progress energy 09/24/08
Upcoming SlideShare
Loading in...5
×
 

progress energy 09/24/08

on

  • 651 views

 

Statistics

Views

Total Views
651
Views on SlideShare
651
Embed Views
0

Actions

Likes
0
Downloads
0
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

progress energy 09/24/08 progress energy 09/24/08 Presentation Transcript

  • Securing our Energy Future Mark Mulhern Mark Mulhern Senior Vice President and CFO Senior Vice President and CFO Merrill Lynch Merrill Lynch Power & Gas Leaders Conference Power & Gas Leaders Conference September 24, 2008 September 24, 2008
  • Caution Regarding Forward-Looking Statements This presentation includes information that is forward-looking in nature. Many factors could cause the actual results to be materially different than the forward-looking information provided. These factors are discussed in more detail in the Company’s most recent Form 10-K and Form 10-Qs.
  • Major Discussion Topics 1. Company overview 2. Growth strategy 3. Nuclear expansion 4. Regulatory update 5. Financial update
  • Company Overview
  • Profile of who we are: Two High-Performing Electric Utilities North Carolina Progress Energy Carolinas • 12,400 MW capacity • Over 1.4M customers • 2.2% cust. growth (7-yr CGR) • $4.4B total revenue • $12B total assets South • 5,000 employees • 34,000 sq. mile service area Carolina • 18 plants, 82 units Progress Energy Florida • 9,400 MW capacity Florida • ~1.7M customers • 2.2% cust. growth (7-yr CGR) • $4.7B total revenue • $13B total assets • 4,000 employees Service Area • 20,000 sq. mile service area • 14 plants, 65 units
  • PGN Overarching Strategy
  • Growth Strategy
  • Significant Rate Base Growth Even Prior to New Nuclear Progress Energy Carolinas¹ Progress Energy Florida² 2008-2010E 2008-2010E CAGR CAGR 18% 5% $9,000 $9,000 2001-2007 CAGR Retail Rate Base (x 1M) Retail Rate Base (x 1M) $8,000 $8,000 5.0% $7,000 $7,000 2001-2007 CAGR $6,000 $6,000 4.1% $5,000 $5,000 $4,000 $4,000 $3,000 $3,000 $2,000 $2,000 $1,000 $1,000 $0 $0 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E Retail rate base Clause-related (1) PEC rate base includes Clean Smokestacks Act expenditures in excess of $584M. (2) PEF rate base excludes Levy County nuclear capital expenditures.
  • Major Near-Term Capital Projects (1) Capital expenditures exclude AFUDC. (2) Replacing 444 MW of oil steam units for a net increase of 715 MW. (3) On September 5, 2008, NCUC authorized PEC to rate-base expenditures above $584M.
  • Allowance for Funds Used During Construction (AFUDC) PEC capital projects lasting more than Carolinas one month are forecast to earn 8-9% AFUDC rate. ($15M in 2007 growing to ~$35M in 2008) PEF capital projects greater than $45 Florida million and lasting more than one year earn an 8.848% AFUDC rate. * ($53M in 2007 growing to ~$125M in 2008) * PEF has a base level of CWIP embedded in its rate base.
  • Key Investments Drive Earnings Growth * * For illustrative purposes only.
  • Nuclear Expansion
  • A Well-Established, High-Performing Nuclear Generation Fleet: 4,323 MW Crystal River (1 PWR unit) Brunswick (2 BWR units) 1977 1975-1977 838 MW (1) 1,875 MW (1) 91.78% 81.67% ownership ownership Robinson (1 PWR unit) Harris (1 PWR unit) 1971 1987 900 MW (1) 710 MW 83.83% 100% ownership ownership (1) Facilities are jointly owned. The capacities shown include joint owners’ share.
  • Strong Case for New Nuclear in U.S. Federal climate policy expected in 2009-2010 Need for new baseload generating capacity Need for fuel diversity and energy security Nuclear is the only proven carbon-free, baseload option that can be delivered at scale
  • Even Stronger Nuclear Case in Florida Progress Energy Florida Increasing nuclear share: • reduces fuel costs Purchased Oil/Gas 32% • reduces price volatility 23% • helps address carbon challenge • strengthens fuel supply security Nuclear 14% Coal 31% Generation Output Mix in 2007 Output
  • Supportive Florida Legislation 2006: Nuclear Investment Recovery Pre-construction and licensing Capacity cost recovery clause (CCRC) Costs are recovered dollar for dollar During construction AFUDC is recovered through CCRC 8.848% AFUDC rate is locked until commercial operation Annual prudence reviews Completion Base rate adjustment at in-service for capital costs ROE and capital structure based on last approved (currently 11.75% ROE on 57.83% common equity) Project cancellation cost recovery
  • Levy Nuclear Project in Florida Location Technology # of units Capacity (MW) In Service Levy County, Westinghouse Unit 1: 2016 2 ~2,200 total Florida AP1000 Unit 2: 2017 • 8 miles NE of our Crystal River Energy Complex • Negotiating joint ownership with multiple parties (1) • Negotiating engineering, procurement & construction (EPC) agreement with Westinghouse and Shaw • Site prep & pre-construction begin ~2010/11; safety- related construction begins 2012/13 (1) Confidentiality obligations preclude us from discussing this further until the negotiations are completed.
  • Regulatory Timeline for Levy Project Mar. May June July Aug. Sept. Oct. April 2008 2010 2012/13 Need Case Filed Hearing Vote Order Cost Recovery Filed Hearing Order Site Certification Filed (18 month review) Issued Combined License Filed (3 - 4 year review) Issued
  • Regulatory Update
  • Carolinas Cost Recovery Filings South Carolina fuel filing PSC approved $39M increase Effective July 1, 2008 North Carolina fuel filing Reached a proposed settlement with interveners for $275M increase Represents a 3-year recovery (with interest) of ~$200M deferred fuel balance at July 31, 2008, plus projected fuel costs Hearing held Sept 16; awaiting order; rates effective Dec 1, 2008 North Carolina REPS cost recovery Filed for ~$12M actual and projected incremental cost of compliance Avoided costs will flow through fuel clause proceedings Hearing held Sept 17; awaiting order; rates effective Dec 1, 2008 North Carolina DSM/EE rider and DSDR* program Filed for ~$42M actual and projected cost recovery Rates effective Dec 1, 2008 (hearing scheduled for Dec 17, 2008) * Distribution System Demand Response.
  • NC Clean Smokestacks Update $1.5B-$1.6B: current estimate of total costs ~$700M remaining expenditures $813M: original estimate of $229M balance compliance costs into rate base $15M amortization in Q1-08 $584M: cumulative amortization to date $569M – 70% of original estimate amortized by 12/31/07 Received favorable order from NCUC on Sept 5: PEC allowed to accrue AFUDC above $813M; eliminates any further accelerated amortization
  • Florida Cost Recovery Filings Storm damage reserve ended July 31 2008 mid-year fuel cost adjustment $213M request for full recovery from Aug-Dec ’08 FPSC approved half for recovery Aug-Dec ’08; remaining half in ’09 2009 cost recovery filings on Aug 29 Fuel Hearings scheduled for Nov 4-6; Capacity rates effective Jan 1, 2009 Environmental Energy conservation Levy nuclear Hearings held Sept 11-12; rates effective Jan 1, 2009 CR3 uprate Current rate settlement expires at end of 2009
  • Florida Environmental Cost Recovery Environmental Cost Recovery Clause (ECRC) Annual ECRC filing Accrue AFUDC based on existing rate settlement Return-of and return-on capital invested when placed-in service Dollar-for-dollar recovery of Related O&M expenses Emission allowances Estimated total spend of $1.2B through 2010 Crystal River 4 & 5 $625M spent through June 30, 2008
  • Financial Update
  • Our Long-Term Financial Objectives Achieve our 4-5% EPS growth objective Preserve an investment grade credit rating Maintain dividend growth Keep rate increases reasonable to customers Fund Levy and capital investments in the rest of the business
  • Financial Update: Challenges/Opportunities Weaker than expected Florida revenues mitigated by Wholesale Cost management Regulatory depreciation/amortization at PEC Received Clean Smokestacks order from NCUC on 9/5/2008 $75M of Harris depreciation by end of 2009 Capital expenditure program for 2008 on track
  • Progress Energy Average Customer Growth * * Approximate average net increase in number of customers for respective three-month periods compared to prior year.
  • Long-term Demographics for Florida are Strong • Economists say that in spite of a severe housing slowdown, Florida should continue growing and creating new jobs at a FL CAGR = 2.0% faster rate than the U.S. vs. economy as a whole – Times US CAGR = 0.8% Personal Finance Editor • “We believe above average growth in population could help to correct inventory levels in Florida at a slightly faster rate than the national average” – Lehman Brothers Source: U.S. Census Bureau US Census projected population study estimates that Florida’s population is expected to grow 64% vs. the U.S. rate of 23% between 2005 and 2030.
  • Liquidity Overview * (in millions) Debt Maturity Profile PGN Revolving Credit Facilities Program Term Amount Expiration Issue 2009 2010 2011 2012 Progress Energy 5-Year $1,130 5/3/12 PGN $ -$ 100 $ 700 $ 450 Progress Energy PEC 400 6 - 500 5-Year 450 6/28/11 Carolinas PEF - 300 300 - Progress Energy 450 3/28/11 Florida 5-Year PCH - - - - $2,030 Total $ 400 $ 406 $ 1,000 $ 950 * * As of September 19, 2008.
  • Credit Facilities Consortium * $ in millions Bank Total J.P. Morgan Chase $ 225.0 Bank Tokyo-Mitsubishi 200.0 Barclays Capital 190.5 Bank of America 190.0 Citigroup 180.0 Wachovia 175.5 Royal Bank of Scotland 169.0 Bank of New York Mellon 120.0 SunTrust 115.0 Morgan Stanley 100.0 Goldman Sachs 100.0 Deutsche Bank 95.0 UBS 80.0 BNP Paribas 50.0 BB&T 25.0 First Tennessee 15.0 Total $ 2,030.0 * * As of September 19, 2008.
  • Conclusion
  • Value Proposition: A Superior Risk-Adjusted Return Attractive dividend yield with growth commitment Long-term earnings growth supported by sales and rate base growth Clear business model with successful execution history Balance sheet and credit metrics support strategy A solid, low-risk, long-term holding
  • PGN Overarching Strategy
  • Q&A