Obligation Duval Energy Florida 3.2% ( US26444HAC51 ) en USD

Duval Energy Florida

100 % ▲

Etas-Unis

US26444HAC51 ( en USD )

3.2% par an ( paiement semestriel )

15/01/2027

Prospectus brochure de l'obligation Duke Energy Florida US26444HAC51 en USD 3.2%, échéance 15/01/2027

2 000 USD

650 000 000 USD

26444HAC5

A ( Qualité moyenne supérieure )

A1 ( Qualité moyenne supérieure )

15/07/2025 ( Dans 25 jours )

Duke Energy Florida est une filiale de Duke Energy qui fournit de l'électricité à environ 2 millions de clients dans une zone couvrant la majeure partie de la Floride centrale et du sud-ouest de la Floride.

L'Obligation émise par Duval Energy Florida ( Etas-Unis ) , en USD, avec le code ISIN US26444HAC51, paye un coupon de 3.2% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 15/01/2027

L'Obligation émise par Duval Energy Florida ( Etas-Unis ) , en USD, avec le code ISIN US26444HAC51, a été notée A1 ( Qualité moyenne supérieure ) par l'agence de notation Moody's.

L'Obligation émise par Duval Energy Florida ( Etas-Unis ) , en USD, avec le code ISIN US26444HAC51, a été notée A ( Qualité moyenne supérieure ) par l'agence de notation Standard & Poor's ( S&P ).

424B5 1 a2230596z424b5.htm 424B5
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TABLE OF CONTENTS Prospectus Supplement
TABLE OF CONTENTS
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-213765-04
CALCULATION OF REGISTRATION FEE

Proposed
Proposed
maximum
maximum
Amount of
Title of each class of securities
Amount to be
offering price
aggregate
registration
to be registered

registered

per unit

offering price

fee(1)

First Mortgage Bonds,
1.85% Series due 2020

$250,000,000
99.886%

$249,715,000

$28,942.00

First Mortgage Bonds,
3.20% Series due 2027

$650,000,000
99.940%

$649,610,000

$75,290.00

Total First Mortgage Bonds

$900,000,000

$899,325,000

$104,232.00

(1)
The filing fee, calculated in accordance with Rule 457(r) under the Securities Act of 1933, as amended, has been transmitted to the Securities
and Exchange Commission in connection with the securities offered by means of this prospectus supplement.
Table of Contents
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 23, 2016)
$250,000,000 First Mortgage Bonds, 1.85% Series due 2020
$650,000,000 First Mortgage Bonds, 3.20% Series due 2027
Duke Energy Florida, LLC is offering $900,000,000 aggregate principal amount of First Mortgage Bonds in two series. We are offering
$250,000,000 aggregate principal amount of First Mortgage Bonds, 1.85% Series due 2020 (the "2020 Mortgage Bonds") and $650,000,000 aggregate
principal amount of First Mortgage Bonds, 3.20% Series due 2027 (the "2027 Mortgage Bonds" and, together with the 2020 Mortgage Bonds, the
"Mortgage Bonds"). We will pay interest on the 2020 Mortgage Bonds at a rate of 1.85% per annum, payable semi-annually in arrears on January 15
and July 15 of each year, beginning on July 15, 2017. The 2020 Mortgage Bonds will mature as to principal on January 15, 2020. We will pay interest
on the 2027 Mortgage Bonds at a rate of 3.20% per annum, payable semi-annually in arrears on January 15 and July 15 of each year, beginning on
July 15, 2017. The 2027 Mortgage Bonds will mature as to principal on January 15, 2027. The Mortgage Bonds are secured by the lien of our mortgage
and rank equally with all of our other first mortgage bonds from time to time outstanding. The lien of our mortgage is discussed under "Description of
First Mortgage Bonds--Ranking and Security" on page 5 of the accompanying prospectus.
We may redeem the Mortgage Bonds of either series at our option at any time and from time to time, in whole or in part, as described in this
prospectus supplement under the caption "Description of the Mortgage Bonds--Redemption--Optional Redemption." In addition, upon the occurrence
of specific events, we may redeem, at our option, the Mortgage Bonds of either series, in whole, but not in part, as described in this prospectus
supplement under the caption "Description of the Mortgage Bonds--Redemption--Special Redemption." The Mortgage Bonds will not be entitled to
the benefit of any sinking fund or to a special redemption by operation of a sinking fund.
Each series of the Mortgage Bonds is a new issue of securities with no established trading market. We do not intend to list the Mortgage Bonds on
any securities exchange or include them in any automated quotation system. Please read the information provided under the caption "Description of the
Mortgage Bonds" in this prospectus supplement and "Description of First Mortgage Bonds" in the accompanying prospectus for a more detailed
description of the Mortgage Bonds.
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Investing in the Mortgage Bonds involves risks. See "Risk Factors" on page S-6 of this prospectus supplement.
Proceeds to
Duke Energy
Underwriting
Florida, LLC

Price to Public(1)

Discount(2)

Before Expenses

Per 2020 Mortgage Bond

99.886%

0.350%

99.536%
Total 2020 Mortgage Bonds

$
249,715,000
$
875,000
$
248,840,000
Per 2027 Mortgage Bond

99.940%

0.650%

99.290%
Total 2027 Mortgage Bonds

$
649,610,000
$
4,225,000
$
645,385,000
(1)
Plus accrued interest from January 6, 2017, if settlement occurs after that date.
(2)
The underwriters have agreed to reimburse us for a portion of our expenses incurred in connection with the offerings. See "Underwriting
(Conflicts of Interest)."
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
We expect the Mortgage Bonds to be ready for delivery only in book-entry form through the facilities of The Depository Trust Company for the
accounts of its participants, including Clearstream Banking, société anonyme, Luxembourg and Euroclear Bank S.A./N.V., on or about January 6, 2017.
Joint Book-Running Managers
BofA Merrill Lynch

Scotiabank

TD Securities

UBS Investment Bank

Wells Fargo Securities
Co-Managers
BNY Mellon Capital Markets, LLC
DNB Markets
The Williams Capital Group, L.P.
Junior Co-Managers
Lebenthal Capital Markets

Mischler Financial Group, Inc.

The date of this prospectus supplement is January 3, 2017.
Table of Contents
You should rely only on the information contained in or incorporated by reference in this prospectus supplement, the accompanying
prospectus and any free writing prospectus authorized by us. We have not, and the underwriters have not, authorized anyone to provide you
with information that is different. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and
the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer is not permitted. You should not assume
that the information contained in or incorporated by reference in this prospectus supplement, the accompanying prospectus or any free writing
prospectus authorized by us is accurate as of any date other than the date of the document containing the information or such other date as
may be specified therein. Our business, financial condition, liquidity, results of operations and prospects may have changed since those
respective dates.
TABLE OF CONTENTS
Prospectus Supplement

Page

About This Prospectus Supplement

ii
Prospectus Supplement Summary
S-1
Risk Factors
S-6
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Cautionary Statement Regarding Forward-Looking Information
S-6
Ratios of Earnings to Fixed Charges
S-8
Use of Proceeds
S-8
Description of the Mortgage Bonds
S-9
U.S. Federal Income Tax Considerations for Non-U.S. Holders
S-14
Book-Entry System
S-17
Underwriting (Conflicts of Interest)
S-21
Legal Matters
S-26
Where You Can Find More Information
S-26
Prospectus

Page

References to Additional Information

i
About This Prospectus

i
Forward-looking Statements

ii
The Company

1
Risk Factors

1
Use of Proceeds

1
Ratio of Earnings to Fixed Charges

2
Description of First Mortgage Bonds

2
Description of Debt Securities

8
Global Securities

19
Plan of Distribution

20
Experts

21
Validity of the Securities

21
Where You Can Find More Information

21
i
Table of Contents
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this prospectus supplement, which describes the specific terms of these offerings. The second part,
the accompanying prospectus, gives more general information, some of which does not apply to these offerings.
If the description of the offerings varies between this prospectus supplement and the accompanying prospectus, you should rely on the information
contained in or incorporated by reference in this prospectus supplement.
It is important for you to read and consider all information contained in or incorporated by reference in this prospectus supplement and the
accompanying prospectus in making your investment decision. You should also read and consider the information contained in the documents to which
we have referred you in "Where You Can Find More Information" in this prospectus supplement and the accompanying prospectus.
Unless we have indicated otherwise, or the context otherwise requires, references in this prospectus supplement and the accompanying prospectus
to "Duke Energy Florida," "the Company," "we," "us" and "our" or similar terms are to Duke Energy Florida, LLC. References in this prospectus
supplement to "First Mortgage Bonds" are to all of our first mortgage bonds issued under the Mortgage (as defined below) and from time to time
outstanding.
ii
Table of Contents
PROSPECTUS SUPPLEMENT SUMMARY
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The following summary is qualified in its entirety by, and should be read together with, the more detailed information that is included elsewhere in
this prospectus supplement and the accompanying prospectus, as well as the information that is incorporated or deemed to be incorporated by
reference in this prospectus supplement and the accompanying prospectus. See "Where You Can Find More Information" in this prospectus supplement
for information about how you can obtain the information that is incorporated or deemed to be incorporated by reference in this prospectus supplement
and the accompanying prospectus. Investing in the Mortgage Bonds involves risks. See "Risk Factors" in this prospectus supplement.
Duke Energy Florida, LLC
Duke Energy Florida, LLC, a Florida limited liability company and an indirect wholly owned subsidiary of Duke Energy Corporation, is a
regulated public utility primarily engaged in the generation, transmission, distribution, and sale of electricity in portions of Florida. Duke Energy
Florida's service area covers approximately 13,000 square miles and supplies electric service to approximately 1.7 million residential, commercial and
industrial customers. As of December 31, 2015, our asset portfolio included approximately 9,101 megawatts of owned generation capacity, 42,400
miles of distribution lines and 5,200 miles of transmission lines.
The address of our principal executive offices is 299 First Avenue North, St. Petersburg, Florida 33701. Our telephone number is (704) 382-3853.
The foregoing information about Duke Energy Florida is only a general summary and is not intended to be comprehensive. For additional
information about Duke Energy Florida, you should refer to the information described under the caption "Where You Can Find More Information" in
this prospectus supplement.
S-1
Table of Contents

The Offering
Issuer

Duke Energy Florida, LLC

Securities Offered
We are offering $250,000,000 aggregate principal amount of the 2020 Mortgage Bonds and
$650,000,000 aggregate principal amount of the 2027 Mortgage Bonds.

Maturity Dates
The 2020 Mortgage Bonds will mature on January 15, 2020. The 2027 Mortgage Bonds
will mature on January 15, 2027.

Interest Rates
The per annum interest rate on the 2020 Mortgage Bonds will be 1.85%. The per annum
interest rate on the 2027 Mortgage Bonds will be 3.20%.

Interest Payment Dates
Interest on the Mortgage Bonds will be payable semi-annually in arrears on January 15 and
July 15 of each year, beginning on July 15, 2017.

Ranking
The Mortgage Bonds are two new series of First Mortgage Bonds and will be secured by
the lien of the Mortgage and will rank equally with all our other First Mortgage Bonds
from time to time outstanding. See "Description of the Mortgage Bonds--Ranking and
Security." At September 30, 2016, we had outstanding approximately $4.4 billion in
aggregate principal amount of First Mortgage Bonds, which will rank equally with the
Mortgage Bonds.

Further Issuance
Subject to limits contained in our Mortgage that are described under "Description of the
Mortgage Bonds--Basis for Issuance of the Mortgage Bonds," we may, at any time,
without the consent of the holders of the Mortgage Bonds, issue additional First Mortgage
Bonds having the same ranking, interest rate, maturity and other terms as the Mortgage
Bonds of either series being offered hereby; provided, however, that such additional First
Mortgage Bonds must be fungible with the applicable Mortgage Bonds offered hereby for
U.S. federal income tax purposes, and any such additional First Mortgage Bonds, together
with the Mortgage Bonds of such series, will be taken to constitute the same series of First
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Mortgage Bonds under the Mortgage.

Collateral
In the opinion of our counsel, the Mortgage Bonds will be secured by a first mortgage lien,
subject only to permitted encumbrances and liens, on substantially all of the fixed
properties owned by us, except miscellaneous properties specifically excepted. After-
acquired property is covered by the lien of the Mortgage, subject to existing liens at the
time such property is acquired.
S-2
Table of Contents
Optional Redemption

We will have the right to redeem the 2020 Mortgage Bonds, in whole or in part and from
time to time, at a redemption price equal to the greater of (1) 100% of the principal amount
of the 2020 Mortgage Bonds being redeemed and (2) the sum of the present values of the
remaining scheduled payments of principal and interest on the 2020 Mortgage Bonds being
redeemed (exclusive of interest accrued to the redemption date), discounted to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-
day months) at the Treasury Rate (as defined below) plus 7.5 basis points, plus, in either
case, accrued and unpaid interest on the principal amount of the 2020 Mortgage Bonds
being redeemed to, but excluding, such redemption date.

At any time before October 15, 2026 (which is the date that is three months prior to
maturity of the 2027 Mortgage Bonds (the "2027 Par Call Date")), we will have the right
to redeem the 2027 Mortgage Bonds, in whole or in part and from time to time, at a
redemption price equal to the greater of (1) 100% of the principal amount of the 2027
Mortgage Bonds being redeemed and (2) the sum of the present values of the remaining
scheduled payments of principal and interest on the 2027 Mortgage Bonds being redeemed
that would be due if the 2027 Mortgage Bonds matured on the 2027 Par Call Date
(exclusive of interest accrued to the redemption date), discounted to the redemption date
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Rate plus 15 basis points, plus, in either case, accrued and unpaid interest on
the principal amount of the 2027 Mortgage Bonds being redeemed to, but excluding, such
redemption date. At any time on or after the 2027 Par Call Date, we will have the right to
redeem the 2027 Mortgage Bonds, in whole or in part and from time to time, at a
redemption price equal to 100% of the principal amount of the 2027 Mortgage Bonds being
redeemed plus accrued and unpaid interest on the principal amount of the 2027 Mortgage
Bonds being redeemed to, but excluding, such redemption date. See "Description of the
Mortgage Bonds--Redemption--Optional Redemption."

Special Redemption
Upon the occurrence of certain specific events described under "Description of the
Mortgage Bonds--Redemption--Special Redemption," we may redeem, at our option, the
Mortgage Bonds of either series, together with all other outstanding First Mortgage Bonds,
in whole, but not in part, at the make-whole redemption price applicable to the optional
redemption of the Mortgage Bonds of such series (with respect to the 2027 Mortgage
Bonds, at the redemption price applicable to the optional redemption of the 2027 Mortgage
Bonds at any time before the 2027 Par Call Date) as described above, plus accrued and
unpaid interest to, but excluding, the redemption date. See "Description of the Mortgage
Bonds--Redemption--Special Redemption."
S-3
Table of Contents
No Sinking Fund
The Mortgage Bonds will not be entitled to the benefit of any sinking fund or to a special
redemption by operation of a sinking fund.

Issuance of Additional First Mortgage Bonds
Under the terms of the Mortgage, as of October 31, 2016, we could issue additional First
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Mortgage Bonds in amounts equal to approximately (i) $3.3 billion based upon the
bondable value of property additions (approximately $2.4 billion after giving effect to the
offerings) and (ii) $600 million based upon the amount of previously authenticated First
Mortgage Bonds that have been cancelled or delivered for cancellation.

Use of Proceeds
The aggregate net proceeds from the sale of the Mortgage Bonds, after deducting the
respective underwriting discounts and related offering expenses and giving effect to the
underwriters' reimbursement to us, will be approximately $891.6 million. The aggregate
net proceeds from the sale of the Mortgage Bonds will be used (i) to fund capital
expenditures for ongoing construction and capital maintenance, (ii) to repay at maturity
$250 million aggregate principal amount of our First Mortgage Bonds, 5.80% Series due
2017 (the "2017 Bonds") and (iii) for general company purposes.

We expect that the sales of the 2020 Mortgage Bonds and the 2027 Mortgage Bonds will
take place concurrently. However, the sales of the 2020 Mortgage Bonds and the 2027
Mortgage Bonds are not conditioned upon each other, and we may consummate the sale of
one series and not the other, or consummate the sales at different times.

Conflicts of Interest
Some of the underwriters or their affiliates may own some of the 2017 Bonds which would
be repaid with a portion of the aggregate net proceeds from the sale of the Mortgage
Bonds. See "Underwriting (Conflicts of Interest)--Conflicts of Interest."
S-4
Table of Contents
Book-Entry

Each series of the Mortgage Bonds will be represented by one or more global securities
registered in the name of and deposited with or on behalf of The Depository Trust
Company ("DTC") or its nominee. Beneficial interests in the Mortgage Bonds will be
represented through book-entry accounts of financial institutions acting on behalf of
beneficial owners as direct and indirect participants in DTC. Investors may elect to hold
interests in the global securities through either DTC in the United States or Clearstream
Banking, société anonyme, Luxembourg ("Clearstream, Luxembourg") or Euroclear
Bank S.A./N.V., as operator of the Euroclear System (the "Euroclear System") in Europe if
they are participants in those systems, or indirectly through organizations which are
participants in those systems. This means that you will not receive a certificate for your
Mortgage Bonds and Mortgage Bonds will not be registered in your name, except under
certain limited circumstances described under the caption "Book-Entry System."

Mortgage Trustee
The Bank of New York Mellon.
S-5
Table of Contents
RISK FACTORS
You should carefully consider the risk factors in our Annual Report on Form 10-K for the year ended December 31, 2015, which has been filed
with the Securities and Exchange Commission (the "SEC") and is incorporated by reference in this prospectus supplement and the accompanying
prospectus, as well as all of the other information included or incorporated by reference in this prospectus supplement and the accompanying prospectus,
before making an investment decision.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This prospectus supplement, the accompanying prospectus, and the information incorporated by reference herein and therein, include forward-
looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of
1934, as amended. Forward-looking statements are based on management's beliefs and assumptions and can often be identified by terms and phrases
https://www.sec.gov/Archives/edgar/data/37637/000104746917000036/a2230596z424b5.htm[1/4/2017 3:05:08 PM]

that include "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," "potential,"
"forecast," "target," "guidance," "outlook," or other similar terminology. Various factors may cause actual results to be materially different than the
suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but
are not limited to:
·
State and federal 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 costs and liabilities to comply with federal and state laws, regulations, and legal requirements related to coal
ash remediation, including amounts for required closure of certain ash impoundments, are uncertain and difficult to estimate;
·
The ability to recover eligible costs, including amounts associated with coal ash impoundment retirement obligations and costs related to
significant weather events, and to earn an adequate return on investment through the regulatory process;
·
The costs of decommissioning Crystal River Unit 3 and other nuclear facilities could prove to be more extensive than amounts estimated
and all costs may not be fully recoverable through the regulatory process;
·
The risk that our credit ratings may be different from what we expect;
·
Costs and effects of legal and administrative proceedings, settlements, investigations and claims;
·
Industrial, commercial and residential growth or decline in our service territories or customer bases resulting from variations in customer
usage patterns, including energy efficiency efforts and use of alternative energy sources, including self-generation and distributed
generation technologies;
·
Federal and state regulations, laws and other efforts designed to promote and expand the use of energy efficiency measures and
distributed generation technologies, such as rooftop solar and battery storage, in Duke Energy Florida service territories could result in
customers leaving the electric distribution system, excess generation resources as well as stranded costs;
·
Advancements in technology;
·
Additional competition in electric markets and continued industry consolidation;
S-6
Table of Contents
·
The influence of weather and other natural phenomena on our operations, including the economic, operational and other effects of severe
storms, hurricanes, droughts, earthquakes and tornadoes;
·
The ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to
the Company resulting from an incident that affects the U.S. electric grid or generating resources;
·
The impact on our facilities and business from a terrorist attack, cybersecurity threats, data security breaches, and other catastrophic
events such as fires, explosions, pandemic health events or other similar occurrences;
·
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 our ability to obtain financing on favorable terms, which can be affected by various factors,
including our credit ratings, interest rate fluctuations, 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 our capital investment projects, including risks related to
financing, obtaining and complying with terms of permits, meeting construction budgets and schedules, and satisfying operating and
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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; and
·
The effect of accounting pronouncements issued periodically by accounting standard-setting bodies.
Additional risks and uncertainties are identified and discussed in our reports filed with the SEC and available at the SEC's website. In light of these
risks, uncertainties and assumptions, the events described in the forward-looking statements included or incorporated by reference in this prospectus
supplement and the accompanying prospectus 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 and we expressly disclaim an obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
S-7
Table of Contents
RATIOS OF EARNINGS TO FIXED CHARGES
The ratios of earnings to fixed charges have been calculated using the SEC guidelines.

Nine Months

Year Ended December 31,

Ended
September 30,

2016

2015

2014

2013

2012

2011

(dollars in millions)

Earnings as defined for fixed charges calculation

Add:

Pretax income from continuing operations
$
774 $
943 $
898 $ 538 $ 413 $ 494
Fixed charges

176
284
294
285
309
275
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Total earnings
$
950 $ 1,227 $ 1,192 $ 823 $ 722 $ 769
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
? ?
?
? ?
?
? ?
?
? ?
?
? ?
?
? ?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Fixed charges:

Interest on debt, including capitalized portions
$
159 $
248 $
252 $ 249 $ 274 $ 253
Estimate of interest within rental expense

17
36
42
36
35
22
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Total fixed charges
$
176 $
284 $
294 $ 285 $ 309 $ 275
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
? ?
?
? ?
?
? ?
?
? ?
?
? ?
?
? ?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
?
Ratio of earnings to fixed charges

5.4
4.3
4.1
2.9
2.3
2.8
USE OF PROCEEDS
The aggregate net proceeds from the sale of the Mortgage Bonds, after deducting the respective underwriting discounts and related offering
expenses and giving effect to the underwriters' reimbursement to us, will be approximately $891.6 million. The aggregate net proceeds from the sale of
the Mortgage Bonds will be used (i) to fund capital expenditures for ongoing construction and capital maintenance, (ii) to repay at maturity
$250 million aggregate principal amount of our First Mortgage Bonds, 5.80% Series due 2017 (the "2017 Bonds") and (iii) for general company
purposes. Some of the underwriters or their affiliates may own some of the 2017 Bonds which would be repaid with a portion of the aggregate net
proceeds from the sale of the Mortgage Bonds. See "Underwriting (Conflicts of Interest)--Conflicts of Interest."
We expect that the sales of the 2020 Mortgage Bonds and the 2027 Mortgage Bonds will take place concurrently. However, the sales of the 2020
Mortgage Bonds and the 2027 Mortgage Bonds are not conditioned upon each other, and we may consummate the sale of one series and not the other, or
consummate the sales at different times.
S-8
Table of Contents
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DESCRIPTION OF THE MORTGAGE BONDS
We will issue the Mortgage Bonds as two new series of First Mortgage Bonds under an Indenture, dated as of January 1, 1944 (the "Original
Indenture"), with The Bank of New York Mellon, as successor trustee (the "Mortgage Trustee"). The Original Indenture is supplemented by
supplemental indentures, including by the Fifty-Fourth Supplemental Indenture to be dated as of January 1, 2017 (the "Supplemental Indenture"), which
establishes the specific terms of the Mortgage Bonds. In the following discussion, we will refer to the Original Indenture and all indentures
supplemental to the Indenture together as the "Mortgage."
Please read the following information concerning the Mortgage Bonds in conjunction with the statements under "Description of First Mortgage
Bonds" in the accompanying prospectus, which the following information supplements and, in the event of any inconsistencies, supersedes. Capitalized
terms not defined in this prospectus supplement are used as defined in the Mortgage and the Supplemental Indenture governing the Mortgage Bonds or
as otherwise provided in the accompanying prospectus.
General
We will initially offer $900,000,000 aggregate principal amount of the Mortgage Bonds, consisting of $250,000,000 aggregate principal amount of
the 2020 Mortgage Bonds and $650,000,000 aggregate principal amount of the 2027 Mortgage Bonds. Subject to the limits contained in the Mortgage
that are described under "--Basis for Issuance of the Mortgage Bonds," we may, at any time, without the consent of the holders of the Mortgage Bonds,
issue additional First Mortgage Bonds having the same ranking, interest rate, maturity and other terms as the Mortgage Bonds of either series being
offered hereby; provided, however, that such additional First Mortgage Bonds must be fungible with the applicable Mortgage Bonds offered hereby for
U.S. federal income tax purposes, and any such additional First Mortgage Bonds, together with the Mortgage Bonds of such series, will be taken to
constitute the same series of First Mortgage Bonds under the Mortgage.
The Mortgage Bonds will be issuable in denominations of $2,000 and integral multiples of $1,000 above that amount. For more information on
DTC, see "Book-Entry System--The Depository Trust Company" below.
Basis for Issuance of the Mortgage Bonds
We will issue the Mortgage Bonds under the Mortgage based upon the bondable value of property additions.
As of October 31, 2016, we could issue under the Mortgage:
·
based upon the bondable value of property additions, up to approximately $3.3 billion (approximately $2.4 billion after giving effect to
the offerings) of additional First Mortgage Bonds; and
·
based upon the amount of previously authenticated First Mortgage Bonds that have been canceled or delivered for cancellation,
approximately $600 million of additional First Mortgage Bonds.
Maturity, Interest and Payment
The 2020 Mortgage Bonds will mature on January 15, 2020, and the 2027 Mortgage Bonds will mature on January 15, 2027.
We will pay interest on the 2020 Mortgage Bonds at the rate of 1.85% per annum and the 2027 Mortgage Bonds at the rate of 3.20% per annum.
Interest on the Mortgage Bonds of each series will
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accrue from and including January 6, 2017. We will pay interest on the Mortgage Bonds of each series on January 15 and July 15 of each year,
beginning on July 15, 2017. We will pay interest on the Mortgage Bonds of each series to the person(s) in whose name(s) such Mortgage Bonds are
registered at the close of business on the tenth calendar day next preceding the interest payment date, provided, however, that so long as such Mortgage
Bonds are registered in the name of DTC, its nominee or a successor depositary, the record date for interest payable on any interest payment date for
such Mortgage Bonds so registered shall be the close of business on the business day immediately preceding such interest payment date. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months. If a due date for the payment of interest or principal falls on a day that is
not a business day, then the payment will be made on the next succeeding business day, and no interest will accrue on the amounts payable for the
period from and after the original due date and until the next business day.
Pursuant to the Mortgage, we will pay interest, to the extent enforceable under law, on any overdue installment of interest on the Mortgage Bonds
at the highest rate of interest payable on any of the First Mortgage Bonds outstanding under the Mortgage.
Ranking and Security
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The Mortgage Bonds will be secured by the lien of the Mortgage and will rank equally with all our other First Mortgage Bonds from time to time
outstanding. At September 30, 2016, we had approximately $4.4 billion in aggregate principal amount of First Mortgage Bonds outstanding, which will
rank equally with the Mortgage Bonds. In the opinion of our counsel, the Mortgage constitutes a first mortgage lien, subject only to permitted
encumbrances and liens, on substantially all of the fixed properties owned by us, except miscellaneous properties specifically excepted. After-acquired
property is covered by the lien of the Mortgage, subject to existing liens at the time such property is acquired.
Dividend Restrictions
So long as any First Mortgage Bonds are outstanding, we may only pay cash dividends on our common stock, and make any other distribution to
Progress Energy, Inc., our common stockholder, out of our net income subsequent to December 31, 1943. For purposes of the Mortgage, the terms
(i) "dividend" shall be interpreted so as to include distributions and (ii) "common stock" shall be interpreted so as to include membership interests.
Redemption
The Mortgage Bonds of each series are redeemable prior to maturity, as set forth below. We have agreed that before any applicable redemption
date for either series, we will deposit with the Mortgage Trustee a sum of money equal to the applicable redemption price. If we elect to redeem any
Mortgage Bonds of either series, we will notify the Mortgage Trustee of our election at least 45 days prior to the redemption date, or a shorter period
acceptable to the Mortgage Trustee, including in the notice of redemption a reasonably detailed computation of the redemption price, or manner of
calculation if not then known. Our failure to make the required deposit will constitute a completed default under the Mortgage on the specified
redemption date and the subject Mortgage Bonds or, in the case of a special redemption, all outstanding First Mortgage Bonds, including the Mortgage
Bonds, shall immediately become due and payable.
Optional Redemption
We will have the right to redeem the 2020 Mortgage Bonds, in whole or in part and from time to time, at a redemption price equal to the greater of
(1) 100% of the principal amount of the 2020 Mortgage Bonds being redeemed and (2) the sum of the present values of the remaining
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scheduled payments of principal and interest on the 2020 Mortgage Bonds being redeemed (exclusive of interest accrued to the redemption date),
discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as
defined below) plus 7.5 basis points, plus, in either case, accrued and unpaid interest on the principal amount of the 2020 Mortgage Bonds being
redeemed to, but excluding, such redemption date.
At any time before October 15, 2026 (which is the date that is three months prior to maturity of the 2027 Mortgage Bonds (the "2027 Par Call
Date")), we will have the right to redeem the 2027 Mortgage Bonds, in whole or in part and from time to time, at a redemption price equal to the
greater of (1) 100% of the principal amount of the 2027 Mortgage Bonds being redeemed and (2) the sum of the present values of the remaining
scheduled payments of principal and interest on the 2027 Mortgage Bonds being redeemed that would be due if the 2027 Mortgage Bonds matured on
the 2027 Par Call Date (exclusive of interest accrued to the redemption date), discounted to the redemption date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Treasury Rate plus 15 basis points, plus, in either case, accrued and unpaid interest on the
principal amount of the 2027 Mortgage Bonds being redeemed to, but excluding, such redemption date.
At any time on or after the 2027 Par Call Date, we will have the right to redeem the 2027 Mortgage Bonds, in whole or in part and from time to
time, at a redemption price equal to 100% of the principal amount of the 2027 Mortgage Bonds being redeemed plus accrued and unpaid interest on the
principal amount of the 2027 Mortgage Bonds being redeemed to, but excluding, such redemption date.
For purposes of the optional redemption provisions, the following terms have the following meanings:
"Comparable Treasury Issue" means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated
maturity comparable to the remaining term of the applicable series of Mortgage Bonds to be redeemed (assuming, for this purpose, that the 2020
Mortgage Bonds matured on the maturity date thereof and the 2027 Mortgage Bonds matured on the 2027 Par Call Date), that would be utilized, at the
time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of a comparable maturity to the
remaining term of such Mortgage Bonds.
"Comparable Treasury Price" means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (B) if the Quotation Agent obtains fewer than
four of such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations as determined by us.
"Quotation Agent" means one of the Reference Treasury Dealers appointed by us.
"Reference Treasury Dealer" means each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Scotia Capital (USA) Inc., TD Securities
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