DUK-2015.03.31-10Q


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to
________________________
Commission file number
Registrant, State of Incorporation or Organization,
Address of Principal Executive Offices, and Telephone Number
IRS Employer Identification No.
 
 
1-32853
DUKE ENERGY CORPORATION
(a Delaware corporation)
550 South Tryon Street
Charlotte, North Carolina 28202-1803
704-382-3853
20-2777218
Commission file number
Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number
 
Commission file number
Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number
1-4928
DUKE ENERGY CAROLINAS, LLC
(a North Carolina limited liability company)
526 South Church Street
Charlotte, North Carolina 28202-1803
704-382-3853
56-0205520
 
1-3274
DUKE ENERGY FLORIDA, INC.
(a Florida corporation)
299 First Avenue North
St. Petersburg, Florida 33701
704-382-3853
59-0247770
1-15929
PROGRESS ENERGY, INC.
(a North Carolina corporation)
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
704-382-3853
56-2155481
 
1-1232
DUKE ENERGY OHIO, INC.
(an Ohio corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
704-382-3853
31-0240030
1-3382
DUKE ENERGY PROGRESS, INC.
(a North Carolina corporation)
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
704-382-3853
56-0165465
 
1-3543
DUKE ENERGY INDIANA, INC.
(an Indiana corporation)
1000 East Main Street
Plainfield, Indiana 46168
704-382-3853
35-0594457
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Duke Energy Corporation (Duke Energy)
Yes x
No ¨
 
Duke Energy Florida, Inc. (Duke Energy Florida)
Yes x
No ¨
Duke Energy Carolinas, LLC (Duke Energy Carolinas)
Yes x
No ¨
 
Duke Energy Ohio, Inc. (Duke Energy Ohio)
Yes x
No ¨
Progress Energy, Inc. (Progress Energy)
Yes x
No ¨
 
Duke Energy Indiana, Inc. (Duke Energy Indiana)
Yes x
No ¨
Duke Energy Progress, Inc. (Duke Energy Progress)
Yes x
No ¨
 
 
 
 



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Duke Energy
Yes x 
No ¨
 
Duke Energy Florida
Yes x 
No ¨
Duke Energy Carolinas
Yes x 
No ¨
 
Duke Energy Ohio
Yes x 
No ¨
Progress Energy
Yes x 
No ¨
 
Duke Energy Indiana
Yes x 
No ¨
Duke Energy Progress
Yes x 
No ¨
 
 
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Duke Energy
Large accelerated filer x 
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company ¨
Duke Energy Carolinas
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x 
Smaller reporting company ¨
Progress Energy
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x 
Smaller reporting company ¨
Duke Energy Progress
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x 
Smaller reporting company ¨
Duke Energy Florida
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x 
Smaller reporting company ¨
Duke Energy Ohio
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x 
Smaller reporting company ¨
Duke Energy Indiana
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x 
Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Duke Energy
Yes ¨
No x 
 
Duke Energy Florida
Yes ¨
No x 
Duke Energy Carolinas
Yes ¨
No x 
 
Duke Energy Ohio
Yes ¨
No x 
Progress Energy
Yes ¨
No x 
 
Duke Energy Indiana
Yes ¨
No x 
Duke Energy Progress
Yes ¨
No x 
 
 
 
 
Number of shares of Common Stock outstanding at May 5, 2015:
Registrant
Description
Shares
Duke Energy
Common Stock, $0.001 par value
691,537,400
Duke Energy Carolinas
All of the registrant's limited liability company member interests are directly owned by Duke Energy.
Progress Energy
All of the registrant's common stock is directly owned by Duke Energy.
Duke Energy Progress
All of the registrant's common stock is indirectly owned by Duke Energy.
Duke Energy Florida
All of the registrant's common stock is indirectly owned by Duke Energy.
Duke Energy Ohio
All of the registrant's common stock is indirectly owned by Duke Energy.
Duke Energy Indiana
All of the registrant's common stock is indirectly owned by Duke Energy.
This combined Form 10-Q is filed separately by seven registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana (collectively the Duke Energy Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.
Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.



TABLE OF CONTENTS
 
 
 
 
 
PART I. FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART II. OTHER INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 




CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions. These forward-looking statements are identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook,” and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:
◦
State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements or climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;
◦
The extent and timing of the costs and liabilities relating to the Dan River ash basin release and compliance with current regulations and any future regulatory changes related to the management of coal ash;
◦
The ability to recover eligible costs, including those associated with future significant weather events, and earn an adequate return on investment through the regulatory process;
◦
The costs of decommissioning Crystal River Unit 3 could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process;
◦
Credit ratings of the Duke Energy Registrants may be different from what is expected;
◦
Costs and effects of legal and administrative proceedings, settlements, investigations and claims;
◦
Industrial, commercial and residential growth or decline in service territories or customer bases resulting from customer usage patterns, including energy efficiency efforts and use of alternative energy sources, including self-generation and distributed generation technologies;
◦
Additional competition in electric markets and continued industry consolidation;
◦
Political and regulatory uncertainty in other countries in which Duke Energy conducts business;
◦
The influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts and tornadoes;
◦
The ability to successfully operate electric generating facilities and deliver electricity to customers;
◦
The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches and other catastrophic events;
◦
The inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks;
◦
The timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets;
◦
The results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings and general economic conditions;
◦
Declines in the market prices of equity and fixed income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans and nuclear decommissioning trust funds;
◦
Construction and development risks associated with the completion of Duke Energy Registrants’ capital investment projects in existing and new generation facilities, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules, and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner or at all;
◦
Changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants;
◦
The ability to control operation and maintenance costs;
◦
The level of creditworthiness of counterparties to transactions;
◦
Employee workforce factors, including the potential inability to attract and retain key personnel;
◦
The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);
◦
The performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities;
◦
The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;
◦
The impact of potential goodwill impairments;
◦
The ability to reinvest prospective undistributed earnings of foreign subsidiaries or repatriate such earnings on a tax-efficient basis; and
◦
The ability to successfully complete future merger, acquisition or divestiture plans.



In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made; the Duke Energy Registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise that occur after that date.


PART I. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended March 31,
(in millions, except per-share amounts)
2015

 
2014

Operating Revenues
 
 
 
Regulated electric
$
5,457

 
$
5,550

Nonregulated electric and other
377

 
491

Regulated natural gas
231

 
222

Total operating revenues
6,065

 
6,263

Operating Expenses
 
 
 
Fuel used in electric generation and purchased power – regulated
1,941

 
2,000

Fuel used in electric generation and purchased power – nonregulated
104

 
136

Cost of natural gas and other
111

 
116

Operation, maintenance and other
1,426

 
1,449

Depreciation and amortization
777

 
755

Property and other taxes
264

 
350

Impairment charges
—

 
96

Total operating expenses
4,623

 
4,902

Gains on Sales of Other Assets and Other, net
14

 
1

Operating Income
1,456

 
1,362

Other Income and Expenses
 
 
 
Equity in earnings of unconsolidated affiliates
13

 
36

Other income and expenses, net
74

 
95

Total other income and expenses
87

 
131

Interest Expense
403

 
404

Income From Continuing Operations Before Income Taxes
1,140

 
1,089

Income Tax Expense from Continuing Operations
364

 
339

Income From Continuing Operations
776

 
750

Income (Loss) From Discontinued Operations, net of tax
91

 
(843
)
Net Income (Loss)
867

 
(93
)
Less: Net Income Attributable to Noncontrolling Interests
3

 
4

Net Income (Loss) Attributable to Duke Energy Corporation
$
864

 
$
(97
)
 
 
 
 
Earnings Per Share – Basic and Diluted
 
 
 
Income from continuing operations attributable to Duke Energy Corporation common shareholders
 
 
 
Basic
$
1.09

 
$
1.05

Diluted
$
1.09

 
$
1.05

Income (Loss) from discontinued operations attributable to Duke Energy Corporation common shareholders
 
 
 
Basic
$
0.13

 
$
(1.19
)
Diluted
$
0.13

 
$
(1.19
)
Net Income (Loss) attributable to Duke Energy Corporation common shareholders
 
 
 
Basic
$
1.22

 
$
(0.14
)
Diluted
$
1.22

 
$
(0.14
)
Weighted-average shares outstanding
 
 
 
Basic
708

 
706

Diluted
708

 
706


See Notes to Condensed Consolidated Financial Statements
6

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 
Three Months Ended March 31,
(in millions)
 
2015

 
2014

Net Income (Loss)
 
$
867

 
$
(93
)
Other Comprehensive (Loss) Income, net of tax
 
 
 
 
Foreign currency translation adjustments
 
(125
)
 
24

Pension and OPEB adjustments
 
(5
)
 
(1
)
Net unrealized losses on cash flow hedges
 
(7
)
 
—

Reclassification into earnings from cash flow hedges
 
4

 
—

Other Comprehensive (Loss) Income, net of tax
 
(133
)
 
23

Comprehensive Income (Loss)
 
734

 
(70
)
Less: Comprehensive (Loss) Income Attributable to Noncontrolling Interests
 
(1
)
 
5

Comprehensive Income (Loss) Attributable to Duke Energy Corporation
 
$
735

 
$
(75
)


See Notes to Condensed Consolidated Financial Statements
7

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)
March 31, 2015
 
December 31, 2014
ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
2,821

 
$
2,036

Receivables (net of allowance for doubtful accounts of $16 at March 31, 2015 and $17 at December 31, 2014)
750

 
791

Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $54 at March 31, 2015 and $51 at December 31, 2014)
2,016

 
1,973

Inventory
3,413

 
3,459

Assets held for sale
354

 
364

Regulatory assets
960

 
1,115

Other
2,008

 
1,837

Total current assets
12,322

 
11,575

Investments and Other Assets
 
 
 
Investments in equity method unconsolidated affiliates
343

 
358

Nuclear decommissioning trust funds
5,576

 
5,546

Goodwill
16,329

 
16,321

Assets held for sale
2,603

 
2,642

Other
3,207

 
3,008

Total investments and other assets
28,058

 
27,875

Property, Plant and Equipment
 
 
 
Cost
105,692

 
104,861

Accumulated depreciation and amortization
(35,400
)
 
(34,824
)
Generation facilities to be retired, net
9

 
9

Net property, plant and equipment
70,301

 
70,046

Regulatory Assets and Deferred Debits
 
 
 
Regulatory assets
11,279

 
11,042

Other
182

 
171

Total regulatory assets and deferred debits
11,461

 
11,213

Total Assets
$
122,142

 
$
120,709

LIABILITIES AND EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
1,920

 
$
2,271

Notes payable and commercial paper
3,790

 
2,514

Taxes accrued
508

 
569

Interest accrued
490

 
418

Current maturities of long-term debt
2,800

 
2,807

Liabilities associated with assets held for sale
146

 
262

Regulatory liabilities
235

 
204

Other
2,014

 
2,188

Total current liabilities
11,903

 
11,233

Long-Term Debt
37,173

 
37,213

Deferred Credits and Other Liabilities
 
 
 
Deferred income taxes
13,914

 
13,423

Investment tax credits
424

 
427

Accrued pension and other post-retirement benefit costs
1,170

 
1,145

Liabilities associated with assets held for sale
26

 
35

Asset retirement obligations
8,541

 
8,466

Regulatory liabilities
6,237

 
6,193

Other
1,667

 
1,675

Total deferred credits and other liabilities
31,979

 
31,364

Commitments and Contingencies


 


Equity
 
 
 
Common stock, $0.001 par value, 2 billion shares authorized; 708 million and 707 million shares outstanding at March 31, 2015 and December 31, 2014, respectively
1

 
1

Additional paid-in capital
39,413

 
39,405

Retained earnings
2,309

 
2,012

Accumulated other comprehensive loss
(672
)
 
(543
)
Total Duke Energy Corporation stockholders' equity
41,051

 
40,875

Noncontrolling interests
36

 
24

Total equity
41,087

 
40,899

Total Liabilities and Equity
$
122,142

 
$
120,709


See Notes to Condensed Consolidated Financial Statements
8

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Three Months Ended March 31,
(in millions)
2015

 
2014

CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income (loss)
$
867

 
$
(93
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation, amortization and accretion (including amortization of nuclear fuel)
883

 
884

Equity component of AFUDC
(42
)
 
(28
)
Gains on sales of other assets
(16
)
 
—

Impairment charges
43

 
1,382

Deferred income taxes
368

 
(178
)
Equity in earnings of unconsolidated affiliates
(13
)
 
(36
)
Accrued pension and other post-retirement benefit costs
18

 
27

Contributions to qualified pension plans
(132
)
 
—

(Increase) decrease in
 
 
 
Net realized and unrealized mark-to-market and hedging transactions
(47
)
 
45

Receivables
(41
)
 
29

Inventory
57

 
272

Other current assets
(63
)
 
(297
)
Increase (decrease) in
 
 
 
Accounts payable
(201
)
 
(97
)
Taxes accrued
(63
)
 
(175
)
Other current liabilities
(85
)
 
(346
)
Other assets
30

 
(22
)
Other liabilities
(123
)
 
6

Net cash provided by operating activities
1,440

 
1,373

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Capital expenditures
(1,411
)
 
(1,232
)
Investment expenditures
(14
)
 
(36
)
Acquisitions
(29
)
 
—

Purchases of available-for-sale securities
(1,035
)
 
(967
)
Proceeds from sales and maturities of available-for-sale securities
1,069

 
1,004

Net proceeds from the sales of equity investments and other assets
1

 
4

Change in restricted cash
(36
)
 
(27
)
Other
(1
)
 
(32
)
Net cash used in investing activities
(1,456
)
 
(1,286
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Proceeds from the:
 
 
 
Issuance of long-term debt
497

 
875

Issuance of common stock related to employee benefit plans
15

 
19

Payments for the redemption of long-term debt
(403
)
 
(1,287
)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days
187

 
—

Payments for the redemption of short-term debt with original maturities greater than 90 days
(643
)
 
—

Notes payable and commercial paper
1,727

 
898

Distributions to noncontrolling interests
—

 
(3
)
Dividends paid
(564
)
 
(553
)
Other
(15
)
 
(6
)
Net cash provided by (used in) financing activities
801

 
(57
)
Net increase in cash and cash equivalents
785

 
30

Cash and cash equivalents at beginning of period
2,036

 
1,501

Cash and cash equivalents at end of period
$
2,821

 
$
1,531

Supplemental Disclosures:
 
 
 
Significant non-cash transactions:
 
 
 
Accrued capital expenditures
$
438

 
$
361


See Notes to Condensed Consolidated Financial Statements
9

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
 
 
 
 
 
 
 
 
 
Accumulated Other Comprehensive Loss
 
 
 
 
 
 
(in millions)
Common
Stock
Shares

 
Common
Stock

 
Additional
Paid-in
Capital

 
Retained
Earnings

 
Foreign Currency Translation Adjustments

 
Net Losses on Cash Flow Hedges

 
Net Gains on Available-for-Sale Securities

 
Pension and OPEB Adjustments

 
Common
Stockholders'
Equity

 
Noncontrolling
Interests

 
Total
Equity

Balance at December 31, 2013
706

 
$
1

 
$
39,365

 
$
2,363

 
$
(307
)
 
$
(40
)
 
$
—

 
$
(52
)
 
$
41,330

 
$
78

 
$
41,408

Net (loss) income
—

 
—

 
—

 
(97
)
 
—

 
—

 
—

 
—

 
(97
)
 
4

 
(93
)
Other comprehensive income (loss)
—

 
—

 
—

 
—

 
23

 
—

 
—

 
(1
)
 
22

 
1

 
23

Common stock issuances, including dividend reinvestment and employee benefits
1

 
—

 
7

 
—

 
—

 
—

 
—

 
—

 
7

 
—

 
7

Common stock dividends
—

 
—

 
—

 
(553
)
 
—

 
—

 
—

 
—

 
(553
)
 
—

 
(553
)
Distributions to noncontrolling interest in subsidiaries
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(3
)
 
(3
)
Balance at March 31, 2014
707

 
$
1

 
$
39,372

 
$
1,713

 
$
(284
)
 
$
(40
)
 
$
—

 
$
(53
)
 
$
40,709

 
$
80

 
$
40,789

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2014
707

 
$
1

 
$
39,405

 
$
2,012

 
$
(439
)
 
$
(59
)
 
$
3

 
$
(48
)
 
$
40,875

 
$
24

 
$
40,899

Net income
—

 
—

 
—

 
864

 
—

 
—

 
—

 
—

 
864

 
3

 
867

Other comprehensive (loss) income
—

 
—

 
—

 
—

 
(121
)
 
(3
)
 
—

 
(5
)
 
(129
)
 
(4
)
 
(133
)
Common stock issuances, including dividend reinvestment and employee benefits
1

 
—

 
8

 
—

 
—

 
—

 
—

 
—

 
8

 
—

 
8

Common stock dividends
—

 
—

 
—

 
(564
)
 
—

 
—

 
—

 
—

 
(564
)
 
—

 
(564
)
Other (a)
—

 
—

 
—

 
(3
)
 
—

 
—

 
—

 
—

 
(3
)
 
13

 
10

Balance at March 31, 2015
708


$
1


$
39,413


$
2,309


$
(560
)

$
(62
)

$
3


$
(53
)

$
41,051


$
36


$
41,087


(a)
The $13 million change in Noncontrolling Interests is primarily related to an acquisition of majority interest in a solar company for an insignificant amount of cash consideration.

See Notes to Condensed Consolidated Financial Statements
10

PART I


DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 
Three Months Ended March 31,
(in millions)
2015

 
2014

Operating Revenues
$
1,901

 
$
2,000

Operating Expenses
 
 
 
Fuel used in electric generation and purchased power
578

 
658

Operation, maintenance and other
489

 
487

Depreciation and amortization
249

 
242

Property and other taxes
70

 
104

Total operating expenses
1,386

 
1,491

Operating Income
515

 
509

Other Income and Expenses, net
42

 
49

Interest Expense
102

 
101

Income Before Income Taxes
455

 
457

Income Tax Expense
163

 
171

Net Income
$
292

 
$
286

Other Comprehensive Income, net of tax
 
 
 
Reclassification into earnings from cash flow hedges
—

 
1

Comprehensive Income
$
292

 
$
287



See Notes to Condensed Consolidated Financial Statements
11

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)
March 31, 2015

 
December 31, 2014

ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
30

 
$
13

Receivables (net of allowance for doubtful accounts of $3 at March 31, 2015 and
December 31, 2014)
106

 
129

Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $6 at March 31, 2015 and December 31, 2014)
658

 
647

Receivables from affiliated companies
91

 
75

Notes receivable from affiliated companies
755

 
150

Inventory
1,117

 
1,124

Regulatory assets
376

 
399

Other
41

 
77

Total current assets
3,174

 
2,614

Investments and Other Assets
 
 
 
Nuclear decommissioning trust funds
3,118

 
3,042

Other
996

 
959

Total investments and other assets
4,114

 
4,001

Property, Plant and Equipment
 
 
 
Cost
37,682

 
37,372

Accumulated depreciation and amortization
(12,935
)
 
(12,700
)
Net property, plant and equipment
24,747

 
24,672

Regulatory Assets and Deferred Debits
 
 
 
Regulatory assets
2,460

 
2,465

Other
45

 
42

Total regulatory assets and deferred debits
2,505

 
2,507

Total Assets
$
34,540

 
$
33,794

LIABILITIES AND MEMBER'S EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
504

 
$
709

Accounts payable to affiliated companies
204

 
154

Taxes accrued
129

 
146

Interest accrued
135

 
95

Current maturities of long-term debt
506

 
507

Regulatory liabilities
26

 
34

Other
398

 
434

Total current liabilities
1,902


2,079

Long-Term Debt
8,079

 
7,584

Long-Term Debt Payable to Affiliated Companies
300

 
300

Deferred Credits and Other Liabilities
 
 
 
Deferred income taxes
5,901

 
5,812

Investment tax credits
203

 
204

Accrued pension and other post-retirement benefit costs
109

 
111

Asset retirement obligations
3,460

 
3,428

Regulatory liabilities
2,730

 
2,710

Other
640

 
642

Total deferred credits and other liabilities
13,043

 
12,907

Commitments and Contingencies


 


Member's Equity
 
 
 
Member's equity
11,229

 
10,937

Accumulated other comprehensive loss
(13
)
 
(13
)
Total member's equity
11,216

 
10,924

Total Liabilities and Member's Equity
$
34,540

 
$
33,794


See Notes to Condensed Consolidated Financial Statements
12

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Three Months Ended March 31,
(in millions)
2015

 
2014

CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income
$
292

 
$
286

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization (including amortization of nuclear fuel)
324

 
309

Equity component of AFUDC
(24
)
 
(22
)
Deferred income taxes
113

 
87

Accrued pension and other post-retirement benefit costs
4

 
6

Contributions to qualified pension plans
(42
)
 
—

(Increase) decrease in
 
 
 
Net realized and unrealized mark-to-market and hedging transactions
—

 
3

Receivables
16

 
11

Receivables from affiliated companies
(16
)
 
(27
)
Inventory
7

 
181

Other current assets
2

 
(59
)
Increase (decrease) in
 
 
 
Accounts payable
(133
)
 
(100
)
Accounts payable to affiliated companies
50

 
21

Taxes accrued
(17
)
 
(3
)
Other current liabilities
(27
)
 
(26
)
Other assets
44

 
14

Other liabilities
(17
)
 
(9
)
Net cash provided by operating activities
576

 
672

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Capital expenditures
(448
)
 
(426
)
Purchases of available-for-sale securities
(643
)
 
(584
)
Proceeds from sales and maturities of available-for-sale securities
643

 
579

Notes receivable from affiliated companies
(605
)
 
(115
)
Other
4

 
(6
)
Net cash used in investing activities
(1,049
)
 
(552
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Proceeds from the issuance of long-term debt
496

 
—

Distributions to parent
—

 
(126
)
Other
(6
)
 
—

Net cash provided by (used in) financing activities
490

 
(126
)
Net increase (decrease) in cash and cash equivalents
17

 
(6
)
Cash and cash equivalents at beginning of period
13

 
23

Cash and cash equivalents at end of period
$
30

 
$
17

Supplemental Disclosures:
 
 
 
Significant non-cash transactions:
 
 
 
Accrued capital expenditures
$
102

 
$
133


See Notes to Condensed Consolidated Financial Statements
13

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Changes in Member's Equity
(Unaudited)
 
 
 
Accumulated Other Comprehensive Loss
 
 
(in millions)
Member's
Equity

 
Net Losses on Cash Flow Hedges

 
Unrealized Losses on Available-for-Sale Securities

 
Total

Balance at December 31, 2013
$
10,365

 
$
(14
)
 
$
(1
)
 
$
10,350

Net income
286

 
—

 
—

 
286

Other comprehensive income
—

 
1

 
—

 
1

Distributions to parent
(126
)
 
—

 
—

 
(126
)
Balance at March 31, 2014
$
10,525

 
$
(13
)
 
$
(1
)
 
$
10,511

 
 
 
 
 
 
 
 
Balance at December 31, 2014
$
10,937

 
$
(12
)
 
$
(1
)
 
$
10,924

Net income
292

 
—

 
—

 
292

Balance at March 31, 2015
$
11,229

 
$
(12
)
 
$
(1
)
 
$
11,216



See Notes to Condensed Consolidated Financial Statements
14

PART I


PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 
Three Months Ended March 31,
(in millions)
2015

 
2014

Operating Revenues
$
2,536

 
$
2,541

Operating Expenses
 
 
 
Fuel used in electric generation and purchased power
1,032

 
1,043

Operation, maintenance and other
565

 
595

Depreciation and amortization
287

 
276

Property and other taxes
111

 
151

Total operating expenses
1,995

 
2,065

Gains on Sales of Other Assets and Other, net
8

 
1

Operating Income
549

 
477

Other Income and Expenses, net
27

 
15

Interest Expense
168

 
169

Income From Continuing Operations Before Taxes
408

 
323

Income Tax Expense From Continuing Operations
144

 
119

Income From Continuing Operations
264

 
204

Loss From Discontinued Operations, net of tax
(1
)
 
(1
)
Net Income
263

 
203

Less: Net Income Attributable to Noncontrolling Interest
3

 
1

Net Income Attributable to Parent
$
260

 
$
202

 
 
 
 
Net Income
$
263

 
$
203

Other Comprehensive Income (Loss), net of tax
 
 
 
Pension and OPEB adjustments
1

 
1

Net unrealized gain on cash flow hedges
—

 
1

Reclassification into earnings from cash flow hedges
(2
)
 
—

Other Comprehensive (Loss) Income, net of tax
(1
)

2

Comprehensive Income
262

 
205

Less: Comprehensive Income Attributable to Noncontrolling Interests
3

 
1

Comprehensive Income Attributable to Parent
$
259


$
204



See Notes to Condensed Consolidated Financial Statements
15

PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)
March 31, 2015

 
December 31, 2014

ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
44

 
$
42

Receivables (net of allowance for doubtful accounts of $7 at March 31, 2015 and $8 at December 31, 2014)
129

 
129

Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $8 at March 31, 2015 and December 31, 2014)
779

 
741

Receivables from affiliated companies
80

 
59

Notes receivable from affiliated companies
178

 
220

Inventory
1,543

 
1,590

Regulatory assets
392

 
491

Other
793

 
1,285

Total current assets
3,938

 
4,557

Investments and Other Assets
 
 
 
Nuclear decommissioning trust funds
2,458

 
2,503

Goodwill
3,655

 
3,655

Other
777

 
670

Total investments and other assets
6,890

 
6,828

Property, Plant and Equipment
 
 
 
Cost
39,067

 
38,650

Accumulated depreciation and amortization
(13,714
)
 
(13,506
)
Net property, plant and equipment
25,353

 
25,144

Regulatory Assets and Deferred Debits
 
 
 
Regulatory assets
5,687

 
5,408

Other
90

 
91

Total regulatory assets and deferred debits
5,777

 
5,499

Total Assets
$
41,958

 
$
42,028

LIABILITIES AND EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
667

 
$
847

Accounts payable to affiliated companies
286

 
203

Notes payable to affiliated companies
650

 
835

Taxes accrued
161

 
114

Interest accrued
203

 
184

Current maturities of long-term debt
1,564

 
1,507

Regulatory liabilities
125

 
106

Other
961

 
1,021

Total current liabilities
4,617

 
4,817

Long-Term Debt
12,946

 
13,247

Deferred Credits and Other Liabilities
 
 
 
Deferred income taxes
4,834

 
4,759

Accrued pension and other post-retirement benefit costs
561

 
533

Asset retirement obligations
4,738

 
4,711

Regulatory liabilities
2,413

 
2,379

Other
411

 
406

Total deferred credits and other liabilities
12,957

 
12,788

Commitments and Contingencies

 

Common Stockholder's Equity
 
 
 
Common stock, $0.01 par value, 100 shares authorized and outstanding at March 31, 2015 and December 31, 2014
—

 
—

Additional paid-in capital
7,467

 
7,467

Retained earnings
4,039

 
3,782

Accumulated other comprehensive loss
(42
)
 
(41
)
Total common stockholder's equity
11,464

 
11,208

Noncontrolling interests
(26
)
 
(32
)
Total equity
11,438

 
11,176

Total Liabilities and Common Stockholder's Equity
$
41,958

 
$
42,028


See Notes to Condensed Consolidated Financial Statements
16

PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Three Months Ended March 31,
(in millions)
2015

 
2014

CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income
$
263

 
$
203

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, amortization and accretion (including amortization of nuclear fuel)
329

 
316

Equity component of AFUDC
(14
)
 
(1
)
Gains on sales of other assets and other, net
(8
)
 
(1
)
Deferred income taxes
196

 
183

Accrued pension and other post-retirement benefit costs
(1
)
 
7

Contributions to qualified pension plans
(42
)
 
—

(Increase) decrease in
 
 
 
Net realized and unrealized mark-to-market and hedging transactions
(22
)
 
13

Receivables
(66
)
 
(45
)
Receivables from affiliated companies
(21
)
 
—

Inventory
47

 
72

Other current assets
302

 
(134
)
Increase (decrease) in
 
 
 
Accounts payable
(107
)
 
(53
)
Accounts payable to affiliated companies
83

 
114

Taxes accrued
47

 
3

Other current liabilities
(10
)
 
(116
)
Other assets
(21
)
 
(52
)
Other liabilities
(48
)
 
(6
)
Net cash provided by operating activities
907

 
503

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Capital expenditures
(563
)
 
(475
)
Purchases of available-for-sale securities
(298
)
 
(266
)
Proceeds from sales and maturities of available-for-sale securities
367

 
269

Notes receivable from affiliated companies
42

 
(101
)
Other
(20
)
 
(25
)
Net cash used in investing activities
(472
)
 
(598
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Proceeds from the issuance of long-term debt
—

 
875

Payments for the redemption of long-term debt
(245
)
 
(469
)
Notes payable to affiliated companies
(185
)
 
(291
)
Distributions to noncontrolling interests
—

 
(3
)
Other
(3
)
 
(39
)
Net cash (used in) provided by financing activities
(433
)
 
73

Net increase (decrease) in cash and cash equivalents
2

 
(22
)
Cash and cash equivalents at beginning of period
42

 
58

Cash and cash equivalents at end of period
$
44

 
$
36

Supplemental Disclosures:
 
 
 
Significant non-cash transactions:
 
 
 
Accrued capital expenditures
$
176

 
$
158


See Notes to Condensed Consolidated Financial Statements
17

PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Changes in Common Stockholder's Equity
(Unaudited)
 
 
 
 
 
 
 
Accumulated Other Comprehensive Loss
 
 
 
 
 
 
(in millions)
Common
Stock

 
Additional
Paid-in Capital

 
Retained
Earnings

 
Net Losses on Cash Flow Hedges

 
Net Gains on Available for Sale Securities

 
Pension and OPEB Adjustments

 
Common Stockholder's Equity

 
Noncontrolling
Interests

 
Total
Equity

Balance at December 31, 2013
$
—

 
$
7,467

 
$
3,452

 
$
(43
)
 
$
—

 
$
(16
)
 
$
10,860

 
$
4

 
$
10,864

Net income
—

 
—

 
202

 
—

 
—

 
—

 
202

 
1

 
203

Other comprehensive income
—

 
—

 
—

 
1

 
—

 
1

 
2

 
—

 
2

Distributions to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(3
)
 
(3
)
Transfer of service company net assets to Duke Energy
—

 
—

 
(542
)
 
3

 
—

 
—

 
(539
)
 
—

 
(539
)
Balance at March 31, 2014
$
—


$
7,467


$
3,112


$
(39
)

$
—


$
(15
)

$
10,525


$
2


$
10,527

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2014
$
—

 
$
7,467

 
$
3,782

 
$
(35
)
 
$
1

 
$
(7
)
 
$
11,208

 
$
(32
)
 
$
11,176

Net income
—

 
—

 
260

 
—

 


 
—

 
260

 
3

 
263

Other comprehensive (loss) income
—

 
—

 
—

 
(2
)
 
—

 
1

 
(1
)
 
—

 
(1
)
Other
—

 
—

 
(3
)
 
—

 
—

 
—

 
(3
)
 
3

 
—

Balance at March 31, 2015
$
—


$
7,467


$
4,039


$
(37
)

$
1


$
(6
)

$
11,464


$
(26
)

$
11,438



See Notes to Condensed Consolidated Financial Statements
18

PART I


DUKE ENERGY PROGRESS, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 
Three Months Ended March 31,
(in millions)
2015

 
2014

Operating Revenues
$
1,449

 
$
1,422

Operating Expenses
 
 
 
Fuel used in electric generation and purchased power
575

 
573

Operation, maintenance and other
375

 
381

Depreciation and amortization
152

 
144

Property and other taxes
32

 
67

Total operating expenses
1,134

 
1,165

Gains on Sales of Other Assets and Other, net
1

 
1

Operating Income
316

 
258

Other Income and Expenses, net
20

 
9

Interest Expense
60

 
57

Income Before Income Taxes
276

 
210

Income Tax Expense
93

 
77

Net Income and Comprehensive Income
$
183

 
$
133



See Notes to Condensed Consolidated Financial Statements
19

PART I

DUKE ENERGY PROGRESS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)
March 31, 2015

 
December 31, 2014

ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
6

 
$
9

Receivables (net of allowance for doubtful accounts of $6 at March 31, 2015 and $7 at December 31, 2014)
49

 
43

Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $4 at March 31, 2015 and $5 at December 31, 2014)
479

 
436

Receivables from affiliated companies
4

 
10

Notes receivable from affiliated companies
205

 
237

Inventory
929

 
966

Regulatory assets
267

 
287

Other
99

 
384

Total current assets
2,038

 
2,372

Investments and Other Assets
 
 
 
Nuclear decommissioning trust funds
1,738

 
1,701

Other
450

 
412

Total investments and other assets
2,188

 
2,113

Property, Plant and Equipment
 
 
 
Cost
24,444

 
24,207

Accumulated depreciation and amortization
(9,162
)
 
(9,021
)
Net property, plant and equipment
15,282

 
15,186

Regulatory Assets and Deferred Debits
 
 
 
Regulatory assets
2,857

 
2,675

Other
34

 
34

Total regulatory assets and deferred debits
2,891

 
2,709

Total Assets
$
22,399

 
$
22,380

LIABILITIES AND COMMON STOCKHOLDER'S EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
363

 
$
481

Accounts payable to affiliated companies
183

 
120

Taxes accrued
61

 
47

Interest accrued
87

 
81

Current maturities of long-term debt
702

 
945

Regulatory liabilities
80

 
71

Other
359

 
409

Total current liabilities