department of Environmental Protection (FDEP), PEF has reviewed these distribution transformer sites and substation sites for mineral oil-impacted soil caused by equipment integrity issues. Should additional distribution transformer sites be identified outside of this population, the distribution O&M expense will not be recoverable through the ECRC. At June 30, 2011 and December 31, 2010, PEF has recorded a regulatory asset for the probable recovery of costs through the ECRC related to the sites included under the agreement with the FDEP. B. AIR AND WATER QUALITY We are subject to various current federal, state and local environmental compliance laws and regulations governing air and water quality, resulting in capital expenditures and increased O&M expense. These compliance laws and regulations included the Clean Air Interstate Rule (CAIR), the Clean Air Visibility Rule (CAVR), the North Carolina Clean Smokestacks Act, enacted in June 2002 (Clean Smokestacks Act) and mercury air regulation. PEC has installed environmental compliance controls that meet the emission reduction requirements under the first phase of the Clean Smokestacks Act. The air quality controls installed to comply with nitrogen oxides (NOx) requirements under certain sections of the Clean Air Act and the Clean Smokestacks Act, as well as PEC's plan to replace a portion of its coal-fired generation with natural gas-fueled generation, largely address the CAIR requirements for NOx for our North Carolina units at PEC. PEF has installed environmental compliance controls that meet the emission reduction requirements under the first phase of CAIR. In 2008, the U.S. Court of Appeals for the District of Columbia (D.C. Court of Appeals) initially vacated the CAIR in its entirety and subsequently remanded the rule without vacating it for the EPA to conduct further proceedings consistent with the court's prior opinion. In 2010, the EPA published the proposed Clean Air Transport Rule, which was the regulatory program proposed to replace the CAIR. On July 7, 2011, the EPA issued the Cross-State Air Pollution Rule (CSAPR) as the final version of the proposed Clean Air Transport Rule. The CSAPR replaces the CAIR effective January 1, 2012. The CSAPR contains new emissions trading programs for nitrogen oxides and sulfur dioxide (SO2) emissions as well as more stringent overall emissions targets in 27 states, including North Carolina, South Carolina and Florida. The EPA issued the CSAPR as four separate programs, including the NOx annual trading program, the NOx ozone season trading program, the SO2 Group 1 trading program and the SO2 Group 2 trading program. North Carolina and South Carolina are included in the NOx and SO2 annual trading programs, as well as the NOx ozone season program. North Carolina remains classified as a Group 1 state, which will require additional NOx and SO2 emission reductions beginning in January 2014. South Carolina remains classified as a Group 2 state with no additional reductions required. Florida is subject only to the NOx ozone season program. Due to significant investments in NOx and SO2 emissions controls and fleet modernization projects completed or under way, we believe both PEC and PEF are relatively well positioned to comply with the CSAPR. Because of the D.C. Court of Appeals' decision that remanded the CAIR, implementation of the CAIR fulfilled best available retrofit technology (BART) for NOx and SO2 for BART-affected units under the CAVR. Under subsequent implementation of the CSAPR, CAVR compliance eventually may require consideration of NOx and SO2 emissions in addition to particulate matter emissions for BART-eligible units. We are currently evaluating the impacts of the CSAPR. In 2008, the D.C. Court of Appeals vacated the Clean Air Mercury Rule (CAMR). As a result, the EPA subsequently announced that it will develop a maximum achievable control technology (MACT) standard. The U.S. District Court for the District of Columbia issued an order requiring the EPA to issue a final MACT standard for power plants by November 16, 2011. On March 16, 2011, the EPA issued its proposed MACT standards for coal-fired and oil-fired electric steam generating units (EGU MACT), and the proposed EGU MACT was formally published in the Federal Register on May 3, 2011. The proposed EGU MACT contains stringent emission limits for mercury, non-mercury metals, and acid gases from coal-fired units and hazardous air pollutant metals, acid gases, and hydrogen fluoride from oil-fired units. Following a 90-day public comment period, the EPA is scheduled to issue a final rule in November 2011. In addition, North Carolina adopted a state-specific mercury requirement. The North Carolina mercury rule contains a requirement that all coal-fired units in the state install mercury controls by December 31, 2017, and requires compliance plan applications to be submitted in 2013. We are currently evaluating the impact of the EPA's proposed EGU MACT standard and the North Carolina state-specific requirement. The outcome of these matters cannot be predicted. To date, expenditures at PEF for CAIR regulation primarily relate to environmental compliance projects at Crystal River Units No. 4 and No. 5 (CR4 and CR5), which have both been completed and placed in service. Under an agreement with the FDEP, PEF will retire Crystal River Units No. 1 and No. 2 (CR1 and CR2) as coal-fired units and operate emission control equipment at CR4 and CR5. CR1 and CR2 will be retired after the second proposed nuclear unit at Levy completes its first fuel cycle, which was originally anticipated to be around 2020. As discussed in Note 4B, major construction activities for Levy are being postponed until after the NRC issues the Levy COL. As required, PEF has advised the FDEP of these developments that will delay the retirement of CR1 and CR2 beyond the originally anticipated date. We are currently evaluating the impacts of the Levy schedule on PEF's compliance with environmental regulations. We cannot predict the outcome of this matter. We account for emission allowances as inventory using the average cost method. We value inventory of the Utilities at historical cost consistent with ratemaking treatment. The CSAPR establishes new NOx annual and seasonal ozone programs and a new SO2 trading program. NOx and SO2 emission allowances applicable to the current CAIR cannot be used to satisfy the new CSAPR programs effective January 1, 2012. At June 30, 2011 and December 31, 2010, PEC had approximately $5 million and $8 million, respectively, in SO2 emission allowances and an immaterial amount of NOx emission allowances. At June 30, 2011 and December 31, 2010, PEF had approximately $5 million in SO2 emission allowances and approximately $25 million and $28 million, respectively, in NOx emission allowances. Emission allowances are included on the Balance Sheets in inventory and in other assets and deferred debits. SO2 emission allowances will be utilized by the Utilities to comply with existing Clean Air Act requirements. PEF believes the purchases of NOx emission allowances to meet the requirements of the CAIR were prudent and expects to recover the costs of these allowances through its ECRC. We cannot predict the outcome of this matter. |
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PEC
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Environmental Matters | 12. ENVIRONMENTAL MATTERS We are subject to regulation by various federal, state and local authorities in the areas of air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. We believe that we are in substantial compliance with those environmental regulations currently applicable to our business and operations and believe we have all necessary permits to conduct such operations. Environmental laws and regulations frequently change and the ultimate costs of compliance cannot always be precisely estimated. A. HAZARDOUS AND SOLID WASTE The provisions of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA), authorize the U.S. Environmental Protection Agency (EPA) to require the cleanup of hazardous waste sites. This statute imposes retroactive joint and several liabilities. Some states, including North Carolina, South Carolina and Florida, have similar types of statutes. We are periodically notified by regulators, including the EPA and various state agencies, of our involvement or potential involvement in sites that may require investigation and/or remediation. There are presently several sites with respect to which we have been notified of our potential liability by the EPA, the state of North Carolina, the state of Florida, or potentially responsible party (PRP) groups as described below in greater detail. Various organic materials associated with the production of manufactured gas, generally referred to as coal tar, are regulated under federal and state laws. PEC and PEF are each PRPs at several manufactured gas plant (MGP) sites. We are also currently in the process of assessing potential costs and exposures at other sites. These costs are eligible for regulatory recovery through either base rates or cost-recovery clauses. Both PEC and PEF evaluate potential claims against other PRPs and insurance carriers and plan to submit claims for cost recovery where appropriate. The outcome of potential and pending claims cannot be predicted. A discussion of sites by legal entity follows. The EPA and a number of states are considering additional regulatory measures that may affect management, treatment, marketing and disposal of coal combustion residues, primarily ash, from each of the Utilities' coal-fired plants. Revised or new laws or regulations under consideration may impose changes in solid waste classifications or groundwater protection environmental controls. In June 2010, the EPA proposed two options for new rules to regulate coal combustion residues. The first option would create a comprehensive program of federally enforceable requirements for coal combustion residues management and disposal as hazardous waste. The other option would have the EPA set performance standards for coal combustion residues management facilities and regulate disposal of coal combustion residues as nonhazardous waste. The EPA did not identify a preferred option. Under both options, the EPA may leave in place a regulatory exemption for approved beneficial uses of coal combustion residues that are recycled. A final rule is expected in 2012. Compliance plans and estimated costs to meet the requirements of new regulations will be determined when any new regulations are finalized. We are also evaluating the effect on groundwater quality from past and current operations, which may result in operational changes and additional measures under existing regulations. These issues are also under evaluation by state agencies. Certain regulated chemicals have been measured in wells near our ash ponds at levels above groundwater quality standards. Additional monitoring and investigation will be conducted. Detailed plans and cost estimates will be determined if these evaluations reveal that corrective actions are necessary. We cannot predict the outcome of this matter. We measure our liability for environmental sites based on available evidence, including our experience in investigating and remediating environmentally impaired sites. The process often involves assessing and developing cost-sharing arrangements with other PRPs. For all sites, as assessments are developed and analyzed, we will accrue costs for the sites in O&M expense on the Income Statements to the extent our liability is probable and the costs can be reasonably estimated. Because the extent of environmental impact, allocation among PRPs for all sites, remediation alternatives (which could involve either minimal or significant efforts), and concurrence of the regulatory authorities have not yet reached the stage where a reasonable estimate of the remediation costs can be made, we cannot determine the total costs that may be incurred in connection with the remediation of all sites at this time. It is probable that current estimates will change and additional losses, which could be material, may be incurred in the future. The following tables contain information about accruals for probable and estimable costs related to various environmental sites, which were included in other current liabilities and other liabilities and deferred credits on the Balance Sheets:
PEC PEC has recorded a minimum estimated total remediation cost for all of its remaining MGP sites based upon its historical experience with remediation of several of its MGP sites. The maximum amount of the range for all the sites cannot be determined at this time. Actual experience may differ from current estimates, and it is probable that estimates will continue to change in the future. In 2004, the EPA advised PEC that it had been identified as a PRP at the Ward Transformer site in Raleigh, N.C. (Ward). The EPA offered PEC and a number of other PRPs the opportunity to negotiate the removal action for the Ward site and reimbursement to the EPA for the EPA's past expenditures in addressing conditions at the Ward site. Subsequently, PEC and other PRPs signed a settlement agreement, which requires the participating PRPs to remediate the Ward site. At June 30, 2011 and December 31, 2010, PEC's recorded liability for the site was approximately $5 million. In 2008 and 2009, PEC filed civil actions against PRPs seeking contribution for and recovery of costs incurred in remediating the Ward site, as well as a declaratory judgment that defendants are jointly and severally liable for response costs at the site. PEC has settled with a number of the PRPs and is in active settlement negotiations with others. In March 2010, the federal district court in which this matter is pending denied motions to dismiss filed by a number of defendants, but granted several other motions filed by state agencies and successor entities. The court also set a trial date for May 7, 2012. In June 2010, the court entered a case management order and discovery is proceeding. The outcome of these matters cannot be predicted. In 2008, the EPA issued a Record of Decision for the operable unit for stream segments downstream from the Ward site (Ward OU1) and advised 61 parties, including PEC, of their identification as PRPs for Ward OU1 and for the operable unit for further investigation at the Ward facility and certain adjacent areas (Ward OU2). The EPA's estimate for the selected remedy for Ward OU1 is approximately $6 million. The EPA offered PEC and the other PRPs the opportunity to negotiate implementation of a response action for Ward OU1 and a remedial investigation and feasibility study for Ward OU2, as well as reimbursement to the EPA of approximately $1 million for the EPA's past expenditures in addressing conditions at the site. In 2009, PEC and several of the other participating PRPs at the Ward site submitted a letter containing a good faith response to the EPA's special notice letter. Another group of PRPs separately submitted a good faith response, which the EPA advised would be used to negotiate implementation of the required actions. The other PRPs' good faith response was subsequently withdrawn. Discussions among representatives of certain PRPs, including PEC, and the EPA are ongoing. Although a loss is considered probable, an agreement among the PRPs for these matters has not been reached; consequently, it is not possible at this time to reasonably estimate the total amount of PEC's obligation, if any, for Ward OU1 and Ward OU2. B. AIR AND WATER QUALITY We are subject to various current federal, state and local environmental compliance laws and regulations governing air and water quality, resulting in capital expenditures and increased O&M expense. These compliance laws and regulations included the Clean Air Interstate Rule (CAIR), the Clean Air Visibility Rule (CAVR), the North Carolina Clean Smokestacks Act, enacted in June 2002 (Clean Smokestacks Act) and mercury air regulation. PEC has installed environmental compliance controls that meet the emission reduction requirements under the first phase of the Clean Smokestacks Act. The air quality controls installed to comply with nitrogen oxides (NOx) requirements under certain sections of the Clean Air Act and the Clean Smokestacks Act, as well as PEC's plan to replace a portion of its coal-fired generation with natural gas-fueled generation, largely address the CAIR requirements for NOx for our North Carolina units at PEC. PEF has installed environmental compliance controls that meet the emission reduction requirements under the first phase of CAIR. In 2008, the U.S. Court of Appeals for the District of Columbia (D.C. Court of Appeals) initially vacated the CAIR in its entirety and subsequently remanded the rule without vacating it for the EPA to conduct further proceedings consistent with the court's prior opinion. In 2010, the EPA published the proposed Clean Air Transport Rule, which was the regulatory program proposed to replace the CAIR. On July 7, 2011, the EPA issued the Cross-State Air Pollution Rule (CSAPR) as the final version of the proposed Clean Air Transport Rule. The CSAPR replaces the CAIR effective January 1, 2012. The CSAPR contains new emissions trading programs for nitrogen oxides and sulfur dioxide (SO2) emissions as well as more stringent overall emissions targets in 27 states, including North Carolina, South Carolina and Florida. The EPA issued the CSAPR as four separate programs, including the NOx annual trading program, the NOx ozone season trading program, the SO2 Group 1 trading program and the SO2 Group 2 trading program. North Carolina and South Carolina are included in the NOx and SO2 annual trading programs, as well as the NOx ozone season program. North Carolina remains classified as a Group 1 state, which will require additional NOx and SO2 emission reductions beginning in January 2014. South Carolina remains classified as a Group 2 state with no additional reductions required. Florida is subject only to the NOx ozone season program. Due to significant investments in NOx and SO2 emissions controls and fleet modernization projects completed or under way, we believe both PEC and PEF are relatively well positioned to comply with the CSAPR. Because of the D.C. Court of Appeals' decision that remanded the CAIR, implementation of the CAIR fulfilled best available retrofit technology (BART) for NOx and SO2 for BART-affected units under the CAVR. Under subsequent implementation of the CSAPR, CAVR compliance eventually may require consideration of NOx and SO2 emissions in addition to particulate matter emissions for BART-eligible units. We are currently evaluating the impacts of the CSAPR. In 2008, the D.C. Court of Appeals vacated the Clean Air Mercury Rule (CAMR). As a result, the EPA subsequently announced that it will develop a maximum achievable control technology (MACT) standard. The U.S. District Court for the District of Columbia issued an order requiring the EPA to issue a final MACT standard for power plants by November 16, 2011. On March 16, 2011, the EPA issued its proposed MACT standards for coal-fired and oil-fired electric steam generating units (EGU MACT), and the proposed EGU MACT was formally published in the Federal Register on May 3, 2011. The proposed EGU MACT contains stringent emission limits for mercury, non-mercury metals, and acid gases from coal-fired units and hazardous air pollutant metals, acid gases, and hydrogen fluoride from oil-fired units. Following a 90-day public comment period, the EPA is scheduled to issue a final rule in November 2011. In addition, North Carolina adopted a state-specific mercury requirement. The North Carolina mercury rule contains a requirement that all coal-fired units in the state install mercury controls by December 31, 2017, and requires compliance plan applications to be submitted in 2013. We are currently evaluating the impact of the EPA's proposed EGU MACT standard and the North Carolina state-specific requirement. The outcome of these matters cannot be predicted. To date, expenditures at PEF for CAIR regulation primarily relate to environmental compliance projects at Crystal River Units No. 4 and No. 5 (CR4 and CR5), which have both been completed and placed in service. Under an agreement with the FDEP, PEF will retire Crystal River Units No. 1 and No. 2 (CR1 and CR2) as coal-fired units and operate emission control equipment at CR4 and CR5. CR1 and CR2 will be retired after the second proposed nuclear unit at Levy completes its first fuel cycle, which was originally anticipated to be around 2020. As discussed in Note 4B, major construction activities for Levy are being postponed until after the NRC issues the Levy COL. As required, PEF has advised the FDEP of these developments that will delay the retirement of CR1 and CR2 beyond the originally anticipated date. We are currently evaluating the impacts of the Levy schedule on PEF's compliance with environmental regulations. We cannot predict the outcome of this matter. We account for emission allowances as inventory using the average cost method. We value inventory of the Utilities at historical cost consistent with ratemaking treatment. The CSAPR establishes new NOx annual and seasonal ozone programs and a new SO2 trading program. NOx and SO2 emission allowances applicable to the current CAIR cannot be used to satisfy the new CSAPR programs effective January 1, 2012. At June 30, 2011 and December 31, 2010, PEC had approximately $5 million and $8 million, respectively, in SO2 emission allowances and an immaterial amount of NOx emission allowances. At June 30, 2011 and December 31, 2010, PEF had approximately $5 million in SO2 emission allowances and approximately $25 million and $28 million, respectively, in NOx emission allowances. Emission allowances are included on the Balance Sheets in inventory and in other assets and deferred debits. SO2 emission allowances will be utilized by the Utilities to comply with existing Clean Air Act requirements. PEF believes the purchases of NOx emission allowances to meet the requirements of the CAIR were prudent and expects to recover the costs of these allowances through its ECRC. We cannot predict the outcome of this matter. |
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PEF
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Environmental Matters | 12. ENVIRONMENTAL MATTERS We are subject to regulation by various federal, state and local authorities in the areas of air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. We believe that we are in substantial compliance with those environmental regulations currently applicable to our business and operations and believe we have all necessary permits to conduct such operations. Environmental laws and regulations frequently change and the ultimate costs of compliance cannot always be precisely estimated. A. HAZARDOUS AND SOLID WASTE The provisions of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA), authorize the U.S. Environmental Protection Agency (EPA) to require the cleanup of hazardous waste sites. This statute imposes retroactive joint and several liabilities. Some states, including North Carolina, South Carolina and Florida, have similar types of statutes. We are periodically notified by regulators, including the EPA and various state agencies, of our involvement or potential involvement in sites that may require investigation and/or remediation. There are presently several sites with respect to which we have been notified of our potential liability by the EPA, the state of North Carolina, the state of Florida, or potentially responsible party (PRP) groups as described below in greater detail. Various organic materials associated with the production of manufactured gas, generally referred to as coal tar, are regulated under federal and state laws. PEC and PEF are each PRPs at several manufactured gas plant (MGP) sites. We are also currently in the process of assessing potential costs and exposures at other sites. These costs are eligible for regulatory recovery through either base rates or cost-recovery clauses. Both PEC and PEF evaluate potential claims against other PRPs and insurance carriers and plan to submit claims for cost recovery where appropriate. The outcome of potential and pending claims cannot be predicted. A discussion of sites by legal entity follows. The EPA and a number of states are considering additional regulatory measures that may affect management, treatment, marketing and disposal of coal combustion residues, primarily ash, from each of the Utilities' coal-fired plants. Revised or new laws or regulations under consideration may impose changes in solid waste classifications or groundwater protection environmental controls. In June 2010, the EPA proposed two options for new rules to regulate coal combustion residues. The first option would create a comprehensive program of federally enforceable requirements for coal combustion residues management and disposal as hazardous waste. The other option would have the EPA set performance standards for coal combustion residues management facilities and regulate disposal of coal combustion residues as nonhazardous waste. The EPA did not identify a preferred option. Under both options, the EPA may leave in place a regulatory exemption for approved beneficial uses of coal combustion residues that are recycled. A final rule is expected in 2012. Compliance plans and estimated costs to meet the requirements of new regulations will be determined when any new regulations are finalized. We are also evaluating the effect on groundwater quality from past and current operations, which may result in operational changes and additional measures under existing regulations. These issues are also under evaluation by state agencies. Certain regulated chemicals have been measured in wells near our ash ponds at levels above groundwater quality standards. Additional monitoring and investigation will be conducted. Detailed plans and cost estimates will be determined if these evaluations reveal that corrective actions are necessary. We cannot predict the outcome of this matter. We measure our liability for environmental sites based on available evidence, including our experience in investigating and remediating environmentally impaired sites. The process often involves assessing and developing cost-sharing arrangements with other PRPs. For all sites, as assessments are developed and analyzed, we will accrue costs for the sites in O&M expense on the Income Statements to the extent our liability is probable and the costs can be reasonably estimated. Because the extent of environmental impact, allocation among PRPs for all sites, remediation alternatives (which could involve either minimal or significant efforts), and concurrence of the regulatory authorities have not yet reached the stage where a reasonable estimate of the remediation costs can be made, we cannot determine the total costs that may be incurred in connection with the remediation of all sites at this time. It is probable that current estimates will change and additional losses, which could be material, may be incurred in the future. The following tables contain information about accruals for probable and estimable costs related to various environmental sites, which were included in other current liabilities and other liabilities and deferred credits on the Balance Sheets:
PEF The accruals for PEF's MGP and other sites relate to two former MGP sites and other sites associated with PEF that have required, or are anticipated to require, investigation and/or remediation. The maximum amount of the range for all the sites cannot be determined at this time. Actual experience may differ from current estimates, and it is probable that estimates will continue to change in the future. PEF has received approval from the FPSC for recovery through the Environmental Cost Recovery Clause (ECRC) of the majority of costs associated with the remediation of a population of distribution and substation transformers. Under agreements with the Florida Department of Environmental Protection (FDEP), PEF has reviewed these distribution transformer sites and substation sites for mineral oil-impacted soil caused by equipment integrity issues. Should additional distribution transformer sites be identified outside of this population, the distribution O&M expense will not be recoverable through the ECRC. At June 30, 2011 and December 31, 2010, PEF has recorded a regulatory asset for the probable recovery of costs through the ECRC related to the sites included under the agreement with the FDEP. B. AIR AND WATER QUALITY We are subject to various current federal, state and local environmental compliance laws and regulations governing air and water quality, resulting in capital expenditures and increased O&M expense. These compliance laws and regulations included the Clean Air Interstate Rule (CAIR), the Clean Air Visibility Rule (CAVR), the North Carolina Clean Smokestacks Act, enacted in June 2002 (Clean Smokestacks Act) and mercury air regulation. PEC has installed environmental compliance controls that meet the emission reduction requirements under the first phase of the Clean Smokestacks Act. The air quality controls installed to comply with nitrogen oxides (NOx) requirements under certain sections of the Clean Air Act and the Clean Smokestacks Act, as well as PEC's plan to replace a portion of its coal-fired generation with natural gas-fueled generation, largely address the CAIR requirements for NOx for our North Carolina units at PEC. PEF has installed environmental compliance controls that meet the emission reduction requirements under the first phase of CAIR. In 2008, the U.S. Court of Appeals for the District of Columbia (D.C. Court of Appeals) initially vacated the CAIR in its entirety and subsequently remanded the rule without vacating it for the EPA to conduct further proceedings consistent with the court's prior opinion. In 2010, the EPA published the proposed Clean Air Transport Rule, which was the regulatory program proposed to replace the CAIR. On July 7, 2011, the EPA issued the Cross-State Air Pollution Rule (CSAPR) as the final version of the proposed Clean Air Transport Rule. The CSAPR replaces the CAIR effective January 1, 2012. The CSAPR contains new emissions trading programs for nitrogen oxides and sulfur dioxide (SO2) emissions as well as more stringent overall emissions targets in 27 states, including North Carolina, South Carolina and Florida. The EPA issued the CSAPR as four separate programs, including the NOx annual trading program, the NOx ozone season trading program, the SO2 Group 1 trading program and the SO2 Group 2 trading program. North Carolina and South Carolina are included in the NOx and SO2 annual trading programs, as well as the NOx ozone season program. North Carolina remains classified as a Group 1 state, which will require additional NOx and SO2 emission reductions beginning in January 2014. South Carolina remains classified as a Group 2 state with no additional reductions required. Florida is subject only to the NOx ozone season program. Due to significant investments in NOx and SO2 emissions controls and fleet modernization projects completed or under way, we believe both PEC and PEF are relatively well positioned to comply with the CSAPR. Because of the D.C. Court of Appeals' decision that remanded the CAIR, implementation of the CAIR fulfilled best available retrofit technology (BART) for NOx and SO2 for BART-affected units under the CAVR. Under subsequent implementation of the CSAPR, CAVR compliance eventually may require consideration of NOx and SO2 emissions in addition to particulate matter emissions for BART-eligible units. We are currently evaluating the impacts of the CSAPR. In 2008, the D.C. Court of Appeals vacated the Clean Air Mercury Rule (CAMR). As a result, the EPA subsequently announced that it will develop a maximum achievable control technology (MACT) standard. The U.S. District Court for the District of Columbia issued an order requiring the EPA to issue a final MACT standard for power plants by November 16, 2011. On March 16, 2011, the EPA issued its proposed MACT standards for coal-fired and oil-fired electric steam generating units (EGU MACT), and the proposed EGU MACT was formally published in the Federal Register on May 3, 2011. The proposed EGU MACT contains stringent emission limits for mercury, non-mercury metals, and acid gases from coal-fired units and hazardous air pollutant metals, acid gases, and hydrogen fluoride from oil-fired units. Following a 90-day public comment period, the EPA is scheduled to issue a final rule in November 2011. In addition, North Carolina adopted a state-specific mercury requirement. The North Carolina mercury rule contains a requirement that all coal-fired units in the state install mercury controls by December 31, 2017, and requires compliance plan applications to be submitted in 2013. We are currently evaluating the impact of the EPA's proposed EGU MACT standard and the North Carolina state-specific requirement. The outcome of these matters cannot be predicted. To date, expenditures at PEF for CAIR regulation primarily relate to environmental compliance projects at Crystal River Units No. 4 and No. 5 (CR4 and CR5), which have both been completed and placed in service. Under an agreement with the FDEP, PEF will retire Crystal River Units No. 1 and No. 2 (CR1 and CR2) as coal-fired units and operate emission control equipment at CR4 and CR5. CR1 and CR2 will be retired after the second proposed nuclear unit at Levy completes its first fuel cycle, which was originally anticipated to be around 2020. As discussed in Note 4B, major construction activities for Levy are being postponed until after the NRC issues the Levy COL. As required, PEF has advised the FDEP of these developments that will delay the retirement of CR1 and CR2 beyond the originally anticipated date. We are currently evaluating the impacts of the Levy schedule on PEF's compliance with environmental regulations. We cannot predict the outcome of this matter. We account for emission allowances as inventory using the average cost method. We value inventory of the Utilities at historical cost consistent with ratemaking treatment. The CSAPR establishes new NOx annual and seasonal ozone programs and a new SO2 trading program. NOx and SO2 emission allowances applicable to the current CAIR cannot be used to satisfy the new CSAPR programs effective January 1, 2012. At June 30, 2011 and December 31, 2010, PEC had approximately $5 million and $8 million, respectively, in SO2 emission allowances and an immaterial amount of NOx emission allowances. At June 30, 2011 and December 31, 2010, PEF had approximately $5 million in SO2 emission allowances and approximately $25 million and $28 million, respectively, in NOx emission allowances. Emission allowances are included on the Balance Sheets in inventory and in other assets and deferred debits. SO2 emission allowances will be utilized by the Utilities to comply with existing Clean Air Act requirements. PEF believes the purchases of NOx emission allowances to meet the requirements of the CAIR were prudent and expects to recover the costs of these allowances through its ECRC. We cannot predict the outcome of this matter. |
New Accounting Standards
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6 Months Ended |
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Jun. 30, 2011
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Schedule Of New Accounting Pronouncements And Changes In Accounting Principles Disclosure [Line Items] | |
New Accounting Standards | 3. NEW ACCOUNTING STANDARDS FAIR VALUE MEASUREMENT AND DISCLOSURES In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements,” which amends Accounting Standards Codification (ASC) 820 to clarify certain existing disclosure requirements and to require a number of additional disclosures, including amounts and reasons for significant transfers between the three levels of the fair value hierarchy, and presentation of certain information in the reconciliation of recurring Level 3 measurements on a gross basis. ASU 2010-06 was effective for us on January 1, 2010, with certain disclosures effective January 1, 2011. The adoption of ASU 2010-06 resulted in additional disclosures in the notes to the financial statements but did not have an impact on our or the Utilities' financial position, results of operations, or cash flows. In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,” which amends ASC 820 to develop a single, converged fair value framework between U.S. GAAP and IFRS. ASU 2011-04 is effective prospectively for us on January 1, 2012. The adoption of ASU 2011-04 will result in changes in certain fair value measurement principles, as well as additional disclosure in the notes to the financial statements. However, the impact of adoption is not expected to be significant to our or the Utilities' financial position, results of operations, or cash flows. |
PEC
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Schedule Of New Accounting Pronouncements And Changes In Accounting Principles Disclosure [Line Items] | |
New Accounting Standards | 3. NEW ACCOUNTING STANDARDS FAIR VALUE MEASUREMENT AND DISCLOSURES In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements,” which amends Accounting Standards Codification (ASC) 820 to clarify certain existing disclosure requirements and to require a number of additional disclosures, including amounts and reasons for significant transfers between the three levels of the fair value hierarchy, and presentation of certain information in the reconciliation of recurring Level 3 measurements on a gross basis. ASU 2010-06 was effective for us on January 1, 2010, with certain disclosures effective January 1, 2011. The adoption of ASU 2010-06 resulted in additional disclosures in the notes to the financial statements but did not have an impact on our or the Utilities' financial position, results of operations, or cash flows. In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,” which amends ASC 820 to develop a single, converged fair value framework between U.S. GAAP and IFRS. ASU 2011-04 is effective prospectively for us on January 1, 2012. The adoption of ASU 2011-04 will result in changes in certain fair value measurement principles, as well as additional disclosure in the notes to the financial statements. However, the impact of adoption is not expected to be significant to our or the Utilities' financial position, results of operations, or cash flows. |
PEF
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Schedule Of New Accounting Pronouncements And Changes In Accounting Principles Disclosure [Line Items] | |
New Accounting Standards | 3. NEW ACCOUNTING STANDARDS FAIR VALUE MEASUREMENT AND DISCLOSURES In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements,” which amends Accounting Standards Codification (ASC) 820 to clarify certain existing disclosure requirements and to require a number of additional disclosures, including amounts and reasons for significant transfers between the three levels of the fair value hierarchy, and presentation of certain information in the reconciliation of recurring Level 3 measurements on a gross basis. ASU 2010-06 was effective for us on January 1, 2010, with certain disclosures effective January 1, 2011. The adoption of ASU 2010-06 resulted in additional disclosures in the notes to the financial statements but did not have an impact on our or the Utilities' financial position, results of operations, or cash flows. In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,” which amends ASC 820 to develop a single, converged fair value framework between U.S. GAAP and IFRS. ASU 2011-04 is effective prospectively for us on January 1, 2012. The adoption of ASU 2011-04 will result in changes in certain fair value measurement principles, as well as additional disclosure in the notes to the financial statements. However, the impact of adoption is not expected to be significant to our or the Utilities' financial position, results of operations, or cash flows. |
Benefit Plans
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Benefit Plans Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Benefit Plans | 9. BENEFIT PLANS We have noncontributory defined benefit retirement plans that provide pension benefits for substantially all full-time employees. We also have supplementary defined benefit pension plans that provide benefits to higher-level employees. In addition to pension benefits, we provide contributory other postretirement benefits (OPEB), including certain health care and life insurance benefits, for retired employees who meet specified criteria. The components of the net periodic benefit cost for the respective Progress Registrants for the three months ended June 30 were:
The components of the net periodic benefit cost for the respective Progress Registrants for the six months ended June 30 were:
In 2011, we expect to make contributions directly to pension plan assets of approximately $300 million to $350 million for us, including $200 million to $225 million for PEC and $100 million to $125 million for PEF. We contributed $229 million during the six months ended June 30, 2011, including $150 million for PEC and $77 million for PEF. As a result of the Patient Protection and Affordable Care Act and the related Health Care and Education Reconciliation Act, which were enacted in March 2010, an additional tax expense of $22 million for us, including $12 million for PEC and $10 million for PEF, was recognized during the six months ended June 30, 2010. See Note 16A in the 2010 Form 10-K. |
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PEC
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Benefit Plans Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Benefit Plans | 9. BENEFIT PLANS We have noncontributory defined benefit retirement plans that provide pension benefits for substantially all full-time employees. We also have supplementary defined benefit pension plans that provide benefits to higher-level employees. In addition to pension benefits, we provide contributory other postretirement benefits (OPEB), including certain health care and life insurance benefits, for retired employees who meet specified criteria. The components of the net periodic benefit cost for the respective Progress Registrants for the three months ended June 30 were:
The components of the net periodic benefit cost for the respective Progress Registrants for the six months ended June 30 were:
In 2011, we expect to make contributions directly to pension plan assets of approximately $300 million to $350 million for us, including $200 million to $225 million for PEC and $100 million to $125 million for PEF. We contributed $229 million during the six months ended June 30, 2011, including $150 million for PEC and $77 million for PEF. As a result of the Patient Protection and Affordable Care Act and the related Health Care and Education Reconciliation Act, which were enacted in March 2010, an additional tax expense of $22 million for us, including $12 million for PEC and $10 million for PEF, was recognized during the six months ended June 30, 2010. See Note 16A in the 2010 Form 10-K. |
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PEF
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Benefit Plans Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Benefit Plans | 9. BENEFIT PLANS We have noncontributory defined benefit retirement plans that provide pension benefits for substantially all full-time employees. We also have supplementary defined benefit pension plans that provide benefits to higher-level employees. In addition to pension benefits, we provide contributory other postretirement benefits (OPEB), including certain health care and life insurance benefits, for retired employees who meet specified criteria. The components of the net periodic benefit cost for the respective Progress Registrants for the three months ended June 30 were:
The components of the net periodic benefit cost for the respective Progress Registrants for the six months ended June 30 were:
In 2011, we expect to make contributions directly to pension plan assets of approximately $300 million to $350 million for us, including $200 million to $225 million for PEC and $100 million to $125 million for PEF. We contributed $229 million during the six months ended June 30, 2011, including $150 million for PEC and $77 million for PEF. As a result of the Patient Protection and Affordable Care Act and the related Health Care and Education Reconciliation Act, which were enacted in March 2010, an additional tax expense of $22 million for us, including $12 million for PEC and $10 million for PEF, was recognized during the six months ended June 30, 2010. See Note 16A in the 2010 Form 10-K. |
Condensed Consolidating Statements
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Condensed Consolidating Statements Disclosure Abstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed consolidating financials | 14. CONDENSED CONSOLIDATING STATEMENTS As discussed in Note 23 in the 2010 Form 10-K, we have guaranteed certain payments of two 100 percent owned indirect subsidiaries, FPC Capital I (the Trust) and Florida Progress Funding Corporation (Funding Corp.). Our guarantees are joint and several, full and unconditional and are in addition to the joint and several, full and unconditional guarantees issued to the Trust and Funding Corp. by Florida Progress. Our subsidiaries have provisions restricting the payment of dividends to the Parent in certain limited circumstances, and as disclosed in Note 11B in the 2010 Form 10-K, there were no restrictions on PEC's or PEF's retained earnings. The Trust is a VIE of which we are not the primary beneficiary. Separate financial statements and other disclosures concerning the Trust have not been presented because we believe that such information is not material to investors. Presented below are the condensed consolidating Statements of Income, Balance Sheets and Statements of Cash Flows as required by Rule 3-10 of Regulation S-X. In these condensed consolidating statements, the Parent column includes the financial results of the parent holding company only. The Subsidiary Guarantor column includes the consolidated financial results of Florida Progress only, which is primarily comprised of its wholly owned subsidiary PEF. The Non-guarantor Subsidiaries column includes the consolidated financial results of all non-guarantor subsidiaries, which is primarily comprised of our wholly owned subsidiary PEC. The Other column includes elimination entries for all intercompany transactions and other consolidation adjustments. Financial statements for PEC and PEF are separately presented elsewhere in this Form 10-Q. All applicable corporate expenses have been allocated appropriately among the guarantor and non-guarantor subsidiaries. The financial information may not necessarily be indicative of results of operations or financial position had the Subsidiary Guarantor or other non-guarantor subsidiaries operated as independent entities.
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Risk Management Activities and Derivative Transactions
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Jun. 30, 2011
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Risk Management Activities And Derivative Transactions Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Management Activities And Derivative Transactions | 10. RISK MANAGEMENT ACTIVITIES AND DERIVATIVE TRANSACTIONS We are exposed to various risks related to changes in market conditions. We have a risk management committee that includes senior executives from various business groups. The risk management committee is responsible for administering risk management policies and monitoring compliance with those policies by all subsidiaries. Under our risk policy, we may use a variety of instruments, including swaps, options and forward contracts, to manage exposure to fluctuations in commodity prices and interest rates. Such instruments contain credit risk if the counterparty fails to perform under the contract. We minimize such risk by performing credit and financial reviews using a combination of financial analysis and publicly available credit ratings of such counterparties. Potential nonperformance by counterparties is not expected to have a material effect on our financial position or results of operations. A. COMMODITY DERIVATIVES GENERAL Most of our physical commodity contracts are not derivatives or qualify as normal purchases or sales. Therefore, such contracts are not recorded at fair value. ECONOMIC DERIVATIVES Derivative products, primarily natural gas and oil contracts, may be entered into from time to time for economic hedging purposes. While management believes the economic hedges mitigate exposures to fluctuations in commodity prices, these instruments are not designated as hedges for accounting purposes and are monitored consistent with trading positions. The Utilities have financial derivative instruments with settlement dates through 2015 related to their exposure to price fluctuations on fuel oil and natural gas purchases. The majority of our financial hedge agreements will settle in 2011 and 2012. Substantially all of these instruments receive regulatory accounting treatment. Related unrealized gains and losses are recorded in regulatory liabilities and regulatory assets, respectively, on the Balance Sheets until the contracts are settled. After settlement of the derivatives and the fuel is consumed, any realized gains or losses are passed through the fuel cost-recovery clause. Certain hedge agreements may result in the receipt of, or posting of, derivative collateral with our counterparties, depending on the daily derivative position. Fluctuations in commodity prices that lead to our return of collateral received and/or our posting of collateral with our counterparties negatively impact our liquidity. We manage open positions with strict policies that limit our exposure to market risk and require daily reporting to management of potential financial exposures. Certain counterparties have posted or held cash collateral in support of these instruments. Progress Energy had a cash collateral asset included in derivative collateral posted of $122 million and $164 million on the Progress Energy Consolidated Balance Sheets at June 30, 2011 and December 31, 2010, respectively. At June 30, 2011, Progress Energy had 291.3 million MMBtu notional of natural gas and 17.6 million gallons notional of fuel oil related to outstanding commodity derivative swaps that were entered into to hedge forecasted natural gas and oil purchases. PEC had a cash collateral asset included in prepayments and other current assets of $18 million and $24 million on the PEC Consolidated Balance Sheets at June 30, 2011 and December 31, 2010, respectively. At June 30, 2011, PEC had 78.1 million MMBtu notional of natural gas related to outstanding commodity derivative swaps that were entered into to hedge forecasted natural gas purchases. PEF's cash collateral asset included in derivative collateral posted was $104 million and $140 million on the PEF Balance Sheets at June 30, 2011 and December 31, 2010, respectively. At June 30, 2011, PEF had 213.2 million MMBtu notional of natural gas and 17.6 million gallons notional of oil related to outstanding commodity derivative swaps that were entered into to hedge forecasted natural gas and oil purchases. B. INTEREST RATE DERIVATIVES – FAIR VALUE OR CASH FLOW HEDGES We use cash flow hedging strategies to reduce exposure to changes in cash flow due to fluctuating interest rates. We use fair value hedging strategies to reduce exposure to changes in fair value due to interest rate changes. Our cash flow hedging strategies are primarily accomplished through the use of forward starting swaps and our fair value hedging strategies are primarily accomplished through the use of fixed-to-floating swaps. The notional amounts of interest rate derivatives are not exchanged and do not represent exposure to credit loss. In the event of default by the counterparty, the exposure in these transactions is the cost of replacing the agreements at current market rates. CASH FLOW HEDGES At June 30, 2011, all open interest rate hedges will reach their mandatory termination dates in approximately 2 years. At June 30, 2011, including amounts related to terminated hedges, we had $74 million of after-tax losses, including $36 million and $9 million of after-tax losses at PEC and PEF, respectively, recorded in accumulated other comprehensive income (OCI) related to forward starting swaps. It is expected that in the next twelve months losses of $7 million, net of tax, primarily related to terminated hedges, will be reclassified to interest expense at Progress Energy, including $4 million at PEC. The actual amounts that will be reclassified to earnings may vary from the expected amounts as a result of changes in interest rates, changes in the timing of debt issuances at the Parent and the Utilities and changes in market value of currently open forward starting swaps. At December 31, 2010, including amounts related to terminated hedges, we had $63 million of after-tax losses, including $33 million and $4 million of after-tax losses at PEC and PEF, respectively, recorded in accumulated OCI related to forward starting swaps. At December 31, 2010, Progress Energy had $1.050 billion notional of open forward starting swaps, including $350 million at PEC and $200 million at PEF. At June 30, 2011, Progress Energy had $925 million notional of open forward starting swaps, including $450 million at PEC and $275 million at PEF. FAIR VALUE HEDGES For interest rate fair value hedges, the change in the fair value of the hedging derivative is recorded in net interest charges and is offset by the change in the fair value of the hedged item. At June 30, 2011, and December 31, 2010, neither we nor the Utilities had any outstanding positions in such contracts. C. CONTINGENT FEATURES Certain of our commodity derivative instruments contain provisions defining fair value thresholds requiring the posting of collateral for hedges in a liability position greater than such threshold amounts. The thresholds are tiered and based on the individual company's credit rating with Moody's Investors Service, Inc. (Moody's), Standard & Poor's Rating Services (S&P) and/or Fitch Ratings (Fitch). Higher credit ratings have a higher threshold requiring a lower amount of the outstanding liability position to be covered by posted collateral. Conversely, lower credit ratings require a higher amount of the outstanding liability position to be covered by posted collateral. If our credit ratings were to be downgraded, we may have to post additional collateral on certain hedges in liability positions. In addition, certain of our commodity derivative instruments contain provisions that require our debt to maintain an investment grade credit rating from Moody's, S&P and/or Fitch. If our debt were to fall below investment grade, we would be in violation of these provisions, and the counterparties to the commodity derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on commodity derivative instruments in net liability positions. The aggregate fair value of all commodity derivative instruments at Progress Energy with credit risk-related contingent features that are in a net liability position was $362 million at June 30, 2011, for which Progress Energy has posted collateral of $122 million in the normal course of business. If the credit risk-related contingent features underlying these agreements were triggered at June 30, 2011, Progress Energy would have been required to post an additional $240 million of collateral with its counterparties. The aggregate fair value of all commodity derivative instruments at PEC with credit risk-related contingent features that are in a liability position was $105 million at June 30, 2011, for which PEC has posted collateral of $18 million in the normal course of business. If the credit risk-related contingent features underlying these agreements were triggered at June 30, 2011, PEC would have been required to post an additional $87 million of collateral with its counterparties. The aggregate fair value of all commodity derivative instruments at PEF with credit risk-related contingent features that are in a net liability position was $257 million at June 30, 2011, for which PEF has posted collateral of $104 million in the normal course of business. If the credit risk-related contingent features underlying these agreements were triggered on June 30, 2011, PEF would have been required to post an additional $153 million of collateral with its counterparties. D. DERIVATIVE INSTRUMENT AND HEDGING ACTIVITY INFORMATION PROGRESS ENERGY
The following tables present the effect of derivative instruments on OCI (See Note 5C) and the Consolidated Statements of Income for the three months ended June 30, 2011 and 2010:
The following tables present the effect of derivative instruments on OCI (See Note 5C) and the Consolidated Statements of Income for the six months ended June 30, 2011 and 2010:
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PEC
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Risk Management Activities And Derivative Transactions Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Management Activities And Derivative Transactions | 10. RISK MANAGEMENT ACTIVITIES AND DERIVATIVE TRANSACTIONS We are exposed to various risks related to changes in market conditions. We have a risk management committee that includes senior executives from various business groups. The risk management committee is responsible for administering risk management policies and monitoring compliance with those policies by all subsidiaries. Under our risk policy, we may use a variety of instruments, including swaps, options and forward contracts, to manage exposure to fluctuations in commodity prices and interest rates. Such instruments contain credit risk if the counterparty fails to perform under the contract. We minimize such risk by performing credit and financial reviews using a combination of financial analysis and publicly available credit ratings of such counterparties. Potential nonperformance by counterparties is not expected to have a material effect on our financial position or results of operations. A. COMMODITY DERIVATIVES GENERAL Most of our physical commodity contracts are not derivatives or qualify as normal purchases or sales. Therefore, such contracts are not recorded at fair value. ECONOMIC DERIVATIVES Derivative products, primarily natural gas and oil contracts, may be entered into from time to time for economic hedging purposes. While management believes the economic hedges mitigate exposures to fluctuations in commodity prices, these instruments are not designated as hedges for accounting purposes and are monitored consistent with trading positions. The Utilities have financial derivative instruments with settlement dates through 2015 related to their exposure to price fluctuations on fuel oil and natural gas purchases. The majority of our financial hedge agreements will settle in 2011 and 2012. Substantially all of these instruments receive regulatory accounting treatment. Related unrealized gains and losses are recorded in regulatory liabilities and regulatory assets, respectively, on the Balance Sheets until the contracts are settled. After settlement of the derivatives and the fuel is consumed, any realized gains or losses are passed through the fuel cost-recovery clause. Certain hedge agreements may result in the receipt of, or posting of, derivative collateral with our counterparties, depending on the daily derivative position. Fluctuations in commodity prices that lead to our return of collateral received and/or our posting of collateral with our counterparties negatively impact our liquidity. We manage open positions with strict policies that limit our exposure to market risk and require daily reporting to management of potential financial exposures. Certain counterparties have posted or held cash collateral in support of these instruments. Progress Energy had a cash collateral asset included in derivative collateral posted of $122 million and $164 million on the Progress Energy Consolidated Balance Sheets at June 30, 2011 and December 31, 2010, respectively. At June 30, 2011, Progress Energy had 291.3 million MMBtu notional of natural gas and 17.6 million gallons notional of fuel oil related to outstanding commodity derivative swaps that were entered into to hedge forecasted natural gas and oil purchases. PEC had a cash collateral asset included in prepayments and other current assets of $18 million and $24 million on the PEC Consolidated Balance Sheets at June 30, 2011 and December 31, 2010, respectively. At June 30, 2011, PEC had 78.1 million MMBtu notional of natural gas related to outstanding commodity derivative swaps that were entered into to hedge forecasted natural gas purchases. PEF's cash collateral asset included in derivative collateral posted was $104 million and $140 million on the PEF Balance Sheets at June 30, 2011 and December 31, 2010, respectively. At June 30, 2011, PEF had 213.2 million MMBtu notional of natural gas and 17.6 million gallons notional of oil related to outstanding commodity derivative swaps that were entered into to hedge forecasted natural gas and oil purchases. B. INTEREST RATE DERIVATIVES – FAIR VALUE OR CASH FLOW HEDGES We use cash flow hedging strategies to reduce exposure to changes in cash flow due to fluctuating interest rates. We use fair value hedging strategies to reduce exposure to changes in fair value due to interest rate changes. Our cash flow hedging strategies are primarily accomplished through the use of forward starting swaps and our fair value hedging strategies are primarily accomplished through the use of fixed-to-floating swaps. The notional amounts of interest rate derivatives are not exchanged and do not represent exposure to credit loss. In the event of default by the counterparty, the exposure in these transactions is the cost of replacing the agreements at current market rates. CASH FLOW HEDGES At June 30, 2011, all open interest rate hedges will reach their mandatory termination dates in approximately 2 years. At June 30, 2011, including amounts related to terminated hedges, we had $74 million of after-tax losses, including $36 million and $9 million of after-tax losses at PEC and PEF, respectively, recorded in accumulated other comprehensive income (OCI) related to forward starting swaps. It is expected that in the next twelve months losses of $7 million, net of tax, primarily related to terminated hedges, will be reclassified to interest expense at Progress Energy, including $4 million at PEC. The actual amounts that will be reclassified to earnings may vary from the expected amounts as a result of changes in interest rates, changes in the timing of debt issuances at the Parent and the Utilities and changes in market value of currently open forward starting swaps. At December 31, 2010, including amounts related to terminated hedges, we had $63 million of after-tax losses, including $33 million and $4 million of after-tax losses at PEC and PEF, respectively, recorded in accumulated OCI related to forward starting swaps. At December 31, 2010, Progress Energy had $1.050 billion notional of open forward starting swaps, including $350 million at PEC and $200 million at PEF. At June 30, 2011, Progress Energy had $925 million notional of open forward starting swaps, including $450 million at PEC and $275 million at PEF. FAIR VALUE HEDGES For interest rate fair value hedges, the change in the fair value of the hedging derivative is recorded in net interest charges and is offset by the change in the fair value of the hedged item. At June 30, 2011, and December 31, 2010, neither we nor the Utilities had any outstanding positions in such contracts. C. CONTINGENT FEATURES Certain of our commodity derivative instruments contain provisions defining fair value thresholds requiring the posting of collateral for hedges in a liability position greater than such threshold amounts. The thresholds are tiered and based on the individual company's credit rating with Moody's Investors Service, Inc. (Moody's), Standard & Poor's Rating Services (S&P) and/or Fitch Ratings (Fitch). Higher credit ratings have a higher threshold requiring a lower amount of the outstanding liability position to be covered by posted collateral. Conversely, lower credit ratings require a higher amount of the outstanding liability position to be covered by posted collateral. If our credit ratings were to be downgraded, we may have to post additional collateral on certain hedges in liability positions. In addition, certain of our commodity derivative instruments contain provisions that require our debt to maintain an investment grade credit rating from Moody's, S&P and/or Fitch. If our debt were to fall below investment grade, we would be in violation of these provisions, and the counterparties to the commodity derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on commodity derivative instruments in net liability positions. The aggregate fair value of all commodity derivative instruments at Progress Energy with credit risk-related contingent features that are in a net liability position was $362 million at June 30, 2011, for which Progress Energy has posted collateral of $122 million in the normal course of business. If the credit risk-related contingent features underlying these agreements were triggered at June 30, 2011, Progress Energy would have been required to post an additional $240 million of collateral with its counterparties. The aggregate fair value of all commodity derivative instruments at PEC with credit risk-related contingent features that are in a liability position was $105 million at June 30, 2011, for which PEC has posted collateral of $18 million in the normal course of business. If the credit risk-related contingent features underlying these agreements were triggered at June 30, 2011, PEC would have been required to post an additional $87 million of collateral with its counterparties. The aggregate fair value of all commodity derivative instruments at PEF with credit risk-related contingent features that are in a net liability position was $257 million at June 30, 2011, for which PEF has posted collateral of $104 million in the normal course of business. If the credit risk-related contingent features underlying these agreements were triggered on June 30, 2011, PEF would have been required to post an additional $153 million of collateral with its counterparties. D. DERIVATIVE INSTRUMENT AND HEDGING ACTIVITY INFORMATION
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PEF
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Risk Management Activities And Derivative Transactions Disclosure [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk Management Activities And Derivative Transactions | 10. RISK MANAGEMENT ACTIVITIES AND DERIVATIVE TRANSACTIONS We are exposed to various risks related to changes in market conditions. We have a risk management committee that includes senior executives from various business groups. The risk management committee is responsible for administering risk management policies and monitoring compliance with those policies by all subsidiaries. Under our risk policy, we may use a variety of instruments, including swaps, options and forward contracts, to manage exposure to fluctuations in commodity prices and interest rates. Such instruments contain credit risk if the counterparty fails to perform under the contract. We minimize such risk by performing credit and financial reviews using a combination of financial analysis and publicly available credit ratings of such counterparties. Potential nonperformance by counterparties is not expected to have a material effect on our financial position or results of operations. A. COMMODITY DERIVATIVES GENERAL Most of our physical commodity contracts are not derivatives or qualify as normal purchases or sales. Therefore, such contracts are not recorded at fair value. ECONOMIC DERIVATIVES Derivative products, primarily natural gas and oil contracts, may be entered into from time to time for economic hedging purposes. While management believes the economic hedges mitigate exposures to fluctuations in commodity prices, these instruments are not designated as hedges for accounting purposes and are monitored consistent with trading positions. The Utilities have financial derivative instruments with settlement dates through 2015 related to their exposure to price fluctuations on fuel oil and natural gas purchases. The majority of our financial hedge agreements will settle in 2011 and 2012. Substantially all of these instruments receive regulatory accounting treatment. Related unrealized gains and losses are recorded in regulatory liabilities and regulatory assets, respectively, on the Balance Sheets until the contracts are settled. After settlement of the derivatives and the fuel is consumed, any realized gains or losses are passed through the fuel cost-recovery clause. Certain hedge agreements may result in the receipt of, or posting of, derivative collateral with our counterparties, depending on the daily derivative position. Fluctuations in commodity prices that lead to our return of collateral received and/or our posting of collateral with our counterparties negatively impact our liquidity. We manage open positions with strict policies that limit our exposure to market risk and require daily reporting to management of potential financial exposures. Certain counterparties have posted or held cash collateral in support of these instruments. Progress Energy had a cash collateral asset included in derivative collateral posted of $122 million and $164 million on the Progress Energy Consolidated Balance Sheets at June 30, 2011 and December 31, 2010, respectively. At June 30, 2011, Progress Energy had 291.3 million MMBtu notional of natural gas and 17.6 million gallons notional of fuel oil related to outstanding commodity derivative swaps that were entered into to hedge forecasted natural gas and oil purchases. PEC had a cash collateral asset included in prepayments and other current assets of $18 million and $24 million on the PEC Consolidated Balance Sheets at June 30, 2011 and December 31, 2010, respectively. At June 30, 2011, PEC had 78.1 million MMBtu notional of natural gas related to outstanding commodity derivative swaps that were entered into to hedge forecasted natural gas purchases. PEF's cash collateral asset included in derivative collateral posted was $104 million and $140 million on the PEF Balance Sheets at June 30, 2011 and December 31, 2010, respectively. At June 30, 2011, PEF had 213.2 million MMBtu notional of natural gas and 17.6 million gallons notional of oil related to outstanding commodity derivative swaps that were entered into to hedge forecasted natural gas and oil purchases. B. INTEREST RATE DERIVATIVES – FAIR VALUE OR CASH FLOW HEDGES We use cash flow hedging strategies to reduce exposure to changes in cash flow due to fluctuating interest rates. We use fair value hedging strategies to reduce exposure to changes in fair value due to interest rate changes. Our cash flow hedging strategies are primarily accomplished through the use of forward starting swaps and our fair value hedging strategies are primarily accomplished through the use of fixed-to-floating swaps. The notional amounts of interest rate derivatives are not exchanged and do not represent exposure to credit loss. In the event of default by the counterparty, the exposure in these transactions is the cost of replacing the agreements at current market rates. CASH FLOW HEDGES At June 30, 2011, all open interest rate hedges will reach their mandatory termination dates in approximately 2 years. At June 30, 2011, including amounts related to terminated hedges, we had $74 million of after-tax losses, including $36 million and $9 million of after-tax losses at PEC and PEF, respectively, recorded in accumulated other comprehensive income (OCI) related to forward starting swaps. It is expected that in the next twelve months losses of $7 million, net of tax, primarily related to terminated hedges, will be reclassified to interest expense at Progress Energy, including $4 million at PEC. The actual amounts that will be reclassified to earnings may vary from the expected amounts as a result of changes in interest rates, changes in the timing of debt issuances at the Parent and the Utilities and changes in market value of currently open forward starting swaps. At December 31, 2010, including amounts related to terminated hedges, we had $63 million of after-tax losses, including $33 million and $4 million of after-tax losses at PEC and PEF, respectively, recorded in accumulated OCI related to forward starting swaps. At December 31, 2010, Progress Energy had $1.050 billion notional of open forward starting swaps, including $350 million at PEC and $200 million at PEF. At June 30, 2011, Progress Energy had $925 million notional of open forward starting swaps, including $450 million at PEC and $275 million at PEF. FAIR VALUE HEDGES For interest rate fair value hedges, the change in the fair value of the hedging derivative is recorded in net interest charges and is offset by the change in the fair value of the hedged item. At June 30, 2011, and December 31, 2010, neither we nor the Utilities had any outstanding positions in such contracts. C. CONTINGENT FEATURES Certain of our commodity derivative instruments contain provisions defining fair value thresholds requiring the posting of collateral for hedges in a liability position greater than such threshold amounts. The thresholds are tiered and based on the individual company's credit rating with Moody's Investors Service, Inc. (Moody's), Standard & Poor's Rating Services (S&P) and/or Fitch Ratings (Fitch). Higher credit ratings have a higher threshold requiring a lower amount of the outstanding liability position to be covered by posted collateral. Conversely, lower credit ratings require a higher amount of the outstanding liability position to be covered by posted collateral. If our credit ratings were to be downgraded, we may have to post additional collateral on certain hedges in liability positions. In addition, certain of our commodity derivative instruments contain provisions that require our debt to maintain an investment grade credit rating from Moody's, S&P and/or Fitch. If our debt were to fall below investment grade, we would be in violation of these provisions, and the counterparties to the commodity derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on commodity derivative instruments in net liability positions. The aggregate fair value of all commodity derivative instruments at Progress Energy with credit risk-related contingent features that are in a net liability position was $362 million at June 30, 2011, for which Progress Energy has posted collateral of $122 million in the normal course of business. If the credit risk-related contingent features underlying these agreements were triggered at June 30, 2011, Progress Energy would have been required to post an additional $240 million of collateral with its counterparties. The aggregate fair value of all commodity derivative instruments at PEC with credit risk-related contingent features that are in a liability position was $105 million at June 30, 2011, for which PEC has posted collateral of $18 million in the normal course of business. If the credit risk-related contingent features underlying these agreements were triggered at June 30, 2011, PEC would have been required to post an additional $87 million of collateral with its counterparties. The aggregate fair value of all commodity derivative instruments at PEF with credit risk-related contingent features that are in a net liability position was $257 million at June 30, 2011, for which PEF has posted collateral of $104 million in the normal course of business. If the credit risk-related contingent features underlying these agreements were triggered on June 30, 2011, PEF would have been required to post an additional $153 million of collateral with its counterparties. D. DERIVATIVE INSTRUMENT AND HEDGING ACTIVITY INFORMATION
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