~~0001326160duk:DukeEnergyFloridaMemberduk:SpentNuclearFuelMattersMember2018-06-182018-06-18~~00013261602022FYfalse0000030371000109409300000177970000037637000002029000000810200000078460http://fasb.org/us-gaap/2022#AccountingStandardsUpdate201613MemberP3Yhttp://fasb.org/us-gaap/2022#DeferredCreditsAndOtherLiabilitieshttp://fasb.org/us-gaap/2022#DeferredCreditsAndOtherLiabilities365770728http://fasb.org/us-gaap/2022#PublicUtilitiesPropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2022#PublicUtilitiesPropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2022#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2022#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2022#LongTermDebtCurrenthttp://fasb.org/us-gaap/2022#LongTermDebtCurrenthttp://fasb.org/us-gaap/2022#LongTermDebtNoncurrenthttp://fasb.org/us-gaap/2022#LongTermDebtNoncurrenthttp://fasb.org/us-gaap/2022#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2022#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2022#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2022#DeferredCreditsAndOtherLiabilitieshttp://fasb.org/us-gaap/2022#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2022#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2022#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2022#DeferredCreditsAndOtherLiabilitieshttp://fasb.org/us-gaap/2022#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2022#DeferredCreditsAndOtherLiabilitieshttp://fasb.org/us-gaap/2022#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2022#DeferredCreditsAndOtherLiabilities1111111111111111111111111111110001326160duk:DECNCSFAndDEPNCSFMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMember2022-01-012022-12-31

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal ~~period~~year ended December 31, ~~2020~~2022 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~~ File Number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Zip Code and Telephone Number	IRS Employer Identification No.

1-32853	DUKE ENERGY CORPORATION	20-2777218

(a Delaware corporation)

~~550~~526 South ~~Tryon~~Church Street

Charlotte, North Carolina 28202-1803

704-382-3853


1-4928			DUKE ENERGY CAROLINAS, LLC						56-0205520

(a North Carolina limited liability company)

526 South Church Street

Charlotte, North Carolina 28202-1803

704-382-3853


1-15929			PROGRESS ENERGY, INC.						56-2155481

(a North Carolina corporation)

410 South Wilmington Street

Raleigh, North Carolina 27601-1748

704-382-3853


1-3382			DUKE ENERGY PROGRESS, LLC						56-0165465

(a North Carolina limited liability company)

410 South Wilmington Street

Raleigh, North Carolina 27601-1748

704-382-3853


1-3274			DUKE ENERGY FLORIDA, LLC						59-0247770

(a Florida limited liability company)

299 First Avenue North

St. Petersburg, Florida 33701

704-382-3853


1-1232			DUKE ENERGY OHIO, INC.						31-0240030

(an Ohio corporation)

139 East Fourth Street

Cincinnati, Ohio 45202

704-382-3853


1-3543			DUKE ENERGY INDIANA, LLC						35-0594457

(an Indiana limited liability company)

1000 East Main Street

Plainfield, Indiana 46168

704-382-3853


1-6196			PIEDMONT NATURAL GAS COMPANY, INC.						56-0556998

(a North Carolina corporation)

4720 Piedmont Row Drive

Charlotte, North Carolina 28210

704-364-3120

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Name of each exchange on

Registrant Title of each class Trading symbols which registered

Duke Energy Corporation Common Stock, $0.001 par value DUK New York Stock Exchange LLC

(Duke Energy)

Duke Energy ~~5.125% Junior Subordinated Debentures due DUKH New York Stock Exchange LLC~~

~~January 15, 2073~~

~~Duke Energy~~ 5.625% Junior Subordinated Debentures due DUKB New York Stock Exchange LLC

September 15, 2078

Duke Energy Depositary Shares, each representing a 1/1,000th DUK PR A New York Stock Exchange LLC

interest in a share of 5.75% Series A Cumulative

Redeemable Perpetual Preferred Stock, par value

$0.001 per share

Duke Energy 3.10% Senior Notes due 2028 DUK 28A New York Stock Exchange LLC

Duke Energy 3.85% Senior Notes due 2034 DUK 34 New York Stock Exchange LLC

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Duke Energy

Yes

☒

☐

Duke Energy Florida, LLC (Duke Energy Florida)

Yes

☒

☐

Duke Energy Carolinas, LLC (Duke Energy Carolinas)

Yes

☒

☐

Duke Energy Ohio, Inc. (Duke Energy Ohio)

Yes

☒

☐

Progress Energy, Inc. (Progress Energy)

Yes

☐

☒

Duke Energy Indiana, LLC (Duke Energy Indiana)

Yes

☒

☐

Duke Energy Progress, LLC (Duke Energy Progress)

Yes

☒

☐

Piedmont Natural Gas Company, Inc. (Piedmont)

Yes

☒

☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒ (Response applicable to all registrants.)

Indicate by check mark whether the registrants (1) have 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. Yes ☒ No ☐

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ¨

Indicate by check mark whether Duke Energy is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

Large Accelerated Filer ☒ Accelerated Filer ¨ Non-accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether each of Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont is a large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

Large Accelerated Filer ¨ Accelerated Filer ¨ Non-accelerated Filer ☒ Smaller Reporting Company ☐ Emerging Growth Company ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. ~~7252(b)~~7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨

Indicate by check mark whether each of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x


Estimated aggregate market value of the common equity held by nonaffiliates of Duke Energy at June 30, ~~2020.~~2022.	$	~~58,688,204,289~~82,471,565
Number of shares of Common Stock, $0.001 par value, outstanding at January 31, ~~2021.~~2023.	~~768,663,580~~770,080,285

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Duke Energy definitive proxy statement for the ~~2021~~2023 Annual Meeting of the Shareholders or an amendment to this Annual Report are incorporated by reference into PART III, Items 10, 11 and 13 hereof.

This combined Form 10-K is filed separately by eight registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont (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, Duke Energy Indiana and Piedmont meet the conditions set forth in General Instructions I(1)(a) and (b) of Form 10-K and are, therefore, filing this Form 10-K with the reduced disclosure format specified in General Instructions I(2) of Form 10-K.

Auditor Firm ID: 34 Auditor Name: Deloitte & Touche LLP Auditor Location: Charlotte, NC


TABLE OF CONTENTS

TABLE OF CONTENTS

FORM 10-K FOR THE YEAR ENDED December 31, ~~2020~~2022


Item	Item		Page	Item		Page

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION	CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION			CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

GLOSSARY OF TERMS	GLOSSARY OF TERMS			GLOSSARY OF TERMS

PART I.	PART I.			PART I.
1.	1.	BUSINESS	9	1.	BUSINESS	9
		DUKE ENERGY	9		DUKE ENERGY	9
		GENERAL	9		GENERAL	9
		BUSINESS SEGMENTS	9		BUSINESS SEGMENTS	9
		EMPLOYEES	21		HUMAN CAPITAL MANAGEMENT	19
		EXECUTIVE OFFICERS	23		EXECUTIVE OFFICERS	21
		ENVIRONMENTAL MATTERS	23		ENVIRONMENTAL MATTERS	22
		DUKE ENERGY CAROLINAS	24		DUKE ENERGY CAROLINAS	22
		PROGRESS ENERGY	24		PROGRESS ENERGY	22
		DUKE ENERGY PROGRESS	24		DUKE ENERGY PROGRESS	22
		DUKE ENERGY FLORIDA	24		DUKE ENERGY FLORIDA	23
		DUKE ENERGY OHIO	25		DUKE ENERGY OHIO	23
		DUKE ENERGY INDIANA	25		DUKE ENERGY INDIANA	23
		PIEDMONT	25		PIEDMONT	23

1A.	1A.	RISK FACTORS	25	1A.	RISK FACTORS	23

1B.	1B.	UNRESOLVED STAFF COMMENTS	34	1B.	UNRESOLVED STAFF COMMENTS	32

2.	2.	PROPERTIES	35	2.	PROPERTIES	33

3.	3.	LEGAL PROCEEDINGS	40	3.	LEGAL PROCEEDINGS	36

4.	4.	MINE SAFETY DISCLOSURES	40	4.	MINE SAFETY DISCLOSURES	36

PART II.	PART II.			PART II.
5.	5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	41	5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	37

6.	6.	SELECTED FINANCIAL DATA	41	6.	SELECTED FINANCIAL DATA	37

7.	7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	42	7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	38

7A.	7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	74	7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	67

8.	8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	75	8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	68

9.	9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	243	9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	224

9A.	9A.	CONTROLS AND PROCEDURES	243	9A.	CONTROLS AND PROCEDURES	224

PART III.	PART III.			PART III.
10.	10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	245	10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	226

11.	11.	EXECUTIVE COMPENSATION	245	11.	EXECUTIVE COMPENSATION	226

12.	12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	245	12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	226

13.	13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	246	13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	226

14.	14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	246	14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	227

PART IV.	PART IV.			PART IV.
15.	15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	247	15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	228
		EXHIBIT INDEX	E-1		EXHIBIT INDEX	E-1
		SIGNATURES	E-2		SIGNATURES	E-2


FORWARD LOOKING STATEMENTS

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 and can often be identified by terms and phrases 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:

◦The ~~impact of the COVID-19 pandemic;~~ability to implement our business strategy, including our carbon emission reduction goals;

◦State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, including those related to 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, asset retirement and construction costs related to carbon emissions reductions, and costs related to significant weather events, and to earn an adequate return on investment through rate case proceedings and the regulatory process;

◦The costs of decommissioning nuclear facilities could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process;

◦The impact of extraordinary external events, such as the pandemic health event resulting from COVID-19, and their collateral consequences, including the disruption of global supply chains or the economic activity in our service territories;

◦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 sustained downturns of the economy, reduced customer usage due to cost pressures from inflation or fuel costs, and the economic health of our service territories or variations in customer usage patterns, including energy efficiency efforts, natural gas building and appliance electrification, and use of alternative energy sources, such as 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, natural gas electrification, and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in a reduced number of customers, ~~leaving the electric distribution system,~~ excess generation resources as well as stranded costs;

◦Advancements in technology;

◦Additional competition in electric and natural gas markets and continued industry consolidation;

◦The influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts, earthquakes and tornadoes, including extreme weather associated with climate change;

◦Changing investor, customer and other stakeholder expectations and demands including heightened emphasis on environmental, social and governance ~~concerns;~~concerns and costs related thereto;

◦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 United States electric grid or generating resources;

◦Operational interruptions to our natural gas distribution and transmission activities;

◦The availability of adequate interstate pipeline transportation capacity and natural gas supply;

◦The impact on facilities and business from a terrorist or other attack, war, vandalism, cybersecurity threats, data security breaches, operational ~~accidents,~~events, information technology failures or other catastrophic events, such as fires, explosions, pandemic health events or other similar occurrences;

◦The inherent risks associated with the operation of nuclear facilities, including environmental, health, safety, regulatory and financial risks, including the financial stability of third-party service providers;

◦The timing and extent of changes in commodity prices and interest 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, interest rate fluctuations, compliance with debt covenants and conditions, an individual utility’s generation mix, and general market and economic conditions;

◦Credit ratings of the Duke Energy Registrants may be different from what is expected;

◦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;


FORWARD LOOKING STATEMENTS

◦Construction and development risks associated with the completion of the Duke Energy Registrants’ capital investment projects, including risks related to financing, timing and receipt of necessary regulatory approvals, 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;

◦The ability to obtain adequate insurance at acceptable costs;


~~FORWARD LOOKING STATEMENTS~~

◦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;~~opportunities, as well as the successful sale of the Commercial Renewables Disposal Groups;

◦The effect of accounting and reporting pronouncements issued periodically by accounting standard-setting ~~bodies;~~bodies and the SEC;

◦The impact of United States tax legislation to our financial condition, results of operations or cash flows and our credit ratings;

◦The impacts from potential impairments of goodwill or equity method investment carrying values;

◦Asset or business acquisitions and dispositions may not yield the anticipated benefits;

◦The actions of activist shareholders could disrupt our operations, impact our ability to ~~implement~~execute on our business strategy, ~~including enhancing existing technology systems.~~or cause fluctuations in the trading price of our common stock; and

Additional risks and uncertainties are identified and discussed in the Duke Energy Registrants' reports filed with the SEC and available at the SEC's website at sec.gov. 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 and the Duke Energy Registrants expressly disclaim an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


GLOSSARY OF TERMS

Glossary of Terms

The following terms or acronyms used in this Form 10-K are defined below:


Term or Acronym			Definition

~~2013 Settlement~~			~~Revised and Restated Stipulation and Settlement Agreement approved in November 2013 among Duke Energy Florida, the Florida Office of Public Counsel and other customer advocates~~

2017 Settlement			Second Revised and Restated Settlement Agreement in 2017 among Duke Energy Florida, the Florida Office of Public Counsel and other customer advocates, which replaces and supplants the 2013 Settlement

~~ACE~~2021 Settlement			~~Affordable Clean~~Settlement Agreement in 2021 among Duke Energy Florida, the Florida Office of Public Counsel, the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PSC Phosphate and NUCOR Steel Florida, Inc.

ACP			Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion and Duke Energy ~~and Southern Company Gas~~

ACP pipeline			The approximately 600-mile canceled interstate natural gas pipeline

AFS			Available for Sale

AFUDC			Allowance for funds used during construction

~~AFS~~			~~Available for Sale~~

AMI			Advanced Metering Infrastructure

AMT			Alternative Minimum Tax

AOCI			Accumulated Other Comprehensive Income (Loss)

ARO			Asset Retirement Obligation

~~ATM~~			~~At-the-market~~

Audit Committee			Audit Committee of the Board of Directors

~~Beckjord~~			~~Beckjord Generating Station~~

Belews Creek			Belews Creek Steam Station

Bison			Bison Insurance Company Limited

Board of Directors			Duke Energy Board of Directors

Brunswick			Brunswick Nuclear Plant

Cardinal			Cardinal Pipeline Company, LLC

Catawba			Catawba Nuclear Station

CC			Combined Cycle

CCR			Coal Combustion Residuals

CEP Rider			Duke Energy Ohio's Capital Expenditure Program Rider

Cinergy			Cinergy Corp. (collectively with its subsidiaries)

Citrus County CC			Citrus County Combined Cycle Facility

CO2			Carbon Dioxide

Coal Ash Act			North Carolina Coal Ash Management Act of 2014

the ~~Company~~company			Duke Energy Corporation and its subsidiaries

~~Constitution~~Commercial Renewables Disposal Groups			~~Constitution Pipeline Company, LLC~~Commercial Renewables business segment, excluding the offshore wind contract for Carolina Long Bay, marketed as two separate disposal groups, the utility-scale solar and wind group and the distributed generation group

COVID-19			Coronavirus Disease 2019

CPCN			Certificate of Public Convenience and Necessity

CRC			Cinergy Receivables Company LLC

Crystal River Unit 3			Crystal River Unit 3 Nuclear Plant

CT			Combustion Turbine

~~CWA~~			~~Clean Water Act~~

DATC			Duke-American Transmission Company, LLC

~~D.C. Circuit Court~~DECON			~~U.S. Court~~A method of ~~Appeals~~decommissioning in which structures, systems, and components that contain radioactive contamination are removed from a site and safely disposed at a commercially operated low-level waste disposal facility, or decontaminated to a level that permits the site to be released for ~~the District of Columbia~~unrestricted use shortly after it ceases operation


~~GLOSSARY OF TERMS~~


DEFR			Duke Energy Florida Receivables, LLC

Deloitte			Deloitte & Touche LLP, and the member firms of Deloitte Touche Tohmatsu and their respective affiliates

DEPR			Duke Energy Progress Receivables, LLC

DERF			Duke Energy Receivables Finance Company, LLC


GLOSSARY OF TERMS


DOE			U.S. Department of Energy

Dominion			Dominion Energy, Inc.

Dth			Dekatherms

Duke Energy			Duke Energy Corporation (collectively with its subsidiaries)

Duke Energy Carolinas			Duke Energy Carolinas, LLC

Duke Energy Florida			Duke Energy Florida, LLC

Duke Energy Indiana			Duke Energy Indiana, LLC

Duke Energy Kentucky			Duke Energy Kentucky, Inc.

Duke Energy Ohio			Duke Energy Ohio, Inc.

Duke Energy Progress			Duke Energy Progress, LLC

Duke Energy Registrants			Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont

East Bend			East Bend Generating Station

EDIT			Excess deferred income tax

EE			Energy efficiency

EPA			U.S. Environmental Protection Agency

~~EPC~~			~~Engineering, Procurement and Construction agreement~~

EPS			Earnings Per Share

ETR			Effective tax rate

EU&I			Electric Utilities and Infrastructure

Exchange Act			Securities Exchange Act of 1934

FASB			Financial Accounting Standards Board

FERC			Federal Energy Regulatory Commission

~~FES~~			~~FirstEnergy Solutions Corp.~~

Form S-3			Registration statement

FPSC			Florida Public Service Commission

FTR			Financial transmission rights

~~FV-NI~~			~~Fair value through net income~~

GAAP			Generally Accepted Accounting Principles in the United States

GAAP Reported Earnings			Net Income Available to Duke Energy Corporation common stockholders

GAAP Reported EPS			Basic EPS Available to Duke Energy Corporation common stockholders

GHG			Greenhouse Gas

GIC			GIC Private Limited, Singapore's sovereign wealth fund and an experienced investor in U.S. infrastructure

GU&I			Gas Utilities and Infrastructure

GWh			Gigawatt-hour

Hardy Storage			Hardy Storage Company, LLC

Harris			Shearon Harris Nuclear Plant

~~HLBV~~HB 951			~~Hypothetical Liquidation at Book Value~~The Energy Solutions for North Carolina, or House Bill 951, passed in October 2021

~~IGCC~~			~~Integrated Gasification Combined Cycle~~


~~GLOSSARY OF TERMS~~


IMPA			Indiana Municipal Power Agency

IMR			Integrity Management Rider

IRP			Integrated Resource Plans

IRS			Internal Revenue Service

ISO			Independent System Operator

ITC			Investment Tax Credit

IURC			Indiana Utility Regulatory Commission

Investment Trusts			Grantor trusts of Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana

KO Transmission			KO Transmission Company

KPSC			Kentucky Public Service Commission


~~LIBOR~~GLOSSARY OF TERMS			~~London Interbank Offered Rate~~


LLC			Limited Liability Company

McGuire			McGuire Nuclear Station

MGP			Manufactured gas plant

MGP Settlement			Stipulation and Recommendation filed jointly by Duke Energy Ohio the staff of the PUCO, the Office of the Ohio Consumers' Counsel and the Ohio Energy Group on August 31, 2021

MISO			Midcontinent Independent System Operator, Inc.

~~MMBtu~~			~~Million British Thermal Unit~~

MTBE			Methyl tertiary butyl ether

MW			Megawatt

MWh			Megawatt-hour

MYRP			Multiyear rate plans

NCDEQ			North Carolina Department of Environmental Quality

~~NCEMC~~			~~North Carolina Electric Membership Corporation~~

~~NCEMPA~~			~~North Carolina Eastern Municipal Power Agency~~

NCUC			North Carolina Utilities Commission

NDTF			Nuclear decommissioning trust funds

New Source Review			Clean Air Act program that requires industrial facilities to install modern pollution control equipment when they are built or when making a change that increases emissions significantly

NMC			National Methanol Company

NOL			Net operating loss

NPNS			Normal purchase/normal sale

NRC			U.S. Nuclear Regulatory Commission

NYSE			New York Stock Exchange

Oconee			Oconee Nuclear Station

OPEB			Other Post-Retirement Benefit Obligations

~~ORS~~			~~Office of Regulatory Staff~~

~~OTTI~~			~~Other-than-temporary impairment~~

OVEC			Ohio Valley Electric Corporation

the Parent			Duke Energy Corporation holding company

PBR			Performance-based regulation

PGA			Purchased Gas Adjustments

PHMSA			Pipeline and Hazardous Materials Safety Administration


~~GLOSSARY OF TERMS~~


Piedmont			Piedmont Natural Gas Company, Inc.

Pine Needle			Pine Needle LNG Company, LLC

Pioneer			Pioneer Transmission, LLC

PJM			PJM Interconnection, LLC

PMPA			Piedmont Municipal Power Agency

PISCC			Post-in-service carrying costs

PPA			Purchase Power Agreement

Progress Energy			Progress Energy, Inc.

PSCSC			Public Service Commission of South Carolina

PTC			Production Tax Credits

PUCO			Public Utilities Commission of Ohio

PURPA			Public Utility Regulatory Policies Act of 1978

QF			Qualifying Facility

REC			Renewable Energy Certificate

Relative TSR			TSR of Duke Energy stock relative to a predefined peer group

Robinson			Robinson Nuclear Plant

ROE			Return of equity

ROU			Right-of-use

RSU			Restricted Stock Unit


GLOSSARY OF TERMS


RTO			Regional Transmission Organization

Sabal Trail			Sabal Trail Transmission, LLC

SAFSTOR			A method of decommissioning in which a nuclear facility is placed and maintained in a condition that allows the facility to be safely stored and subsequently decontaminated to levels that permit release for unrestricted use

SEC			Securities and Exchange Commission

~~SELC~~			~~Southern Environmental Law Center~~

~~Spectra Capital~~			~~Spectra Energy Capital, LLC~~

S&P			Standard & Poor’s Rating Services

State utility commissions			NCUC, PSCSC, FPSC, PUCO, IURC, KPSC and TPUC (Collectively)

State electric utility commissions			NCUC, PSCSC, FPSC, PUCO, IURC and KPSC (Collectively)

State gas utility commissions			NCUC, PSCSC, PUCO, TPUC and KPSC (Collectively)

Subsidiary Registrants			Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont

Sutton			L.V. Sutton Combined Cycle Plant

the Tax Act			Tax Cuts and Jobs Act

TPUC			Tennessee Public Utility Commission

TSR			Total shareholder return

U.S.			United States

VIE			Variable Interest Entity

~~WACC~~			~~Weighted Average Cost of Capital~~

W.S. Lee CC			William States Lee Combined Cycle Facility

WVPA			Wabash Valley Power Association, Inc.


BUSINESS

ITEM 1. BUSINESS

DUKE ENERGY

General

Duke Energy was incorporated on May 3, 2005, and is an energy company headquartered in Charlotte, North Carolina, subject to regulation by the FERC and other regulatory agencies listed below. Duke Energy operates in the U.S. primarily through its direct and indirect subsidiaries. Certain Duke Energy subsidiaries are also Subsidiary Registrants, including Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of its separate Subsidiary Registrants, which along with Duke Energy, are collectively referred to as the Duke Energy Registrants.

The Duke Energy Registrants electronically file reports with the SEC, including Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to such reports.

The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at sec.gov. Additionally, information about the Duke Energy Registrants, including reports filed with the SEC, is available through Duke Energy’s website at duke-energy.com. Such reports are accessible at no charge and are made available as soon as reasonably practicable after such material is filed with or furnished to the SEC.

Business Segments

Duke Energy's segment structure includes ~~three~~two reportable business segments: Electric Utilities and Infrastructure (EU&I) and Gas Utilities and Infrastructure ~~and Commercial Renewables.~~(GU&I). The remainder of Duke Energy’s operations is presented as Other. Commercial Renewables is reported as discontinued operations and is no longer a reportable segment beginning in the fourth quarter of 2022. See Note 2 for further details. Duke Energy's chief operating decision-maker routinely reviews financial information about each of these business segments in deciding how to allocate resources and evaluate the performance of the business. For additional information on each of these business segments, including financial and geographic information, see Note 23 to the Consolidated Financial Statements, “Business Segments.” The following sections describe the business and operations of each of Duke Energy’s business segments, as well as Other.

ELECTRIC UTILITIES AND INFRASTRUCTURE

~~Electric Utilities and Infrastructure~~EU&I conducts operations primarily through the regulated public utilities of Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Indiana and Duke Energy Ohio. ~~Electric Utilities and Infrastructure~~EU&I provides retail electric service through the generation, transmission, distribution and sale of electricity to approximately ~~7.9~~8.2 million customers within the Southeast and Midwest regions of the U.S. The service territory is approximately ~~91,000~~92,000 square miles across six states with a total estimated population of ~~25 million people.~~26 million. The operations include electricity sold wholesale to municipalities, electric cooperative utilities and other load-serving entities. ~~Electric Utilities and Infrastructure~~

During 2021, Duke Energy executed an agreement providing for an investment by an affiliate of GIC in Duke Energy Indiana in exchange for a 19.9% minority interest issued by Duke Energy Indiana Holdco, LLC, the holding company for Duke Energy Indiana. The transaction was completed following two closings. Additionally, in November 2022, Duke Energy committed to a plan to sell the Commercial Renewables business segment, excluding the offshore wind contract for Carolina Long Bay, which was moved to EU&I. See Note 2 to the Consolidated Financial Statements, “Dispositions," for additional information.

EU&I is also a joint owner in certain electric transmission projects. ~~Electric Utilities and Infrastructure~~EU&I has a 50% ownership interest in DATC, a partnership with American Transmission Company, formed to design, build and operate transmission infrastructure. DATC owns 72% of the transmission service rights to Path 15, an 84-mile transmission line in central California. ~~Electric Utilities and Infrastructure~~EU&I also has a 50% ownership interest in Pioneer, which builds, owns and operates electric transmission facilities in North America. The following map shows the service territory for ~~Electric Utilities and Infrastructure~~EU&I as of December 31, ~~2020.~~2022.


BUSINESS

The electric operations and investments in projects are subject to the rules and regulations of the FERC, the NRC, the NCUC, the PSCSC, the FPSC, the IURC, the PUCO and the KPSC.

The following table represents the distribution of GWh billed sales by customer class for the year ended December 31, ~~2020.~~2022.


		Duke		Duke		Duke		Duke		Duke			Duke		Duke		Duke		Duke		Duke
		Energy		Energy		Energy		Energy		Energy			Energy		Energy		Energy		Energy		Energy
		Carolinas		Progress		Florida		Ohio		Indiana			Carolinas		Progress		Florida		Ohio		Indiana
Residential	Residential	33	%	27	%	51	%	38	%	30	%	Residential	33	%	26	%	47	%	38	%	30	%
General service	General service	33	%	22	%	35	%	37	%	25	%	General service	33	%	22	%	34	%	38	%	27	%
Industrial	Industrial	23	%	16	%	7	%	23	%	31	%	Industrial	23	%	16	%	8	%	22	%	28	%
Total retail sales	Total retail sales	89	%	65	%	93	%	98	%	86	%	Total retail sales	89	%	64	%	89	%	98	%	85	%
Wholesale and other sales	Wholesale and other sales	11	%	35	%	7	%	2	%	14	%	Wholesale and other sales	11	%	36	%	11	%	2	%	15	%
Total sales	Total sales	100	%	100	%	100	%	100	%	100	%	Total sales	100	%	100	%	100	%	100	%	100	%

The number of residential and general service customers within the ~~Electric Utilities and Infrastructure~~EU&I service territory is expected to increase over time. Sales growth is expected within the service territory but continues to be ~~influenced~~impacted by adoption of energy efficiencies and self-generation. ~~Residential~~Migration into EU&I’s service territories and continued remote work contributed to higher residential sales ~~increased~~volumes in ~~2020 compared~~2022 while higher data center usage contributed to ~~2019 due to customer~~ growth ~~and the stay-at-home orders as a result of the COVID-19 pandemic. Meanwhile,~~in commercial sales ~~for general service and industrial customers decreased in 2020 due to the impacts of the COVID-19 pandemic. These trends in residential, general service and~~volumes. This was partially offset by lower industrial sales ~~may continue~~volumes impacted by certain automotive customers experiencing supply chain constraints along with reduced volumes in the ~~short term but are not expected~~steel sector. The impact on customer's usage from these factors and other potential economic dynamics continues to be ~~permanent. It~~monitored. Over the longer time frame, it is still expected that the continued adoption of more efficient housing and appliances will have a negative impact on average usage per residential customer over time.

Seasonality and the Impact of Weather


~~BUSINESS~~

The estimated impact of weather on earnings is based on the temperature variances from a normal condition and customers’ historic usage patterns. The methodology used to estimate the impact of weather does not consider all variables that may impact customer response to weather conditions such as humidity in the summer or wind chill in the winter. The precision of this estimate may also be impacted by applying long-term weather trends to shorter-term periods.


BUSINESS

Heating degree days measure the variation in weather based on the extent the average daily temperature falls below a base temperature. Cooling degree days measure the variation in weather based on the extent the average daily temperature rises above the base temperature. Each degree of temperature below the base temperature counts as one heating degree day and each degree of temperature above the base temperature counts as one cooling degree day.

Competition

Retail

~~Electric Utilities and Infrastructure’s~~EU&I’s businesses operate as the sole supplier of electricity within their service territories, with the exception of Ohio, which has a competitive electricity supply market for generation service. ~~Electric Utilities and Infrastructure~~EU&I owns and operates facilities necessary to generate, transmit, distribute and sell electricity. Services are priced by state commission-approved rates designed to include the costs of providing these services and a reasonable return on invested capital. This regulatory policy is intended to provide safe and reliable electricity at fair prices.

In Ohio, ~~Electric Utilities and Infrastructure~~EU&I conducts competitive auctions for electricity supply. The cost of energy purchased through these auctions is recovered from retail customers. ~~Electric Utilities and Infrastructure~~EU&I earns retail margin in Ohio on the transmission and distribution of electricity, but not on the cost of the underlying energy.

Competition in the regulated electric distribution business is primarily from the development and deployment of alternative energy sources including on-site generation from industrial customers and distributed generation, such as private solar, at residential, general service and/or industrial customer sites.

Wholesale

Duke Energy competes with other utilities and merchant generators for bulk power sales, sales to municipalities and cooperatives and wholesale transactions under primarily cost-based contracts approved by FERC. The principal factors in competing for these sales are availability of capacity and power, reliability of service and price. Prices are influenced primarily by market conditions and fuel costs.

Increased competition in the wholesale electric utility industry and the availability of transmission access could affect ~~Electric Utilities and Infrastructure’s~~EU&I’s load forecasts, plans for power supply and wholesale energy sales and related revenues. Wholesale energy sales will be impacted by the extent to which additional generation is available to sell to the wholesale market and the ability of ~~Electric Utilities and Infrastructure~~EU&I to attract new customers and to retain existing customers.

Energy Capacity and Resources

~~Electric Utilities and Infrastructure~~EU&I owns approximately ~~50,807~~49,870 MW of generation capacity. For additional information on owned generation facilities, see Item 2, “Properties.”

Energy and capacity are also supplied through contracts with other generators and purchased on the open market. Factors that could cause ~~Electric Utilities and Infrastructure~~EU&I to purchase power for its customers may include, but are not limited to, generating plant outages, extreme weather conditions, generation reliability, demand growth and price. ~~Electric Utilities and Infrastructure~~EU&I has interconnections and arrangements with its neighboring utilities to facilitate planning, emergency assistance, sale and purchase of capacity and energy and reliability of power supply.

~~Electric Utilities and Infrastructure’s~~EU&I’s generation portfolio is a balanced mix of energy resources having different operating characteristics and fuel sources designed to provide energy at the lowest possible cost to meet its obligation to serve retail customers. All options, including owned generation resources and purchased power opportunities, are continually evaluated on a real-time basis to select and dispatch the lowest-cost resources available to meet system load requirements.


~~BUSINESS~~

Sources of Electricity

~~Electric Utilities and Infrastructure~~EU&I relies principally on natural gas, nuclear fuel and coal for its generation of electricity. The following table lists sources of electricity and fuel costs for the three years ended December 31, ~~2020.~~2022.


								Cost of Delivered Fuel per Net										Cost of Delivered Fuel per Net
		Generation by Source						Kilowatt-hour Generated (Cents)				Generation by Source						Kilowatt-hour Generated (Cents)
		2020		2019		2018		2020	2019	2018		2022		2021		2020		2022	2021	2020
Natural gas and oil(a)		31.3	%	29.2	%	26.2	%	2.55	2.96	3.57
Natural gas and fuel oil(a)											Natural gas and fuel oil(a)	34.2	%	31.8	%	31.3	%	6.35	3.89	2.55
Nuclear(a)	Nuclear(a)	29.6	%	28.6	%	26.0	%	0.58	0.60	0.50	Nuclear(a)	26.6	%	29.8	%	29.6	%	0.58	0.58	0.58
Coal(a)	Coal(a)	18.1	%	21.6	%	24.4	%	2.99	3.08	2.82	Coal(a)	13.5	%	18.2	%	18.1	%	3.43	2.84	2.99
All fuels (cost-based on weighted average)(a)		79.0	%	79.4	%	76.6	%	1.91	2.14	2.29
All fuels (cost based on weighted average)(a)											All fuels (cost based on weighted average)(a)	74.3	%	79.8	%	79.0	%	3.75	2.42	1.91
Hydroelectric and solar(b)	Hydroelectric and solar(b)	1.9	%	1.2	%	1.3	%				Hydroelectric and solar(b)	1.5	%	1.5	%	1.9	%
Total generation	Total generation	80.9	%	80.6	%	77.9	%				Total generation	75.8	%	81.3	%	80.9	%
Purchased power and net interchange	Purchased power and net interchange	19.1	%	19.4	%	22.1	%				Purchased power and net interchange	24.2	%	18.7	%	19.1	%
Total sources of energy	Total sources of energy	100.0	%	100.0	%	100.0	%				Total sources of energy	100.0	%	100.0	%	100.0	%

(a) Statistics related to all fuels reflect ~~Electric Utilities and Infrastructure's~~EU&I's public utility ownership interest in jointly owned generation facilities.

(b) Generating figures are net of output required to replenish ~~pumped storage~~pumped-storage facilities during off-peak periods.

Natural Gas and Fuel Oil

Natural gas and fuel oil supply, transportation and storage for ~~Electric Utilities and Infrastructure’s~~EU&I’s generation fleet is purchased under standard industry agreements from various suppliers, including Piedmont. Natural gas supply agreements typically provide for a percentage of forecasted burns being procured over time, with varied expiration dates. Electric Utilities and Infrastructure believes it has access to an adequate supply of natural gas and fuel oil for the reasonably foreseeable future.

~~Electric Utilities and Infrastructure~~


BUSINESS

EU&I has certain dual-fuel generating facilities that can operate utilizing both natural gas and fuel oil. The cost of ~~Electric Utilities and Infrastructure’s~~EU&I’s natural gas and fuel oil is fixed price or determined by published market prices as reported in certain industry publications, plus any transportation and freight costs. Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana use derivative instruments to manage a portion of their exposure to price fluctuations for natural gas. ~~For~~ Duke Energy Florida ~~there is currently an~~has temporarily agreed to ~~moratorium with the FPSC on future hedging of~~not hedge natural gas ~~prices.~~prices, but retains an ability to propose hedging again in annual fuel docket filings.

~~Electric Utilities and Infrastructure~~EU&I has firm interstate and intrastate natural gas transportation agreements and storage agreements in place to support generation needed for load requirements. ~~Electric Utilities and Infrastructure~~EU&I may purchase additional shorter-term natural gas transportation and utilize natural gas interruptible transportation agreements to support generation needed for load requirements. The ~~Electric Utilities and Infrastructure~~EU&I natural gas plants are served by various supply zones and multiple pipelines.

Nuclear

The industrial processes for producing nuclear generating fuel generally involve the mining and milling of uranium ore to produce uranium concentrates and services to convert, enrich and fabricate fuel assemblies.

~~Electric Utilities and Infrastructure~~EU&I has contracted for uranium materials and services to fuel its nuclear reactors. Uranium concentrates, conversion services and enrichment services are primarily met through a diversified portfolio of long-term supply contracts. The contracts are diversified by supplier, country of origin and pricing. ~~Electric Utilities and Infrastructure~~EU&I staggers its contracting so that its portfolio of long-term contracts covers the majority of its fuel requirements in the near term and decreasing portions of its fuel requirements over time thereafter. Near-term requirements not met by long-term supply contracts have been and are expected to be fulfilled with spot market purchases. Due to the technical complexities of changing suppliers of fuel fabrication services, ~~Electric Utilities and Infrastructure~~EU&I generally source these services to a single domestic supplier on a plant-by-plant basis using multiyear contracts.

~~Electric Utilities and Infrastructure~~EU&I has entered into fuel contracts that cover 100% of its uranium concentrates ~~and~~through at least 2024, 100% of its conversion services through at least ~~2021,~~2026, 100% of its enrichment services through at least ~~2022,~~2026, and 100% of its fabrication services requirements for these plants through at least 2027. For future requirements not already covered under long-term contracts, ~~Electric Utilities and Infrastructure~~EU&I believes it will be able to renew contracts as they expire or enter into similar contractual arrangements with other suppliers of nuclear fuel materials and services.

Coal

~~Electric Utilities and Infrastructure~~EU&I meets its coal demand through a portfolio of long-term purchase contracts and short-term spot market purchase agreements. Large amounts of coal are purchased under long-term contracts with mining operators who mine both underground and at the surface. ~~Electric Utilities and Infrastructure~~EU&I uses spot market purchases to meet coal requirements not met by long-term contracts. Expiration dates for its long-term contracts, which may have various price adjustment provisions and market reopeners, range from ~~2021~~2023 to ~~2023~~2027 for Duke Energy Carolinas and Duke Energy ~~Progress and 2021~~Indiana, 2023 to ~~2025~~2024 for Duke Energy ~~Indiana. Expiration dates~~Progress and 2023 to 2025 for Duke Energy Florida and Duke Energy ~~Ohio are in 2021. Electric Utilities and Infrastructure~~Ohio. EU&I expects to renew these contracts or enter into similar contracts with other suppliers as existing contracts expire, though prices will fluctuate over time as coal markets change. ~~Electric Utilities and Infrastructure~~EU&I has an adequate supply of coal under contract to meet its risk management guidelines regarding projected future consumption. As a result of volatility in natural gas prices and the associated impacts on coal-fired dispatch within the generation fleet, coal inventories will continue to fluctuate. ~~Electric Utilities and Infrastructure~~EU&I continues to actively manage its portfolio and has worked with suppliers to obtain increased flexibility in its coal contracts.


~~BUSINESS~~

Coal purchased for the Carolinas is primarily produced from mines in Central Appalachia, Northern Appalachia and the Illinois Basin. Coal purchased for Florida is primarily produced from mines in the Illinois Basin. Coal purchased for Kentucky is produced from mines along the Ohio River in Illinois, Ohio, West Virginia and Pennsylvania. Coal purchased for Indiana is primarily produced in Indiana and Illinois. There are adequate domestic coal reserves to serve ~~Electric Utilities and Infrastructure's~~EU&I's coal generation needs through end of life. The current average sulfur content of coal purchased by Electric Utilities and Infrastructure is between ~~1.5%~~0.5% and 2%3.5% for Duke Energy Carolinas and Duke Energy Progress, and between ~~2.5%~~0.5% and 3%4% for Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana. ~~Electric Utilities and Infrastructure's~~EU&I's environmental controls, in combination with the use of sulfur dioxide (SO2) emission allowances, enable ~~Electric Utilities and Infrastructure~~EU&I to satisfy current SO2 emission limitations for its existing facilities.

Purchased Power

~~Electric Utilities and Infrastructure~~EU&I purchases a portion of its capacity and system requirements through purchase obligations, leases and purchase capacity contracts. ~~Electric Utilities and Infrastructure~~EU&I believes it can obtain adequate purchased power capacity to meet future system load needs. However, during periods of high demand, the price and availability of purchased power may be significantly affected.

The following table summarizes purchased power for the previous three years:


		2020	2019	2018		2022	2021	2020
Purchase obligations and leases (in millions of MWh)(a)	Purchase obligations and leases (in millions of MWh)(a)	32.7	34.8	21.3	Purchase obligations and leases (in millions of MWh)(a)	41.2	36.0	32.7
Purchase capacity under contract (in MW)(b)	Purchase capacity under contract (in MW)(b)	4,716	4,238	4,025	Purchase capacity under contract (in MW)(b)	4,028	4,259	4,716

(a) Represents approximately ~~13%~~16% of total system requirements for ~~2020,~~2022, 14% for ~~2019~~2021 and 7%13% for ~~2018.~~2020.

(b) For ~~2020, 2019~~2022, 2021 and ~~2018,~~2020, these agreements include approximately 412 MW of firm capacity under contract by Duke Energy Florida with QFs.

Inventory

~~Electric Utilities and Infrastructure~~EU&I must maintain an adequate stock of fuel and materials and supplies in order to ensure continuous operation of generating facilities and reliable delivery to customers. As of December 31, ~~2020,~~2022, the inventory balance for ~~Electric Utilities and Infrastructure~~EU&I was approximately $3$3.4 billion. For additional information on inventory, see Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies.”


BUSINESS

Ash Basin Management

During 2015, EPA issued regulations related to the management of CCR from power plants. These regulations classify CCR as nonhazardous waste under the Resource Conservation and Recovery Act (RCRA) and apply to electric generating sites with new and existing landfills and new and existing surface impoundments and ~~establishes~~establish requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures for the disposal and management of CCR. In addition to the federal regulations, CCR landfills and surface impoundments (ash basins or impoundments) will continue to be regulated by existing state laws, regulations and permits, such as the North Carolina Coal Ash Management Act ~~in North Carolina.~~of 2014 (Coal Ash Act).

~~Electric Utilities and Infrastructure~~EU&I has and will periodically submit to applicable authorities required site-specific coal ash impoundment remediation or closure plans. Closure plans must be approved and all associated permits ~~will receive necessary approvals~~issued before any work can begin. Closure activities have begun in all of Duke Energy's jurisdictions. Excavation began in 2015 at the four sites specified as high priority by the NC Coal Ash ~~Management~~ Act and at the W.S. Lee Steam Station site in South Carolina in connection with other legal requirements. Excavation at these sites involves movement of CCR materials to ~~off-site locations for use as structural fill, to~~ appropriate engineered off-site or on-site lined landfills or for reuse in an approved beneficial application. Duke Energy has completed excavation of coal ash at ~~three of~~ the four high-priority NCNorth Carolina sites. At other sites where CCR management is required, planning and closure methods have been studied and factored into the estimated retirement and management costs, and closure activities have commenced.

The EPA CCR rule and the NC Coal Ash ~~Management~~ Act leave the decision on cost recovery determinations related to closure of coal ash surface impoundments to the normal ratemaking processes before utility regulatory commissions. Duke Energy's electric utilities have included compliance costs associated with federal and state requirements in their respective rate proceedings. ~~In January 2021, Duke Energy Carolinas and Duke Energy Progress reached a settlement agreement on recovery of coal ash costs, which is subject to review and approval of the NCUC.~~ During 2017, Duke Energy Carolinas' and Duke Energy Progress’ wholesale contracts were amended to include the recovery of expenditures related to AROs for the closure of coal ash basins. The amended contracts have retail disallowance parity or provisions limiting challenges to CCR cost recovery actions at FERC. FERC approved the amended wholesale rate schedules in 2017. For additional information on the ash basins and recovery, see Item 7, "Other Matters" and Notes 3, 4, 5 and 910 to the Consolidated Financial Statements, "Regulatory Matters," "Commitments and Contingencies" and "Asset Retirement Obligations," respectively.

Nuclear Matters

Duke Energy owns, wholly or partially, 11 operating nuclear reactors located at six operating stations. The Crystal River Unit 3 permanently ceased operation in February 2013. Nuclear insurance includes: nuclear liability coverage; property damage coverage; nuclear accident decontamination and premature decommissioning coverage; and accidental outage coverage for losses in the event of a major accidental outage. Joint owners reimburse Duke Energy for certain expenses associated with nuclear insurance in accordance with joint owner agreements. The Price-Anderson Act requires plant owners to provide for public nuclear liability claims resulting from nuclear incidents to the maximum total financial protection liability, which is approximately ~~$13.8~~$13.7 billion. For additional information on nuclear insurance, see Note 45 to the Consolidated Financial Statements, “Commitments and Contingencies.”


~~BUSINESS~~

Duke Energy has a significant future financial commitment to dispose of spent nuclear fuel and decommission and decontaminate each plant safely. The NCUC, PSCSC and FPSC require Duke Energy to update their cost estimates for decommissioning their nuclear plants every five years.

The following table summarizes the fair value of NDTF investments and the most recent site-specific nuclear decommissioning cost studies. Decommissioning costs are stated in 2018 or 2019 dollars, depending on the year of the cost study, and include costs to decommission plant components not subject to radioactive contamination.


		NDTF(a)				Decommissioning				NDTF(a)				Decommissioning
(in millions)	(in millions)	December 31, 2020		December 31, 2019		Costs(a)		Year of Cost Study	(in millions)	December 31, 2022		December 31, 2021		Costs(a)		Year of Cost Study
Duke Energy	Duke Energy	$	9,114	$	8,140	$	9,105	2018 or 2019	Duke Energy	$	8,637	$	10,401	$	9,105	2018 or 2019
Duke Energy Carolinas(b)(c)	Duke Energy Carolinas(b)(c)	4,977		4,359		4,365		2018	Duke Energy Carolinas(b)(c)	4,783		5,759		4,365		2018
Duke Energy Progress(d)	Duke Energy Progress(d)	3,500		3,047		4,181		2019	Duke Energy Progress(d)	3,430		4,089		4,181		2019
Duke Energy Florida(e)	Duke Energy Florida(e)	637		734		559		N/A	Duke Energy Florida(e)	424		553		559		N/A

(a) Amounts for Progress Energy equal the sum of Duke Energy Progress and Duke Energy Florida.

(b) Decommissioning cost for Duke Energy Carolinas reflects its ownership interest in jointly owned reactors. Other joint owners are responsible for decommissioning costs related to their interest in the reactors.

(c) Duke Energy Carolinas' site-specific nuclear decommissioning cost study completed in 2018 was filed with the NCUC and PSCSC in 2019. A new funding study was also completed and filed with the NCUC and PSCSC in 2019.

(d) Duke Energy Progress' site-specific nuclear decommissioning cost study completed in 2019 was filed with the NCUC and PSCSC in March 2020. Duke Energy Progress also completed a funding study, which was filed with the NCUC and PSCSC in July 2020. In October 2021, Duke Energy Progress filed the 2019 nuclear decommissioning cost study with the FERC, as well as a revised date schedule for decommissioning expense to be collected from wholesale customers. The FERC accepted the filing, as filed on December 9, 2021.

(e) During 2019, Duke Energy Florida reached an agreement to transfer decommissioning work for Crystal River Unit 3 to a third party and decommissioning costs are based on the agreement with this third party rather than a cost study. Regulatory approval was received from the NRC and the FPSC in April 2020 and August 2020, respectively. See Note 34 to the Consolidated Financial Statements, "Regulatory Matters,” for more information.

The NCUC, PSCSC, FPSC and FERC have allowed ~~Electric Utilities and Infrastructure~~EU&I to recover estimated decommissioning costs through retail and wholesale rates over the expected remaining service periods of their nuclear stations. ~~Electric Utilities and Infrastructure~~EU&I believes the decommissioning costs being recovered through rates, when coupled with the existing fund balances and expected fund earnings, will be sufficient to provide for the cost of future decommissioning. For additional information, see Note 910 to the Consolidated Financial Statements, “Asset Retirement Obligations.”


BUSINESS

The Nuclear Waste Policy Act of 1982 (as amended) provides the framework for development by the federal government of interim storage and permanent disposal facilities for high-level radioactive waste materials. The government has not yet developed a storage facility or disposal capacity, so ~~Electric Utilities and Infrastructure~~EU&I will continue to store spent fuel on its reactor sites.

Under federal law, the DOE is responsible for the selection and construction of a facility for the permanent disposal of spent nuclear fuel and high-level radioactive waste. The DOE terminated the project to license and develop a geologic repository at Yucca Mountain, Nevada in 2010, and is currently taking no action to fulfill its responsibilities to dispose of spent fuel.

Until the DOE begins to accept the spent nuclear fuel, Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida will continue to safely manage their spent nuclear fuel. Under current regulatory guidelines, Harris has sufficient storage capacity in its spent fuel pools through the expiration of its renewed operating license. With certain modifications and approvals by the NRC to expand the on-site dry cask storage facilities, spent nuclear fuel dry storage facilities will be sufficient to provide storage space of spent fuel through the expiration of the operating licenses, including any license renewals, for Brunswick, Catawba, McGuire, Oconee and Robinson. Crystal River Unit 3 ceased operation in 2013 and was placed in a SAFSTOR condition in January 2018. As of January 2018, all spent fuel at Crystal River Unit 3 has been transferred from the spent fuel pool to dry storage at an on-site independent spent fuel storage installation. During 2020, the NRC and the FPSC approved an agreement to transfer ownership of spent fuel for Crystal River Unit 3 to a third party. See Note 34 to the Consolidated Financial Statements, "Regulatory Matters,” for more information.

The nuclear power industry faces uncertainties with respect to the cost and long-term availability of disposal sites for spent nuclear fuel and other radioactive waste, compliance with changing regulatory requirements, capital outlays for modifications and new plant construction.


~~BUSINESS~~

~~Electric Utilities and Infrastructure~~EU&I is subject to the jurisdiction of the NRC for the design, construction and operation of its nuclear generating facilities. The following table includes the current year of expiration of nuclear operating licenses for nuclear stations in operation. ~~During 2019,~~In June 2021, Duke Energy Carolinas filed a subsequent license renewal application for the Oconee Nuclear Station (ONS) with the U.S. Nuclear Regulatory Commission to renew ONS's operating license for an additional 20 years. Duke Energy has announced its intention to seek 20-year operating license renewals for each of the reactors it operates in Duke Energy Carolinas and Duke Energy Progress. See Note 4 to the Consolidated Financial Statements, "Regulatory Matters,” for additional information.


Unit			Year of Expiration
Duke Energy Carolinas
Catawba Units 1 and 2			2043
McGuire Unit 1			2041
McGuire Unit 2			2043
Oconee Units 1 and 2			2033
Oconee Unit 3			2034
Duke Energy Progress
Brunswick Unit 1			2036
Brunswick Unit 2			2034
Harris			2046
Robinson			2030

The NRC has acknowledged permanent cessation of operation and permanent removal of fuel from the reactor vessel at Crystal River Unit 3. Therefore, the license no longer authorizes operation of the reactor. For additional information on nuclear decommissioning activity, see Notes 34 and 910 to the Consolidated Financial Statements, "Regulatory Matters" and "Asset Retirement Obligations," respectively.

Regulation

State

The state electric utility commissions approve rates for Duke Energy's retail electric service within their respective states. The state electric utility commissions, to varying degrees, have authority over the construction and operation of ~~Electric Utilities and Infrastructure’s~~EU&I’s generating facilities. CPCNs issued by the state electric utility commissions, as applicable, authorize ~~Electric Utilities and Infrastructure~~EU&I to construct and operate its electric facilities and to sell electricity to retail and wholesale customers. Prior approval from the relevant state electric utility commission is required for the entities within ~~Electric Utilities and Infrastructure~~EU&I to issue securities. The underlying concept of utility ratemaking is to set rates at a level that allows the utility to collect revenues equal to its cost of providing service plus earn a reasonable rate of return on its invested capital, including equity.

In addition to rates approved in base rate cases, each of the state electric utility commissions allow recovery of certain costs through various ~~cost-recovery~~cost recovery clauses to the extent the respective commission determines in periodic hearings that such costs, including any past over or under-recovered costs, are prudent.

Fuel, fuel-related costs and certain purchased power costs are eligible for recovery by ~~Electric Utilities and Infrastructure. Electric Utilities and Infrastructure~~EU&I. EU&I uses coal, hydroelectric, natural gas, oil, renewable generation and nuclear fuel to generate electricity, thereby maintaining a diverse fuel mix that helps mitigate the impact of cost increases in any one fuel. Due to the associated regulatory treatment and the method allowed for recovery, changes in fuel costs from year to year have no material impact on operating results of ~~Electric Utilities and Infrastructure,~~EU&I, unless a commission finds a portion of such costs to have been imprudent. However, delays between the expenditure for fuel costs and recovery from customers can adversely impact the timing of cash flows of ~~Electric Utilities and Infrastructure.~~EU&I.

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The table below reflects significant electric rate case applications approved and effective in the past three years orand applications currently pending approval.

Regulatory
Body
Annual
Increase
(Decrease)
(in millions)
Return
on
Equity
Equity
Component of
Capital Structure
Effective
Date
Approved Rate Cases:
Duke Energy Indiana 2019 Indiana Rate Case(a)
IURC $ 146 9.7 % 53 % 7/30/2020
Duke Energy Kentucky 2019 Kentucky Electric Rate Case KPSC 24 9.25 % 48.23 % 5/1/2020
Duke Energy Carolinas 2018 South Carolina Rate Case PSCSC 45 9.5 % 53 % 6/1/2019
Duke Energy Progress 2018 South Carolina Rate Case PSCSC 29 9.5 % 53 % 6/1/2019
Duke Energy Ohio 2017 Ohio Electric Rate Case PUCO (19) 9.84 % 50.75 % 1/2/2019
Duke Energy Carolinas 2017 North Carolina Rate Case NCUC (73) 9.9 % 52 % 8/1/2018
Duke Energy Kentucky 2017 Kentucky Electric Rate Case KPSC 8 9.725 % 49 % 5/1/2018
Duke Energy Progress 2017 North Carolina Rate Case NCUC 151 9.9 % 52 % 3/16/2018
Pending Rate Cases:
Duke Energy Carolinas 2019 North Carolina Rate Case(b)
NCUC $ 291 10.3 % 53 % 8/1/2020
Duke Energy Progress 2019 North Carolina Rate Case(b)
NCUC 464 10.3 % 53 % 9/1/2020


	Regulatory Body	Annual Increase (Decrease) (in millions)		Return on Equity		Equity Component of Capital Structure		Effective Date
Approved Rate Cases:
Duke Energy Progress 2022 South Carolina Rate Case	PSCSC	$	52	9.6	%	52.43	%	4/1/2023
Duke Energy Ohio 2021 Ohio Electric Rate Case	PUCO	23		9.5	%	50.5	%	1/3/2023
Duke Energy Progress 2019 North Carolina Rate Case	NCUC	178		9.6	%	52	%	6/1/2021
Duke Energy Carolinas 2019 North Carolina Rate Case	NCUC	33		9.6	%	52	%	6/1/2021
Duke Energy Indiana 2019 Indiana Rate Case(a)	IURC	146		9.7	%	54	%	7/30/2020
Duke Energy Kentucky 2019 Kentucky Electric Rate Case	KPSC	24		9.25	%	48.23	%	5/1/2020

Pending Rate Cases:

Duke Energy Carolinas 2023 North Carolina Rate Case(b)	NCUC	$	823	10.4	%	53	%	1/1/2024
Duke Energy Kentucky 2022 Kentucky Electric Rate Case	KPSC	75		10.35	%	52.5	%	7/15/2023
Duke Energy Progress 2022 North Carolina Rate Case(c)	NCUC	615		10.4	%	53	%	10/1/2023

(a) Step 1 rates are approximately 75% of the total and became effective July 30, 2020. Step 2 rates are approximately 25% of the total rate case ~~increase~~increase. They were approved on July 28, 2021, and ~~will be~~ implemented in ~~mid-2021. Amounts exclude the Utility Receipt Tax amounts.~~August 2021.

(b) ~~Partial Settlements were reached on July 31, 2020, which~~Year 1 rates are ~~subject to approval by the NCUC. Components~~approximately 61% of the ~~partial settlements included a return~~total. Year 2 rates are approximately 21% of ~~equity~~the total rate case increase. Year 3 rates are approximately 18% of ~~9.6% and a capital structure~~the total rate increase.

(c) Year 1 rates are approximately 53% of ~~52% equity. These temporary~~the total. Year 2 rates ~~went into effect August 24, 2020,~~are approximately 25% of the total rate case increase. Year 3 rates are approximately 22% of the total rate increase. Implementation of interim rates is planned for ~~Duke Energy Carolinas and September~~June 1, ~~2020, for Duke Energy Progress. A settlement was also reached, subject to approval by the NCUC, on coal ash cost recovery in January of 2021.~~

2023.

Additionally, in January 2021, Duke Energy Florida filed a settlement agreement with the FPSC that ~~if approved,~~ will allow annual increases to its base rates, at an agreed upon return on equity (“ROE”) ~~band~~ and includes a base rate stay-out provision through 2024, among other provisions. The FPSC approved the 2021 Settlement on May 4, 2021, issuing an order on June 4, 2021. Revised customer rates became effective January 1, 2022, with subsequent base rate increases effective January 1, 2023, and January 1, 2024. For more information on rate matters and other regulatory proceedings, see Note 34 to the Consolidated Financial Statements, “Regulatory Matters.”

Federal

The FERC approves ~~Electric Utilities and Infrastructure’s~~EU&I’s cost-based rates for electric sales to certain power and transmission wholesale customers. Regulations of FERC and the state electric utility commissions govern access to regulated electric and other data by nonregulated entities and services provided between regulated and nonregulated energy affiliates. These regulations affect the activities of nonregulated affiliates with ~~Electric Utilities and Infrastructure.~~EU&I.

RTOs

PJM and MISO are the ISOs and FERC-approved RTOs for the regions in which Duke Energy Ohio and Duke Energy Indiana operate. PJM and MISO operate energy, capacity and other markets, and control the day-to-day operations of bulk power systems through central dispatch.

Duke Energy Ohio is a member of PJM and Duke Energy Indiana is a member of MISO. Transmission owners in these RTOs have turned over control of their transmission facilities and their transmission systems are currently under the dispatch control of the RTOs. Transmission service is provided on a regionwide, open-access basis using the transmission facilities of the RTO members at rates based on the costs of transmission service.

Environmental

~~Electric Utilities and Infrastructure~~EU&I is subject to the jurisdiction of the EPA and state and local environmental agencies. For a discussion of environmental regulation, see “Environmental Matters” in this section. See the “Other Matters” section of Item 7 Management's Discussion and Analysis for a discussion about potential Global Climate Change legislation and other EPA regulations under development and the potential impacts such legislation and regulation could have on Duke Energy’s operations.

GAS UTILITIES AND INFRASTRUCTURE

~~Gas Utilities and Infrastructure~~GU&I conducts natural gas operations primarily through the regulated public utilities of Piedmont, Duke Energy Ohio and Duke Energy Kentucky. The natural gas operations are subject to the rules and regulations of the NCUC, PSCSC, PUCO, KPSC, TPUC, PHMSA and the FERC. ~~Gas Utilities and Infrastructure~~GU&I serves residential, commercial, industrial and power generation natural gas customers, including customers served by municipalities who are wholesale customers. ~~Gas Utilities and Infrastructure~~GU&I has over 1.6 million total customers, including 1.1 million customers located in North Carolina, South Carolina and Tennessee, and an additional ~~541,000~~550,000 customers located within southwestern Ohio and northern Kentucky. In the Carolinas, Ohio and Kentucky, the service areas are comprised of numerous cities, towns and communities. In Tennessee, the service area is the metropolitan area of Nashville. The following map shows the service territory and investments in operating pipelines for ~~Gas Utilities and Infrastructure~~GU&I as of December 31, ~~2020.~~2022.

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The number of residential, commercial and industrial customers within the ~~Gas Utilities and Infrastructure~~GU&I service territory is expected to increase over time. Average usage per residential customer is expected to remain flat or decline for the foreseeable future; however, decoupled rates in North Carolina and various rate design mechanisms in other jurisdictions partially mitigate the impact of the declining usage per customer on overall profitability.

~~Gas Utilities and Infrastructure~~GU&I also ~~owns, operates and~~ has investments in various pipeline transmission projects, renewable natural gas projects and natural gas storage facilities.

Natural Gas for Retail Distribution

~~Gas Utilities and Infrastructure~~GU&I is responsible for the distribution of natural gas to retail customers in its North Carolina, South Carolina, Tennessee, Ohio and Kentucky service territories. ~~Gas Utilities and Infrastructure’s~~GU&I’s natural gas procurement strategy is to contract primarily with major and independent producers and marketers for natural gas supply. It also purchases a diverse portfolio of transportation and storage service from interstate pipelines. This strategy allows ~~Gas Utilities and Infrastructure~~GU&I to assure reliable natural gas supply and transportation for its firm customers during peak winter conditions. When firm pipeline services or contracted natural gas supplies are temporarily not needed due to market demand fluctuations, ~~Gas Utilities and Infrastructure~~GU&I may release these services and supplies in the secondary market under FERC-approved capacity release provisions or make wholesale secondary market sales. In ~~2020,~~2022, firm supply purchase commitment agreements provided 100% of the natural gas supply for both Piedmont and Duke Energy Ohio. Approximately 90% of forecasted demand was under contract prior to the winter heating season, with firm daily spot purchases making up the balance.

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BUSINESS

Impact of Weather

~~Gas Utilities and Infrastructure~~GU&I revenues are generally protected from the impact of weather fluctuations due to the regulatory mechanisms that are available in most service territories. In North Carolina, margin decoupling provides protection from both weather and other usage variations like conservation for residential and ~~commercial customer classes.~~small and medium general service customers. Margin decoupling provides a set ~~revenue~~margin per customer independent of actual usage. In South Carolina, Tennessee and Kentucky, weather normalization adjusts revenues either up or down depending on how much warmer or colder than normal a given month has been. Weather normalization adjustments occur from November through March in South Carolina, from October through April in Tennessee and from November through April in Kentucky. Duke Energy Ohio collects most of its non-fuel revenue through a fixed monthly charge that is not impacted by usage fluctuations that result from weather changes or conservation.

Competition

~~Gas Utilities and Infrastructure’s~~GU&I’s businesses operate as the sole provider of natural gas service within their retail service territories. ~~Gas Utilities and Infrastructure~~GU&I owns and operates facilities necessary to transport and distribute natural gas. ~~Gas Utilities and Infrastructure~~GU&I earns retail margin on the transmission and distribution of natural gas and not on the cost of the underlying commodity. Services are priced by state commission-approved rates designed to include the costs of providing these services and a reasonable return on invested capital. This regulatory policy is intended to provide safe and reliable natural gas service at fair prices.

In residential, commercial and industrial customer markets, natural gas distribution operations compete with other companies that supply energy, primarily electric companies, propane and fuel oil dealers, renewable energy providers and coal companies in relation to sources of energy for electric power plants, as well as nuclear energy. A significant competitive factor is price. ~~Gas Utilities and Infrastructure's~~GU&I's primary product competition is with electricity for heating, water heating and cooking. Increases in the price of natural gas or decreases in the price of other energy sources could negatively impact competitive position by decreasing the price benefits of natural gas to the consumer. In the case of industrial customers, such as manufacturing plants, adverse economic or market conditions, including higher natural gas costs, could cause these customers to suspend business operations or to use alternative sources of energy in favor of energy sources with lower per-unit costs.

Higher natural gas costs or decreases in the price of other energy sources may allow competition from alternative energy sources for applications that have traditionally used natural gas, encouraging some customers to move away from natural gas-fired equipment to equipment fueled by other energy sources. Competition between natural gas and other forms of energy is also based on efficiency, performance, reliability, safety and other non-price factors. Technological improvements in other energy sources and events that impair the public perception of the non-price attributes of natural gas could erode our competitive advantage. These factors in turn could decrease the demand for natural gas, impair our ability to attract new customers and cause existing customers to switch to other forms of energy or to bypass our systems in favor of alternative competitive sources. This could result in slow or no customer growth and could cause customers to reduce or cease using our product, thereby reducing our ability to make capital expenditures and otherwise grow our business, adversely affecting our earnings.

~~Pipeline and Storage~~Natural Gas Investments

Duke Energy, through its ~~Gas Utilities and Infrastructure~~GU&I segment, has a 7.5% equity ownership interest in Sabal Trail. Sabal Trail is a joint venture that owns the Sabal Trail Natural Gas Pipeline (Sabal Trail pipeline) to transport natural gas to Florida, regulated by FERC. The Sabal Trail Phase I mainline was placed into service in July 2017 and traverses Alabama, Georgia and Florida. The remaining lateral line to the Duke Energy Florida's Citrus County CC was placed into service in March 2018. Phase II of Sabal Trail went into service in May 2020, adding approximately 200,000 Dth of capacity to the Sabal Trail pipeline.

~~Gas Utilities and Infrastructure~~Duke Energy, through its GU&I segment, has a 47% equity ownership interest in ACP, which planned to build the ACP pipeline, an approximately 600-mile interstate natural gas pipeline. The ACP pipeline was intended to transport diverse natural gas supplies into southeastern markets and would be regulated by FERC. Dominion Energy owns 53% of ACP and was contracted to construct and operate the ACP pipeline upon completion. On July 5, 2020, Dominion announced a sale of substantially all of its natural gas transmission and storage segment assets, which were critical to the ACP pipeline. Further, permitting delays and legal challenges had materially affected the timing and cost of the pipeline. As a result, Duke Energy determined that they would no longer invest in the construction of the ACP pipeline. ~~For the year ended December 31, 2020, Duke Energy recorded $2.1 billion of costs related to ACP.~~

Gas Utilities and Infrastructure has a 24% equity ownership interest in Constitution, an interstate pipeline development company formed to develop, construct, own and operate a 124-mile natural gas pipeline and related facilities, regulated by FERC. Constitution was slated to transport natural gas supplies from the Marcellus supply region in northern Pennsylvania to major northeastern markets. As of February 5, 2020, the Constitution partners formally resolved to initiate the dissolution of Constitution, and to terminate the Constitution Pipeline project.

Duke Energy, also through its ~~Gas Utilities and Infrastructure~~GU&I segment, has investments in various renewable natural gas joint ventures.

GU&I has a 21.49% equity ownership interest in Cardinal, an intrastate pipeline located in North Carolina regulated by the NCUC, a 45% equity ownership in Pine Needle, an interstate liquefied natural gas storage facility located in North Carolina and a 50% equity ownership interest in Hardy Storage, an underground interstate natural gas storage facility located in Hardy and Hampshire counties in West Virginia. Pine Needle and Hardy Storage are regulated by FERC.

KO Transmission Company (KO Transmission), a wholly owned subsidiary of Duke Energy Ohio, is an interstate pipeline company engaged in the business of transporting natural gas and is subject to the rules and regulations of FERC. KO Transmission's 90-mile pipeline supplies natural gas to Duke Energy Ohio and interconnects with the Columbia Gulf Transmission pipeline and Tennessee Gas Pipeline. An approximately 70-mile portion of KO Transmission's pipeline facilities is co-owned by Columbia Gas Transmission, ~~Corporation.~~LLC. KO Transmission sold all of its pipeline facilities and related real property to Columbia Gas Transmission, LLC on February 1, 2023, for approximately book value.

See Notes ~~3, 12~~4, 13 and 1718 to the Consolidated Financial Statements, "Regulatory Matters," "Investments in Unconsolidated Affiliates" and "Variable Interest Entities," respectively, for further information on Duke Energy's ~~pipeline~~and GU&I's natural gas investments.


~~BUSINESS~~

Inventory

~~Gas Utilities and Infrastructure~~GU&I must maintain adequate natural gas inventory in order to provide reliable delivery to customers. As of December 31, ~~2020,~~2022, the inventory balance for ~~Gas Utilities and Infrastructure~~GU&I was ~~$82~~$185 million. For more information on inventory, see Note 1 to the Consolidated Financial Statements, "Summary of Significant Accounting Policies."


BUSINESS

Regulation

State

The state gas utility commissions approve rates for Duke Energy's retail natural gas service within their respective states. The state gas utility commissions, to varying degrees, have authority over the construction and operation of ~~Gas Utilities and Infrastructure’s~~GU&I’s natural gas distribution facilities. CPCNs issued by the state gas utility commissions or other government agencies, as applicable, authorize ~~Gas Utilities and Infrastructure~~GU&I to construct and operate its natural gas distribution facilities and to sell natural gas to retail and wholesale customers. Prior approval from the relevant state gas utility commission is required for ~~Gas Utilities and Infrastructure~~GU&I to issue securities. The underlying concept of utility ratemaking is to set rates at a level that allows the utility to collect revenues equal to its cost of providing service plus a reasonable rate of return on its invested capital, including equity.

In addition to amounts collected from customers through approved base rates, each of the state gas utility commissions allow recovery of certain costs through various ~~cost-recovery~~cost recovery clauses to the extent the respective commission determines in periodic hearings that such costs, including any past over- or under-recovered costs, are prudent.

Natural gas costs are eligible for recovery by ~~Gas Utilities and Infrastructure.~~GU&I. Due to the associated regulatory treatment and the method allowed for recovery, changes in natural gas costs from year to year have no material impact on operating results of ~~Gas Utilities and Infrastructure,~~GU&I, unless a commission finds a portion of such costs to have been imprudent. However, delays between the expenditure for natural gas and recovery from customers can adversely impact the timing of cash flows of ~~Gas Utilities and Infrastructure.~~GU&I.

The following table summarizes certain components underlying recently approved and effective base rates or rate stabilization filings in the last three ~~years.~~years and applications currently pending approval.

Annual
Increase
(Decrease)
(in millions)
Return
on
Equity
Equity
Component of
Capital Structure
Effective Date
Approved Rate Cases:
Piedmont 2017 South Carolina Rate Stabilization Adjustment Filing $ 6 10.2 % 53.0 % November 2017
Piedmont 2018 South Carolina Rate Stabilization Adjustment Filing (14) 10.2 % 53.0 % November 2018
Piedmont 2019 South Carolina Rate Stabilization Adjustment Filing 6 9.9 % 55.4 % November 2019
Piedmont 2020 South Carolina Rate Stabilization Adjustment Filing 7 9.8 % 52.3 % November 2020
Duke Energy Kentucky 2018 Natural Gas Base Rate Case 7 9.7 % 50.8 % April 2019
Piedmont 2019 North Carolina Natural Gas Base Rate Case 109 9.7 % 52.0 % November 2019
Piedmont 2020 Tennessee Natural Gas Base Rate Case 16 9.8 % 50.5 % January 2021


	Annual Increase (Decrease) (in millions)		Return on Equity		Equity Component of Capital Structure		Effective Date
Approved Rate Cases:
Piedmont 2020 Tennessee Natural Gas Base Rate Case	$	16	9.8	%	50.5	%	January 2021
Piedmont 2021 North Carolina Natural Gas Base Rate Case	67		9.6	%	51.6	%	November 2021
Piedmont 2021 South Carolina Rate Stabilization Adjustment Filing	7		9.8	%	52.2	%	November 2021
Duke Energy Kentucky 2021 Natural Gas Base Rate Case(a)	9		9.38	%	51.3	%	January 2022
Piedmont 2022 South Carolina Natural Gas Base Rate Case(b)	2		9.3	%	52.2	%	November 2022

Pending Rate Cases:
Duke Energy Ohio 2022 Natural Gas Base Rate Case	49		10.3	%	52.3	%	April 2023

~~Gas Utilities~~(a) An ROE of 9.375% for natural gas base rates and ~~Infrastructure~~9.3% for natural gas riders was approved.

(b) Under the rate stabilization adjustment (RSA) mechanism, Piedmont resets rates in South Carolina based on updated costs and revenues on an annual basis. The SC RSA filing for 2022 did not reset the rates since Piedmont filed a General Rate Case in 2022.

GU&I has an IMR ~~mechanisms~~mechanism in North Carolina ~~and Tennessee~~ designed to separately track and recover certain costs associated with capital investments incurred to comply with federal pipeline safety and integrity programs. Piedmont has withdrawn from the Tennessee IMR mechanism subsequent to the authorization of the Tennessee Annual Review Mechanism effective January 2022. The following table summarizes information related to the recently approved IMR filing.

Cumulative

Annual

Effective

Cumulative

Annual

Effective

(in millions)

Investment

Revenues

Date

(in millions)

Investment

Revenues

Date

Piedmont 2020 IMR Filing – North Carolina

307

December 2020

Piedmont 2022 IMR Filing – North Carolina

213

December 2022

In ~~Piedmont's Tennessee~~Ohio, GU&I has a Capital Expenditure Program Rider (CEP Rider) designed to recover costs between rate ~~case settled in February 2021,~~cases on PUCO approved capital expenditures. Duke Energy Ohio submits a filing each year for incremental investments to increase the ~~Company included projected IMR~~revenue requirement up to the cap of approximately $7 million. The cumulative investment ~~through December 31, 2021, in its rate base. The recovery~~under the CEP Rider is $359 million with total annual revenue requirement of ~~integrity investment was requested in the rate case and not through the Tennessee IMR mechanism.~~$70 million.

For more information on rate matters and other regulatory proceedings, see Note 34 to the Consolidated Financial Statements, “Regulatory Matters.”

Federal

~~Gas Utilities and Infrastructure~~GU&I is subject to various federal regulations, including regulations that are particular to the natural gas industry. These federal regulations include but are not limited to the following:

•Regulations of the FERC affect the certification and siting of new interstate natural gas pipeline projects, the purchase and sale of, the prices paid for, and the terms and conditions of service for the interstate transportation and storage of natural gas.

•Regulations of the PHMSA affect the design, construction, operation, maintenance, integrity, safety and security of natural gas distribution and transmission systems.


~~BUSINESS~~

•Regulations of the EPA relate to the environment including proposed air emissions regulations that would expand to include emissions of methane.


BUSINESS

Regulations of the FERC and the state gas utility commissions govern access to regulated natural gas and other data by nonregulated entities and services provided between regulated and nonregulated energy affiliates. These regulations affect the activities of nonregulated affiliates with Gas Utilities and Infrastructure.

Environmental

~~Gas Utilities and Infrastructure~~GU&I is subject to the jurisdiction of the EPA and state and local environmental agencies. For a discussion of environmental regulation, see “Environmental Matters” in this section. See “Other Matters” section of Item 7 Management's Discussion and Analysis for a discussion about potential Global Climate Change legislation and other EPA regulations under development and the potential impacts such legislation and regulation could have on Duke Energy’s operations.

~~COMMERCIAL RENEWABLES~~

Commercial Renewables primarily acquires, develops, builds, operates and owns wind and solar renewable generation throughout the continental U.S. The portfolio includes nonregulated renewable energy and energy storage businesses.

Commercial Renewables' renewable energy includes utility-scale wind and solar generation assets, distributed solar generation assets, distributed fuel cell assets and battery storage projects, which total 2,763 MW across 21 states from 21 wind facilities, 150 solar projects, 70 fuel cell locations and two battery storage facilities. Revenues are primarily generated by selling the power produced from renewable generation through long-term contracts to utilities, electric cooperatives, municipalities and corporate customers. In most instances, these customers have obligations under state-mandated renewable energy portfolio standards or similar state or local renewable energy goals. Energy and renewable energy credits generated by wind and solar projects are generally sold at contractual prices. The following map shows the locations of renewable generation facilities of which Commercial Renewables has an ownership interest as of December 31, 2020.

As eligible projects are placed in service, Commercial Renewables recognizes either PTCs as power is generated by wind projects over 10 years or ITCs when the renewable solar or fuel cell project achieves commercial availability. ITCs are recognized over the useful life of the asset as a reduction to depreciation expense. Benefits of the tax basis adjustment due to the ITC are recognized in income in the year of commercial availability. The ITC for solar and fuel cells is being phased down from a rate of 30% for projects that began construction before 2020 to a permanent 10% rate for solar and no ITC available for fuel cells if construction begins after 2023. The PTC is being phased out and wind turbines will earn 10 years of PTCs at phased-out rates if construction begins in 2017 through 2021.


~~BUSINESS~~

Commercial Renewables has entered into agreements for certain of its generating assets that are held by LLCs whose members include a noncontrolling tax equity investor. The allocation of tax attributes and cash flows to the tax equity investor are governed by the provisions of the LLC agreements. The GAAP earnings allocations to the tax equity investors can result in variability in earnings to Duke Energy as a result of the application of the HLBV method in allocating income or loss to the owners. As part of its growth strategy, Commercial Renewables expects to enter into these arrangements for future generating assets.

~~For additional information on Commercial Renewables' generation facilities, see Item 2, “Properties.”~~

~~Market Environment and Competition~~

Commercial Renewables primarily competes for wholesale contracts for the generation and sale of electricity from generation assets it either develops or acquires and owns. The market price of commodities and services, along with the quality and reliability of services provided, drive competition in the wholesale energy business. The number and type of competitors may vary based on location, generation type and project size. Commercial Renewables' main competitors include other nonregulated generators and wholesale power providers.

~~Sources of Electricity~~

~~Commercial Renewables relies on wind, solar, fuel cells and battery resources for its generation of electric energy.~~

~~Regulation~~

Commercial Renewables is subject to regulation at the federal level, primarily from the FERC. Regulations of the FERC govern access to regulated market information by nonregulated entities and services provided between regulated and nonregulated utilities.

OTHER

The remainder of Duke Energy’s operations is presented as Other. While it is not a business segment, Other primarily includes interest expense on holding company debt, unallocated corporate costs, ~~including costs to achieve strategic acquisitions,~~ amounts related to certain companywide initiatives and contributions made to the Duke Energy Foundation. Other also includes Bison and an investment in NMC.

The Duke Energy Foundation is a nonprofit organization funded by Duke Energy shareholders that makes charitable contributions to selected nonprofits and government subdivisions.

Bison, a wholly owned subsidiary of Duke Energy, is a captive insurance company with the principal activity of providing Duke Energy subsidiaries with indemnification for financial losses primarily related to property, workers’ compensation and general liability.

Duke Energy owns a 17.5% equity interest in NMC. The joint venture company has production facilities in Jubail, Saudi Arabia, where it manufactures certain petrochemicals and plastics. The company annually produces approximately 1 million metric tons each of MTBE and methanol and has the capacity to produce 50,000 metric tons of polyacetal. The main feedstocks to produce these products are natural gas and butane. Duke Energy records the investment activity of NMC using the equity method of accounting and retains 25% of NMC's board of directors' representation and voting rights.

Human Capital Management

Governance

Our employees are critical to the success of our company. Our Human Resources organization is responsible for our human capital management strategy, which includes recruiting and hiring, onboarding and training, diversity and inclusion, workforce planning, talent and succession planning, performance management and employee development. Key areas of focus include fostering a high-performance and inclusive culture built on strong leadership and highly engaged and diverse employees, building a pipeline of skilled workers and ensuring knowledge transfer as employees retire.

Our Board of Directors provides oversight on certain human capital management matters, primarily through the Compensation and People Development Committee, which is responsible for reviewing strategies and policies related to human capital management, including with respect to matters such as diversity and inclusion, employee engagement and talent development. ~~The Compensation and People Development Committee also receives updates on employee engagement surveys and action plans.~~

Employees

On December 31, ~~2020,~~2022, Duke Energy had a total of ~~27,535~~27,859 full-time, part-time and temporary employees, the ~~overwhelming~~ majority of which were full-time employees. The total includes ~~5,165~~5,081 employees who are represented by labor unions under various collective bargaining agreements that generally cover wages, benefits, working practices, and other terms and conditions of employment.


~~BUSINESS~~

Compensation

The company seeks to attract and retain an appropriately qualified workforce and leverages Duke Energy’s leadership imperatives to foster a culture focused on customers, innovation, and highly engaged employees. Our compensation program is market driven and designed to link pay to performance with the goal of attracting and retaining talented employees, rewarding individual performance, and encouraging long-term commitment to our ~~business,~~business. Our market competitive pay program includes short-term and ~~aligning~~long-term variable pay components that help to align the interests of Duke Energy to our ~~management team with those of key stakeholders, including shareholders~~customers and ~~customers.~~shareholders. In addition to competitive base pay, we provide eligible employees with compensation and benefits under a variety of plans and programs, including ~~with respect to~~ health care benefits, retirement savings, pension, health savings and flexible spending accounts, wellness, family leaves, employee assistance, as well as other benefits including a charitable matching program. ~~We supplement~~The company is committed to providing market competitive, fair, and equitable compensation and regularly conducts internal pay equity reviews, and benchmarking against peer companies to ensure our pay for performance program with a number of compensation policies that are aligned with the long-term interests of Duke Energy and our shareholders, including a short-term incentive plan and a long-term incentive plan for eligible employees.is competitive.

Diversity and Inclusion

Duke Energy is committed to continuing to build a diverse workforce that reflects the communities we serve while strengthening a culture of inclusion where employees and customers feel respected and valued. Our Enterprise Diversity and Inclusion ~~Advisory~~ Council, ~~which is~~ chaired by our Chief Operating Officer ~~is responsible for reviewing~~in 2022, monitors the effectiveness and execution of our diversity and inclusion ~~initiatives for continuous improvement, as well as helping to develop actionable outcomes~~strategy and ~~results. We have established aspirational goals with respect to~~programs. Employee-led councils are also embedded across the company in our business units and focus on the specific diversity and inclusion needs of the business and ~~we regularly report~~help drive inclusion deeper into the employee experience. Leaders and individual contributors also have the opportunity to participate in voluntary diversity and inclusion training programs and facilitated conversations on insightful topics offered to further our ~~progress toward achieving those goals.~~ commitment to building and enabling an inclusive work environment.

Our aspirational goals include achieving a workforce representation of at least 25% female and 20% racial and ethnic diversity. AsWe continue to strive toward reaching these aspirational goals and as of December 31, ~~2020,~~2022, our workforce consisted of approximately ~~23%~~23.9% female and ~~18%~~20.4% racial and ethnic diversity.


BUSINESS

The company also has ~~a number of~~10 Employee Resource Groups (ERGs), ~~which~~with 37 chapters and more than 6,500 employees participating. ERGs are networks of employees formed around a common dimension of diversity whose goals and objectives align with the company's goals and objectives. These groups focus on employee professional development and networking, community outreach, cultural awareness, recruiting and retention. They also serve as a resource to the company for advocacy and community outreach and improving customer service through innovation. ERG-sponsored forums include networking events, mentoring, scholarship banquets for aspiring college students, and workshops on topics such as time management, stress reduction, career planning and work-life balance. Our ERGs are open to all employees.

Among other efforts, the company has developed partnerships with community organizations, community colleges and historically ~~black~~Black colleges and universities to support our strategy of building a diverse and highly skilled talent pipeline.

Operational Excellence

The foundation for our growth and success is our continued focus on operational excellence, the leading indicator of which is safety. As such, the safety of our workforce remains our top priority. The company closely monitors the ~~Total Incident Case Rate~~total incident case rate (TICR), which is a metric based on strict OSHA definitions that measures the number of occupational injuries and illnesses per 100 employees. This objective emphasizes our focus on achieving an event-free and injury-free workplace. As an indication of our commitment to safety, we include safety metrics in both the short-term and long-term incentive plans based on the TICR for employees. Our employees delivered strong safety results in ~~2020,~~2022, consistent with our industry-leading performance levels from ~~2016~~2017 through ~~2019.~~

~~COVID-19 Response~~

Safety continued to be of paramount importance during the COVID-19 pandemic and included executing on robust business continuity plans that helped ensure critical functions continued to operate under a broad range of circumstances while maintaining a safe work environment. Actions included the following:

•~~Engaged our environmental, health and safety experts to develop new safety protocols for thousands of essential workers~~

•~~Quickly transitioned thousands of employees to virtual status~~

•Added bandwidth for our information technology systems, reviewed inventory in supply chain, implemented a series of surveys to get employee input, and provided ongoing communications to keep them informed as conditions evolved

•~~Created a cross-functional COVID-19 case management team to track and disposition positive cases, ensure appropriate contact tracing and compliance with quarantine and safe return to work requirements~~

•~~Ensured power plants and electricity and natural gas delivery facilities were staffed, helping safeguard dependable service to customers~~

•Implemented stringent preventive measures in alignment with the Centers for Disease Control and Prevention’s (CDC) guidance to help keep employees and customers safe and help ensure we had adequate resources to maintain reliability

~~The company also provided additional benefits to support our workforce throughout the pandemic, including:~~

•~~60 hours of additional personal time off to employees who experienced a disruption in dependent care due to school, daycare or other dependent care issues~~

•~~A $1,500 stipend to assist with unplanned expenses resulting from costs related to COVID-19 to employees at a certain pay threshold~~

•~~Donated more than $550,000 to the Relief4Employees program, which is a fund that employees can draw upon for short-term financial help during times of personal need~~2021.

2220


BUSINESS

Information about Our Executive Officers

The following table sets forth the individuals who currently serve as executive officers. Executive officers serve until their successors are duly elected or appointed.

Name

Age(a)

Current and Recent Positions Held

Lynn J. Good

61 63

Chair, President and Chief Executive Officer. Ms. Good has served as Chair, President and Chief Executive Officer of Duke Energy since January 1, 2016, and was Vice Chairman, President and Chief Executive Officer of Duke Energy from July 2013 through December 2015. Prior to that, she served as Executive Vice President and Chief Financial Officer since 2009.

~~Steven K. Young~~Brian D. Savoy

62 47

Executive Vice President and Chief Financial Officer. Mr. ~~Young~~Savoy assumed ~~his current~~the position of Executive Vice President and Chief Financial Officer in ~~August 2013.~~September 2022. Prior to that, he ~~served as~~held the position of Executive Vice President, Chief ~~Accounting~~Strategy and Commercial Officer from May 2021 through August 2022; Senior Vice President, Chief Transformation and Administrative Officer from October 2019 through April 2021; Senior Vice President, Business Transformation and Technology from May 2016 through September 2019; Senior Vice President, Controller ~~assuming the role of~~and Chief Accounting Officer ~~in July 2012~~from September 2013 to May 2016; Director, Forecasting and ~~the role of Controller in December 2006.~~

~~Douglas F Esamann~~

~~Executive Vice President, Energy Solutions~~Analysis from 2009 to September 2013; and ~~President, Midwest/Florida Regions and Natural Gas Business.~~ ~~Mr. Esamann assumed his current position in October 2019, was Executive Vice President, Energy Solutions and President, Midwest and Florida Regions since September 2016 and was Executive~~ Vice President and ~~President, Midwest and Florida Regions since June 2015. Prior~~Controller of the Commercial Power segment from 2006 to ~~that, he served as President, Duke Energy Indiana since November 2010.~~2009.

Kodwo Ghartey-Tagoe

57 59

Executive Vice President, Chief Legal Officer and Corporate Secretary. Mr. Ghartey-Tagoe assumed the position of Executive Vice President, Chief Legal Officer and Corporate Secretary in May 2020. He was appointed Executive Vice President and Chief Legal Officer in October 2019 after serving as President, South Carolina since 2017. Mr. Ghartey-Tagoe joined Duke Energy in 2002, and has held numerous management positions in Duke Energy’s Legal Department, including Duke Energy's Senior Vice President of State and Federal Regulatory Legal Support.

~~Dwight L. Jacobs~~T. Preston Gillespie

55 60

Executive Vice President, Chief Generation Officer and Enterprise Operational Excellence. Mr. Gillespie assumed the position of Executive Vice President, Chief Generation Officer and Enterprise Operational Excellence in January 2023. Prior to that, Mr. Gillespie served as the Chief Generation Officer since 2020.

R. Alexander Glenn

Senior Vice President and Chief ~~Accounting~~Executive Officer, ~~Tax~~Duke Energy Florida and ~~Controller.~~Midwest. Mr. ~~Jacobs has~~Glenn assumed his current position in May 2021. Prior to that, Mr. Glenn served as Senior Vice President, ~~Chief Accounting Officer, Tax~~State and ~~Controller~~Federal Regulatory Legal Support since January 1, 2019. Prior to that, he served as Senior Vice President, Chief Accounting Officer and Controller since June 1, 2018. Prior to that, he served as Senior Vice President, Financial Planning & Analysis since February 20162017 and as ~~Chief Risk Officer since July 2014. Prior~~State President of Duke Energy Florida's operations from 2012 to ~~his role as Chief Risk Officer, Mr. Jacobs served as Vice President, Rates & Regulatory Strategy since May 2010.~~2017.

Dhiaa M. Jamil

64 66

Executive Vice President and Chief Operating Officer. Mr. Jamil assumed the role of Chief Operating Officer in May 2016. Prior to his current position, he held the title Executive Vice President and President, Regulated Generation and Transmission since June 2015. Prior to that, he served as Executive Vice President and President, Regulated Generation since August 2014. He served as Executive Vice President and President of Duke Energy Nuclear from March 2013 to August 2014, and was Chief Nuclear Officer from February 2008 to February 2013.

Julia S. Janson

56 58

Executive Vice President ~~External Affairs~~ and ~~President, Carolinas Region.~~Chief Executive Officer, Duke Energy Carolinas. Ms. Janson ~~has~~assumed her current position in May 2021. Prior to that she held the position of Executive Vice President, External Affairs and President, Carolinas Region since October ~~2019.Prior to that, she held~~2019 and the position of Executive Vice President, External Affairs and Chief Legal Officer since November 2018. She originally assumed the position of Executive Vice President, Chief Legal Officer and Corporate Secretary in December 2012, and then assumed the responsibilities for External Affairs in February 2016.

~~Brian D. Savoy~~Cynthia S. Lee

45 56

Vice President, Chief Accounting Officer and Controller. Ms. Lee assumed her role as Vice President, Chief Accounting Officer and Controller in May 2021. Prior to that, she served as Director, Investor Relations since June 2019 and in various roles within the Corporate Controller's organization after joining the Corporation and its affiliates in 2002.

Ronald R. Reising

Senior Vice President and Chief ~~Transformation and Administrative~~Human Resources Officer. Mr. ~~Savoy~~Reising assumed his current position in ~~October 2019.~~July 2020. Prior to that, he served as Senior Vice President ~~Business Transformation and Technology~~of Operations Support since ~~May 2016;~~ 2014. Prior to that, he served as Chief Procurement Officer since 2006.

Louis E. Renjel

Senior Vice President, ~~Controller~~External Affairs and ~~Chief Accounting Officer from September 2013~~Communications. Mr. Renjel assumed his current position in May 2021. Prior to ~~May 2016; Director, Forecasting and Analysis from 2009 to September 2013; and~~that, he served as Senior Vice President of Federal Government and ~~Controller~~Corporate Affairs since 2019, and as Vice President, Federal Government Affairs and Strategic Policy since he joined Duke Energy in March 2017 until 2019. Prior to joining Duke Energy, Mr. Renjel served as Vice President of ~~the Commercial Power segment~~Strategic Infrastructure since 2009 for CSX Corp and as their Director of Environmental and Government Affairs from 2006 to ~~2009.~~2008.

Harry K. Sideris

50 52

~~Senior~~Executive Vice President, Customer Experience, Solutions and Services. Mr. Sideris assumed his current position in October 2019. Prior to that, he served as Senior Vice President and Chief Distribution Officer since June 2018; State President, Florida from January 2017 to June 2018; Senior Vice President of Environmental Health and Safety from August 2014 to January 2017; and Vice President of Power Generations for the ~~Company's~~company's Fossil/Hydro Operations in the western portions of North Carolina and South Carolina from July 2012 to August 2014.

Steven K. Young

Executive Vice President, Chief Strategy and Commercial Officer. Mr. Young assumed the position of Executive Vice President, Chief Strategy and Commercial Officer in September 2022. Prior to that, he held the position of Executive Vice President and Chief Financial Officer from August 2013 through August 2022; Vice President, Chief Accounting Officer and Controller, assuming the role of Chief Accounting Officer in July 2012 and the role of Controller in December 2006.

(a) The ages of the officers provided are as of January 31, ~~2021.~~2023.

There are no family relationships between any of the executive officers, nor any arrangement or understanding between any executive officer and any other person involved in officer selection.


BUSINESS

Environmental Matters

The Duke Energy Registrants are subject to federal, state and local laws and regulations with regard to air and water quality, hazardous and solid waste disposal and other environmental matters. Environmental laws and regulations affecting the Duke Energy Registrants include, but are not limited to:

•The Clean Air Act, as well as state laws and regulations impacting air emissions, including State Implementation Plans related to existing and new national ambient air quality standards for ozone and particulate matter. Owners and/or operators of air emission sources are responsible for obtaining permits and for annual compliance and reporting.

•The ~~CWA,~~Clean Water Act, which requires permits for facilities that discharge wastewaters into navigable waters.

•The Comprehensive Environmental Response, Compensation and Liability Act, which can require any individual or entity that currently owns or in the past owned or operated a disposal site, as well as transporters or generators of hazardous substances sent to a disposal site, to share in remediation costs.


~~BUSINESS~~

•The National Environmental Policy Act, which requires federal agencies to consider potential environmental impacts in their permitting and licensing decisions, including siting approvals.

•Coal Ash Act, as amended, which establishes requirements regarding the use and closure of existing ash basins, the disposal of ash at active coal plants and the handling of surface water and groundwater impacts from ash basins in North Carolina.

•The Solid Waste Disposal Act, as amended by RCRA, which creates a framework for the proper management of hazardous and nonhazardous solid waste; classifies CCR as nonhazardous waste; and establishes standards for landfill and surface impoundment placement, design, operation and closure, groundwater monitoring, corrective action, and post-closure care.

•The Toxic Substances Control Act, which gives EPA the authority to require reporting, recordkeeping and testing requirements, and to place restrictions relating to chemical substances and/or mixtures, including polychlorinated biphenyls.

For more information on environmental matters, see Notes 45 and 910 to the Consolidated Financial Statements, “Commitments and Contingencies – Environmental” and "Asset Retirement Obligations," respectively, and the “Other Matters” section of Item 7 Management's Discussion and Analysis. Except as otherwise described in these sections, costs to comply with current federal, state and local provisions regulating the discharge of materials into the environment or other potential costs related to protecting the environment are incorporated into the routine cost structure of our various business segments and are not expected to have a material adverse effect on the competitive position, consolidated results of operations, cash flows or financial position of the Duke Energy Registrants.

The "Other Matters" section of Item 7 Management's Discussion and Analysis includes more information on certain environmental regulations and a discussion of Global Climate Change including the potential impact of current and future legislation related to GHG emissions on the Duke Energy Registrants' operations. Recently passed and potential future environmental statutes and regulations could have a significant impact on the Duke Energy Registrants’ results of operations, cash flows or financial position. However, if and when such statutes and regulations become effective, the Duke Energy Registrants will seek appropriate regulatory recovery of costs to comply within its regulated operations.

DUKE ENERGY CAROLINAS

Duke Energy Carolinas is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Carolinas’ service area covers approximately 24,000 square miles and supplies electric service to ~~2.7~~2.8 million residential, commercial and industrial customers. For information about Duke Energy Carolinas’ generating facilities, see Item 2, “Properties.” Duke Energy Carolinas is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.

Substantially all of Duke Energy Carolinas' operations are regulated and qualify for regulatory accounting. Duke Energy Carolinas operates one reportable business segment, ~~Electric Utilities and Infrastructure.~~EU&I. For additional information regarding this business segment, including financial information, see Note 23 to the Consolidated Financial Statements, “Business Segments.”

PROGRESS ENERGY

Progress Energy is a public utility holding company primarily engaged in the regulated electric utility business and is subject to regulation by the FERC. Progress Energy conducts operations through its wholly owned subsidiaries, Duke Energy Progress and Duke Energy Florida. When discussing Progress Energy’s financial information, it necessarily includes the results of Duke Energy Progress and Duke Energy Florida.

Substantially all of Progress Energy’s operations are regulated and qualify for regulatory accounting. Progress Energy operates one reportable business segment, ~~Electric Utilities and Infrastructure.~~EU&I. For additional information regarding this business segment, including financial information, see Note 23 to the Consolidated Financial Statements, “Business Segments.”

DUKE ENERGY PROGRESS

Duke Energy Progress is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Progress’ service area covers approximately 29,000 square miles and supplies electric service to approximately ~~1.6~~1.7 million residential, commercial and industrial customers. For information about Duke Energy Progress’ generating facilities, see Item 2, “Properties.” Duke Energy Progress is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.

Substantially all of Duke Energy Progress’ operations are regulated and qualify for regulatory accounting. Duke Energy Progress operates one reportable business segment, ~~Electric Utilities and Infrastructure.~~EU&I. For additional information regarding this business segment, including financial information, see Note 23 to the Consolidated Financial Statements, “Business Segments.”

PART I

DUKE ENERGY FLORIDA

Duke Energy Florida 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 1.9 million residential, commercial and industrial customers. For information about Duke Energy Florida’s generating facilities, see Item 2, “Properties.” Duke Energy Florida is subject to the regulatory provisions of the FPSC, NRC and FERC.

Substantially all of Duke Energy Florida’s operations are regulated and qualify for regulatory accounting. Duke Energy Florida operates one reportable business segment, ~~Electric Utilities and Infrastructure.~~EU&I. For additional information regarding this business segment, including financial information, see Note 23 to the Consolidated Financial Statements, “Business Segments.”


~~BUSINESS~~

DUKE ENERGY OHIO

Duke Energy Ohio is a regulated public utility primarily engaged in the transmission and distribution of electricity in portions of Ohio and Kentucky, in the generation and sale of electricity in portions of Kentucky and the transportation and sale of natural gas in portions of Ohio and Kentucky. Duke Energy Ohio also conducts competitive auctions for retail electricity supply in Ohio whereby recovery of the energy price is from retail customers. Operations in Kentucky are conducted through its wholly owned subsidiary, Duke Energy Kentucky. References herein to Duke Energy Ohio include Duke Energy Ohio and its subsidiaries, unless otherwise noted. Duke Energy Ohio is subject to the regulatory provisions of the PUCO, KPSC, PHMSA and FERC.

Duke Energy Ohio’s service area covers approximately 3,000 square miles and supplies electric service to approximately ~~880,000~~900,000 residential, commercial and industrial customers and provides transmission and distribution services for natural gas to approximately ~~545,000~~550,000 customers. For information about Duke Energy Ohio's generating facilities, see Item 2, “Properties.”

KO Transmission, a wholly owned subsidiary of Duke Energy Ohio, is an interstate pipeline company engaged in the business of transporting natural gas and is subject to the rules and regulations of FERC. KO Transmission's 90-mile pipeline supplies natural gas to Duke Energy Ohio and interconnects with the Columbia Gulf Transmission pipeline and Tennessee Gas Pipeline. An approximately 70-mile portion of KO Transmission's pipeline facilities is co-owned by Columbia Gas Transmission, ~~Corporation.~~LLC. KO Transmission sold all of its pipeline facilities and related real property to Columbia Gas Transmission, LLC on February 1, 2023, for approximately book value.

Substantially all of Duke Energy Ohio's operations are regulated and qualify for regulatory accounting. Duke Energy Ohio has two reportable segments, ~~Electric Utilities~~EU&I and ~~Infrastructure and Gas Utilities and Infrastructure.~~GU&I. For additional information on these business segments, including financial information, see Note 23 to the Consolidated Financial Statements, “Business Segments.”

DUKE ENERGY INDIANA

Duke Energy Indiana is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Indiana. Duke Energy Indiana’s service area covers 23,000 square miles and supplies electric service to ~~850,000~~890,000 residential, commercial and industrial customers. For information about Duke Energy Indiana's generating facilities, see Item 2, “Properties.” Duke Energy Indiana is subject to the regulatory provisions of the IURC and FERC.

In 2021, Duke Energy executed an agreement providing for an investment in Duke Energy Indiana by GIC. The transaction was completed following two closings. For additional information, see Note 2 to the Consolidated Financial Statements, "Dispositions."

Substantially all of Duke Energy Indiana’s operations are regulated and qualify for regulatory accounting. Duke Energy Indiana operates one reportable business segment, ~~Electric Utilities and Infrastructure.~~EU&I. For additional information regarding this business segment, including financial information, see Note 23 to the Consolidated Financial Statements, “Business Segments.”

PIEDMONT

Piedmont is a regulated public utility primarily engaged in the distribution of natural gas to over 1.1 million residential, commercial, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee, including customers served by municipalities who are wholesale customers. For information about Piedmont's natural gas distribution facilities, see Item 2, "Properties." Piedmont is subject to the regulatory provisions of the NCUC, PSCSC, TPUC, PHMSA and FERC.

Substantially all of Piedmont’s operations are regulated and qualify for regulatory accounting. Piedmont operates one reportable business segment, ~~Gas Utilities and Infrastructure.~~GU&I. For additional information regarding this business segment, including financial information, see Note 23 to the Consolidated Financial Statements, “Business Segments.”

ITEM 1A. RISK FACTORS

In addition to other disclosures within this Form 10-K, including "Management's Discussion and Analysis of Financial Condition and Results of Operations – Matters Impacting Future Results" for each registrant in Item 7, and other documents filed with the SEC from time to time, the following factors should be considered in evaluating Duke Energy and its subsidiaries. Such factors could affect actual results of operations and cause results to differ substantially from those currently expected or sought. Unless otherwise indicated, risk factors discussed below generally relate to risks associated with all of the Duke Energy Registrants. Risks identified at the Subsidiary Registrant level are generally applicable to Duke Energy.


RISK FACTORS

BUSINESS STRATEGY RISKS

Duke Energy’s future results could be adversely affected if it is unable to implement its business ~~strategy.~~strategy including achieving its carbon emissions reduction goals.

Duke Energy’s results of operations depend, in significant part, on the extent to which it can implement its business strategy successfully. Duke Energy's ~~strategy,~~clean energy transition, which includes ~~transforming the customer experience,~~ achieving net-zero carbon emissions from electricity generation by 2050, modernizing the regulatory construct, transforming the customer experience, and digital transformation, is subject to business, policy, regulatory, technology, economic and competitive uncertainties and contingencies, ~~and required advancements in technology to achieve net-zero carbon emissions by 2050,~~ many of which are beyond its ~~control.~~ control and may make those goals difficult to achieve.

Federal or state policies could be enacted that restrict the availability of fuels or generation technologies, such as natural gas or nuclear power, that enable Duke Energy to reduce its carbon emissions. Supportive policies may be needed to facilitate the siting and cost recovery of transmission and distribution upgrades needed to accommodate the build out of large volumes of renewables and energy storage. Further, the approval of our state regulators will be necessary for the company to continue to retire existing carbon emitting assets or make investments in new generating capacity. The company may be constrained by the ability to procure resources or labor needed to build new generation at a reasonable price as well as to construct projects on time. In addition, new technologies that are not yet commercially available or are unproven at utility scale will likely be needed including new resources capable of following electric load over long durations such as advanced nuclear, hydrogen and long-duration storage, If these technologies are not developed or are not available at reasonable prices, or if we invest in early stage technologies that are then supplanted by technological breakthroughs, Duke Energy’s ability to achieve a net-zero target by 2050 at a cost-effective price could be at risk.

Achieving our carbon reduction goals will require continued operation of our existing carbon-free technologies including nuclear and renewables. The rapid transition to and expansion of certain low-carbon resources, such as renewables without cost-effective storage, may challenge our ability to meet customer expectations of reliability in a carbon constrained environment. Our nuclear fleet is central to our ability to meet these objectives and customer expectations. We are continuing to seek to renew the operating licenses of the 11 reactors we operate at six nuclear stations for an additional 20 years, extending their operating lives to and beyond midcentury. Failure to receive approval from the NRC for the relicensing of any of these reactors could affect our ability to achieve a net-zero target by 2050.

As a consequence, Duke Energy may not be able to fully implement or realize the anticipated results of its ~~strategy.~~


~~RISK FACTORS~~

energy transition strategy, which may have an adverse effect on its financial condition.

REGULATORY, LEGISLATIVE AND LEGAL RISKS

The Duke Energy Registrants’ regulated utility revenues, earnings and results of operations are dependent on state legislation and regulation that affect electric generation, electric and natural gas transmission, distribution and related activities, which may limit their ability to recover costs.

The Duke Energy Registrants’ regulated electric and natural gas utility businesses are regulated on a cost-of-service/rate-of-return basis subject to statutes and regulatory commission rules and procedures of North Carolina, South Carolina, Florida, Ohio, Tennessee, Indiana and Kentucky. If the Duke Energy Registrants’ regulated utility earnings exceed the returns established by the state utility commissions, retail electric and natural gas rates may be subject to review and possible reduction by the ~~Commissions,~~commissions, which may decrease the Duke Energy Registrants’ earnings. Additionally, if regulatory or legislative bodies do not allow recovery of costs incurred in providing service, or do not do so on a timely basis, the Duke Energy Registrants’ earnings could be negatively impacted. Differences in regulation between jurisdictions with concurrent operations, such as North Carolina and South Carolina in Duke Energy Carolinas' and Duke Energy Progress' service territory, may also result in failure to recover costs.

If legislative and regulatory structures were to evolve in such a way that the Duke Energy Registrants’ exclusive rights to serve their regulated customers were eroded, their earnings could be negatively impacted. Federal and state regulations, laws, commercialization and reduction of costs and other efforts designed to promote and expand the use of EE measures and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could reduce recovery of fixed costs in Duke Energy service territories or result in customers leaving the electric distribution system and an increase in customer net energy metering, which allows customers with private solar to receive bill credits for surplus power at the full retail amount. Over time, customer adoption of these technologies ~~and increased EE~~ could result in ~~excess generation resources as well as stranded costs if~~ Duke Energy is not being able to fully recover the costs and investment in generation.

State regulators have approved various mechanisms to stabilize natural gas utility margins, including margin decoupling in North Carolina and rate stabilization in South Carolina. State regulators have approved other margin stabilizing mechanisms that, for example, allow for recovery of margin losses associated with negotiated transactions designed to retain large volume customers that could use alternative fuels or that may otherwise directly access natural gas supply through their own connection to an interstate pipeline. If regulators decided to discontinue the Duke Energy Registrants' use of tariff mechanisms, it would negatively impact results of operations, financial position and cash flows. In addition, regulatory authorities also review whether natural gas costs are prudently incurred and can disallow the recovery of a portion of natural gas costs that the Duke Energy Registrants seek to recover from customers, which would adversely impact earnings.

The rates that the Duke Energy Registrants’ regulated utility businesses are allowed to charge are established by state utility commissions in rate case proceedings, which may limit their ability to recover costs and earn an appropriate return on investment.

The rates that the Duke Energy Registrants’ regulated utility ~~business~~businesses are allowed to charge significantly influences the results of operations, financial position and cash flows of the Duke Energy Registrants. The regulation of the rates that the regulated utility businesses charge customers is determined, in large part, by state utility commissions in rate case proceedings. Negative decisions made by these regulators, or by any court on appeal of a rate case proceeding, have, and in the future could have, a material adverse effect on the Duke Energy Registrants’ results of operations, financial position or cash flows and affect the ability of the Duke Energy Registrants to recover costs and an appropriate return on the significant infrastructure investments being made.


RISK FACTORS

Deregulation or restructuring in the electric industry may result in increased competition and unrecovered costs that could adversely affect the Duke Energy Registrants’ results of operations, financial position or cash flows and their utility businesses.

Increased competition resulting from deregulation or restructuring legislation could have a significant adverse impact on the Duke Energy Registrants’ results of operations, financial position or cash ~~flows.~~flows and their utility businesses. If the retail jurisdictions served by the Duke Energy Registrants become subject to deregulation, the impairment of assets, loss of retail customers, lower profit margins or increased costs of capital, and recovery of stranded costs could have a significant adverse financial impact on the Duke Energy Registrants. Stranded costs primarily include the generation assets of the Duke Energy Registrants whose value in a competitive marketplace may be less than their current book value, as well as above-market purchased power commitments from QFs from whom the Duke Energy Registrants are legally obligated to purchase energy at an avoided cost rate under PURPA. The Duke Energy Registrants cannot predict the extent and timing of entry by additional competitors into the electric markets. The Duke Energy Registrants cannot predict if or when they will be subject to changes in legislation or regulation, nor can they predict the impact of these changes on their results of operations, financial position or cash flows.

The Duke Energy Registrants’ businesses are subject to extensive federal regulation and a wide variety of laws and governmental policies, including taxes and environmental regulations, that may change over time in ways that affect operations and costs.

The Duke Energy Registrants are subject to regulations under a wide variety of U.S. federal and state regulations and policies, including by FERC, NRC, EPA and various other federal agencies as well as the North American Electric Reliability Corporation. Regulation affects almost every aspect of the Duke Energy Registrants’ businesses, including, among other things, their ability to: take fundamental business management actions; determine the terms and rates of transmission and distribution services; make acquisitions; issue equity or debt securities; engage in transactions with other subsidiaries and affiliates; and pay dividends upstream to the Duke Energy Registrants. Changes to federal regulations are continuous and ongoing. There can be no assurance that laws, regulations and policies will not be changed in ways that result in material modifications of business models and objectives or affect returns on investment by restricting activities and products, subjecting them to escalating costs, causing delays, or prohibiting them outright.


~~RISK FACTORS~~

The Duke Energy Registrants are subject to numerous environmental laws and regulations requiring significant capital expenditures that can increase the cost of operations, and which may impact or limit business plans, or cause exposure to environmental liabilities.

The Duke Energy Registrants are subject to numerous environmental laws and regulations affecting many aspects of their present and future operations, including CCRs, air emissions, water quality, wastewater discharges, solid waste and hazardous waste. These laws and regulations can result in increased capital, operating and other costs. These laws and regulations generally require the Duke Energy Registrants to obtain and comply with a wide variety of environmental licenses, permits, inspections and other approvals. Compliance with environmental laws and regulations can require significant expenditures, including expenditures for cleanup costs and damages arising from contaminated properties. Failure to comply with environmental regulations may result in the imposition of fines, penalties and injunctive measures affecting operating assets. The steps the Duke Energy Registrants could be required to take to ensure their facilities are in compliance could be prohibitively expensive. As a result, the Duke Energy Registrants may be required to shut down or alter the operation of their facilities, which may cause the Duke Energy Registrants to incur losses. Further, the Duke Energy Registrants may not be successful in recovering capital and operating costs incurred to comply with new environmental regulations through existing regulatory rate structures and their contracts with customers. Also, the Duke Energy Registrants may not be able to obtain or maintain from time to time all required environmental regulatory approvals for their operating assets or development projects. Delays in obtaining any required environmental regulatory approvals, failure to obtain and comply with them or changes in environmental laws or regulations to more stringent compliance levels could result in additional costs of operation for existing facilities or development of new facilities being prevented, delayed or subject to additional costs. Although it is not expected that the costs to comply with current environmental regulations will have a material adverse effect on the Duke Energy Registrants’ results of operations, financial position and cash flows due to regulatory cost recovery, the Duke Energy Registrants are at risk that the costs of complying with environmental regulations in the future will have such an effect.

The EPA has enacted or proposed federal regulations governing the management of cooling water intake structures, wastewater and CO2 emissions. New state legislation ~~including the North Carolina Clean Energy Plan,~~ could impose carbon reduction goals that are more aggressive than the company's plans. These regulations may require the Duke Energy Registrants to make additional capital expenditures and increase operating and maintenance costs.

The Duke Energy Registrants' operations, capital expenditures and financial results may be affected by regulatory changes related to the impacts of global climate change.

There is continued concern, and increasing activism, both nationally and internationally, about climate change. The EPA and state regulators have, and may adopt and implement, additional regulations to restrict emissions of GHGs to address global climate change. Certain local and state jurisdictions have also enacted laws to restrict or prevent new natural gas infrastructure. Increased regulation of GHG emissions could impose significant additional costs on the Duke Energy Registrants' electric and natural gas operations, their suppliers and ~~customers. Regulatory changes could result in generation facilities to be retired early~~customers and ~~result in stranded costs if Duke Energy is not able to fully recover the costs and investment in generation, and could also~~ affect demand for energy conservation and renewable products, which could impact both our electric and natural gas businesses. Regulatory changes could also result in generation facilities to be retired earlier than planned to meet our net-zero 2050 goal. Though we would plan to seek cost recovery for investments related to GHG emissions reductions through regulatory rate structures, changes in the regulatory climate could result in the delay in or failure to fully recover such costs and investment in generation.

OPERATIONAL RISKS

~~The Duke Energy Registrants’ operations have been and may be affected by COVID-19 in ways listed below and in ways the registrants cannot predict at this time.~~

The COVID-19 pandemic has impacted the Duke Energy Registrants' business strategy, results of operations, financial position and cash flows, albeit not materially as of this filing date, from specific activities listed below:

•~~Decreased demand for electricity and natural gas;~~

•~~Delays in rate cases and other legal proceedings;~~

•~~An inability to obtain labor or equipment necessary for the construction of generation projects or pipeline expansion;~~

•~~The health and availability of our critical personnel and their ability to perform business functions; and~~

•~~Actions of state utility commissions or federal or state governments to allow customers to suspend or delay payment of bills related to the provision of electric or natural gas services.~~

Furthermore, due to the unpredictability of the COVID-19 pandemic’s ongoing impact on global health and economic stability, the Duke Energy Registrants expect that the activities listed below could negatively impact their business strategy, results of operations, financial position and cash flows:

•~~An inability to procure satisfactory levels of fuels or other necessary equipment to continue production of electricity and delivery of natural gas;~~

•~~An inability to maintain information technology systems and protections from cyberattack;~~

•~~An inability to obtain financing in volatile financial markets;~~

•~~Additional federal regulation tied to stimulus and other aid packages; and~~

•~~Impairment charges, which could include real estate as options for working remotely are evaluated and goodwill.~~


~~RISK FACTORS~~

The Duke Energy Registrants’ results of operations may be negatively affected by overall market, economic and other conditions that are beyond their control.

Sustained downturns or sluggishness in the economy generally affect the markets in which the Duke Energy Registrants operate and negatively influence operations. Declines in demand for electricity or natural gas as a result of economic downturns in the Duke Energy Registrants’ regulated service territories will reduce overall sales and lessen cash flows, especially as industrial customers reduce production and, therefore, consumption of electricity and the use of natural gas. Although the Duke Energy Registrants’ regulated electric and natural gas businesses are subject to regulated allowable rates of return and recovery of certain costs, such as fuel and purchased natural gas costs, under periodic adjustment clauses, overall declines in electricity or natural gas sold as a result of economic downturn or recession could reduce revenues and cash flows, thereby diminishing results of operations.


RISK FACTORS

A continuation of adverse economic conditions including economic downturn or high commodity prices could also negatively impact the financial stability of certain of our customers and result in their inability to pay for electric and natural gas services. This could lead to increased bad debt expense and higher allowance for doubtful account reserves for the Duke Energy Registrants and result in delayed or unrecovered operating costs and lower financial results. Additionally, prolonged economic downturns that negatively impact the Duke Energy Registrants’ results of operations and cash flows could result in future material impairment charges to write-down the carrying value of certain assets, including goodwill, to their respective fair values. The Duke Energy Registrants also monitor the impacts of inflation on the procurement of goods and services and seek to minimize its effects in future periods through pricing strategies, productivity improvements, and cost reductions. Rapidly rising prices as a result of inflation or other factors may impact the ability of the company to recover costs timely or execute on its business strategy including the achievement of growth objectives.

The Duke Energy Registrants ~~also~~ sell electricity into the spot market or other competitive power markets on a contractual basis. With respect to such transactions, the Duke Energy Registrants are not guaranteed any rate of return on their capital investments through mandated rates, and revenues and results of operations are likely to depend, in large part, upon prevailing market prices. These market prices may fluctuate substantially over relatively short periods of time and could negatively impact the company's ability to accurately forecast the financial impact or reduce the Duke Energy Registrants’ revenues and margins, thereby diminishing results of operations.

Factors that could impact sales volumes, generation of electricity and market prices at which the Duke Energy Registrants are able to sell electricity and natural gas are as follows:

•weather conditions, including abnormally mild winter or summer weather that cause lower energy or natural gas usage for heating or cooling purposes, as applicable, and periods of low rainfall that decrease the ability to operate facilities in an economical manner;

•supply of and demand for energy commodities;

•transmission or transportation constraints or inefficiencies that impact nonregulated energy operations;

•availability of purchased power;

•availability of competitively priced alternative energy sources, which are preferred by some customers over electricity produced from coal, nuclear or natural gas plants, and customer usage of energy-efficient equipment that reduces energy demand;

•natural gas, crude oil and refined products production levels and prices;

•ability to procure satisfactory levels of inventory, including materials, supplies, and fuel such as coal, natural gas and uranium; and

•capacity and transmission service into, or out of, the Duke Energy Registrants’ markets.

Natural disasters or operational accidents may adversely affect the Duke Energy Registrants’ operating results.

Natural disasters or ~~other~~ operational accidents within the company or industry (such as forest fires, earthquakes, hurricanes or natural gas transmission pipeline explosions) could have direct or indirect impacts to the Duke Energy Registrants or to key contractors and suppliers. Further, the generation of electricity and the transportation and storage of natural gas involve inherent operating risks that may result in accidents involving serious injury or loss of life, environmental damage or property damage. Such events could impact the Duke Energy Registrants through changes to policies, laws and regulations whose compliance costs have a significant impact on the Duke Energy Registrants’ results of operations, financial position and cash flows. In addition, if a serious operational accident were to occur, existing insurance policies may not cover all of the potential exposures or the actual amount of loss ~~incurred.~~incurred, including potential litigation awards. Any losses not covered by insurance, or any increases in the cost of applicable insurance as a result of such accident, could have a material adverse effect on the results of operations, financial position, cash flows and reputation of the Duke Energy Registrants.

The reputation and financial condition of the Duke Energy Registrants could be negatively impacted due to their obligations to comply with federal and state regulations, laws, and other legal requirements that govern the operations, assessments, storage, closure, remediation, disposal and monitoring relating to CCR, the high costs and new rate impacts associated with implementing these new CCR-related requirements and the strategies and methods necessary to implement these requirements in compliance with these legal obligations.

As a result of electricity produced for decades at coal-fired power plants, the Duke Energy Registrants manage large amounts of CCR that are primarily stored in dry storage within landfills or combined with water in ~~other~~ surface impoundments, all in compliance with applicable regulatory requirements. A CCR-related operational incident could have a material adverse impact on the reputation and results of operations, financial position and cash flows of the Duke Energy Registrants.


~~RISK FACTORS~~

During 2015, EPA regulations were enacted related to the management of CCR from power plants. These regulations classify CCR as nonhazardous waste under the RCRA and apply to electric generating sites with new and existing landfills and, new and existing surface impoundments, and establish requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures for the disposal and management of CCR. In addition to the federal regulations, CCR landfills and surface impoundments will continue to be regulated by existing state laws, regulations and permits, as well as additional legal requirements that may be imposed in the future, such as the settlement reached with the NCDEQ to excavate seven of the nine remaining coal ash basins in North Carolina, and partially excavate the remaining ~~two.~~two, and the EPA's January 11, 2022, issuance of a letter interpreting the CCR Rule, including its applicability and closure provisions. These federal and state laws, regulations and other legal requirements may require or result in additional expenditures, including increased operating and maintenance costs, which could affect the results of operations, financial position and cash flows of the Duke Energy Registrants. The Duke Energy Registrants will continue to seek full cost recovery for expenditures through the normal ratemaking process with state and federal utility commissions, who permit recovery in rates of necessary and prudently incurred costs associated with the Duke Energy Registrants’ regulated operations, and through other wholesale contracts with terms that contemplate recovery of such costs, although there is no guarantee of full cost recovery. In addition, the timing for and amount of recovery of such costs could have a material adverse impact on Duke Energy's cash flows.


RISK FACTORS

The Duke Energy Registrants have recognized significant AROs related to these CCR-related requirements. Closure activities began in 2015 at the four sites specified as high priority by the Coal Ash Act and at the W.S. Lee Steam Station site in South Carolina in connection with other legal requirements. Excavation at these sites involves movement of CCR materials to off-site locations for use as structural fill, to ~~appropriate~~appropriately engineered off-site or on-site lined landfills or conversion of the ash for beneficial use. Duke Energy has completed excavation of coal ash at ~~three of~~ the four ~~high priority~~high-priority North Carolina sites. At other sites, planning and closure methods have been studied and factored into the estimated retirement and management costs, and closure activities have commenced. As the closure and CCR management work progresses and final closure plans and corrective action measures are developed and approved at each site, the scope and complexity of work and the amount of CCR material could be greater than estimates and could, therefore, materially increase compliance expenditures and rate impacts.

The Duke Energy Registrants’ results of operations, financial position and cash flows may be negatively affected by a lack of growth or slower growth in the number of customers, or decline in customer demand or number of customers.

Growth in customer accounts and growth of customer usage each directly influence demand for electricity and natural gas and the need for additional power generation and delivery facilities. Customer growth and customer usage are affected by several factors outside the control of the Duke Energy Registrants, such as mandated EE measures, demand-side management goals, distributed generation resources and economic and demographic conditions, such as inflation and interest rate volatility, population changes, job and income growth, housing starts, new business formation and the overall level of economic activity.

~~Certain~~In addition, certain regulatory and legislative bodies have passed legislation implementing the extension of certain tax credits to be used toward the costs of residential solar installation or have introduced or are considering requirements and/or incentives to reduce energy consumption by certain ~~dates.~~dates in response to concerns related to climate change. Additionally, technological advances driven by federal laws mandating new levels of EE in end-use electric and natural gas devices or other improvements in or applications of technology could lead to declines in per capita energy consumption.

Advances in distributed generation technologies that produce power, including fuel cells, microturbines, wind turbines and solar cells, may reduce the cost of alternative methods of producing power to a level competitive with central power station electric production utilized by the Duke Energy Registrants. In addition, the electrification of buildings and appliances currently relying on natural gas could reduce the number of customers in our natural gas distribution business.

Some or all of these factors could result in a lack of growth or decline in customer demand for electricity or number of customers and may cause the failure of the Duke Energy Registrants to fully realize anticipated benefits from significant capital investments and expenditures, which could have a material adverse effect on their results of operations, financial position and cash flows.

Furthermore, the Duke Energy Registrants currently have EE riders in place to recover the cost of EE programs in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky. Should the Duke Energy Registrants be required to invest in conservation measures that result in reduced sales from effective conservation, regulatory lag in adjusting rates for the impact of these measures could have a negative financial impact.

The Duke Energy Registrants future results of operations may be impacted by changing ~~customer~~ expectations and demands including heightened emphasis on environmental, social and governance concerns.

Duke Energy’s ability to execute its strategy and achieve anticipated financial outcomes are influenced by the expectations of our customers, regulators, investors, and stakeholders. Those expectations are based in part on the corefundamentals of reliability and affordability but are also increasingly focused on our ability to meet rapidly changing demands for new and varied products, services and offerings. Additionally, the risks of global climate change continues to shape our customers’ sustainability goals and energy ~~needs.~~needs as well as the investment and financing criteria of investors. Failure to meet ~~those~~these increasing expectations or to adequately address the risks and external pressures from regulators, customers, investors and other stakeholders may impact Duke Energy’s reputation and affect its ability to achieve favorable outcomes in future rate cases and the results of operations for the Duke Energy Registrants. Furthermore, the increasing use of social media may accelerate and increase the potential scope of negative publicity we might receive and could increase the negative impact on our reputation, business, results of operations, and financial condition.

As it relates to electric generation, a diversified fleet with increasingly clean generation resources may facilitate more efficient financing and lower costs. Conversely, jurisdictions utilizing more carbon-intensive generation such as coal may experience difficulty attracting certain investors and obtaining the most economical financing terms available. Furthermore, with this heightened emphasis on environmental, social, and governance concerns, and climate change in particular, there is an increased risk of litigation, activism, and legislation from groups both in support of and opposed to various environmental, social and governance initiatives, which could cause delays and increase the costs of our clean energy transition.

The Duke Energy Registrants’ operating results may fluctuate on a seasonal and quarterly basis and can be negatively affected by changes in weather conditions and severe weather, including extreme weather conditions ~~associated with~~and changes in weather patterns from climate change.

Electric power generation and natural gas distribution are generally seasonal businesses. In most parts of the U.S., the demand for power peaks during the warmer summer months, with market prices also typically peaking at that time. In other areas, demand for power peaks during the winter. Demand for natural gas peaks during the winter months. Further, changing frequency or magnitude of extreme weather conditions such as hurricanes, droughts, heat waves, winter storms and severe weather, ~~associated with~~including from climate change, could cause these seasonal fluctuations to be more pronounced. As a result, the overall operating results of the Duke Energy Registrants’ businesses may fluctuate substantially on a seasonal and quarterly basis and thus make period-to-period comparison less relevant.


~~RISK FACTORS~~

Sustained severe drought conditions could impact generation by hydroelectric plants, as well as fossil and nuclear plant operations, as these facilities use water for cooling purposes and for the operation of environmental compliance equipment. Furthermore, destruction caused by severe weather events, such as hurricanes, flooding, tornadoes, severe thunderstorms, snow and ice storms, including from climate change, can result in lost operating revenues due to outages, property damage, including downed transmission and distribution lines, and additional and unexpected expenses to mitigate storm damage. The cost of storm restoration efforts may not be fully recoverable through the regulatory process.


RISK FACTORS

The Duke Energy Registrants’ sales may decrease if they are unable to gain adequate, reliable and affordable access to transmission assets.

The Duke Energy Registrants depend on transmission and distribution facilities owned and operated by utilities and other energy companies to deliver electricity sold to the wholesale market. In addition, the growth of renewables and energy storage will put strains on existing transmission assets and require transmission and distribution upgrades. The FERC’s power transmission regulations require wholesale electric transmission services to be offered on an open-access, non-discriminatory basis. If transmission is disrupted, or if transmission capacity is inadequate, the Duke Energy Registrants’ ability to sell and deliver products may be hindered.

The different regional power markets have changing regulatory structures, which could affect growth and performance in these regions. In addition, the ISOs who oversee the transmission systems in regional power markets have imposed in the past, and may impose in the future, price limitations and other mechanisms to address volatility in the power markets. These types of price limitations and other mechanisms may adversely impact the profitability of the Duke Energy Registrants’ wholesale power marketing business.

The availability of adequate interstate pipeline transportation capacity and natural gas supply may decrease.

The Duke Energy Registrants purchase almost all of their natural gas supply from interstate sources that must be transported to the applicable service territories. Interstate pipeline companies transport the natural gas to the Duke Energy Registrants' systems under firm service agreements that are designed to meet the requirements of their core markets. A significant disruption to interstate pipelines capacity or reduction in natural gas supply due to events including, but not limited to, operational failures or disruptions, hurricanes, tornadoes, floods, freeze off of natural gas wells, terrorist or cyberattacks or other acts of war or legislative or regulatory actions or requirements, including remediation related to integrity inspections or regulations and laws enacted to address climate change, could reduce the normal interstate supply of natural gas and thereby reduce earnings. Moreover, if additional natural gas infrastructure, including, but not limited to, exploration and drilling rigs and platforms, processing and gathering systems, offshore pipelines, interstate pipelines and storage, cannot be built at a pace that meets demand, then growth opportunities could be limited.

Fluctuations in commodity prices or availability may adversely affect various aspects of the Duke Energy Registrants’ operations as well as their results of operations, financial position and cash flows.

The Duke Energy Registrants are exposed to the effects of market fluctuations in the price of natural gas, coal, fuel oil, nuclear fuel, electricity and other energy-related commodities as a result of their ownership of energy-related assets. Fuel costs are recovered primarily through ~~cost-recovery~~cost recovery clauses, subject to the approval of state utility commissions.

Additionally, the Duke Energy Registrants are exposed to risk that counterparties will not be able to fulfill their obligations. Disruption in the delivery of fuel, including disruptions as a result of, among other things, bankruptcies, transportation delays, weather, labor relations, force majeure events or environmental regulations affecting any of these fuel suppliers, could limit the Duke Energy Registrants' ability to operate their facilities. Should counterparties fail to perform, the Duke Energy Registrants might be forced to replace the underlying commitment at prevailing market prices possibly resulting in losses in addition to the amounts, if any, already paid to the counterparties.

Certain of the Duke Energy Registrants’ hedge agreements may result in the receipt of, or posting of, collateral with counterparties, depending on the daily market-based calculation of financial exposure of the derivative positions. Fluctuations in commodity prices that lead to the return of collateral received and/or the posting of collateral with counterparties could negatively impact liquidity. Downgrades in the Duke Energy Registrants’ credit ratings could lead to additional collateral posting requirements. The Duke Energy Registrants continually monitor derivative positions in relation to market price activity.

Cyberattacks and data security breaches could adversely affect the Duke Energy Registrants' businesses.

Cybersecurity risks have increased in recent years as a result of the proliferation of new technologies and the increased sophistication, magnitude and frequency of cyberattacks and data security breaches. Duke Energy relies on the continued operation of sophisticated digital information technology systems and network infrastructure, which are part of an interconnected regional grid. Additionally, connectivity to the internet continues to increase through grid modernization and other operational excellence initiatives. Because of the critical nature of the infrastructure, increased connectivity to the internet and technology systems’ inherent vulnerability to disability or failures due to hacking, viruses, acts of war or terrorism or other types of data security breaches, the Duke Energy Registrants face a heightened risk of cyberattack from foreign or domestic sources and have been subject, and will likely continue to be subject, to attempts to gain unauthorized access to information and/or information systems or to disrupt utility operations through computer viruses and phishing attempts either directly or indirectly through its material vendors or related third parties. In the event of a significant cybersecurity breach on either the Duke Energy Registrants or with one of our material vendors or related third parties, the Duke Energy Registrants could (i) have business operations disrupted, including the disruption of the operation of our natural gas and electric assets and the power grid, theft of confidential company, employee, retiree, shareholder, vendor or customer information, and general business systems and process interruption or compromise, including preventing the Duke Energy Registrants from servicing customers, collecting revenues or the recording, processing and/or reporting financial information correctly, (ii) experience substantial loss of revenues, repair and restoration costs, penalties and costs for lack of compliance with relevant regulations, implementation costs for additional security measures to avert future cyberattacks and other financial loss and (iii) be subject to increased regulation, litigation and reputational damage. While Duke Energy maintains insurance relating to cybersecurity events, such insurance is subject to a number of exclusions and may be insufficient to offset any losses, costs or damage experienced. Also, the market for cybersecurity insurance is relatively new and coverage available for cybersecurity events is evolving as the industry matures.

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RISK FACTORS

The Duke Energy Registrants are subject to standards enacted by the North American Electric Reliability Corporation and enforced by FERC regarding protection of the physical and ~~cyber security~~cybersecurity of critical infrastructure assets required for operating North America's bulk electric system. The Duke Energy Registrants are also subject to regulations set by the Nuclear Regulatory Commission regarding the protection of digital computer and communication systems and networks required for the operation of nuclear power plants. The Duke Energy Registrants that operate designated critical pipelines that transport natural gas are also subject to security directives issued by the Department of Homeland Security's Transportation Security Administration (TSA) requiring such registrants to implement specific cybersecurity mitigation measures. While the Duke Energy Registrants believe they are in compliance with, or, in the case of recent TSA security directives, are in the process of implementing such standards and regulations, the Duke Energy Registrants have from time to time been, and may in the future be, found to be in violation of such standards and regulations. In addition, compliance with or changes in the applicable standards and regulations may subject the Duke Energy Registrants to higher operating costs and/or increased capital expenditures as well as substantial fines for non-compliance.

The Duke Energy Registrants’ operations have been and may be affected by pandemic health events, including COVID-19, in ways listed below and in ways the Duke Energy Registrants cannot predict at this time.

The COVID-19 pandemic and efforts to respond to it have resulted in widespread adverse consequences on the global economy and on the Duke Energy Registrants’ customers, third-party vendors, and other parties with whom we do business. If the COVID-19 pandemic or other health epidemics and outbreaks that may occur are significantly prolonged, it could impact the Duke Energy Registrants' business strategy, results of operations, financial position and cash flows in the future as a result of delays in rate cases or other legal proceedings, an inability to obtain labor or equipment necessary for the construction of large capital projects, an inability to procure satisfactory levels of fuels or other necessary equipment for the continued production of electricity and delivery of natural gas, and the health and availability of our critical personnel and their ability to perform business functions.

Duke Energy Ohio’s and Duke Energy Indiana’s membership in an RTO presents risks that could have a material adverse effect on their results of operations, financial position and cash flows.

The rules governing the various regional power markets may change, which could affect Duke Energy Ohio’s and Duke Energy Indiana’s costs and/or revenues. To the degree Duke Energy Ohio and Duke Energy Indiana incur significant additional fees and increased costs to participate in an RTO, their results of operations may be impacted. Duke Energy Ohio and Duke Energy Indiana may be allocated a portion of the cost of transmission facilities built by others due to changes in RTO transmission rate design. Duke Energy Ohio and Duke Energy Indiana may be required to expand their transmission system according to decisions made by an RTO rather than their own internal planning process. In addition, RTOs have been developing rules associated with the allocation and methodology of assigning costs associated with improved transmission reliability, reduced transmission congestion and firm transmission rights that may have a financial impact on the results of operations, financial position and cash flows of Duke Energy Ohio and Duke Energy Indiana.

As members of an RTO, Duke Energy Ohio and Duke Energy Indiana are subject to certain additional risks, including those associated with the allocation among RTO members, of losses caused by unreimbursed defaults of other participants in the RTO markets and those associated with complaint cases filed against an RTO that may seek refunds of revenues previously earned by RTO members.

The Duke Energy Registrants may not recover costs incurred to begin construction on projects that are canceled.

Duke Energy’s long-term strategy requires the construction of new projects, either wholly owned or partially owned, which involve a number of risks, including construction delays, delays in or failure to receive required regulatory approvals and/or sitting or environmental permits, nonperformance by equipment and other third-party suppliers, and increases in equipment and labor costs. To limit the risks of these construction projects, the Duke Energy Registrants enter into equipment purchase orders and construction contracts and incur engineering and design service costs in advance of receiving necessary regulatory approvals and/or siting or environmental permits. If any of these projects are canceled for any reason, including failure to receive necessary regulatory approvals and/or siting or environmental permits, significant cancellation penalties under the equipment purchase orders and construction contracts could occur. In addition, if any construction work or investments have been recorded as an asset, an impairment may need to be recorded in the event the project is canceled.

The Duke Energy Registrants are subject to risks associated with their ability to obtain adequate insurance at acceptable costs.

The financial condition of some insurance companies, actual or threatened physical or cyberattacks, and natural disasters, among other things, could have disruptive effects on insurance markets. The availability of insurance covering risks that the Duke Energy Registrants and their respective competitors typically insure against may decrease, and the insurance that the Duke Energy Registrants are able to obtain may have higher deductibles, higher premiums, and more restrictive policy terms. Further, the insurance policies may not cover all of the potential exposures or the actual amount of loss incurred. Any losses not covered by insurance, or any increases in the cost of applicable insurance, could adversely affect the results of operations, financial position or cash flows of the affected Duke Energy Registrant.

Our business could be negatively affected as a result of actions of activist shareholders.

While we strive to maintain constructive communications with our shareholders, activist shareholders may, from time to time, engage in proxy solicitations or advance shareholder proposals, or otherwise attempt to affect changes and assert influence on our Board and management. Perceived uncertainties as to the future direction or governance of the company may cause concern to our current or potential regulators, vendors or strategic partners, or make it more difficult to execute on our strategy or to attract and retain qualified personnel, which may have a material impact on our business and operating results.

In addition, actions such as those described above could cause fluctuations in the trading price of our common stock, based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.


RISK FACTORS

NUCLEAR GENERATION RISKS

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida may incur substantial costs and liabilities due to their ownership and operation of nuclear generating facilities.

Ownership interests in and operation of nuclear stations by Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida subject them to various risks. These risks include, among other things: the potential harmful effects on the environment and human health resulting from the current or past operation of nuclear facilities and the storage, handling and disposal of radioactive materials; limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with nuclear operations; and uncertainties with respect to the technological and financial aspects of decommissioning nuclear plants at the end of their licensed lives.

Ownership and operation of nuclear generation facilities requires compliance with licensing and safety-related requirements imposed by the NRC. In the event of non-compliance, the NRC may increase regulatory oversight, impose fines or shut down a unit depending upon its assessment of the severity of the situation. Revised security and safety requirements promulgated by the NRC, which could be prompted by, among other things, events within or outside of the control of Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, such as a serious nuclear incident at a facility owned by a third party, could necessitate substantial capital and other expenditures, as well as assessments to cover third-party losses. In addition, if a serious nuclear incident were to occur, it could have a material adverse effect on the results of operations, financial position, cash flows and reputation of the Duke Energy Registrants.


~~RISK FACTORS~~

LIQUIDITY, CAPITAL REQUIREMENTS AND COMMON STOCK RISKS

The Duke Energy Registrants rely on access to short-term borrowings and longer-term debt and equity markets to finance their capital requirements and support their liquidity needs. Access to those markets can be adversely affected by a number of conditions, many of which are beyond the Duke Energy Registrants’ control.

The Duke Energy Registrants’ businesses are significantly financed through issuances of debt and equity. The maturity and repayment profile of debt used to finance investments often does not correlate to cash flows from their assets. Accordingly, as a source of liquidity for capital requirements not satisfied by the cash flows from their operations and to fund investments originally financed through debt instruments with disparate maturities, the Duke Energy Registrants rely on access to short-term money markets as well as longer-term capital markets. The Subsidiary Registrants also rely on access to short-term intercompany borrowings. If the Duke Energy Registrants are not able to access debt or equity at competitive rates or at all, the ability to finance their operations and implement their strategy and business plan as scheduled could be adversely affected. An inability to access debt and equity may limit the Duke Energy Registrants’ ability to pursue improvements or acquisitions that they may otherwise rely on for future growth.

Market disruptions may increase the cost of borrowing or adversely affect the ability to access one or more financial markets. Such disruptions could include: economic downturns, ~~the bankruptcy of an unrelated energy company,~~ unfavorable capital market conditions, market prices for ~~electricity~~natural gas and ~~natural gas,~~coal, geopolitical risks, actual or threatened terrorist attacks, or the overall health of the energy industry. Additionally, rapidly rising interest rates could impact the ability to affordably finance the capital plan or increase rates to customers and could have an impact on our ability to execute on our clean energy transition. The availability of credit under Duke Energy’s Master Credit Facility depends upon the ability of the banks providing commitments under the facility to provide funds when their obligations to do so arise. ~~Systematic~~Systemic risk of the banking system and the financial markets could prevent a bank from meeting its obligations under the facility agreement.

Duke Energy maintains a revolving credit facility to provide backup for its commercial paper program and letters of credit to support variable rate demand tax-exempt bonds that may be put to the Duke Energy Registrant issuer at the option of the holder. The facility includes borrowing sublimits for the Duke Energy Registrants, each of whom is a party to the credit facility, and financial covenants that limit the amount of debt that can be outstanding as a percentage of the total capital for the specific entity. Failure to maintain these covenants at a particular entity could preclude Duke Energy from issuing commercial paper or the Duke Energy Registrants from issuing letters of credit or borrowing under the Master Credit Facility.

The Duke Energy Registrants must meet credit quality standards and there is no assurance they will maintain investment grade credit ratings. If the Duke Energy Registrants are unable to maintain investment grade credit ratings, they would be required under credit agreements to provide collateral in the form of letters of credit or cash, which may materially adversely affect their liquidity.

Each of the Duke Energy Registrants’ senior long-term debt issuances is currently rated investment grade by various rating agencies. The Duke Energy Registrants cannot ensure their senior long-term debt will be rated investment grade in the future.

If the rating agencies were to rate the Duke Energy Registrants below investment grade, borrowing costs would increase, perhaps significantly. In addition, the potential pool of investors and funding sources would likely decrease. Further, if the short-term debt rating were to fall, access to the commercial paper market could be significantly limited.

A downgrade below investment grade could also require the posting of additional collateral in the form of letters of credit or cash under various credit, commodity and capacity agreements and trigger termination clauses in some interest rate derivative agreements, which would require cash payments. All of these events would likely reduce the Duke Energy Registrants’ liquidity and profitability and could have a material effect on their results of operations, financial position and cash flows.

Non-compliance with debt covenants or conditions could adversely affect the Duke Energy Registrants’ ability to execute future borrowings.

The Duke Energy Registrants’ debt and credit agreements contain various financial and other covenants. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements.


RISK FACTORS

Market performance and other changes may decrease the value of the NDTF investments of Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, which then could require significant additional funding.

Ownership and operation of nuclear generation facilities also requires the maintenance of funded trusts that are intended to pay for the decommissioning costs of the respective nuclear power plants. The performance of the capital markets affects the values of the assets held in trust to satisfy these future obligations. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida have significant obligations in this area and hold significant assets in these trusts. These assets are subject to market fluctuations and will yield uncertain returns, which may fall below projected rates of return. Although a number of factors impact funding requirements, a decline in the market value of the assets may increase the funding requirements of the obligations for decommissioning nuclear plants. If Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are unable to successfully manage their NDTF assets, their results of operations, financial position and cash flows could be negatively affected.


~~RISK FACTORS~~

Poor investment performance of the Duke Energy pension plan holdings and other factors impacting pension plan costs could unfavorably impact the Duke Energy Registrants’ liquidity and results of operations.

The costs of providing non-contributory defined benefit pension plans are dependent upon a number of factors, such as the rates of return on plan assets, discount rates, the level of interest rates used to measure the required minimum funding levels of the plans, future government regulation and required or voluntary contributions made to the plans. The Subsidiary Registrants are allocated their proportionate share of the cost and obligations related to these plans. Without sustained growth in the pension investments over time to increase the value of plan assets and, depending upon the other factors impacting costs as listed above, Duke Energy could be required to fund its plans with significant amounts of cash. Such cash funding obligations, and the Subsidiary Registrants’ proportionate share of such cash funding obligations, could have a material adverse impact on the Duke Energy Registrants’ results of operations, financial position and cash flows.

Duke Energy is a holding company and depends on the cash flows from its subsidiaries to meet its financial obligations.

Because Duke Energy is a holding company with no operations or cash flows of its own, its ability to meet its financial obligations, including making interest and principal payments on outstanding indebtedness and to pay dividends on its common stock, is primarily dependent on the net income and cash flows of its subsidiaries and the ability of those subsidiaries to pay upstream dividends or to repay borrowed funds. Prior to funding Duke Energy, its subsidiaries have regulatory restrictions and financial obligations that must be satisfied. These subsidiaries are separate legal entities and have no obligation to provide Duke Energy with funds. In addition, Duke Energy may provide capital contributions or debt financing to its subsidiaries under certain circumstances, which would reduce the funds available to meet its financial obligations, including making interest and principal payments on outstanding indebtedness and to pay dividends on Duke Energy’s common stock.

GENERAL RISKS

The failure of Duke Energy information technology systems, or the failure to enhance existing information technology systems and implement new technology, could adversely affect the Duke Energy Registrants’ businesses.

Duke Energy’s operations are dependent upon the proper functioning of its internal systems, including the information technology systems that support our underlying business processes. Any significant failure or malfunction of such information technology systems may result in disruptions of our operations. In the ordinary course of business, we rely on information technology systems, including the internet and third-party hosted services, to support a variety of business processes and activities and to store sensitive data, including (i) intellectual property, (ii) proprietary business information, (iii) personally identifiable information of our customers, employees, retirees and shareholders and (iv) data with respect to invoicing and the collection of payments, accounting, procurement, and supply chain activities. Our information technology systems are dependent upon global communications and cloud service providers, as well as their respective vendors, many of whom have at some point experienced significant system failures and outages in the past and may experience such failures and outages in the future. These providers’ systems are susceptible to cybersecurity and data breaches, outages from fire, floods, power loss, telecommunications failures, break-ins and similar events. Failure to prevent or mitigate data loss from system failures or outages could materially affect the results of operations, financial position and cash flows of the Duke Energy Registrants.

In addition to maintaining our current information technology systems, Duke Energy believes the digital transformation of its business is key to driving internal efficiencies as well as providing additional capabilities to customers. Duke Energy’s information technology systems are critical to cost-effective, reliable daily operations and our ability to effectively serve our customers. We expect our customers to continue to demand more sophisticated technology-driven solutions and we must enhance or replace our information technology systems in response. This involves significant development and implementation costs to keep pace with changing technologies and customer demand. If we fail to successfully implement critical technology, or if it does not provide the anticipated benefits or meet customer demands, such failure could materially adversely affect our business strategy as well as impact the results of operations, financial position and cash flows of the Duke Energy Registrants.

Potential terrorist activities, or military or other actions, could adversely affect the Duke Energy Registrants’ businesses.

The continued threat of terrorism and the impact of retaliatory military and other action by the U.S. and its allies may lead to increased political, economic and financial market instability and volatility in prices for natural gas and oil, which may have material adverse effects in ways the Duke Energy Registrants cannot predict at this time. In addition, future acts of terrorism and possible reprisals as a consequence of action by the U.S. and its allies could be directed against companies operating in the U.S. Information technology systems, transportation systems for our fuel sources including natural gas pipelines, transmission and distribution and generation facilities such as nuclear plants could be potential targets of terrorist activities or harmful activities by individuals or groups that could have a material adverse effect on Duke Energy Registrants' businesses. In particular, the Duke Energy Registrants may experience increased capital and operating costs to implement increased security for their information technology systems, transmission and distribution and generation facilities, including nuclear power plants under the NRC’s design basis threat requirements. These increased costs could include additional physical plant security and security personnel or additional capability following a terrorist incident.


RISK FACTORS

Failure to attract and retain an appropriately qualified workforce could unfavorably impact the Duke Energy Registrants’ results of operations.

Certain events, such as an aging workforce, mismatch of skill set or complement to future needs, or unavailability of contract resources may lead to operating challenges and increased costs. The challenges include lack of resources, loss of knowledge base and the lengthy time required for skill development. In this case, costs, including costs for contractors to replace employees, productivity costs and safety costs, may increase. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to new employees, or future availability and cost of contract labor may adversely affect the ability to manage and operate the business, especially considering the workforce needs associated with nuclear generation facilities and new skills required to operate a modernized, technology-enabled power grid. If the Duke Energy Registrants are unable to successfully attract and retain an appropriately qualified workforce, their results of operations, financial position and cash flows could be negatively affected.


~~UNRESOLVED STAFF COMMENTS~~

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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PROPERTIES

ITEM 2. PROPERTIES

ELECTRIC UTILITIES AND INFRASTRUCTURE

The following table provides information related to the ~~Electric Utilities and Infrastructure's~~EU&I's generation stations as of December 31, ~~2020.~~2022. The MW displayed in the table below are based on summer capacity. Ownership interest in all facilities is 100% unless otherwise indicated.

Owned MW

Facility

Plant Type

Primary Fuel

Location

Capacity

Duke Energy Carolinas

Oconee

Nuclear

Uranium

2,554

McGuire

Nuclear

Uranium

2,316

Catawba(a)

Nuclear

Uranium

445

Belews Creek

Fossil

Coal/Gas

2,220

Marshall

Fossil

Coal/Gas

2,058

J.E. Rogers

Fossil

Coal/Gas

1,388

Lincoln Combustion Turbine (CT)

Fossil

Gas/Oil

~~1,193~~1,161

Allen

Fossil

Coal

~~1,098~~421

Rockingham CT

Fossil

Gas/Oil

825

W.S. Lee Combined Cycle (CC)(b)

Fossil

Gas

686

Buck CC

Fossil

Gas

668

Dan River CC

Fossil

Gas

662

Mill Creek CT

Fossil

Gas/Oil

563

~~W.S. Lee~~

~~Fossil~~

~~Gas~~

~~170~~

W.S. Lee CT

Fossil

Gas/Oil

Clemson CHP

Fossil

Gas

Bad Creek

Hydro

Water

~~1,440~~1,520

Jocassee

Hydro

Water

780

Cowans Ford

Hydro

Water

324

Keowee

Hydro

Water

152

Other small facilities (19 plants)

Hydro

Water

NC/SC

~~603~~581

Distributed generation

Renewable

Solar

3871

Total Duke Energy Carolinas

~~20,280~~19,492


~~PROPERTIES~~

Owned MW

Facility

Plant Type

Primary Fuel

Location

Capacity

Duke Energy Progress

Brunswick

Nuclear

Uranium

1,870

Harris

Nuclear

Uranium

964

Robinson

Nuclear

Uranium

759

Roxboro

Fossil

Coal

2,439

Smith CC

Fossil

Gas/Oil

~~1,085~~1,083

H.F. Lee CC

Fossil

Gas/Oil

888

Wayne County CT

Fossil

Gas/Oil

~~857~~822

Smith CT

Fossil

Gas/Oil

772

Mayo

Fossil

Coal

~~727~~704

L.V. Sutton CC

Fossil

Gas/Oil

607

Asheville CC

Fossil

Gas/Oil

~~474~~476

Asheville CT

Fossil

Gas/Oil

320

Darlington CT

Fossil

Gas/Oil

234

Weatherspoon CT

Fossil

Gas/Oil

124

L.V. Sutton CT ~~(Black Start)~~

Fossil

Gas/Oil

7884

Blewett CT

Fossil

Oil

Walters

Hydro

Water

112

Other small facilities (3)

Hydro

Water

~~115~~116

Distributed generation

Renewable

Solar

4935

Asheville – Rock Hill Battery

Renewable

Storage

Hot Springs Microgrid

Renewable

Storage

Total Duke Energy Progress

~~12,533~~12,464


PROPERTIES

Owned MW

Facility

Plant Type

Primary Fuel

Location

Capacity

Duke Energy Florida

Hines CC

Fossil

Gas/Oil

~~2,054~~2,061

Citrus County CC

Fossil

Gas

1,610

Crystal River

Fossil

Coal

~~1,422~~1,410

Bartow CC

Fossil

Gas/Oil

~~1,169~~1,112

Anclote

Fossil

Gas

1,013

Intercession City CT

Fossil

Gas/Oil

~~951~~940

Osprey CC

Fossil

Gas/Oil

~~583~~576

DeBary CT

Fossil

Gas/Oil

~~559~~524

Tiger Bay CC

Fossil

Gas/Oil

~~200~~199

Bayboro CT

Fossil

Oil

171

Bartow CT

Fossil

Gas/Oil

168

Suwannee River CT

Fossil

Gas

~~149~~145

University of Florida CoGen CT

Fossil

Gas

4344

Distributed generation

Renewable

Solar

~~195~~485

Trenton Battery

Renewable

Storage

Micanopy Energy Storage

Renewable

Storage

Jennings Battery

Renewable

Storage

5.5

Cape San Blas Battery

Renewable

Storage

5.5

Total Duke Energy Florida

~~10,287~~10,488

Owned MW

Facility

Plant Type

Primary Fuel

Location

Capacity

Duke Energy Ohio

East Bend

Fossil

Coal

600

Woodsdale CT

Fossil

Gas/Propane

476

Beckjord Battery Storage

Renewable

Storage

Total Duke Energy Ohio

~~1,076~~1,080


~~PROPERTIES~~

Owned MW

Facility

Plant Type

Primary Fuel

Location

Capacity

Duke Energy Indiana

Gibson(c)

Fossil

Coal

2,822

Cayuga(d)

Fossil

Coal/Oil

1,005

Edwardsport

Fossil

Coal

595

Madison CT

Fossil

Gas

566

Wheatland CT

Fossil

Gas

~~450~~444

Vermillion CT(e)

Fossil

Gas

360

~~Gallagher~~

~~Fossil~~

~~Coal~~

~~280~~

Noblesville CC

Fossil

Gas/Oil

264

Henry County CT

Fossil

Gas/Oil

~~129~~126

Cayuga CT

Fossil

Gas/Oil

8684

Purdue CHP

Fossil

Gas

Markland

Hydro

Water

5154

Distributed generation

Renewable

Solar

Camp Atterbury Battery

Renewable

Storage

Nabb Battery

Renewable

Storage

Crane Battery

Renewable

Storage

Total Duke Energy Indiana

~~6,631~~6,346


PROPERTIES

Owned MW

Totals by Type

Capacity

Total Electric Utilities

~~50,807~~49,870

Totals by Plant Type

Nuclear

8,908

Fossil

~~38,010~~36,681

Hydro

~~3,577~~3,639

Renewable

~~312~~642

Total Electric Utilities

~~50,807~~49,870

(a)Jointly owned with North Carolina Municipal Power Agency Number 1, NCEMC and PMPA. Duke Energy Carolinas' ownership is 19.25% of the facility.

(b)Jointly owned with NCEMC. Duke Energy Carolinas' ownership is 87.27% of the facility.

(c)Duke Energy Indiana owns and operates Gibson Station Units 1 through 4 and is a joint owner of unit 5 with WVPA and IMPA. Duke Energy Indiana operates unit 5 and owns 50.05%.

(d)Includes Cayuga Internal Combustion.

(e)Jointly owned with WVPA. Duke Energy Indiana's ownership is 62.5% of the facility.

The following table provides information related to ~~Electric Utilities and Infrastructure's~~EU&I's electric transmission and distribution properties as of December 31, ~~2020.~~2022.


			Duke							Duke
		Duke	Energy						Duke	Energy
		Energy	Carolinas	Progress	Florida	Ohio	Indiana		Energy	Carolinas	Progress	Florida	Ohio	Indiana
Electric Transmission Lines	Electric Transmission Lines							Electric Transmission Lines
Miles of 500 to 525 kilovolt (kV)	Miles of 500 to 525 kilovolt (kV)	1,100	600	300	200	—	—	Miles of 500 to 525 kilovolt (kV)	1,100	600	300	200	—	—
Miles of 345 kV	Miles of 345 kV	1,100	—	—	—	400	700	Miles of 345 kV	1,100	—	—	—	400	700
Miles of 230 kV	Miles of 230 kV	8,400	2,700	3,400	1,600	—	700	Miles of 230 kV	8,500	2,700	3,400	1,700	—	700
Miles of 100 to 161 kV	Miles of 100 to 161 kV	12,400	6,800	2,600	900	700	1,400	Miles of 100 to 161 kV	12,500	6,800	2,600	1,000	700	1,400
Miles of 13 to 69 kV	Miles of 13 to 69 kV	8,300	3,000	—	2,200	600	2,500	Miles of 13 to 69 kV	8,300	2,900	—	2,200	700	2,500
Total conductor miles of electric transmission lines	Total conductor miles of electric transmission lines	31,300	13,100	6,300	4,900	1,700	5,300	Total conductor miles of electric transmission lines	31,500	13,000	6,300	5,100	1,800	5,300
Electric Distribution Lines	Electric Distribution Lines							Electric Distribution Lines
Miles of overhead lines	Miles of overhead lines	173,500	66,600	46,400	25,100	13,300	22,100	Miles of overhead lines	173,600	66,600	46,300	25,300	13,300	22,100
Miles of underground line	Miles of underground line	108,900	40,400	31,800	21,100	6,200	9,400	Miles of underground line	116,100	41,900	35,200	22,700	6,500	9,800
Total conductor miles of electric distribution lines	Total conductor miles of electric distribution lines	282,400	107,000	78,200	46,200	19,500	31,500	Total conductor miles of electric distribution lines	289,700	108,500	81,500	48,000	19,800	31,900
Number of electric transmission and distribution substations	Number of electric transmission and distribution substations	3,200	1,400	500	500	300	500	Number of electric transmission and distribution substations	3,000	1,200	500	500	300	500

Substantially all of ~~Electric Utilities and Infrastructure's~~EU&I's electric plant in service is mortgaged under indentures relating to Duke Energy Carolinas’, Duke Energy Progress', Duke Energy Florida's, Duke Energy Ohio’s and Duke Energy Indiana’s various series of First Mortgage Bonds.


~~PROPERTIES~~

GAS UTILITIES AND INFRASTRUCTURE

~~Gas Utilities and Infrastructure~~GU&I owns transmission pipelines and distribution mains that are generally underground, located near public streets and highways, or on property owned by others for which Duke Energy Ohio and Piedmont have obtained the necessary legal rights to place and operate facilities on such property located within the ~~Gas Utilities and Infrastructure~~GU&I service territories. The following table provides information related to ~~Gas Utilities and Infrastructure's~~GU&I's natural gas distribution.

Duke
Duke Energy
Energy Ohio Piedmont
Miles of natural gas distribution and transmission pipelines 34,200 7,400 26,800
Miles of natural gas service lines 27,200 6,300 20,900

~~COMMERCIAL RENEWABLES~~

~~The following table provides information related to Commercial Renewables' electric generation facilities as of December 31, 2020. The MW displayed in the table below are based on nameplate capacity.~~

Owned MW Ownership
Facility Plant Type Primary Fuel Location Capacity Interest (%)
Commercial Renewables – Wind
Los Vientos (five sites) Renewable Wind TX 465 51 %
Mesteno(a)
Renewable Wind TX 202 100 %
Sweetwater IV Renewable Wind TX 113 47 %
Frontier Renewable Wind OK 103 51 %
Top of the World Renewable Wind WY 102 51 %
Notrees Renewable Wind TX 78 51 %
Mesquite Creek Renewable Wind TX 54 26 %
Campbell Hill Renewable Wind WY 50 51 %
Ironwood Renewable Wind KS 44 26 %
Sweetwater V Renewable Wind TX 38 47 %
North Allegheny Renewable Wind PA 36 51 %
Laurel Hill Renewable Wind PA 35 51 %
Cimarron II Renewable Wind KS 34 26 %
Kit Carson Renewable Wind CO 26 51 %
Silver Sage Renewable Wind WY 21 51 %
Happy Jack Renewable Wind WY 15 51 %
Shirley Renewable Wind WI 10 51 %
Total Renewables – Wind 1,426


~~PROPERTIES~~

Owned MW Ownership
Facility Plant Type Primary Fuel Location Capacity Interest (%)
Commercial Renewables – Solar
Holstein(a)
Renewable Solar TX 200 100 %
Rambler(a)
Renewable Solar TX 200 100 %
North Rosamond(a)
Renewable Solar CA 150 100 %
Lapetus(a)
Renewable Solar TX 100 100 %
Conetoe II Renewable Solar NC 80 100 %
Palmer(a)
Renewable Solar CO 60 100 %
Seville I & II Renewable Solar CA 34 67 %
Rio Bravo I & II Renewable Solar CA 27 67 %
Wildwood I & II Renewable Solar CA 23 67 %
Kelford Renewable Solar NC 22 100 %
Dogwood Renewable Solar NC 20 100 %
Halifax Airport Renewable Solar NC 20 100 %
Pasquotank Renewable Solar NC 20 100 %
Shawboro Renewable Solar NC 20 100 %
Caprock Renewable Solar NM 17 67 %
Creswell Alligood Renewable Solar NC 14 100 %
Pumpjack Renewable Solar CA 13 67 %
Longboat Renewable Solar CA 13 67 %
Shoreham(a)
Renewable Solar NY 13 51 %
Washington White Post Renewable Solar NC 12 100 %
Whitakers Renewable Solar NC 12 100 %
Highlander I & II Renewable Solar CA 11 51 %
Other small solar(a)
Renewable Solar Various 193 Various
Total Renewables – Solar 1,274

Owned MW Ownership
Facility Plant Type Primary Fuel Location Capacity Interest (%)
Commercial Renewables – Fuel Cells(a)
Renewable Fuel Cell Various 43 100 %
Total Renewables – Fuel Cells 43

Owned MW Ownership
Facility Plant Type Primary Fuel Location Capacity Interest (%)
Commercial Renewables – Energy Storage
Notrees Battery Storage Renewable Storage TX 18 51 %
Beckjord Battery Storage Renewable Storage OH 2 100 %
Total Renewables – Energy Storage 20

~~Owned MW~~

~~Totals by Type~~

~~Capacity~~

~~Wind~~

~~1,426~~

~~Solar~~

~~1,274~~

~~Fuel Cells~~

~~Energy Storage~~

~~Total Commercial Renewables(b)~~

~~2,763~~

(a) Certain projects, including projects within Other small solar, are in tax-equity structures where investors have differing interests in the project's economic attributes. 100% of the tax-equity project's capacity is included in the table above.

~~(b) Net proportion of MW capacity in operation is 3,937, which represents the amount managed or owned by Duke Energy.~~


		Duke
	Duke	Energy
	Energy	Ohio	Piedmont
Miles of natural gas distribution and transmission pipelines	35,200	7,600	27,600
Miles of natural gas service lines	28,300	6,600	21,700

OTHER

Duke Energy owns approximately 87.1 million square feet and leases approximately 22.7 million square feet of corporate, regional and district office space spread throughout its service territories. See Note 11, "Property, Plant and Equipment," for further information.

3935


LEGAL PROCEEDINGS AND MINE SAFETY DISCLOSURES

ITEM 3. LEGAL PROCEEDINGS

For information regarding legal proceedings, including regulatory and environmental matters, see Note 3, “Regulatory Matters,” and Note 4, “Commitments and Contingencies,” to the Consolidated Financial Statements.

MTBE Litigation

On December 15, 2017, the state of Maryland filed suit in Baltimore City Circuit Court against Duke Energy Merchants and other defendants alleging contamination of state waters by MTBE leaking from gasoline storage ~~tanks.~~tanks and is seeking an unspecified amount of monetary damages. MTBE is a gasoline additive intended to increase the oxygen levels in gasoline and make it burn cleaner. The case was removed from Baltimore City Circuit Court to federal District Court. Initial motions to dismiss filed by the defendants were denied by the court on September 4, 2019, and the matter is now in discovery. On December 18, 2020, the plaintiff and defendants selected 50 focus sites, none of which have any ties to Duke Energy ~~Merchants, and discovery is likely to~~Merchants. Discovery will be specific to those sites. At this time, Duke Energy Merchants has not engaged in settlement negotiations with the plaintiff and the plaintiff has not reached a settlement agreement with any defendant. Duke Energy cannot predict the outcome of this matter.

In addition, the Duke Energy Registrants are, from time to time, parties to various lawsuits and regulatory proceedings in the ordinary course of their business. For information regarding legal proceedings, including regulatory and environmental matters, see Note 4, “Regulatory Matters,” and Note 5, “Commitments and Contingencies,” to the Consolidated Financial Statements.

ITEM 4. MINE SAFETY DISCLOSURES

This is not applicable for any of the Duke Energy Registrants.

4036


SECURITIES INFORMATION

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The common stock of Duke Energy is listed and traded on the NYSE (ticker symbol DUK). As of January 31, ~~2021,~~2023, there ~~were~~ w~~136,857~~ere 127,329 Duke Energy common stockholders of record. For information on dividends, see the "Dividend Payments" section of Management's Discussion and Analysis.

There is no market for the common equity securities of the Subsidiary Registrants, all of which are directly or indirectly owned by Duke Energy. See Note ~~1, "Summary of Significant Accounting Policies,~~2, "Dispositions," to the Consolidated Financial Statements for information on the ~~2021 sale~~investment of a minority interest in Duke Energy Indiana.

Securities Authorized for Issuance Under Equity Compensation Plans

See Item 12 of Part III within this Annual Report for information regarding Securities Authorized for Issuance Under Equity Compensation Plans.

Issuer Purchases of Equity Securities for Fourth Quarter ~~2020~~2022

There were no repurchases of equity securities during the fourth quarter of ~~2020.~~2022.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Stock Performance Graph

The following performance graph compares the cumulative TSR from Duke Energy Corporation common stock, as compared with the Standard & Poor's 500 Stock Index (S&P 500) and the Philadelphia Utility Index for the past five years. The graph assumes an initial investment of $100 on December 31, ~~2015,~~2017, in Duke Energy common stock, in the S&P 500 and in the Philadelphia Utility Index and that all dividends were reinvested. The stockholder return shown below for the five-year historical period may not be indicative of future performance.

NYSE CEO Certification

Duke Energy has filed the certification of its Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 as exhibits to this Annual ~~Report on Form 10-K for the year ended December 31, 2020.~~Report.

ITEM 6. SELECTED FINANCIAL DATA

This is not applicable for any of the Duke Energy Registrants.

4137


MD&A			DUKE ENERGY

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis includes financial information prepared in accordance with GAAP in the U.S., as well as certain non-GAAP financial measures such as adjusted earnings and adjusted EPS discussed below. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance with GAAP. Non-GAAP measures as presented herein may not be comparable to similarly titled measures used by other companies.

The following combined Management’s Discussion and Analysis of Financial Condition and Results of Operations is separately filed by Duke Energy Corporation and its subsidiaries. Duke Energy Carolinas, LLC, Progress Energy, Inc., Duke Energy Progress, LLC, Duke Energy Florida, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, LLC and Piedmont Natural Gas Company, Inc. However, none of the registrants make any representation as to information related solely to Duke Energy or the subsidiary registrants of Duke Energy other than itself.

Management’s Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements and Notes for the years ended December 31, ~~2020, 2019~~2022, 2021 and ~~2018.~~2020.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in Duke Energy's Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2021, filed with the SEC on February ~~20, 2020,~~24, 2022, for a discussion of variance drivers for the year ended December 31, ~~2019,~~2021, as compared to December 31, ~~2018.~~2020.

DUKE ENERGY

Duke Energy is an energy company headquartered in Charlotte, North Carolina. Duke Energy operates in the U.S. primarily through its ~~wholly owned~~direct and indirect subsidiaries, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of the Subsidiary Registrants, which along with Duke Energy, are collectively referred to as the Duke Energy Registrants.

Executive Overview

At Duke Energy, ~~the~~we remain focused on continuing to advance our clean energy transition while maintaining affordability and reliability for our customers and delivering on our commitments to our communities, employees, investors, and other stakeholders. The fundamentals of our business are strong and allow us to deliver growth in earnings and dividends in a low-risk, predictable and transparent way. In ~~2020,~~2022, we ~~met~~continued to make progress, navigating rising interest rates, volatile commodity prices and other macroeconomic headwinds while meeting our near-term financial commitments, executing on our strategic priorities, responding to severe weather and ~~continued~~external events, and continuing to provide the safe and reliable service ~~while managing the impacts of the COVID-19 pandemic.~~that our communities depend on.

In ~~early 2021,~~2022, we announced the sale of our commercial renewables business, filed the Carbon Plan with the NCUC, and continued to ~~position~~engage with the ~~company for sustainable long-term growth, executing an important coal ash settlement agreement~~communities in ~~North Carolina~~our jurisdictions. We also continue to make the investments necessary to support our ongoing clean energy transition and ~~announcing the $2 billion sale of a minority interest in Duke Energy Indiana, providing a source of efficient capital at an attractive valuation. We remain focused on~~ a business portfolio that ~~will deliver~~delivers a reliable and growing dividend, with ~~2020~~2022 representing the ~~94th~~96th consecutive year Duke Energy paid a cash dividend on its common stock. With these recent announcements, we also increased our long-term adjusted EPS growth rate to 5% to 7% through 2025. This growth is supported by our $59 billion capital plan from 2021 to 2025, clean energy investments that benefit our customers, timely cost-recovery mechanisms in most jurisdictions and our ability to effectively manage our cost structure.

Financial Results


~~MD&A~~			~~DUKE ENERGY~~

(a)See Results of Operations below for Duke Energy’s definition of adjusted earnings and adjusted EPS as well as a reconciliation of this non-GAAP financial measure to net income available to Duke Energy and net income available to Duke Energy per basic share.


MD&A			DUKE ENERGY

On February 9, 2023, Duke Energy announced 2022 full year reported earnings of $2,563 million, or $3.33 per share and adjusted earnings of $4,060 million, or $5.27 per share. On February 21, 2023, Duke Energy Indiana received an opinion from the Indiana Court of Appeals disallowing recovery of certain coal ash costs. As a result of this opinion, Duke Energy Indiana recognized a pretax charge of approximately $175 million to Impairment of assets and other charges for the year ended December 31, 2022. The 2022 full year reported earnings changed to $2,444 million, or $3.17 per share. There was no change to adjusted earnings or adjusted earnings per share.

Duke Energy's ~~2020~~2022 Net Income Available to Duke Energy Corporation (GAAP Reported Earnings) ~~were~~was impacted ~~by: regulatory settlements related to coal ash cost recovery in Electric Utilities and Infrastructure;~~primarily by the ~~cancellation~~estimated impairment on the sale of the ~~ACP pipeline~~Commercial Renewables business in ~~Gas Utilities and Infrastructure; and growth in project investments in Commercial Renewables.~~the current year. See “Results of Operations” below for a detailed discussion of the consolidated results of operations and a detailed discussion of financial results for each of Duke Energy’s reportable business segments, as well as Other.

~~2020~~2022 Areas of Focus and Accomplishments

Clean Energy ~~Transformation~~Transition. Our industry ~~has been undergoing~~continues to experience an ~~incredible transformation~~unprecedented level of change and ~~2020~~2022 was a ~~milestone~~dynamic year for our company ~~where~~as we ~~articulated a clear vision for the future~~navigated macroeconomic headwinds and ~~outlined investments~~continued to ~~achieve a clean energy future for~~execute on our ~~customers. We continue to transform the customer experience by generating cleaner energy, modernizing the energy grid,~~strategic priorities and ~~expanding natural gas infrastructure.~~deliver on our vision.

Generating Cleaner Energy

~~In October 2020, we held our first-ever Environmental, Social,~~We’re targeting energy generated from coal to represent less than 5% by 2030 and ~~Governance (ESG) Day for investors, successfully outlining our climate strategy and highlighting our~~a full exit by 2035, subject to regulatory approvals. We’ve made strong progress to date in reducing carbon emissions from electricity generation (a ~~greater than 40%~~44% reduction from 2005) and ~~our commitment~~have committed to do more (at least 50% reduction by 2030 and net-zero by 2050). In October 2022, we announced an additional interim target to reduce carbon emissions from electric generation by 80% by 2040. We also adopted a goal of reducing Scope 2 and certain Scope 3 emissions, including emissions from upstream purchased power and fossil fuel purchases, as well as downstream customer use of natural gas, by 50% by 2035, on the ~~Carolinas,~~way to net-zero by 2050.

Duke Energy is one of the first utilities to address the totality of its impact – approximately 95% of the company's greenhouse gas emissions are now tied to a measurable net-zero goal. Over the next decade, we ~~participated~~expect to deploy over $145 billion of capital into our regulated businesses, driven by clean energy transition investments. These investments will drive substantial economic benefits for the communities we serve and reduce our customer’s exposure to fuel volatility. We’ve filed and refined comprehensive IRPs consistent with this strategy in ~~extensive stakeholder processes focused~~multiple jurisdictions, allowing us to accelerate coal plant retirements, make needed grid investments to enable renewables and energy storage, and increase resiliency. To partially fund this plan, in December 2022, we closed on the second and final tranche of the approximate $2 billion investment in Duke Energy Indiana by GIC.

In 2022, we were awarded one of two North Carolina offshore wind sites held by the Bureau of Ocean Energy Management. The approximately 55,000-acre site in the Atlantic Ocean east of Wilmington could support up to 1.6 gigawatts of potential offshore wind energy, enough to power nearly 375,000 homes. Securing this contract creates optionality for future offshore wind if the NCUC determines it's part of the least cost path to achieve North Carolina's interim and long-term carbon reduction and regulatory reform and filed comprehensive IRP consistent with that strategy. Our planned coal retirements and transition to cleaner energy sources in the Carolinas are some of the largest in the industry. We also committed to an all-electric light-duty fleet and 50% of all medium- and heavy-duty vehicles by 2030 – a pledge that also leads our industry. Our commitment for 2030 includes retiring plants, operating our existing carbon-free resources and investing in renewables, our energy delivery system, and natural gas infrastructure. goals.

As we look beyond 2030, we will need additional tools to continue our progress. We will actively work ~~actively~~ to advocate for research and development and deployment of carbon-free, dispatchable resources. ~~That~~This includes longer-duration energy storage, advanced nuclear technologies, carbon capture and zero-carbon fuels.

Sale of Commercial Renewables

In November 2022, the Board approved pursuing the sale of our Commercial Renewables business, excluding the offshore wind contract for Carolina Long Bay. Since 2007, we have built a portfolio of approximately 5,000 megawatts of commercial wind, solar and battery projects across the U.S., and established a robust development pipeline. As we look forward to the remainder of this decade and beyond, we have line of sight to significant renewable, grid and other investment opportunities within our faster-growing regulated operations.

Carbon Plan

North Carolina House Bill 951 (HB 951) was passed in 2021 and reflects new state policy that accelerates a clean energy transition for generation serving customers in the Carolinas, including providing a framework for a goal of 70% carbon reduction in electric generation in the state from 2005 levels by 2030 and carbon neutrality by 2050 while continuing to prioritize affordability and reliability for our customers. The legislation established a framework overseen by the NCUC to advance state CO2 emission reductions through the use of least cost planning, including stakeholder involvement, and also introduced modernized recovery mechanisms, including multiyear rate plans (MYRP), that promote more efficient recovery of investments and performance-based regulation (PBR), that align incentives between the company and the state’s energy policy objectives.

In May 2022, we filed a proposed Carbon Plan with the NCUC that outlined potential pathways toward achieving the HB 951 carbon reduction targets while balancing affordability and reliability for our customers. We presented four “portfolios” – a base portfolio of what it would take to achieve 70% carbon reduction by 2030 and other portfolios demonstrating the impact of an extension to the 2030 compliance deadline to allow the introduction of new technologies at a more affordable price. In December 2022, the NCUC issued an order adopting its initial Carbon Plan, which included a set of near-term actions to support meeting the state's carbon reduction goals. This is a constructive outcome that advances our clean energy transition, supporting a diverse, all-of-the-above approach that is essential for long-term resource planning.

Modernizing the Power Grid and Natural Gas Infrastructure

Our grid improvement programs continue to be a key component of our growth strategy. Modernization of the electric grid, including smart meters, storm hardening, self-healing and targeted undergrounding, helps to continue to ensure the system is better prepared for severe weather, improves the system's reliability and flexibility, and provides better information and services for customers. ~~In 2020, 98% of our jurisdictions were equipped with smart meters and we remain on track to be fully deployed across all regions by the end of this year.~~ We continue to expand our self-optimizing grid capabilities, and in ~~2020,~~2022, smart, self-healing technologies helped to avoid more than ~~800,000 extended~~1.4 million customer ~~outages~~interruptions across our six-state electric service area, saving customers more than ~~1.8~~443 million ~~hours~~minutes of lost outage time.


MD&A			DUKE ENERGY

Duke Energy ~~also~~ has a demonstrated track record of driving efficiencies and productivity ~~into~~in the business and we continue to leverage new technology, digital tools and data analytics across the business in response to a transforming landscape.

~~Expanding Natural Gas Infrastructure~~

In ~~July 2020,~~2022, we filed for approval of a new demand response pilot program expected to launch in 2023 for customers in the Duke Energy Carolinas service area. Pilot incentives will reduce vehicle lease payments for program participants who lease an eligible electric vehicle, including Ford F-150 Lightning trucks. In exchange, customers will allow their electric vehicles to feed energy back to the grid – helping to balance it during peak demand. Also, in August 2022, Duke Energy Florida announced a research and ~~Dominion announced~~development pilot program to test and evaluate the ~~cancellation~~viability of the ~~ACP pipeline. Litigation risks and delays presented too much uncertainty on our ability to economically complete~~new Ford F-150 Lightning all-electric truck's high-capacity batteries as a grid edge resource.

Recognizing the project on schedule to meet our customers’ needs. Additionally, Dominion reached a decision to exit their natural gas transmission business, further impeding our ability to consider ongoing investment in the project. The Company remains committed to pursuing natural gas infrastructure investments and continues to explore additional resources in eastern North Carolina for the Piedmont system and securing more transport capacity to support power generation. Construction is expected to be completed this year on a liquefied natural gas facility in Robeson County, North Carolina, on property Piedmont owns. This investment will help Piedmont provide a reliable gas supply to customers during peak usage periods and protect customers from price volatility when there is a higher-than-normal demand for natural gas. In the fall of 2020, recognizing the continued importance of natural gas to our plans, we ~~announced~~continue to work toward a net-zero methane emission goal by 2030 related to our natural gas distribution business. In our LDC business, ~~as well as our commitment to lead on reduction of upstream~~we are making great progress reducing methane emissions through our partnership with Accenture, Microsoft and Avanade to use satellites and build an emissions platform, the addition of other sensors and technologies to find and fix leaks in near real time, and the use of cross compression to avoid releasing natural gas into the atmosphere during certain operational activities. Investments in integrity management of our natural gas infrastructure continue to be of importance to ensure reliable, safe, and increasingly clean delivery of natural gas to our customers.

Response to Macroeconomic Headwinds. In addition to achieving financial results in the upper half of our revised guidance, we continued our cost-management journey with a focus on driving productivity, increasing flexibility and prioritizing spend based on risk and strategic value to our customers and investors. In 2022, to address rising interest rates, increased commodity prices, labor and material inflation, and supply chain constraints, we launched the Workload Reduction Initiative, building on our culture of continuous improvement to identify more ways to reduce operating costs. Including cost reductions from supply chain, we identified approximately $300 million of savings opportunities focused on organization simplification, elimination of work, automation, reducing service levels provided to internal customers, and outsourcing.

Commodity prices have impacted the price of electricity in all of our jurisdictions. We actively worked to manage and maintain prices at lower levels than they otherwise would be in light of increased commodity prices, working with our regulators to extend recovery periods in certain jurisdictions in a way that is manageable for our customers. We also continued our work with our ~~natural gas~~vulnerable customers through increased communications, securing state and federal funding, and providing access to philanthropic support. Additionally, we've created a specialized team that's partnered with agencies across our service territories and has helped connect customers to nearly $300 million in energy assistance funding since 2021.

We successfully navigated supply ~~chain.~~chain challenges including inflation, longer lead times, and shortages of solar panels and other equipment. We've executed longer supply agreements and proactively secured equipment in early 2022 for hurricane season while placing orders for key needs for our customer delivery organization for 2023. Our procurement teams continue to execute on action plans to enhance planning, augment supply, amend operations and leverage our scale to continue to mitigate these risks to the extent possible.

Constructive Regulatory and Legislative Outcomes. One of our long-term strategic goals is to achieve modernized regulatory constructs in our jurisdictions. Modernized constructs provide benefits, which include improved earnings and cash flows through more timely recovery of investments, as well as stable pricing for customers.

In 2020, we conducted the bulk of proceedings related to our North Carolina rate cases for both Duke Energy Carolinas and Duke Energy Progress and achieved a partial settlement with the North Carolina Public Staff and ten other intervening parties. In January 2021, Duke Energy Carolinas and Duke Energy Progress reached an important settlement agreement, which subject to NCUC approval, resolves historical coal ash prudence and cost recovery issues and provides clarity on coal ash cost recovery for the next decade. In 2020, we also achieved constructive rate case outcomes in Indiana (our first rate base request in 15 years) and Kentucky (electric). We have a multiyear rate plan in Florida and in January 2021 reached a constructive settlement agreement with key consumer groups, subject to FPSC approval, to bring additional certainty to rates through 2024, In addition, grid Grid investment riders in the Midwest and Florida enable more timely cost recovery and earnings ~~growth.~~growth and we have a MYRP in Florida through 2024. Additionally, as highlighted above, HB 951 provides the framework for many of the benefits of modernized regulatory constructs in North Carolina under the direction of the NCUC. Duke Energy Progress filed its first rate case utilizing these benefits, including both PBR and MYRP, in North Carolina in October 2022. In January 2023, we also filed a Duke Energy Carolinas rate case in North Carolina, which incorporates elements of PBR and MYRP.

In addition to the Duke Energy Progress and Duke Energy Carolinas rate cases in North Carolina, we continued to move a variety of other regulatory initiatives forward during 2022. Base rate cases were filed for both Duke Energy Progress and Piedmont in South Carolina, for Duke Energy Ohio's natural gas business, and for Duke Energy Kentucky's electric business. Constructive partial settlements were approved by the NCUC in January 2022 related to Piedmont's 2021 North Carolina rate case and by the PUCO in December 2022 related to Duke Energy Ohio's 2021 electric rate case. We also reached a constructive comprehensive settlement with all parties in the Duke Energy Progress South Carolina rate case in January 2023, which the PSCSC approved in February 2023. Duke Energy Indiana's TDSIC 2.0 was approved in June 2022 and Duke Energy Florida's 10 year storm protection plan was approved in October 2022, both of which provide for significant investments to improve the reliability and integrity of the grid in their respective jurisdictions. Overall, this was a very active year as it relates to regulatory filings, which reflects the important investments and ongoing clean energy transition across all our service territories.

In November 2022, the Southeast Energy Exchange Market (SEEM) announced it had initiated operations. The new SEEM platform facilitates sub-hourly, bilateral trading, allowing participants to buy and sell power close to the time the energy is consumed, utilizing available unreserved transmission and providing southeastern electricity customers cost, reliability and environmental benefits. Also in 2022, storm securitization legislation was passed in South Carolina, providing the opportunity to securitize deferred storm costs and lower the bill impacts for our customers. We also continue to evaluate the impacts of the Inflation Reduction Act, which is expected to have significant benefits to customers and lower the cost of the clean energy transition.

Customer Satisfaction. Duke Energy continues to transform the customer experience through our use of customer data to better inform operational priorities and performance levels. This data-driven approach allows us to identify the investments that are ~~the~~ most important to the customer experience. ~~Our~~In 2022, we successfully implemented the last of eight jurisdictional releases of Customer Connect, a new system that consolidates four legacy billing systems into one customer-service platform, allowing us to deliver the universal experience customers expect. While customer satisfaction across our industry continues to be impacted by the macroeconomic environment and the impacts of higher fuel prices on customer bills, our work ~~has been~~continues to be recognized by our customers, with ~~external measures showing Duke Energy is improving~~incremental improvements in customer satisfaction scores at ~~a rate greater than the utility industry. Additionally,~~certain jurisdictions including Piedmont, which was ranked number one in ~~2020, we surpassed our internal target that measures~~ customer satisfaction by ~~approximately 14%.~~J.D. Power for residential natural gas service in the south.

4340


MD&A			DUKE ENERGY

Operational Excellence, Safety and Reliability. The reliable and safe operation of our power plants, electric distribution system and natural gas infrastructure in our communities iscontinues to be foundational to serving our customers, our financial results, and our credibility with stakeholders. ~~Our~~This year presented unique challenges to the grid in our service territories, including attacks on two substations in Moore County, North Carolina and extreme winter weather that forced us to take unprecedented measures to ensure the integrity of our systems in North Carolina. Despite these recent challenges, our regulated generation fleet and nuclear sites had strong performance throughout the year and our electric distribution system performed well. The safety of our workforce is a core value. ~~Our~~While our TICR was slightly above target, our employees ~~delivered~~continued to deliver strong safety results in ~~2020,~~2022 and we ~~are at or near~~remain an industry leader in personal safety. In addition, we continued our strong environmental performance, with no reportable environmental events.

Storm activity was severe in our service territories in 2022. Hurricane Ian, the ~~top~~fifth-strongest hurricane on record, impacted our service territories in Florida and the Carolinas with heavy rainfall, strong winds, and life-threatening storm surge and flooding. Across our service territories, we assembled more than 20,000 power line technicians, damage assessors, and vegetation workers to prepare and begin to restore power as soon as it was safe to do so. In total, we experienced 2 million outages, and thanks to their efforts, more than 97% of our ~~industry. Additionally,~~Florida customers were restored within three days of the ~~2020 Atlantic~~storm moving out of our Florida territories, and over 99% of our Carolinas customers within two days of the storm exiting the Carolinas. In November, Hurricane Nicole made landfall in Florida as a Category 1 hurricane ~~season~~causing nearly 300,000 customer outages. Our crews were able to restore more than 98% of those outages within 12 hours.

In December, high winds and extreme cold from Winter Storm Elliott, customer demand that was ~~incredibly active~~higher than forecasted, and ~~marked~~inability to import additional power from out of state, resulted in the ~~fifth consecutive year of above-average damaging storms.~~ need to temporarily interrupt service to about 500,000 customers to maintain overall grid reliability and prevent further potential disruptions in the Carolinas. We will continue to further evaluate lessons learned to improve our strategy and communications, and incorporate any identified improvements to address this matter to better serve our customers now and in the future.

Our ability to effectively handle all facets of the ~~2020~~2022 storm response efforts, including navigating ~~COVID-19 protocols,~~ongoing macroeconomic challenges and supply chain constraints, is a testament to our team’s extensive preparation and coordination, applying lessons learned from previous storms, and to on-the-ground management throughout the restoration efforts.

~~Leading Through COVID-19~~. ~~COVID-19 impacted all that we accomplished~~ Duke Energy has received over 20 Emergency Response Awards since EEI began recognizing storm response in ~~2020 and demonstrated~~1998 (including nine for assisting other utilities). We received EEI’s Emergency Assistance Award for our ~~resiliency and agility:~~

•~~As the pandemic spread, stay-at-home orders coupled with recessionary economic conditions caused overall retail~~support to other electric ~~sales to decline by approximately 2%. To offset this challenge,~~companies following Hurricane Ian, as well as ~~mild weather~~EEI’s Emergency Recovery Award for multiple events that include our own recovery from Hurricane Ian, Winter Storm Izzy, and ~~other COVID-related costs, we successfully achieved~~ the high end of our goal of $400 million to $450 million of broad-based O&M reductions and other mitigating actions. The Company’s results were within its adjusted EPS guidance range and we expect to sustain approximately $200 million ofJuly storms in the ~~2020 O&M cost mitigation into 2021 forward.~~

•Duke Energy kept electricity and gas flowing while voluntarily making significant accommodations for our customers. We led the way in our sector nationally, suspending all nonpay disconnects in all jurisdictions and waiving late payment fees and other fees until the national state of emergency was lifted. In the fall, we began returning to normal business practices, ensuring diligent communication with our customers and providing flexible payment arrangements.

•We ensured the physical safety of our workers and provided support for our employees. As cases spiked nationally, we deployed COVID-19 safety protocols for our front-line essential workers and moved 18,000 colleagues to remote work. Our COVID-19 Case Management Team managed exposures of our workforce and IT ensured our networks could handle the remote work while strengthening cyber protection. Under our COVID-19 protocols, our front-line employees completed 150 fossil and nuclear outages, executed large major projects, restored service from storms and hurricanes, and managed high-water events. Overall, our operations continued, and our team completed their work with excellence.Midwest.

Duke Energy Objectives – ~~2021~~2023 and Beyond

At Duke Energy, ~~will continue~~our climate strategy is our business strategy – to ~~deliver exceptional value to customers, be an integral part of the communities~~safely transform and ready our system by investing in ~~which we do business~~new and ~~provide attractive returns to investors. We have an achievable, long-term strategy in place,~~existing carbon-free technology, modernizing our gas and ~~it is producing tangible results, yet the industry in which we operate is becoming more~~electric infrastructure, and ~~more dynamic. We are adjusting, where necessary,~~expanding and ~~accelerating our focus in key areas to ensure the company is well positioned to be successful for many decades into the future.~~integrating efficiency and demand management programs. As we ~~look ahead~~transition our business to ~~2021,~~cleaner sources of energy, we are focused on delivering sustainable value for our ~~plans include:~~

•~~Continuing~~customers and shareholders by maintaining affordability and leveraging business transformation to ~~place the~~exceed customer ~~at the center of all that we do, which includes~~expectations, optimizing investments to drive attractive shareholder returns, and providing ~~customized products~~new product offerings and solutions

•~~Strengthening our relationships~~ that deliver growth and customer value. To achieve these major milestones, we are shaping the landscape by partnering with ~~all our vast~~ stakeholders, ~~in the communities in which we operate~~championing public policy that advances innovation, and ~~invest~~

•~~Generating cleaner energy~~advancing regulatory models that support carbon and ~~working to achieve net-zero carbon emissions by 2050 and net zero~~ methane ~~emissions by 2030~~

•~~Modernizing and strengthening a green-enabled energy grid~~

•~~Expanding our natural gas infrastructure~~

•~~Maintaining the safety of our communities and employees~~

•~~Deploying digital tools across our business~~emission reductions.

Matters Impacting Future Results

The matters discussed herein could materially impact the future operating results, financial condition and cash flows of the Duke Energy Registrants and Business Segments.

Regulatory Matters

Coal Ash Costs

~~As a result of the NCDEQ settlement on December 31, 2019,~~ Duke Energy Carolinas and Duke Energy Progress ~~agreed~~both have approximately $1.4 billion, in regulatory assets related to ~~excavate seven of the nine remaining~~ coal ash ~~basins~~retirement obligations as of December 31, 2022. Future spending, including amounts recorded for depreciation and liability accretion, is expected to continue to be deferred and recovered in ~~North Carolina with ash moved to on-site lined landfills. At the two remaining basins, uncapped basin ash will be excavated and moved to lined landfills.~~ future rate cases or rider filings. The majority of spend is expected to occur over the next ~~15-20~~10 to 15 years. In January 2021, Duke Energy Carolinas and Duke Energy Progress reached a settlement agreement on recovery of coal ash costs as outlined in Note 3, "Regulatory Matters," which is subject to review and approval of the NCUC. The company agreed not to seek recovery of approximately $1 billion of deferred coal ash expenditures and Duke Energy Carolinas and Duke Energy Progress took a charge of approximately $500 million each.

In 2019, Duke Energy Carolinas and Duke Energy Progress received orders from the PSCSC denying recovery of certain coal ash costs. Duke Energy Carolinas and Duke Energy Progress have appealed these decisions to the South Carolina Supreme Court and those appeals are pending. An order from regulatory or judicial authorities that rejects our proposed settlement or disallows recovery of costs related to closure of these ash basins could have an adverse impact on future results.


~~MD&A~~			~~DUKE ENERGY~~

Duke Energy Indiana has interpreted the CCR rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. ~~In 2020, the~~ ~~Hoosier Environmental Council filed a petition challenging the Indiana Department of Environmental Management's partial approval of Duke Energy Indiana’s ash pond closure plans. Interpretation~~Interpretation of the requirements of the CCR rule is subject to further legal challenges and regulatory approvals, which could result in additional ash basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are not subject to the CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of coal ash. In January 2022, Duke Energy Indiana received a letter from the EPA regarding interpretation of the CCR rule. Duke Energy Indiana has approximately $385 million in regulatory assets related to coal ash asset retirement obligations as of December 31, 2022. See Note 5 to the Consolidated Financial Statements, "Commitments and Contingencies" for more information.

~~Storm Costs~~Fuel Cost Recovery

As a result of rapidly rising commodity costs, including natural gas, fuel and purchased power prices in excess of amounts included in fuel-related revenues has led to an increase in the undercollection of fuel costs from customers at certain jurisdictions including Duke Energy Carolinas, Duke Energy Progress and Duke Energy ~~Florida’s service territories were~~Florida. These amounts have been deferred in regulatory assets and have impacted ~~by several named storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages~~the cash flows of the registrants, including increased borrowings to ~~the service territories of~~temporarily finance related expenditures until recovery. The Duke Energy ~~Carolinas and Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 5 hurricane and~~Registrants are working with various state commissions on the most powerful storm to hit the Florida Panhandle in recorded history. In September 2019, Hurricane Dorian impacted Duke Energy Progress and Duke Energy Florida's service territories. In 2020, Duke Energy Carolinas and Duke Energy Progress reached partial settlements in the 2019 North Carolina rates cases by filing a petition to securitize deferred storm costs, which is subject to review and approvaltiming of ~~the NCUC. In January 2021, Duke Energy Florida filed a settlement agreement with the FPSC, which if approved, allows~~ recovery of the remaining storm cost balance for hurricanes Michael and Dorian. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact.

~~Grid Improvement Costs~~

Duke Energy Carolinas received an order from the NCUC in 2018, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas and Duke Energy Progress have petitioned for deferral of future grid improvement costs in their 2019 rate cases. Partial settlements filed with the NCUC in July 2020 included the allowance for deferral for certain grid projects placed in service from June 2020 through December 2022. There could be adverse impacts if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.

~~Rate Cases~~

~~In 2019, Duke Energy Carolinas and Duke Energy Progress filed general rate cases with the NCUC. Several partial settlement agreements have been filed with the NCUC and are awaiting approval.~~ ~~The outcome of~~ these ~~rate cases could have a material impact.~~

~~MGP~~

The PUCO has issued an order authorizing recovery of MGP costs at certain sites in Ohio with a deadline to complete the MGP environmental investigation and remediation work prior to December 31, 2016. This deadline was subsequently extended to December 31, 2019. Duke Energy Ohio has filed for a request for extension of the deadline. A hearing on that request has not been scheduled. Disallowance of costs incurred, failure to complete the work by the deadline or failure to obtain an extension from the PUCO could result in an adverse impact.

~~For additional information, se~~eamounts. See Note 34 t~~o the Consolidated Financial Statements, “Regulatory Matters.”~~

~~Sale of Minority Interest in Duke Energy Indiana~~

In January 2021, Duke Energy entered into a definitive agreement providing for the sale of a 19.9% minority interest in Duke Energy Indiana with an affiliate of GIC, Singapore's sovereign wealth fund. The sale is subject to the satisfaction of certain customary conditions described in the investment agreement, including receipt of the approval of the FERC and completion of review by the Committee on Foreign Investments in the United States. Failure to obtain related approvals or satisfy the conditions in the investment agreement could result in the termination of the transaction and could result in an adverse impact. For additional information, se~~e Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies.”~~

~~Commercial Renewables~~

Duke Energy continues to monitor recoverability of renewable merchant plants located in the Electric Reliability Council of Texas West market and PJM, due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Based on the most recent recoverability test, the carrying value approximated the aggregate estimated future undiscounted cash flows for the assets under review. A continued decline in energy market pricing would likely result in a future impairment. Impairment of these a~~ssets could result in adverse impacts. For additional information, see Note 10~~ to the Consolidated Financial Statements, ~~"Property, Plant~~"Regulatory Matters" for more information.


MD&A			DUKE ENERGY

Commercial Renewables

In November 2022, Duke Energy committed to a plan to sell the Commercial Renewables Disposal Groups. The bid process for the utility-scale solar and ~~Equipment.~~wind group is ongoing. Initial indicative bids were received for the distributed generation group in January 2023. Duke Energy expects to dispose of both groups in the second half of 2023. The Commercial Renewables Disposal Groups were classified as held for sale and as discontinued operations in the fourth quarter of 2022. Duke Energy recorded an impairment loss in the fourth quarter of 2022. If necessary, the loss on the sale of the assets will be updated based on market changes or the final sales price, after any adjustments at closing for working capital and capital expenditures and could be materially different than the estimated loss. Additionally, certain other costs resulting from the transactions may be recognized in the period incurred, including Duke Energy's share of debt extinguishment costs and costs incurred to modify or terminate PPAs. Proceeds from the sales are expected to be used for debt avoidance. For more information, see Note 2 to the Consolidated Financial Statements, "Dispositions."

In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and wind facilities to generate and sell electricity into the Electric Reliability Council of Texas market. ~~Both lost revenues~~Duke Energy has been named in multiple lawsuits arising out of this winter storm. The legal actions related to these lawsuits will remain with Duke Energy and ~~higher than expected purchased power costs are expected~~any future activity related to ~~negatively impact~~ the ~~operating results of these generating units. The estimated financial impact of the storm is expected to have a material impact on the Commercial Renewables segment's 2021 operating results. See~~matters will be presented in discontinued operations. For more information, see Note 255 to the Consolidated Financial Statements, ~~"Subsequent Events.~~"Commitments and Contingencies."

Supply Chain


~~MD&A~~			~~DUKE ENERGY~~

~~COVID-19~~

Duke Energy ~~cannot predict~~is monitoring supply chain disruptions, which could impact the ~~extent~~timing of in-service dates and may result in adverse impacts on operating results. The company is also monitoring the potential impacts on future financial results and clean energy goals due to ~~which~~supply chain challenges regarding the ~~COVID-19 pandemic will~~availability of transformers and renewable components like solar panels and batteries.

Other

Duke Energy is monitoring general market conditions, including rising interest rates, and evaluating the impact to its results of operations, financial position and cash flows in the future. Duke Energy will continue to actively monitor the impacts of COVID-19 including the economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown continues to cause an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy has mitigation plans in place to partially offset these impacts, and the ability to execute these plans is critical to preserving future financial results.The Company is in the process of reviewing the long-term real estate strategy due to a potential change of in-office work policies after the COVID-19 pandemic. The plan may result in a reduction of physical work space which could create accounting impacts starting in 2021. Accounting impacts may include reassessments of lease terms and lease modifications which could result in termination penalties, as well as, asset impairments on property, plant and equipment. Se~~e Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a discussion of liquidity impacts of COVID-19.~~

~~Within this Item 7, see Liquidity and Capital Resources for a discussion on risks associated with the Tax Act.~~

Results of Operations

Non-GAAP Measures

Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted EPS. These items represent income from continuing operations available to Duke Energy common stockholders in dollar and ~~per-share~~per share amounts, adjusted for the dollar and ~~per-share~~per share impact of special items. As discussed below, special items include certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. Management believes the presentation of adjusted earnings and adjusted EPS provides useful information to investors, as it provides them with an additional relevant comparison of Duke Energy’s performance across periods.

Management uses these non-GAAP financial measures for planning and forecasting, and for reporting financial results to the Board of Directors, employees, stockholders, analysts and investors. Adjusted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measures for adjusted earnings and adjusted EPS are GAAP Reported Earnings and EPS Available to Duke Energy Corporation common stockholders (GAAP Reported EPS), respectively.

Special items included in the periods presented include the following, which management believes do not reflect ongoing costs:

•~~Gas Pipeline Investments~~Regulatory matters and litigation represents ~~costs~~the net impact of charges related to the ~~cancellation of the ACP pipeline~~Indiana court rulings on coal ash and ~~additional exit~~other unrelated ongoing litigation.

•Workplace and workforce realignment represents costs ~~related~~attributable to ~~Constitution.~~business transformation, including long-term real estate strategy changes and workforce reduction.

•Regulatory ~~Settlements~~settlements represents ~~charges~~an impairment charge related to ~~Duke Energy Carolinas'~~the South Carolina Supreme Court decision on coal ash, insurance proceeds and ~~Duke Energy Progress' CCR Settlement Agreement and the partial settlements in the 2019 North Carolina rate cases.~~

•~~Severance represents the reversal of 2018 costs, which were deferred as a result of a partial settlement in the~~ Duke Energy Carolinas and ~~the~~ Duke Energy Progress ~~2019 North Carolina rate cases.~~coal ash settlement.

•~~Impairment Charges~~Gas pipeline investments represents ~~a reduction of a prior year~~additional exit obligations related to ACP.

Discontinued operations primarily includes results from Duke Energy's Commercial Renewables Disposal Groups, including an estimated impairment ~~at Citrus County CC and an OTTI~~ on the ~~remaining investment~~sale of the business in ~~Constitution.~~2022.

Duke Energy’s adjusted earnings and adjusted EPS may not be comparable to similarly titled measures of another company because other companies may not calculate the measures in the same manner.


MD&A			DUKE ENERGY

Reconciliation of GAAP Reported Amounts to Adjusted Amounts

The following table presents a reconciliation of adjusted earnings and adjusted EPS to the most directly comparable GAAP measures.

Years Ended December 31,
2020 2019
(in millions, except per share amounts) Earnings EPS Earnings EPS
GAAP Reported Earnings/EPS $ 1,270 $ 1.72 $ 3,707 $ 5.06
Adjustments to Reported:
Gas Pipeline Investments(a)
1,711 2.32 — —
Regulatory Settlements(b)
872 1.19 — —
Severance(c)
(75) (0.10) — —
Impairment Charges(d)
— — (8) (0.01)
Discontinued Operations (7) (0.01) 7 0.01
Adjusted Earnings/Adjusted EPS $ 3,771 $ 5.12 $ 3,706 $ 5.06


	Years Ended December 31,
	2022				2021
(in millions, except per share amounts)	Earnings		EPS		Earnings		EPS
GAAP Reported Earnings/EPS	$	2,444	$	3.17	$	3,802	$	4.94
Adjustments to Reported:
Regulatory Matters and Litigation(a)	295		0.39		—		—
Workplace and Workforce Realignment(b)	105		0.14		148		0.20
Regulatory Settlements(c)	—		—		69		0.09
Gas Pipeline Investments(d)	—		—		15		0.02

Discontinued Operations(e)	1,216		1.57		(197)		(0.26)
Adjusted Earnings/Adjusted EPS	$	4,060	$	5.27	$	3,837	$	4.99

(a) Net of tax benefit of ~~$399~~$128 million.$386 million recorded within Impairment of assets and other charges, $46 million within Regulated electric (Operating Revenues) and $34 million within Net Loss Attributable to Noncontrolling Interests. $25 million recorded within Operations, maintenance and other.

(b) Net of tax benefit of ~~$263 million.~~

~~(c) Net~~$31 million and tax benefit of ~~tax expense of $23 million.~~

~~(d) Net of tax expense of $3 million.~~


~~MD&A~~			~~DUKE ENERGY~~

~~Year Ended~~$44 million for the years ended December 31, ~~2020, as compared to 2019~~

G2022, and 2021, respectively. ~~AAP Reported EPS was $1.72~~$72 million recorded within Impairment of assets and other charges, $71 million recorded within Operations, maintenance and other and a $7 million gain recorded in Gains on sales of other assets and other for the year ended December 31, ~~2020, compared to $5.06~~2022. $133 million recorded within Impairment of assets and other charges, $42 million within Operations, maintenance and other, and $17 million within Depreciation and amortization for the year ended December 31, ~~2019.~~2021.

(c) Net of tax benefit of $21 million. $202 million of expense recorded within Impairment of assets and other charges, $111 million of income within Other income and expenses, $12 million of expense within Operations, maintenance and other, $28 million of income within Regulated electric operating revenues, $8 million of expense within Interest expense and $7 million of expense within Depreciation and amortization.

(d) Net of tax benefit of $5 million. $20 million loss recorded within Equity in earnings (losses) of unconsolidated affiliates.

(e) Recorded in Loss from Discontinued Operations, net of tax, and Net Loss Attributable to Noncontrolling Interests.

Year Ended December 31, 2022, as compared to 2021

GAAP Reported EPS was $3.17 for the year ended December 31, 2022, compared to $4.94 for the year ended December 31, 2021. The decrease in GAAP Reported Earnings/EPS was primarily due to the ~~cancellation~~estimated impairment on the sale of the ~~ACP pipeline and~~Commercial Renewables Disposal Groups in the ~~CCR Settlement Agreement filed with the NCUC.~~current year.

As discussed and shown in the table above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s adjusted EPS was ~~$5.12~~$5.27 for the year ended December 31, ~~2020,~~2022, compared to ~~$5.06~~$4.99 for the year ended December 31, ~~2019.~~2021. The increase in Adjusted Earnings/Adjusted EPS was primarily due to ~~positive~~higher volumes, favorable weather and rate case contributions, ~~growth in wholesale, lower operations and maintenance expense in response to the pandemic and growth in Commercial Renewables,~~ partially offset by higher financing costs, higher depreciation ~~expense from~~and property taxes on a growing asset base, ~~impacts of the pandemic, mild weather~~storm costs and ~~the loss of ACP earnings.~~unfavorable market impacts.

SEGMENT RESULTS

The remaining information presented in this discussion of results of operations is on a GAAP basis. Management evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests and preferred stock dividends. Segment income includes intercompany revenues and expenses that are eliminated in the Consolidated Financial Statements.

Duke Energy's segment structure includes ~~the following segments:~~ Electric Utilities and Infrastructure (EU&I) and Gas Utilities and Infrastructure ~~and Commercial Renewables.~~(GU&I). The remainder of Duke Energy’s operations is presented as Other. See Note 23 to the Consolidated Financial Statements, “Business Segments,” for additional information on Duke Energy’s segment structure.

~~Electric Utilities and Infrastructure~~

Years Ended December 31,
(in millions) 2020 2019 Variance
Operating Revenues $ 21,720 $ 22,831 $ (1,111)
Operating Expenses
Fuel used in electric generation and purchased power 6,128 6,904 (776)
Operations, maintenance and other 5,391 5,497 (106)
Depreciation and amortization 4,068 3,951 117
Property and other taxes 1,188 1,175 13
Impairment charges 971 (8) 979
Total operating expenses 17,746 17,519 227
Gains on Sales of Other Assets and Other, net 11 1 10
Operating Income 3,985 5,313 (1,328)
Other Income and Expenses, net 344 353 (9)
Interest Expense 1,320 1,345 (25)
Income Before Income Taxes 3,009 4,321 (1,312)
Income Tax Expense 340 785 (445)
Segment Income $ 2,669 $ 3,536 $ (867)
Duke Energy Carolinas GWh sales 84,574 89,920 (5,346)
Duke Energy Progress GWh sales 65,240 68,356 (3,116)
Duke Energy Florida GWh sales 42,490 42,173 317
Duke Energy Ohio GWh sales 23,484 24,729 (1,245)
Duke Energy Indiana GWh sales 30,528 31,886 (1,358)
Total Electric Utilities and Infrastructure GWh sales 246,316 257,064 (10,748)
Net proportional MW capacity in operation 50,419 50,070 349

~~Year Ended December 31, 2020, as compared to 2019~~

Electric Utilities and Infrastructure’s variance is primarily due to impairment charges and revenue reductions related to the CCR settlement agreement filed with the NCUC to resolve coal ash cost recovery issues, unfavorable weather and lower volumes driven by impacts from the COVID-19 pandemic, partially offset by base rate adjustments in various jurisdictions. The following is a detailed discussion of the variance drivers by line item.

~~Operating Revenues.~~ ~~The variance was driven primarily by:~~

•~~an $826 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs at Duke Energy Florida in response to the COVID-19 pandemic;~~

•~~a $237 million decrease in wholesale revenue primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021 and decreased volumes;~~


MD&A			SEGMENT RESULTS - ELECTRIC UTILITIES AND INFRASTRUCTURE

Electric Utilities and Infrastructure


	Years Ended December 31,


(in millions)	2022		2021		Variance
Operating Revenues	$	26,024	$	22,603	$	3,421
Operating Expenses
Fuel used in electric generation and purchased power	8,862		6,332		2,530
Operations, maintenance and other	5,354		5,340		14
Depreciation and amortization	4,550		4,251		299
Property and other taxes	1,315		1,233		82
Impairment of assets and other charges	374		204		170
Total operating expenses	20,455		17,360		3,095
Gains on Sales of Other Assets and Other, net	7		13		(6)
Operating Income	5,576		5,256		320
Other Income and Expenses, net	467		534		(67)
Interest Expense	1,565		1,432		133
Income Before Income Taxes	4,478		4,358		120
Income Tax Expense	536		494		42
Less: Income Attributable to Noncontrolling Interest	13		14		(1)
Segment Income	$	3,929	$	3,850	$	79

Duke Energy Carolinas GWh sales	90,915		87,796		3,119
Duke Energy Progress GWh sales	70,435		66,797		3,638
Duke Energy Florida GWh sales	46,214		42,422		3,792
Duke Energy Ohio GWh sales	24,269		24,129		140
Duke Energy Indiana GWh sales	31,979		31,388		591
Total Electric Utilities and Infrastructure GWh sales	263,812		252,532		11,280
Net proportional MW capacity in operation	49,539		49,871		(332)

Year Ended December 31, 2022, as compared to 2021

•EU&I~~a $207 million decrease in~~’s higher segment income is due to higher retail sales ~~net~~volumes and favorable weather, partially offset by higher depreciation and higher interest expense. The following is a detailed discussion of ~~fuel revenues, due to unfavorable weather;~~the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:

•a ~~$130~~$2,332 million ~~decrease~~increase in ~~rider~~fuel revenues ~~from EE programs;~~primarily due to higher fuel prices and retail sales volumes;

•a ~~$44~~$456 million ~~decrease~~increase in ~~nuclear cost recovery rider revenue~~weather-normal retail sales volumes;

•a $293 million increase in retail base rate pricing due to ~~recovery~~general rate cases in North Carolina, net of ~~the Crystal River 3 uprate regulatory asset~~rider impacts as well as multiyear rate adjustments in ~~2019 at Duke Energy~~ Florida;

•a $145 million increase in retail sales due to favorable weather compared to prior year;

•a $141 million increase in wholesale revenues primarily due to higher capacity volumes; and

•a ~~$17~~$137 million ~~decrease~~increase in ~~weather-normal retail sale volumes driven by lower nonresidential customer demand~~rider revenues primarily due to ~~impacts from the COVID-19 pandemic.~~higher sales volumes and storm securitization in North Carolina.

Partially offset by:

•~~a $214~~an $86 million ~~increase~~decrease in capacity revenue primarily due to ~~higher pricing from~~accelerated recovery of the ~~Indiana retail rate case, net of rider revenues;~~

•~~a $92 million increase~~retired coal units Crystal River 1 and 2 in ~~retail pricing due to Duke Energy Florida's base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment;~~2021; and

•a ~~$32~~$67 million ~~increase~~decrease due to ~~higher pricing from South Carolina retail rate cases, net~~the Indiana Supreme Court ruling on recovery of ~~a return of EDIT to customers.~~certain coal ash costs.

Operating Expenses. The variance was driven primarily by:

•a ~~$979~~$2,530 million increase in ~~impairment charges primarily driven by the CCR Settlement Agreement filed with the NCUC~~fuel used in ~~January 2021;~~electric generation and purchased power due to higher fuel prices and volumes from customer demand;

•a ~~$117~~$299 million increase in depreciation and amortization ~~expense~~ primarily due to ~~additional~~higher plant in service and ~~new~~resolution of prior year rate cases, partially offset by lower depreciation ~~rates from~~related to the extension of the lives of nuclear facilities;

•a $170 million increase in impairment of assets and other charges due to the Indiana ~~retail rate cases;~~court rulings on recovery of certain coal ash costs; and

•~~a $13~~an $82 million increase in property and other taxes primarily due to ~~prior year~~higher property ~~tax reassessments.~~

~~Partially offset by:~~

•~~a $776 million decrease in fuel used in electric generation and purchased power primarily due to lower generation demand and lower fuel and natural gas costs; and~~

•~~a $106 million decrease in operation, maintenance and other expense primarily driven by cost mitigation efforts.~~

~~Interest Expense.~~ ~~The variance was primarily due to lower interest rates on outstanding debt.~~

~~Income Tax Expense.~~ ~~The ETRs for the years ended December 31, 2020, and 2019, were 11.3% and 18.2%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred~~taxes as well as higher revenue related taxes.

4844


MD&A			SEGMENT RESULTS - ~~GAS~~ELECTRIC UTILITIES AND INFRASTRUCTURE

Other Income and Expenses, net. The variance is primarily due to coal ash insurance litigation proceeds received in the prior year, partially offset by an increase in AFUDC equity due to higher capital expenditures.

Interest Expense. The variance was primarily driven by higher interest rates and outstanding debt balances.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income and a decrease in the amortization of excess deferred taxes. The ETRs for the years ended December 31, 2022, and 2021, were 12.0% and 11.3%, respectively. The increase in the ETR was primarily due to a decrease in the amortization of excess deferred taxes.

Gas Utilities and Infrastructure


		Years Ended December 31,						Years Ended December 31,

(in millions)	(in millions)	2020		2019		Variance			(in millions)	2022		2021		Variance
Operating Revenues	Operating Revenues	$	1,748	$	1,866	$	(118)		Operating Revenues	$	2,840	$	2,112	$	728
Operating Expenses	Operating Expenses								Operating Expenses
Cost of natural gas	Cost of natural gas	460		627		(167)			Cost of natural gas	1,276		705		571
Operation, maintenance and other	Operation, maintenance and other	430		446		(16)			Operation, maintenance and other	532		442		90
Depreciation and amortization	Depreciation and amortization	258		256		2			Depreciation and amortization	327		303		24
Property and other taxes	Property and other taxes	112		106		6			Property and other taxes	138		120		18
Impairment charges		7		—		7
Impairment of assets and other charges									Impairment of assets and other charges	(12)		19		(31)
Total operating expenses	Total operating expenses	1,267		1,435		(168)			Total operating expenses	2,261		1,589		672
Gains on Sales of Other Assets and Other, net									Gains on Sales of Other Assets and Other, net	1		—		1
Operating Income									Operating Income	580		523		57

Operating Income		481		431		50
Other Income and Expenses
Equity in (losses) earnings of unconsolidated affiliates		(2,017)		114		(2,131)
Other Income and Expenses, net		56		26		30
Total other income and expenses		(1,961)		140		(2,101)

Other income and expenses, net									Other income and expenses, net	78		70		8
Interest Expense	Interest Expense	135		117		18			Interest Expense	182		142		40
(Loss) Income Before Income Taxes		(1,615)		454		(2,069)
Income Tax (Benefit) Expense		(349)		22		(371)
Income Before Income Taxes									Income Before Income Taxes	476		451		25
Income Tax Expense									Income Tax Expense	8		55		(47)

Segment (Loss) Income		$	(1,266)	$	432	$	(1,698)
Segment Income									Segment Income	$	468	$	396	$	72

Piedmont Local Distribution Company (LDC) throughput (Dth)	Piedmont Local Distribution Company (LDC) throughput (Dth)	490,071,039		511,243,774		(21,172,735)			Piedmont Local Distribution Company (LDC) throughput (Dth)	628,035,471		542,759,891		85,275,580
Duke Energy Midwest LDC throughput (MCF)	Duke Energy Midwest LDC throughput (MCF)	84,160,162		89,025,972		(4,865,810)			Duke Energy Midwest LDC throughput (MCF)	90,010,669		85,787,624		4,223,045

Year Ended December 31, ~~2020,~~2022, as compared to ~~2019~~2021

~~Gas Utilities and Infrastructure’s~~GU&I’s results were impacted primarily by ~~the cancellation of the ACP pipeline.~~margin growth, partially offset by higher operation and maintenance costs and higher interest expense. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:

•a ~~$167~~$383 million ~~decrease~~increase due to ~~lower~~higher natural gas costs passed through to customers ~~lower volumes,~~ and ~~decreased~~higher volumes;

•a $213 million increase due to increased secondary marketing activity including higher off-system sales natural gas costs;

•a $64 million increase due to base rate increases;

•a $48 million increase due to rider revenues related to Ohio Capital Expenditure Program (CEP); and

•a ~~$47~~$4 million ~~decrease~~increase due to ~~return of EDIT to customers.~~customer growth.

Partially offset by:

•~~an $87~~a $15 million ~~increase~~decrease due to ~~North Carolina base rate case increases.~~the MGP Settlement.

Operating Expenses. The variance was driven primarily by:

•a ~~$167~~$383 million ~~decrease~~increase in cost of natural gas due to ~~lower~~higher natural gas ~~prices, lower volumes~~costs passed through to customers and ~~decreased~~higher volumes;

•a $188 million increase in cost of natural gas due to increased secondary marketing activity including higher off-system sales natural gas ~~costs.~~costs;

~~Equity in (losses) earnings of unconsolidated affiliates.~~ •~~The variance was driven primarily by the cancellation of the ACP pipeline.~~

~~Other Income and Expenses, net.The variance was driven primarily by AFUDC equity and other income related to Belews Creek and Marshall Power Generation contracts.~~

~~Income Tax (Benefit) Expense.~~ ~~The~~a $90 million increase in ~~tax benefit was~~operations, maintenance and other primarily due to the MGP settlement, higher spend on internal and contract labor costs, locates, fleet, and materials;

•a $24 million increase in depreciation and amortization due to additional plant in service and lower CEP deferrals; and

•an $18 million increase in property and other taxes due to lower CEP deferrals.

Partially offset by:

•a $31 million decrease in ~~pretax income driven by the impact~~impairment of ~~the cancellation of the ACP pipeline. The ETRs for the years ended December 31, 2020,~~assets and ~~2019,~~ ~~were 21.6% and 4.8%, respectively. The increase in the ETR was primarily~~other charges due to an ~~adjustment, recorded~~impairment of propane caverns in ~~the first quarter of 2019, related to the income tax recognition for equity method investments. The equity method investment adjustment~~2021, which was ~~immaterial and relates to prior years.~~partially reversed in 2022.

4945


MD&A			SEGMENT RESULTS - ~~COMMERCIAL RENEWABLES~~GAS UTILITIES AND INFRASTRUCTURE

~~Commercial Renewables~~

Years Ended December 31,
(in millions) 2020 2019 Variance
Operating Revenues $ 502 $ 487 $ 15
Operating Expenses
Operation, maintenance and other 285 297 (12)
Depreciation and amortization 199 168 31
Property and other taxes 27 23 4
Impairment charges 6 — 6
Total operating expenses 517 488 29
Losses on Sales of Other Assets and Other, net (1) (3) 2
Operating Loss (16) (4) (12)
Other Income and Expenses, net 7 5 2
Interest Expense 66 95 (29)
Loss Before Income Taxes (75) (94) 19
Income Tax Benefit (65) (115) 50
Add: Loss Attributable to Noncontrolling Interests 296 177 119
Segment Income $ 286 $ 198 $ 88
Renewable plant production, GWh 10,204 8,574 1,630
Net proportional MW capacity in operation(a)
3,937 3,485 452

(a) Certain projects are included in tax-equity structures where investors have differing interests in the project's economic attributes. Amounts shown represent 100% of the tax-equity project's capacity.

~~Year Ended December 31, 2020, as compared to 2019~~

~~Commercial Renewables' results were favorable primarily due to growth of new project investments. Since December 31, 2019, Commercial Renewables has placed in service approximately 500 MW of capacity.~~

~~The following is a detailed discussion of the variance drivers by line item.~~

~~Operating Revenues.~~Interest Expense. The variance was primarily ~~driven by a $39 million~~due to higher interest rates and outstanding debt balances and lower CEP Rider deferrals.

Income Tax Expense. The decrease in tax expense was primarily due to an increase ~~associated with~~in the ~~growth~~amortization of ~~new projects placed in service,~~excess deferred taxes related to the Ohio MGP Settlement, partially offset by ~~a $24 million~~an increase in pretax income. The ETRs for the years ended December 31, 2022, and 2021, were 1.7% and 12.2%, respectively. The decrease in the ETR was primarily ~~within~~due to an increase in the ~~distributed energy portfolios for lower engineering and construction activities~~amortization of excess deferred taxes related to ~~delays~~the Ohio MGP Settlement.

Other


	Years Ended December 31,


(in millions)	2022		2021		Variance
Operating Revenues	$	122	$	113	$	9






Operating Expenses	298		409		(111)
Gains (Losses) on Sales of Other Assets and Other, net	14		(1)		15
Operating Loss	(162)		(297)		135
Other Income and Expenses, net	65		125		(60)
Interest Expense	778		643		135
Loss Before Income Taxes	(875)		(815)		(60)
Income Tax Benefit	(244)		(281)		37
Less: Net Income Attributable to Noncontrolling Interests	—		1		(1)
Less: Preferred Dividends	106		106		—
Net Loss	$	(737)	$	(641)	$	(96)

Year Ended December 31, 2022, as compared to 2021

The higher net loss was driven by higher interest expense and lower return on investments, partially offset by higher equity earnings from ~~COVID-19.~~the NMC investment and prior year obligations to the Duke Energy Foundation.

Operating Expenses. The variance was primarily driven by a $52 million increase in operating expenses due to the growth of new projects placed in service. This was partially offset by a $24 million decrease in operating expenses within the distributed energy portfolios for lower engineering and construction costs related to delays from COVID-19.

~~Interest Expense.~~ The decrease was primarily driven by ~~non-qualifying hedge activity in the~~ prior year ~~higher capitalized interest in the current year for solar and wind projects in development and lower outstanding debt balances.~~

~~Income Tax Benefit.~~ ~~The decrease in the tax benefit was primarily driven by an increase in taxes associated with tax equity investments and a decrease in PTCs generated.~~

~~Loss Attributable to Noncontrolling Interests.~~ ~~The increase was driven primarily by the growth of new projects financed by tax equity.~~


~~MD&A~~			~~SEGMENT RESULTS - OTHER~~

~~Other~~

Years Ended December 31,
(in millions) 2020 2019 Variance
Operating Revenues $ 97 $ 95 $ 2
Operating Expenses 12 117 (105)
Losses on Sales of Other Assets and Other, net — (2) 2
Operating Income (Loss) 85 (24) 109
Other Income and Expenses, net 92 145 (53)
Interest Expense 657 705 (48)
Loss Before Income Taxes (480) (584) 104
Income Tax Benefit (162) (173) 11
Less: Net Income Attributable to Noncontrolling Interests 1 — 1
Less: Preferred Dividends 107 41 66
Net Loss $ (426) $ (452) $ 26

~~Year Ended December 31, 2020, as compared to 2019~~

~~The variance was primarily driven by a reversal of corporate allocated severance costs,~~ obligations to the Duke Energy Foundation, ~~in 2019,~~lower expense on certain employee benefit obligations and lower ~~state income tax expense, partially offset by lower returns on investments, higher loss experience related~~asset impairments to ~~captive insurance claims,~~optimize the ~~declaration of preferred stock dividends,~~company's real estate portfolio and ~~lower earnings on the NMC investment. The following is a detailed discussion of the variance drivers by line item.~~

~~Operating Expenses.~~ The decrease was primarily due to the deferral of 2018 corporate allocated severance costs due to the Duke Energy Carolinas and Duke Energy Progress partial settlements in the 2019 North Carolina retail rate case and obligations to the Duke Energy Foundation in 2019, partially offset by higher loss experience related to captive insurance claims and higher franchise tax expense.reduce office space.

Other Income and Expenses, net. The variance was primarily due to lower ~~returns~~return on investments that fund certain employee benefit obligations, ~~and lower~~partially offset by higher equity earnings onfrom the NMC ~~investment primarily due to lower pricing.~~investment.

Interest Expense. The variance was primarily due to ~~lower~~higher interest rates and outstanding ~~short-term~~ debt ~~and lower interest rates.~~balances.

Income Tax Benefit.The decrease in the tax benefit was primarily ~~driven by~~due to a ~~decrease~~reduction of a valuation allowance relating to a capital loss carryforward in ~~pretax losses,~~the prior year, partially offset by ~~an increase~~lower state tax benefit in ~~state income tax benefits.~~the prior year. The ETRs for the years ended December 31, ~~2020,~~2022, and ~~2019,~~ 2021, were ~~33.8%~~27.9% and ~~29.6%~~34.5%, respectively. The ~~increase~~decrease in the ETR was primarily due to ~~an increase~~a reduction of a valuation allowance relating to a capital loss carryforward in ~~state income tax benefits in 2020, in relation~~the prior year.

LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX


	Years Ended December 31,
(in millions)	2022		2021		Variance
Loss From Discontinued Operations, net of tax	$	(1,323)	$	(144)	$	(1,179)

Year Ended December 31, 2022, as compared to ~~pretax losses.~~December 31, 2021

~~Preferred Dividends.~~The variance was primarily driven by the ~~declaration~~estimated impairment on the sale of ~~preferred stock dividends on preferred stock issued~~the Commercial Renewables Disposal Groups in ~~late 2019.~~the current year.

5146


MD&A			DUKE ENERGY CAROLINAS

SUBSIDIARY REGISTRANTS

Basis of Presentation

The results of operations and variance discussion for the Subsidiary Registrants is presented in a reduced disclosure format in accordance with General Instruction (I)(2)(a) of Form 10-K.

DUKE ENERGY CAROLINAS

Results of Operations


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		Variance		(in millions)	2022		2021		Variance
Operating Revenues	Operating Revenues	$	7,015	$	7,395	$	(380)	Operating Revenues	$	7,857	$	7,102	$	755
Operating Expenses	Operating Expenses							Operating Expenses
Fuel used in electric generation and purchased power	Fuel used in electric generation and purchased power	1,682		1,804		(122)		Fuel used in electric generation and purchased power	2,015		1,601		414
Operation, maintenance and other	Operation, maintenance and other	1,743		1,868		(125)		Operation, maintenance and other	1,892		1,833		59
Depreciation and amortization	Depreciation and amortization	1,462		1,388		74		Depreciation and amortization	1,526		1,468		58
Property and other taxes	Property and other taxes	299		292		7		Property and other taxes	340		320		20
Impairment charges		476		17		459
Impairment of assets and other charges								Impairment of assets and other charges	26		227		(201)
Total operating expenses	Total operating expenses	5,662		5,369		293		Total operating expenses	5,799		5,449		350
Gains on Sales of Other Assets and Other, net	Gains on Sales of Other Assets and Other, net	1		—		1		Gains on Sales of Other Assets and Other, net	4		2		2
Operating Income	Operating Income	1,354		2,026		(672)		Operating Income	2,062		1,655		407
Other Income and Expenses, net	Other Income and Expenses, net	177		151		26		Other Income and Expenses, net	221		270		(49)
Interest Expense	Interest Expense	487		463		24		Interest Expense	557		538		19
Income Before Income Taxes	Income Before Income Taxes	1,044		1,714		(670)		Income Before Income Taxes	1,726		1,387		339
Income Tax Expense	Income Tax Expense	88		311		(223)		Income Tax Expense	126		51		75
Net Income	Net Income	$	956	$	1,403	$	(447)	Net Income	$	1,600	$	1,336	$	264

The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Carolinas. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.

Increase (Decrease) over prior year 2020 2019
Residential sales (3.1) % (2.9) %
General service sales (6.7) % (0.1) %
Industrial sales (8.0) % (1.9) %
Wholesale power sales (2.0) % (13.6) %
Joint dispatch sales (46.0) % 4.7 %
Total sales (5.9) % (2.6) %
Average number of customers 1.9 % 2.1 %


Increase (Decrease) over prior year	2022
Residential sales	0.5	%
General service sales	4.0	%
Industrial sales	1.0	%
Wholesale power sales	1.3	%
Joint dispatch sales	0.9	%
Total sales	3.6	%
Average number of customers	1.8	%

Year Ended December 31, ~~2020,~~2022, as compared to ~~2019~~2021

Operating Revenues. The variance was driven primarily by:

•a ~~$151~~$396 million ~~decrease~~increase in fuel revenues ~~due to lower~~driven by higher fuel prices and higher volumes;

•a $156 million increase in weather-normal retail sales volumes;

•a ~~$149~~$78 million ~~decrease~~increase in retail sales due to ~~unfavorable~~favorable weather ~~in the current~~compared to prior year;

•a ~~$73 million decrease in rider revenues primarily due to EE programs; and~~

•~~a $50 million decrease~~ ~~in wholesale revenue primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021.~~

~~Partially offset by:~~

•~~a $25~~$63 million increase due to higher pricing from the ~~South~~North Carolina retail rate case, net of a return of EDIT to customers; and

•a ~~$22~~$52 million increase in ~~weather-normal retail~~rider revenues primarily due to energy efficiency, storm securitization, and competitive procurement of renewable energy programs.

Operating Expenses. The variance was driven primarily by:

•a $414 million increase in fuel used in electric generation and purchased power primarily due to higher coal and natural gas prices and changes in the generation mix, partially offset by the recovery of fuel expenses;

•a $59 million increase in operation, maintenance and other expense primarily due to higher storm restoration costs, higher bad debt expense and higher nuclear outage and maintenance costs;

•a $58 million increase in depreciation and amortization primarily due to new depreciation rates associated with the North Carolina rate case and a higher depreciable base, partially offset by lower depreciation related to the extension of the lives of nuclear facilities; and

•a $20 million increase in property and other taxes due to higher franchise and property taxes and a prior year sales ~~volumes.~~and use tax refund.

5247


MD&A			DUKE ENERGY CAROLINAS

~~Operating Expenses~~. ~~The variance was driven primarily by:~~

•~~a $459 million increase in impairment charges primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021; and~~

•~~a $74 million increase in depreciation and amortization expense primarily due to additional plant in service and new depreciation rates associated with the South Carolina rate case.~~

Partially offset by:

•a ~~$125~~ $201 million decrease in ~~operation, maintenance~~impairment of assets and other ~~expense~~ charges primarily ~~driven by the deferral of 2018 severance costs~~ due to the ~~partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North~~prior year South Carolina ~~retail rate case, and cost mitigation efforts, part~~Supreme Court decision on coal ash~~ially offset by higher storm restoration costs; and~~

•~~a $122 million decrease in fuel used in electric generation and purchased power primarily due to lower retail sales volumes, net of a prior period true up.~~.

Other Income and ~~Expenses, net.~~Expenses. The variance was ~~primarily~~driven by the coal ash insurance litigation proceeds received in the prior year, partially offset by an increase in AFUDC equity due to higher ~~AFUDC equity in the current year.~~capital expenditures.

Interest Expense.The variance was ~~primarily due to~~driven by higher interest rates and outstanding debt ~~outstanding in the current year.~~balances.

Income Tax Expense. The ~~decrease~~increase in tax expense was primarily due to ~~a decrease in pretax income and~~ an increase in ~~the amortization of excess deferred taxes.~~pretax income.

PROGRESS ENERGY

Results of Operations


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		Variance		(in millions)	2022		2021		Variance
Operating Revenues	Operating Revenues	$	10,627	$	11,202	$	(575)	Operating Revenues	$	13,125	$	11,057	$	2,068
Operating Expenses	Operating Expenses							Operating Expenses
Fuel used in electric generation and purchased power	Fuel used in electric generation and purchased power	3,479		4,024		(545)		Fuel used in electric generation and purchased power	5,078		3,584		1,494
Operation, maintenance and other	Operation, maintenance and other	2,479		2,495		(16)		Operation, maintenance and other	2,458		2,529		(71)
Depreciation and amortization	Depreciation and amortization	1,818		1,845		(27)		Depreciation and amortization	2,142		1,929		213
Property and other taxes	Property and other taxes	545		561		(16)		Property and other taxes	607		542		65
Impairment charges		495		(24)		519
Impairment of assets and other charges								Impairment of assets and other charges	12		82		(70)
Total operating expenses	Total operating expenses	8,816		8,901		(85)		Total operating expenses	10,297		8,666		1,631
Gains on Sales of Other Assets and Other, net	Gains on Sales of Other Assets and Other, net	9		—		9		Gains on Sales of Other Assets and Other, net	11		14		(3)
Operating Income	Operating Income	1,820		2,301		(481)		Operating Income	2,839		2,405		434
Other Income and Expenses, net	Other Income and Expenses, net	129		141		(12)		Other Income and Expenses, net	181		215		(34)
Interest Expense	Interest Expense	790		862		(72)		Interest Expense	844		794		50
Income Before Income Taxes	Income Before Income Taxes	1,159		1,580		(421)		Income Before Income Taxes	2,176		1,826		350
Income Tax Expense	Income Tax Expense	113		253		(140)		Income Tax Expense	348		227		121

Net Income	Net Income	1,046		1,327		(281)		Net Income	1,828		1,599		229
Less: Net Income Attributable to Noncontrolling Interests	Less: Net Income Attributable to Noncontrolling Interests	1		—		1		Less: Net Income Attributable to Noncontrolling Interests	—		1		(1)
Net Income Attributable to Parent	Net Income Attributable to Parent	$	1,045	$	1,327	$	(282)	Net Income Attributable to Parent	$	1,828	$	1,598	$	230

Year Ended December 31, ~~2020,~~2022, as compared to ~~2019~~2021

Operating Revenues. The variance was driven primarily by:

•a ~~$567~~$1,481 million ~~decrease~~increase in fuel revenues driven by ~~lower~~higher fuel prices and higher volumes;

•a $249 million increase in weather-normal retail sales ~~volumes as well as an accelerated refund of fuel costs~~volumes;

•a $230 million increase in ~~response~~retail pricing due to the ~~COVID-19 pandemic~~North Carolina rate case and base rate adjustments at Duke Energy Florida related to annual increases from the 2021 Settlement Agreement and the solar base rate adjustment;

•an $85 million increase in rider revenues due to higher revenues from the Storm Protection Plan at Duke Energy Florida and ~~lower fuel prices, volumes~~storm securitization and ~~native load transfer sales in the current year~~energy efficiency riders at Duke Energy Progress;

•a ~~$169~~$53 million ~~decrease~~increase in wholesale ~~revenue primarily driven by the Duke Energy Progress' CCR Settlement Agreement filed with the NCUC in January 2021~~revenues, net of fuel, due to higher capacity volumes; and ~~decreased volumes at Duke Energy Progress, partially offset by increased demand at Duke Energy Florida;~~

•a ~~$55~~$43 million increase in retail sales due to favorable weather.

Partially offset by:

•an $86 million decrease in ~~rider revenues~~capacity revenue primarily due to ~~the~~accelerated recovery of retired Crystal River ~~3 uprate regulatory asset being fully recovered~~coal units in ~~2019 at Duke Energy Florida;~~2021.

Operating Expenses. The variance was driven primarily by:

•a ~~$31~~$1,494 million ~~decrease~~increase in ~~retail sales, net of~~ fuel ~~revenues,~~used in electric generation and purchased power primarily due to ~~unfavorable weather~~higher demand and higher natural gas prices;

•a $213 million increase in depreciation and amortization primarily due to increased rates at Duke Energy Florida and higher amortization of deferred coal ash and storm costs at Duke Energy Progress, partially offset by ~~favorable weather in~~ the ~~current year~~extension of the lives at nuclear facilities at Duke Energy ~~Florida;~~Progress; and

•a ~~$17~~$65 million ~~decrease~~increase in ~~weather-normal retail sales volumes.~~property and other taxes primarily due to an increase in gross receipts taxes at Duke Energy Florida and higher franchise and property taxes at Duke Energy Progress.

5348


MD&A			PROGRESS ENERGY

Partially offset by:

•a ~~$147~~$71 million ~~increase~~decrease in ~~storm revenues~~operation, maintenance and other expense primarily due to ~~Hurricane Dorian collections at Duke Energy Florida;~~

•~~a $92 million increase in retail pricing due to base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment~~reduced storm amortization at Duke Energy Florida; and

•a ~~$16~~$70 million ~~increase~~decrease in impairment of assets and other charges due to ~~higher pricing from~~ the prior year South Carolina ~~retail rate case, net~~Supreme Court decision on coal ash and optimization of ~~a return~~the company's real estate portfolio and reduction of ~~EDIT~~office space.

Other Income and Expenses, net. The variance is primarily due to ~~customers~~coal ash insurance litigation proceeds received in the prior year at Duke Energy Progress.

~~Operating Expenses.~~ ~~The variance was driven primarily by:~~

•a $545 million decrease in fuel used in electric generation and purchased power primarily due to lower demand and changes in generation mix at Duke Energy Progress and lower demand and fuel costs at Duke Energy Florida;

•a $27 million decrease in depreciation and amortization expense primarily driven by a decrease in coal ash amortization, partially offset by a higher depreciable base and impacts from North Carolina and the South Carolina rate cases at Duke Energy Progress;

•a $16 million decrease in operation, maintenance and other expense at Duke Energy Progress primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Progress and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, reduced outage costs and other cost mitigation efforts, partially offset by storm cost amortizations at Duke Energy Florida; and

•~~a $16 million decrease in property and other taxes driven primarily by lower gross receipts taxes due to decreased fuel revenues at Duke Energy Florida.~~

~~Partially offset by:~~

•a $519 million increase in impairment charges primarily driven by the Duke Energy Progress' CCR Settlement Agreement filed with the NCUC in January 2021, and the prior year's impairment reduction related to Citrus County CC at Duke Energy Florida.

Interest Expense. The variance was driven primarily by ~~lower~~higher interest ~~rates on~~expense and outstanding debt balances at Duke Energy ~~Progress.~~Progress and Duke Energy Florida.

Income Tax Expense. The ~~decrease~~increase in tax expense was primarily due to ~~a decrease in pretax income and an increase in the amortization of excess deferred taxes at Duke Energy Progress, partially offset by~~ an increase in pretax income and a decrease in the amortization of excess deferred ~~taxes at Duke Energy Florida.~~taxes.

DUKE ENERGY PROGRESS

Results of Operations

Years Ended December 31,
(in millions) 2020 2019 Variance
Operating Revenues $ 5,422 $ 5,957 $ (535)
Operating Expenses
Fuel used in electric generation and purchased power 1,743 2,012 (269)
Operation, maintenance and other 1,332 1,446 (114)
Depreciation and amortization 1,116 1,143 (27)
Property and other taxes 167 176 (9)
Impairment charges 499 12 487
Total operating expenses 4,857 4,789 68
Gains on Sales of Other Assets and Other, net 8 — 8
Operating Income 573 1,168 (595)
Other Income and Expenses, net 75 100 (25)
Interest Expense 269 306 (37)
Income Before Income Taxes 379 962 (583)
Income Tax (Benefit) Expense (36) 157 (193)
Net Income $ 415 $ 805 $ (390)


~~MD&A~~			~~DUKE ENERGY PROGRESS~~


	Years Ended December 31,
(in millions)	2022		2021		Variance
Operating Revenues	$	6,753	$	5,780	$	973
Operating Expenses
Fuel used in electric generation and purchased power	2,492		1,778		714
Operation, maintenance and other	1,475		1,467		8
Depreciation and amortization	1,187		1,097		90
Property and other taxes	190		159		31
Impairment of assets and other charges	7		63		(56)
Total operating expenses	5,351		4,564		787
Gains on Sales of Other Assets and Other, net	4		13		(9)
Operating Income	1,406		1,229		177
Other Income and Expenses, net	114		143		(29)
Interest Expense	354		306		48
Income Before Income Taxes	1,166		1,066		100
Income Tax Expense	158		75		83
Net Income	$	1,008	$	991	$	17

The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Progress. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.

Increase (Decrease) over prior year 2020 2019
Residential sales (3.2) % (4.0) %
General service sales (7.4) % (1.6) %
Industrial sales (3.9) % 0.6 %
Wholesale power sales (9.1) % (1.5) %
Joint dispatch sales 9.9 % (0.8) %
Total sales (4.6) % (1.4) %
Average number of customers 1.8 % 1.3 %


Increase (Decrease) over prior year	2022
Residential sales	(0.8)	%
General service sales	7.5	%
Industrial sales	18.1	%
Wholesale power sales	2.5	%
Joint dispatch sales	27.5	%
Total sales	5.4	%
Average number of customers	1.9	%

Year Ended December 31, ~~2020,~~2022, as compared to ~~2019~~2021

Operating Revenues. The variance was driven primarily by:

•a ~~$272~~$699 million ~~decrease~~increase in fuel ~~cost recovery~~revenues driven by ~~lower~~higher fuel prices and ~~volumes as well as less native load transfer sales in the current year;~~higher volumes;

•a ~~$180 million decrease in wholesale revenue primarily driven by the CCR Settlement Agreement filed with the NCUC in~~ ~~January 2021, and decreased volumes, partially offset by increased capacity rates;~~

•~~a $77 million decrease in retail sales due to unfavorable weather; and~~

•~~a $10 million decrease in weather-normal retail sales volumes.~~

~~Partially Offset by:~~

•~~a $16~~$128 million increase due to higher pricing from the ~~South~~North Carolina retail rate case, net of a return of EDIT to ~~customers.~~

~~Operating Expenses.~~ ~~The variance was driven primarily by:~~customers;

•a ~~$487~~$58 million increase in ~~impairment charges primarily driven by the CCR Settlement Agreement filed with the NCUC in January 2021.~~

~~Partially Offset by:~~

•~~a $269 million decrease in fuel used in electric generation and purchased power primarily due to lower demand and changes in generation mix;~~weather-normal retail sales volumes;

•a ~~$114~~$39 million ~~decrease~~increase in ~~operation, maintenance~~rider revenues primarily due to storm securitization and ~~other expense primarily driven~~energy efficiency riders, partially offset by the ~~deferral of 2018 severance costs due to the partial settlement agreement between Duke~~Renewable Energy ~~Progress and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, reduced outage costs and other costs mitigation efforts; and~~Portfolio Standards rider;

•a $27 million ~~decrease~~increase in ~~depreciation~~retail sales due to favorable weather compared to the prior year; and ~~amortization expense primarily driven by a decrease in coal ash amortization, partially offset by a higher depreciable base and impacts from the South Carolina rate cases.~~

~~Other Income and Expenses,~~•a $20 million increase in wholesale revenues, net. ~~The variance was primarily~~ of fuel, due to ~~lower AFUDC equity in the current year.~~

~~Interest Expense.~~ ~~The variance was driven primarily by lower interest rates on outstanding debt.~~

~~Income Tax (Benefit) Expense.~~ ~~The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred taxes.~~higher capacity volumes.

5549


MD&A			DUKE ENERGY ~~FLORIDA~~PROGRESS

Operating Expenses. The variance was driven primarily by:

•a $714 million increase in fuel used in electric generation and purchased power primarily due to higher natural gas prices and changes in the generation mix, partially offset by the recovery of fuel expenses and lower coal expense;

•a $90 million increase in depreciation and amortization due to higher amortization of deferred coal ash costs and amortization related to deferred storm costs, partially offset by lower depreciation related to the extension of the lives of nuclear facilities; and

•a $31 million increase in property and other taxes due to higher franchise and property taxes and a prior year sales and use tax refund.

Partially offset by:

•a $56 million decrease in impairment of assets and other charges primarily due to the prior year South Carolina Supreme Court decision on coal ash and optimization of the company's real estate portfolio and reduction of office space.

Other Income and Expenses, net. The variance was primarily due to coal ash insurance litigation proceeds received in the prior year.

Interest Expense. The variance was driven primarily by higher outstanding debt balances.

Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income and a decrease in the amortization of excess deferred taxes.

DUKE ENERGY FLORIDA

Results of Operations


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		Variance		(in millions)	2022		2021		Variance
Operating Revenues	Operating Revenues	$	5,188	$	5,231	$	(43)	Operating Revenues	$	6,353	$	5,259	$	1,094
Operating Expenses	Operating Expenses							Operating Expenses
Fuel used in electric generation and purchased power	Fuel used in electric generation and purchased power	1,737		2,012		(275)		Fuel used in electric generation and purchased power	2,586		1,806		780
Operation, maintenance and other	Operation, maintenance and other	1,131		1,034		97		Operation, maintenance and other	967		1,048		(81)
Depreciation and amortization	Depreciation and amortization	702		702		—		Depreciation and amortization	955		831		124
Property and other taxes	Property and other taxes	381		392		(11)		Property and other taxes	421		383		38
Impairment charges		(4)		(36)		32
Impairment of assets and other charges								Impairment of assets and other charges	4		19		(15)
Total operating expenses	Total operating expenses	3,947		4,104		(157)		Total operating expenses	4,933		4,087		846
Gains on Sales of Other Assets and Other, net	Gains on Sales of Other Assets and Other, net	1		—		1		Gains on Sales of Other Assets and Other, net	2		1		1
Operating Income	Operating Income	1,242		1,127		115		Operating Income	1,422		1,173		249
Other Income and Expenses, net	Other Income and Expenses, net	53		48		5		Other Income and Expenses, net	74		71		3
Interest Expense	Interest Expense	326		328		(2)		Interest Expense	362		319		43
Income Before Income Taxes	Income Before Income Taxes	969		847		122		Income Before Income Taxes	1,134		925		209
Income Tax Expense	Income Tax Expense	198		155		43		Income Tax Expense	225		187		38
Net Income	Net Income	$	771	$	692	$	79	Net Income	$	909	$	738	$	171

The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Florida. The below percentages for retail customer classes represent billed sales only. Wholesale power sales include both billed and unbilled sales. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.

Increase (Decrease) over prior year 2020 2019
Residential sales 3.3 % 0.7 %
General service sales (5.3) % 0.3 %
Industrial sales 6.2 % (4.6) %
Wholesale power sales (1.7) % 28.8 %
Total sales 0.8 % 1.5 %
Average number of customers 1.8 % 1.6 %


Increase (Decrease) over prior year	2022
Residential sales	1.5	%
General service sales	3.5	%
Industrial sales	6.6	%
Wholesale power sales	38.7	%
Total sales	8.9	%
Average number of customers	1.7	%

Year Ended December 31, ~~2020,~~2022, as compared to ~~2019~~2021

Operating Revenues. The variance was driven primarily by:

•a ~~$295~~$782 million ~~decrease~~increase in fuel revenues driven by ~~lower sales volumes as well as an accelerated refund of~~higher fuel ~~costs to customers in response to the COVID-19 pandemic;~~prices and higher volumes;

•a ~~$55~~$191 million ~~decrease~~increase in ~~rider revenues primarily due to full recovery of the Crystal River 3 uprate regulatory asset in 2019; and~~weather-normal retail sales volumes;

•a ~~$7 million decrease in weather-normal retail sales volumes.~~

~~Partially offset by:~~

•~~a $147 million increase in storm revenues due to recovery of Hurricane Dorian costs;~~

•~~a $92~~$102 million increase in retail pricing due to base rate adjustments related to annual increases from the ~~2017~~2021 Settlement ~~Agreement~~agreement and the ~~Solar Base Rate Adjustment;~~

•~~a $46 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year;~~

•an $18 million increase in other revenues primarily due to increased transmission revenues and lighting equipment rentals, partially offset by lower late payment and service charge revenues due to a moratorium during the COVID-19 pandemic; and

•~~an $11 million increase in wholesale power revenues, net of fuel, primarily due to increased capacity charges.~~

~~Operating Expenses.~~ ~~The variance was driven primarily by:~~

•~~a $275 million decrease in fuel used in electric generation and purchased power primarily due to lower fuel costs; and~~

•~~an $11 million decrease in property and other taxes driven by lower gross receipts taxes due to decreased fuel revenues.~~solar base rate adjustment;

5650


MD&A			DUKE ENERGY FLORIDA

•a $46 million increase in rider revenues primarily due to increased Storm Protection Plan rider revenue driven by higher debt and equity returns from increased capital expenditures in the current year;

•a $33 million increase in wholesale power revenues, net of fuel, primarily due to higher capacity revenues and bulk power sales; and

•a $16 million increase in retail sales due to favorable weather in the current year.

Partially offset by:

•an $86 million decrease in capacity revenue primarily due to accelerated recovery of the retired coal units Crystal River 1 and 2 in 2021.

Operating Expenses. The variance was driven primarily by:

•a ~~$97~~$780 million increase in fuel used in electric generation and purchased power primarily due to higher natural gas prices;

•a $124 million increase in depreciation and amortization primarily due to an increase in depreciation rates starting in January 2022; and

•a $38 million increase in property and other taxes primarily due to an increase in gross receipt taxes driven by higher revenues.

Partially offset by:

•an $81 million decrease in operation, maintenance and other ~~expense~~ primarily due to reduced storm ~~cost amortizations;~~amortization and reduced vegetation management costs, partially offset by higher bad debt expense; and

•a ~~$32~~$15 million ~~increase~~decrease in impairment of assets and other charges ~~primarily~~ due to the prior ~~year's impairment~~year optimization of the company's real estate portfolio and reduction ~~related to Citrus County CC.~~of office space.

Interest Expense. The variance was driven by higher interest rates and outstanding debt balances.

Income Tax Expense.The increase in tax expense was primarily due to ~~an increase in~~higher pretax ~~income and a decrease in the amortization of excess deferred taxes.~~income.

DUKE ENERGY OHIO

Results of Operations


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		Variance		(in millions)	2022		2021		Variance
Operating Revenues	Operating Revenues							Operating Revenues
Regulated electric	Regulated electric	$	1,405	$	1,456	$	(51)	Regulated electric	$	1,798	$	1,493	$	305
Regulated natural gas	Regulated natural gas	453		484		(31)		Regulated natural gas	716		544		172

Total operating revenues	Total operating revenues	1,858		1,940		(82)		Total operating revenues	2,514		2,037		477
Operating Expenses	Operating Expenses							Operating Expenses
Fuel used in electric generation and purchased power – regulated		339		388		(49)
Fuel used in electric generation and purchased power								Fuel used in electric generation and purchased power	657		409		248

Cost of natural gas	Cost of natural gas	73		95		(22)		Cost of natural gas	261		136		125
Operation, maintenance and other	Operation, maintenance and other	463		520		(57)		Operation, maintenance and other	523		479		44
Depreciation and amortization	Depreciation and amortization	278		265		13		Depreciation and amortization	324		307		17
Property and other taxes	Property and other taxes	324		308		16		Property and other taxes	369		355		14

Impairment of assets and other charges								Impairment of assets and other charges	(10)		25		(35)
Total operating expenses	Total operating expenses	1,477		1,576		(99)		Total operating expenses	2,124		1,711		413

Gains on Sales of Other Assets and Other, net								Gains on Sales of Other Assets and Other, net	1		1		—
Operating Income	Operating Income	381		364		17		Operating Income	391		327		64
Other Income and Expenses, net	Other Income and Expenses, net	16		24		(8)		Other Income and Expenses, net	19		18		1
Interest Expense	Interest Expense	102		109		(7)		Interest Expense	129		111		18
Income from Continuing Operations Before Income Taxes		295		279		16
Income Tax Expense from Continuing Operations		43		40		3
Income from Continuing Operations		252		239		13
Loss from Discontinued Operations, net of tax		—		(1)		1
Income Before Income Taxes								Income Before Income Taxes	281		234		47
Income Tax (Benefit) Expense								Income Tax (Benefit) Expense	(21)		30		(51)

Net Income	Net Income	$	252	$	238	$	14	Net Income	$	302	$	204	$	98


MD&A			DUKE ENERGY OHIO

The following table shows the percent changes in GWh sales of electricity, MCF of natural gas delivered and average number of electric and natural gas customers for Duke Energy Ohio. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.


		Electric				Natural Gas					Electric		Natural Gas
Increase (Decrease) over prior year	Increase (Decrease) over prior year	2020		2019		2020		2019		Increase (Decrease) over prior year	2022			2022
Residential sales	Residential sales	(1.9)	%	(3.9)	%	(5.7)	%	(3.7)	%	Residential sales	(0.5)	%		13.7	%
General service sales	General service sales	(7.7)	%	(1.9)	%	(8.4)	%	(1.2)	%	General service sales	(2.1)	%		1.3	%
Industrial sales	Industrial sales	(6.6)	%	(2.1)	%	(4.1)	%	(0.4)	%	Industrial sales	(6.8)	%		0.7	%
Wholesale electric power sales	Wholesale electric power sales	(21.3)	%	(4.9)	%	n/a		n/a		Wholesale electric power sales	(11.0)	%		n/a
Other natural gas sales	Other natural gas sales	n/a		n/a		(2.2)	%	0.7	%	Other natural gas sales	n/a			(3.6)	%
Total sales	Total sales	(5.0)	%	(2.4)	%	(5.5)	%	(1.7)	%	Total sales	0.6	%		4.9	%
Average number of customers	Average number of customers	1.3	%	0.7	%	1.1	%	0.7	%	Average number of customers	1.3	%		0.6	%

Year Ended December 31, ~~2020,~~2022, as compared to ~~2019~~2021

Operating Revenues. The variance was driven primarily by:

•a ~~$61~~$372 million ~~decrease~~increase in fuel related revenues primarily due to ~~lower~~higher retail sales volumes and higher fuel rates in the current year in response to an increase in natural gas prices and ~~decreased volumes;~~purchased power expense;

•a ~~$22~~$55 million ~~decrease~~increase in retail revenue riders primarily due to ~~lower EE program~~the Ohio CEP and Distribution Capital Investment Rider (DCI);

•a $39 million increase in other electric revenues ~~volume impacts of the~~primarily due to Distribution Decoupling rider ~~suspension of the MGP rider and higher taxes returned to customers via the Tax Cuts and Job Acts rider, partially offset by an~~adjustments recorded in 2021;

•a $10 million increase in ~~the Distribution Capital Investment rider~~bulk power marketing sales; and

•a $10 million increase due to ~~increased capital investment;~~favorable weather in the current year.

Partially offset by:

•a $15 million decrease ~~in revenues~~ due to ~~unfavorable weather~~the MGP Settlement.

Operating Expenses. The variance was driven primarily by:

•a $373 million increase in fuel expense primarily driven by higher retail prices and increased volumes for natural gas and purchased power;

•a $44 million increase in operation, maintenance and other expense primarily due to the MGP Settlement, partially offset by employee related costs;

•a $17 million increase in depreciation and amortization primarily driven by increases in distribution plant in service and lower CEP deferrals, partially offset by rate case adjustments for the over amortization of meter assets in 2022; and

•a $14 million increase in property and other taxes primarily due to higher property taxes, higher kilowatt and natural gas distribution taxes and a lower Network Integration Transmission Services tax deferral.

Partially offset by:

•a $35 million decrease in impairment of assets and other charges primarily due to the prior year impairments related to the propane caverns in Ohio and the optimization of the company's real estate portfolio and reduction of office space, partially offset by the partial reversal of the propane cavern impairment in the current ~~year;~~year.

•Interest Expense.~~an $11 million~~ The variance was primarily due to higher interest rates, outstanding debt balances and post in-service carrying costs, partially offset by AFUDC debt.

Income Tax (Benefit) Expense. The decrease in ~~other revenues~~tax expense was primarily due to ~~lower OVEC sales into PJM;~~an increase in the amortization of excess deferred taxes related to the MGP Settlement.

5752


MD&A			DUKE ENERGY ~~OHIO~~INDIANA

•~~a $5 million decrease in bulk power marketing sales, and~~

•~~a $4 million decrease in weather-normal sales volumes.~~

~~Partially offset by:~~

•~~a $23 million increase in retail pricing primarily due to rate case impacts in Kentucky; and~~

•~~an $18 million increase in PJM transmission revenues as a result of increased capital spend.~~

~~Operating Expenses.~~ ~~The variance was driven primarily by:~~

•~~a $71 million decrease in fuel expense, primarily driven by lower fuel prices, decreased volumes and lower OVEC costs; and~~

•a $57 million decrease in operations, maintenance and other expense primarily due to a new customer program and other deferrals, the timing of EE programs and outage costs, lower employee benefit expenses and lower vegetation and pole maintenance costs.

~~Partially offset by:~~

•~~a $16 million increase in property and other taxes primarily due to higher property taxes due to increased plant in service, partially offset by lower franchise and other taxes; and~~

•a $13 million increase in depreciation and amortization primarily driven by an increase in distribution plant, partially offset by lower amortization due to the suspension of the MGP rider in Ohio and environmental surcharge mechanism amortization of deferred coal ash pond ARO.

DUKE ENERGY INDIANA

Results of Operations


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		Variance		(in millions)	2022		2021		Variance
Operating Revenues	Operating Revenues	$	2,795	$	3,004	$	(209)	Operating Revenues	$	3,922	$	3,174	$	748
Operating Expenses	Operating Expenses							Operating Expenses
Fuel used in electric generation and purchased power	Fuel used in electric generation and purchased power	767		935		(168)		Fuel used in electric generation and purchased power	1,819		985		834
Operation, maintenance and other	Operation, maintenance and other	762		790		(28)		Operation, maintenance and other	729		750		(21)
Depreciation and amortization	Depreciation and amortization	569		525		44		Depreciation and amortization	645		615		30
Property and other taxes	Property and other taxes	81		69		12		Property and other taxes	75		73		2

Impairment of assets and other charges								Impairment of assets and other charges	388		9		379
Total operating expenses	Total operating expenses	2,179		2,319		(140)		Total operating expenses	3,656		2,432		1,224

Operating Income	Operating Income	616		685		(69)		Operating Income	266		742		(476)
Other Income and Expenses, net	Other Income and Expenses, net	37		41		(4)		Other Income and Expenses, net	36		42		(6)
Interest Expense	Interest Expense	161		156		5		Interest Expense	189		196		(7)
Income Before Income Taxes	Income Before Income Taxes	492		570		(78)		Income Before Income Taxes	113		588		(475)
Income Tax Expense		84		134		(50)
Income Tax (Benefit) Expense								Income Tax (Benefit) Expense	(24)		107		(131)
Net Income	Net Income	$	408	$	436	$	(28)	Net Income	$	137	$	481	$	(344)

The following table shows the percent changes in GWh sales and average number of customers for Duke Energy Indiana. The below percentages for retail customer classes represent billed sales only. Total sales includes billed and unbilled retail sales and wholesale sales to incorporated municipalities, public and private utilities and power marketers. Amounts are not weather-normalized.

Increase (Decrease) over prior year 2020 2019
Residential sales (2.7) % (3.9) %
General service sales (7.0) % (2.2) %
Industrial sales (7.6) % (2.6) %
Wholesale power sales 3.8 % (27.7) %
Total sales (4.3) % (6.8) %
Average number of customers 1.4 % 1.2 %


Increase (Decrease) over prior year	2022
Residential sales	(0.4)	%
General service sales	1.8	%
Industrial sales	(12.1)	%
Wholesale power sales	5.4	%
Total sales	1.9	%
Average number of customers	1.4	%

Year Ended December 31, ~~2020,~~2022, as compared to ~~2019~~2021

Operating Revenues.The variance was driven primarily by:

•a $700 million increase in retail fuel revenues primarily due to higher fuel cost recovery driven by higher retail sales volumes and fuel prices;

•a $74 million increase primarily due to wholesale revenues, including fuel revenues, driven by higher rates and the bulk power marketing sharing provision;

•a $46 million increase in weather-normal retail sales volumes primarily due to higher nonresidential customer demand; and

•a $20 million increase in retail sales due to favorable weather.

Partially offset by:

•a $67 million decrease due to the Indiana Supreme Court ruling on recovery of certain coal ash costs;

•a $13 million decrease primarily due to the Utility Receipts Tax repeal; and

•a $12 million decrease primarily due to fixed bill plans and other electric revenues.

Operating Expenses. The variance was driven primarily by:

•an $834 million increase in fuel used in electric generation and purchased power primarily due to higher purchased power expense and higher natural gas and coal costs;

•a ~~$193~~$379 million increase in impairment of assets and other charges primarily due to the Indiana court rulings on recovery of certain coal ash costs; and

•a $30 million increase in depreciation and amortization primarily due to additional plant in service, Step 2 rates true-up adjustment to depreciation expense and coal ash depreciation.

Partially offset by:

•a $21 million decrease in ~~rider revenues~~operation, maintenance and other primarily due to lower ~~sales volumes~~outage, base maintenance work and ~~credit adjustment rider refunds;~~

•~~a $179 million decrease in fuel revenues primarily due to lower fuel cost recovery driven by customer demand and fuel prices;~~

•~~a $20 million decrease in weather-normal retail sales volumes driven by lower nonresidential customer demand;~~employee related costs.

5853


MD&A			DUKE ENERGY INDIANA

•~~a $16 million decrease in retail sales due to unfavorable weather in the current year; and~~

•~~a $10 million decrease in wholesale revenues primarily related to the true up of wholesale transmission revenues and lower rates in the current year.~~

~~Partially offset by:~~

•~~a $214 million increase primarily due to higher pricing from the Indiana retail rate case, net of certain rider revenues.~~

~~Operating Expenses.The variance was driven primarily by:~~

•a $168 million decrease in fuel used in electric generation and purchased power expense primarily due to lower purchased power expense, lower amortization of deferred fuel costs and lower coal and natural gas costs; and

•~~a $28 million decrease in operation, maintenance and other primarily due to lower storm restoration costs, training costs, employee related costs and a new customer program deferral.~~

~~Partially offset by:~~

•~~a $44 million increase in depreciation and amortization primarily due to a change in depreciation rates from the Indiana retail rate case and additional plant in service; and~~

•~~a $12 million increase in property and other taxes primarily due to additional plant in service and property tax true ups for prior periods.~~

Income Tax (Benefit) Expense.The decrease in ~~income~~ tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred ~~taxes and a decrease in pretax income.~~income taxes.

PIEDMONT

Results of Operations


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		Variance		(in millions)	2022		2021		Variance

Operating Revenues	Operating Revenues	$	1,297	$	1,381	$	(84)	Operating Revenues	$	2,124	$	1,569	$	555
Operating Expenses	Operating Expenses							Operating Expenses
Cost of natural gas	Cost of natural gas	386		532		(146)		Cost of natural gas	1,015		569		446
Operation, maintenance and other	Operation, maintenance and other	322		328		(6)		Operation, maintenance and other	368		327		41
Depreciation and amortization	Depreciation and amortization	180		172		8		Depreciation and amortization	222		213		9
Property and other taxes	Property and other taxes	53		45		8		Property and other taxes	57		55		2
Impairment charges		7		—		7
Impairment of assets and other charges								Impairment of assets and other charges	18		10		8
Total operating expenses	Total operating expenses	948		1,077		(129)		Total operating expenses	1,680		1,174		506
Gains on Sales of Other Assets and Other, net								Gains on Sales of Other Assets and Other, net	4		—		4
Operating Income								Operating Income	448		395		53

Operating Income		349		304		45
Equity in earnings of unconsolidated affiliates		9		8		1

Other income and expenses, net		51		20		31
Total other income and expenses		60		28		32

Other Income and Expenses, net								Other Income and Expenses, net	54		64		(10)
Interest Expense	Interest Expense	118		87		31		Interest Expense	140		119		21
Income Before Income Taxes	Income Before Income Taxes	291		245		46		Income Before Income Taxes	362		340		22
Income Tax Expense	Income Tax Expense	18		43		(25)		Income Tax Expense	39		30		9
Net Income	Net Income	$	273	$	202	$	71	Net Income	$	323	$	310	$	13

The following table shows the percent changes in Dth delivered and average number of customers. The percentages for all throughput deliveries represent billed and unbilled sales. Amounts are not weather-normalized.

Increase (Decrease) over prior year 2020 2019
Residential deliveries (3.5) % (8.0) %
Commercial deliveries (9.1) % (4.6) %
Industrial deliveries (2.9) % 1.7 %
Power generation deliveries (3.7) % (11.8) %
For resale (9.7) % 4.8 %
Total throughput deliveries (4.1) % (8.2) %
Secondary market volumes (9.1) % (0.5) %
Average number of customers 2.3 % 1.4 %


Increase (Decrease) over prior year	2022
Residential deliveries	5.0	%
Commercial deliveries	8.5	%
Industrial deliveries	1.2	%
Power generation deliveries	23.3	%
For resale	(4.3)	%
Total throughput deliveries	15.7	%
Secondary market volumes	18.9	%
Average number of customers	1.4	%

The margin decoupling mechanism adjusts for variations in residential and commercial use per customer, including those due to weather and conservation. The weather normalization adjustment mechanisms mostly offset the impact of weather on bills rendered, but do not ensure full recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.


~~MD&A~~			~~PIEDMONT~~

Year Ended December 31, ~~2020,~~2022, as compared to ~~2019~~2021

Operating Revenues. The variance was driven primarily by:

•a ~~$146~~$257 million ~~decrease~~increase due to ~~lower~~higher natural gas costs passed through to customers ~~lower volumes,~~ and ~~decreased~~higher volumes;

•a $213 million increase due to increased secondary marketing activity including higher off-system sales natural gas costs;

•~~a $47 million decrease due to return of EDIT to customers;~~ and

•a ~~$7 million decrease due to NCUC approval related to tax reform accounting from fixed-rate contracts in the prior year.~~

~~Partially offset by:~~

•~~an $87~~$64 million increase due to ~~North Carolina~~ base rate ~~case increases;~~

•~~a $20 million increase due to North Carolina IMR increases; and~~

•~~an $18 million increase due to addition of Belews Creek and Marshall Power Generation capacity contracts.~~increases.

Operating Expenses. The variance was driven primarily by:

•a ~~$146~~$257 million ~~decrease~~increase in cost of natural gas due to ~~lower~~higher natural gas ~~prices, lower volumes,~~costs passed through to customers and ~~decreased off-system sales natural gas costs.~~higher volumes;

~~Partially offset by:~~

•~~an $8~~a $189 million increase in ~~depreciation and amortization~~cost of natural gas due to ~~additional plant in service and~~increased secondary marketing activity including higher ~~depreciation rates, partially offset by Belews Creek and Marshall Power Generation contracts and amortization of EDIT interest expense;~~off-system sales higher natural gas costs; and

•~~an $8~~a $41 million increase in ~~property~~operation, maintenance and other ~~taxes~~ due to ~~prior year property tax true ups.~~higher spend on internal and contract labor costs, locates, fleet, materials and other.

Other Income and Expenses, net. The variance was driven primarily by a decrease in AFUDC equity ~~and other income related to Belews Creek and Marshall Power Generation contracts.~~base.

Interest Expense. The variance was ~~driven~~ primarily ~~by interest on tax reform related deferrals being returned~~due to ~~customers and~~ higher debt outstanding ~~in the current year.~~and interest rates.

Income Tax Expense.The ~~decrease~~increase in ~~income~~ tax expense was primarily due to an increase in pretax income and a decrease in the amortization of excess deferred ~~taxes and an increase in AFUDC Equity, partially offset by an increase in pretax income.~~taxes.


MD&A			CRITICAL ACCOUNTING POLICIES AND ESTIMATES

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Preparation of financial statements requires the application of accounting policies, judgments, assumptions and estimates that can significantly affect the reported results of operations, cash flows or the amounts of assets and liabilities recognized in the financial statements. Judgments made include the likelihood of success of particular projects, possible legal and regulatory challenges, earnings assumptions on pension and other benefit fund investments and anticipated recovery of costs, especially through regulated operations.

Management discusses these policies, estimates and assumptions with senior members of management on a regular basis and provides periodic updates on management decisions to the Audit Committee. Management believes the areas described below require significant judgment in the application of accounting policy or in making estimates and assumptions that are inherently uncertain and that may change in subsequent periods.

For further information, see Note 1 to the Consolidated Financial Statements, "Summary of Significant Accounting Policies."

Regulated Operations Accounting

Substantially all of Duke Energy’s regulated operations meet the criteria for application of regulated operations accounting treatment. As a result, Duke Energy is required to record assets and liabilities that would not be recorded for nonregulated entities. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory liabilities are recorded when it is probable that a regulator will require Duke Energy to make refunds to customers or reduce rates to customers for previous collections or deferred revenue for costs that have yet to be incurred.

Management continually assesses whether recorded regulatory assets are probable of future recovery by considering factors such as:

•applicable regulatory environment changes;

•historical regulatory treatment for similar costs in Duke Energy’s jurisdictions;

•litigation of rate orders;

•recent rate orders to other regulated entities;


~~MD&A~~			~~CRITICAL ACCOUNTING POLICIES AND ESTIMATES~~

•levels of actual return on equity compared to approved rates of return on equity; and

•the status of any pending or potential deregulation legislation.

If future recovery of costs ceases to be probable, asset write-offs would be recognized in operating income. Additionally, regulatory agencies can provide flexibility in the manner and timing of the depreciation of property, plant and equipment, recognition of asset retirement costs and amortization of regulatory assets, or may disallow recovery of all or a portion of certain assets.

As required by regulated operations accounting rules, significant judgment can be required to determine if an otherwise recognizable incurred cost qualifies to be deferred for future recovery as a regulatory asset. Significant judgment can also be required to determine if revenues previously recognized are for entity specific costs that are no longer expected to be incurred or have not yet been incurred and are therefore a regulatory liability.

For further information, see Note 4 to the Consolidated Financial Statements, "Regulatory Matters."

Goodwill Impairment Assessments

Duke Energy performed its annual goodwill impairment tests for all reporting units as of August 31, ~~2020.~~2022. Additionally, Duke Energy monitors all relevant events and circumstances during the year to determine if an interim impairment test is required. Such events and circumstances include an adverse regulatory outcome, declining financial performance and deterioration of industry or market conditions. As of August 31, ~~2020,~~2022, all of the reporting units' estimated fair value of equity substantially exceeded the carrying value of equity. The fair values of the reporting units were calculated using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market approach, which estimates fair value based on market comparables within the utility and energy industries.

Estimated future cash flows under the income approach are based on Duke Energy’s internal business plan. Significant assumptions used are growth rates, future rates of return expected to result from ongoing rate regulation and discount rates. Management determines the appropriate discount rate for each of its reporting units based on the ~~WACC~~Weighted Average Cost of Capital (WACC) for each individual reporting unit. The WACC takes into account both the after-tax cost of debt and cost of equity. A major component of the cost of equity is the current risk-free rate on 20-year U.S. Treasury bonds. In the ~~2020~~2022 impairment tests, Duke Energy considered implied WACCs for certain peer companies in determining the appropriate WACC rates to use in its analysis. As each reporting unit has a different risk profile based on the nature of its operations, including factors such as regulation, the WACC for each reporting unit may differ. Accordingly, the WACCs were adjusted, as appropriate, to account for company specific risk premiums. The discount rates used for calculating the fair values as of August 31, ~~2020,~~2022, for each of Duke Energy’s reporting units ranged from ~~5.2%~~6.6% to ~~5.7%~~6.9%. The underlying assumptions and estimates are made as of a point in time. Subsequent changes, particularly changes in the discount rates, authorized regulated rates of return or growth rates inherent in management’s estimates of future cash flows, could result in future impairment charges.

One of the most significant assumptions utilized in determining the fair value of reporting units under the market approach is implied market multiples for certain peer companies. Management selects comparable peers based on each peer’s primary business mix, operations, and market capitalization compared to the applicable reporting unit and calculates implied market multiples based on available projected earnings guidance and peer company market values as of August 31. The implied market multiples used for calculating the fair values as of August 31, 2022, for each of Duke Energy's reporting units ranged from 10.3 to 13.6.


MD&A			CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Duke Energy primarily operates in environments that are rate-regulated. In such environments, revenue requirements are adjusted periodically by regulators based on factors including levels of costs, sales volumes and costs of capital. Accordingly, Duke Energy’s regulated utilities operate to some degree with a buffer from the direct effects, positive or negative, of significant swings in market or economic conditions. However, significant changes in discount rates or implied market multiples over a prolonged period may have a material impact on the fair value of equity.

Duke Energy has $19.3 billion in Goodwill at both December 31, 2022, and 2021. For further information, see Note 1112 to the Consolidated Financial Statements, "Goodwill and Intangible Assets."

Asset Retirement Obligations

AROs are recognized for legal obligations associated with the retirement of property, plant and equipment at the present value of the projected liability in the period in which it is incurred, if a reasonable estimate of fair value can be made. Duke Energy has $12.7 billion and $12.6 billion of AROs as of December 31, 2022, and 2021, respectively. See Note 10, "Asset Retirement Obligations," for further details including a rollforward of related liabilities.

The present value of the initial obligation and subsequent updates are based on discounted cash flows, which include estimates regarding the amount and timing of future cash flows, regulatory, legal, and legislative decisions, selection of discount rates and cost escalation rates, among other factors. These estimates are subject to change.

Obligations for nuclear decommissioning are based on site-specific cost studies. Duke Energy Carolinas and Duke Energy Progress assume prompt dismantlement of the nuclear facilities after operations are ceased. During 2020, Duke Energy Florida, closed an agreement for the accelerated decommissioning of the Crystal River Unit 3 nuclear power station after receiving approval from the NRC and FPSC. The retirement obligations for the decommissioning of Crystal River Unit 3 nuclear power station are measured based on accelerated decommissioning from 2020 continuing through 2027. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida also assume that spent fuel will be stored on-site until such time that it can be transferred to a yet to be built DOE facility.

Obligations for closure of ash basins are based upon discounted cash flows of estimated costs for site-specific plans. ~~During 2020,~~In prior years, certain ash basins have had probability weightings applied to them based on different potential closure methods and the Hoosier Environmental Council filed a Petition for Administrative Review with the Indiana Office of Environmental Adjudication challenging the Indiana Department of Environmental Management's partial approval of Duke Energy Indiana's ash pond closure plan. Due to these challenges, in 2020, Duke Energy Indiana remeasured and increased the closure estimates for certain coal ash impoundments.probabilities surrounding pending legal changes.

For further information, see Notes 3, 4, 5 and 910 to the Consolidated Financial Statements, "Regulatory Matters," "Commitments and Contingencies" and "Asset Retirement Obligations."


~~MD&A~~			~~CRITICAL ACCOUNTING POLICIES AND ESTIMATES~~

~~Long-Lived Asset Impairment Assessments, Excluding Regulated~~Discontinued Operations ~~and Equity Method Investments~~

Duke Energy ~~evaluates property, plant and equipment for~~calculated an estimated impairment ~~when events or changes in circumstances (such~~on the disposition of its Commercial Renewables Disposal Groups as ~~a significant change in cash flow projections or the determination that it is more likely than not that an asset or asset group will be sold) indicate~~of December 31, 2022. The impairment was recorded to write-down the carrying amount to fair value, ~~of such assets may not be recoverable.~~less cost to sell. The ~~determination of whether an impairment has occurred is based on an estimate of undiscounted~~fair value was primarily determined from the income approach using discounted cash flows, but also considered market information obtained through the bidding process. Estimated future cash flows ~~attributable to~~under the ~~assets, as compared~~income approach were based on Duke Energy's forecast, which was informed by existing power purchase agreements with ~~their carrying value.~~offtakers and forward merchant curves. Significant assumptions used in the income approach include forward merchant curves and discount rates. The discount rates take into account both the after-tax cost of debt and cost of equity.

~~Performing an impairment evaluation involves a significant degree of estimation~~The actual loss will be recorded based on final sales agreements and judgment in areas such as identifying circumstances that indicate an impairment may exist, identifying and grouping affected assets and developing the undiscounted future cash flows. If an impairment has occurred, the amount of the impairment recognized is determined by estimating the fair value and recording a loss if the carrying value is greatercould be materially different than the fair value. Additionally, determining fair value requires probability weighting future cash flows to reflect expectations about possible variations in their amounts or timing and the selection of an appropriate discount rate. Although cash flow estimates are based on relevant information available at the time the estimates are made, estimates of future cash flows are, by nature, highly uncertain and may vary significantly from actual results.

When determining whether an asset or asset group has been impaired, management groups assets at the lowest level that has discrete cash flows. Investments in affiliates that are not controlled by Duke Energy, but over which it has significant influence, are accounted for using the equity method. Equity method investments are assessed for impairment when conditions exist that indicate that the fair value of the investment is less than book value. It the decline in value is considered to be other than temporary, the investment is written down to its estimated ~~fair value, which establishes a new cost basis in the investment.~~

During 2020, Duke Energy evaluated recoverability of certain renewable merchant plants due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices, capital cost of new renewables and increase renewable penetration. It was determined the assets were all recoverable as the carrying value of the assets approximated or exceeded the aggregate estimated future cash flows.loss.

For further information, ~~see Notes~~See Note 2 ~~10 and 12~~ to the Consolidated Financial Statements, ~~"Business Segments,~~"Dispositions." ~~"Property, Plant and Equipment" and "Investments in Unconsolidated Affiliates."~~

~~Pension and Other Post-Retirement Benefits~~

The calculation of pension expense, other post-retirement benefit expense and net pension and other post-retirement assets or liabilities require the use of assumptions and election of permissible accounting alternatives. Changes in assumptions can result in different expense and reported asset or liability amounts and future actual experience can differ from the assumptions. Duke Energy believes the most critical assumptions for pension and other post-retirement benefits are the expected long-term rate of return on plan assets and the assumed discount rate applied to future projected benefit payments.

Duke Energy elects to amortize net actuarial gain or loss amounts that are in excess of 10% of the greater of the market-related value of plan assets or the plan's projected benefit obligation, into net pension or other post-retirement benefit expense over the average remaining service period of active participants expected to benefit under the plan. If all or almost all of a plan's participants are inactive, the average remaining life expectancy of the inactive participants is used instead of average remaining service period. Prior service cost or credit, which represents an increase or decrease in a plan's pension benefit obligation resulting from plan amendment, is amortized on a straight-line basis over the average expected remaining service period of active participants expected to benefit under the plan. If all or almost all of a plan's participants are inactive, the average remaining life expectancy of the inactive participants is used instead of average remaining service period.

As of December 31, 2020, Duke Energy assumes pension and other post-retirement plan assets will generate a long-term rate of return of 6.50%. The expected long-term rate of return was developed using a weighted average calculation of expected returns based primarily on future expected returns across asset classes considering the use of active asset managers, where applicable. The asset allocation targets were set after considering the investment objective and the risk profile. Equity securities are held for their higher expected returns. Debt securities are primarily held to hedge the qualified pension liability. Real assets, return-seeking fixed income, hedge funds and other global securities are held for diversification. Investments within asset classes are diversified to achieve broad market participation and reduce the impact of individual managers on investments.

Duke Energy discounted its future U.S. pension and other post-retirement obligations using a rate of 2.60% as of December 31, 2020. Discount rates used to measure benefit plan obligations for financial reporting purposes reflect rates at which pension benefits could be effectively settled. As of December 31, 2020, Duke Energy determined its discount rate for U.S. pension and other post-retirement obligations using a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high-quality corporate bonds that generate sufficient cash flow to provide for projected benefit payments of the plan. The selected bond portfolio is derived from a universe of non-callable corporate bonds rated Aa quality or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plan’s projected benefit payments discounted at this rate with the market value of the bonds selected.


~~MD&A~~			~~CRITICAL ACCOUNTING POLICIES AND ESTIMATES~~

Future changes in plan asset returns, assumed discount rates and various other factors related to the participants in Duke Energy’s pension and post-retirement plans will impact future pension expense and liabilities. Duke Energy cannot predict with certainty what these factors will be in the future. The following table presents the approximate effect on Duke Energy’s 2020 pretax pension expense, pretax other post-retirement expense, pension obligation and other post-retirement benefit obligation if a 0.25% change in rates were to occur.

Qualified and Non- Other Post-Retirement
Qualified Pension Plans Plans
(in millions) 0.25 % (0.25) % 0.25 % (0.25) %
Effect on 2020 pretax pension and other post-retirement expense:
Expected long-term rate of return $ (21) $ 21 $ (1) $ 1
Discount rate (9) 9 — (1)
Effect on pension and other post-retirement benefit obligation at December 31, 2020:
Discount rate (208) 213 (13) 14

Duke Energy’s other post-retirement plan uses a health care cost trend rate covering both pre- and post-age 65 retired plan participants, which is comprised of a medical care cost trend rate, which reflects the near- and long-term expectation of increases in medical costs, and a prescription drug cost trend rate, which reflects the near- and long-term expectation of increases in prescription drug costs. As of December 31, 2020, the health care cost trend rate was 6.25%, trending down to 4.75% by 2028. These plans are closed to new employees.

~~For further information, see Note 22 to the Consolidated Financial Statements, “Employee Benefit Plans.”~~

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

Duke Energy relies primarily upon cash flows from operations, debt and equity issuances and its existing cash and cash equivalents to fund its liquidity and capital requirements. Duke Energy’s capital requirements arise primarily from capital and investment expenditures, repaying long-term debt and paying dividends to shareholders.

Among other provisions, the Tax Act lowered the corporate federal income tax rate from 35% to 21% and eliminated bonus depreciation for regulated utilities. For Duke Energy’s regulated operations, the reduction in federal income taxes will result in lower regulated customer rates. However, Additionally, due to its existing ~~NOL position~~tax attributes and ~~other~~projected tax credits to be generated relating to the IRA, Duke Energy does not expect to be a significant federal cash taxpayer ~~through at least 2029. As a result, any reduction~~until around 2030.


MD&A			LIQUIDITY AND CAPITAL RESOURCES

Capital Expenditures

Duke Energy continues to focus on reducing risk and positioning its business for future success and will invest principally in ~~customer rates could cause a material reduction in consolidated cash flows from operations~~its strongest business sectors. Duke Energy’s projected capital and investment expenditures, including AFUDC debt and capitalized interest, for the next three fiscal years are included in the ~~short term. Over time, the reduction~~table below.


(in millions)	2023		2024		2025
Electric Generation(a)	$	1,650	$	1,950	$	3,150
Electric Transmission	1,550		1,925		1,850
Electric Distribution	3,750		3,750		4,100
Environmental and Other	675		500		475
EU&I Growth Capital	7,625		8,125		9,575
Maintenance	2,800		2,625		2,425



Total EU&I	10,425		10,750		12,000
GU&I	1,375		1,150		975
Other	400		375		425


Total projected capital and investment expenditures	$	12,200	$	12,275	$	13,400

(a) Includes nuclear fuel of approximately $1.9 billion in deferred tax liabilities resulting from the Tax Act will increase Duke Energy’s regulated rate base investments and customer rates. Impacts of the Tax Act to Duke Energy’s cash flows and credit metrics are subject to the regulatory actions of its state commissions2023-2025.

Debt

Long-term debt maturities and the ~~FERC.~~interest payable on long-term debt each represent a significant cash requirement for the Duke Energy Registrants. See Note 37 to the Consolidated Financial Statements, ~~“Regulatory Matters,~~“Debt and Credit Facilities,” for information regarding the Duke Energy Registrants' long-term debt at December 31, 2022, the weighted average interest rate applicable to each long-term debt category and a schedule of long-term debt maturities over the next five years.

Fuel and Purchased Power

Fuel and purchased power includes firm capacity payments that provide Duke Energy with uninterrupted firm access to electricity transmission capacity and natural gas transportation contracts, as well as undesignated contracts and contracts that qualify as NPNS. Duke Energy’s contractual cash obligations for fuel and purchased power as of December 31, 2022, are as follows:


	Payments Due by Period
(in millions)	Total		Less than 1 year (2023)		2-3 years (2024 & 2025)		4-5 years (2026 & 2027)		More than 5 years (2028 & beyond)
Fuel and purchased power	$	23,255	$	5,840	$	7,277	$	3,674	$	6,464

Other Purchase Obligations

Other purchase obligations includes contracts for software, telephone, data and consulting or advisory services, contractual obligations for Engineering, Procurement, and Construction agreement costs for new generation plants, solar facilities, plant refurbishments, maintenance and day-to-day contract work and commitments to buy certain products. Amount excludes certain open purchase orders for services that are provided on demand for which the timing of the purchase cannot be determined. Total cash commitments for related other purchase obligation expenditures are $12,095 million, with $11,118 million expected to be paid in the next 12 months.

See Note 6 to the Consolidated Financial Statements, “Leases” for a schedule of both finance lease and operating lease payments over the next five years. See Note 10 to the Consolidated Financial Statements, “Asset Retirement Obligations” for information on nuclear decommissioning trust funding obligations and the closure of ash impoundments.

Duke Energy performs ongoing assessments of its respective guarantee obligations to determine whether any liabilities have been incurred as a result of potential increased nonperformance risk by third parties for which Duke Energy has issued guarantees. See Note 8 to the Consolidated Financial Statements, “Guarantees and Indemnifications,” for further details of the guarantee arrangements. Issuance of these guarantee arrangements is not required for the majority of Duke Energy’s operations. Thus, if Duke Energy discontinued issuing these guarantees, there would not be a material impact to the consolidated results of operations, cash flows or financial position. Other than the guarantee arrangements discussed in Note 8 and off-balance sheet debt related to non-consolidated VIEs, Duke Energy does not have any material off-balance sheet financing entities or structures. For additional ~~information.~~information, see Note 18 to the Consolidated Financial Statements, "Variable Interest Entities."

Cash and Liquidity

The Subsidiary Registrants generally maintain minimal cash balances and use short-term borrowings to meet their working capital needs and other cash requirements. The Subsidiary Registrants, excluding Progress Energy, support their short-term borrowing needs through participation with Duke Energy and certain of its other subsidiaries in a money pool arrangement. The companies with short-term funds may provide short-term loans to affiliates participating under this arrangement. See Note 67 to the Consolidated Financial Statements, “Debt and Credit Facilities,” for additional discussion of the money pool arrangement.


MD&A			LIQUIDITY AND CAPITAL RESOURCES

Duke Energy and the Subsidiary Registrants, excluding Progress Energy, may also use short-term debt, including commercial paper and the money pool, as a bridge to long-term debt financings. The levels of borrowing may vary significantly over the course of the year due to the timing of long-term debt financings and the impact of fluctuations in cash flows from operations. From time to time, Duke Energy’s current liabilities exceed current assets resulting from the use of short-term debt as a funding source to meet scheduled maturities of long-term debt, as well as cash needs, which can fluctuate due to the seasonality of its businesses.

~~During March 2020, in response to market volatility and the ongoing economic uncertainty related to COVID-19, Duke Energy took several actions to enhance the company's liquidity position including:~~

•Duke Energy drew down the remaining $500 million of availability under the existing $1 billion Three-Year Revolving Credit Facility. That additional borrowing was subsequently repaid during the second quarter of 2020; and

•Duke Energy entered into and borrowed the full amount under a $1.5 billion, 364-day Term Loan Credit Agreement. The Term Loan Credit Agreement contained a provision for additional borrowing capacity of $500 million. Duke Energy exercised the provision and borrowed an additional $188 million, for a total borrowing of approximately $1.7 billion. By November 2020, Duke Energy repaid the entire borrowing under the 364-day Term Loan.

Following March 2020, access to credit and equity markets has normalized. In addition to the March 2020 financings to address the company's liquidity position, for the year ended December 31, 2020, Duke Energy issued approximately $5.6 billion in debt and raised approximately $2.9 billion of common equity through equity forward agreements and the company's dividend reinvestment and ATM programs. A portion of the proceeds from the equity forward settlements will be used to fully repay Duke Energy's portion of the ACP construction loan of approximately $860 million. Despite the recovery in capital markets, Duke Energy continues to monitor access to credit and equity markets amid the ongoing economic uncertainty related to COVID-19.


~~MD&A~~			~~LIQUIDITY AND CAPITAL RESOURCES~~

In addition to actions taken by the company, the CARES Act, enacted in March 2020, as an emergency economic stimulus package in response to the COVID-19 pandemic, included provisions providing relief to entities with remaining AMT credit refund allowances. Through the CARES Act, Duke Energy accelerated remaining AMT credit refund allowances and claimed a refund in full for any AMT credit carryforwards. As a result, in the third quarter of 2020, Duke Energy received $572 million related to AMT credit carryforwards and $19 million of interest income. See Note 23 to the Consolidated Financial Statements, "Income Taxes," for additional information.

As of December 31, ~~2020,~~2022, Duke Energy had approximately ~~$259~~$409 million of cash on hand, ~~$5.6~~$5.2 billion available under its $8$9 billion Master ~~Credit Facility and $500 million available under the $1 billion Three-Year Revolving~~ Credit Facility. Duke Energy expects to have sufficient liquidity in the form of cash on hand, cash from operations and available credit capacity to support its funding needs. Refer to Notes 67 and 1920 to the Consolidated Financial Statements, "Debt and Credit Facilities" and "Stockholders' Equity," respectively, for information regarding Duke Energy's debt and equity issuances, debt maturities and available credit facilities including the Master Credit Facility.

Credit Facilities and Registration Statements

See Note 67 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding credit facilities and shelf registration statements available to Duke Energy and the Duke Energy Registrants.

~~CAPITAL EXPENDITURES~~

Duke Energy continues to focus on reducing risk and positioning its business for future success and will invest principally in its strongest business sectors. Duke Energy’s projected capital and investment expenditures, including AFUDC debt and capitalized interest, for the next three fiscal years are included in the table below.

(in millions) 2021 2022 2023
New generation $ 60 $ 20 $ 85
Regulated renewables 665 710 755
Environmental 795 820 600
Nuclear fuel 425 400 380
Major nuclear 280 270 205
Customer additions 565 555 560
Grid modernization and other transmission and distribution projects 3,460 5,025 4,840
Maintenance and other 2,200 2,650 2,750
Total Electric Utilities and Infrastructure 8,450 10,450 10,175
Gas Utilities and Infrastructure 1,250 1,275 1,150
Commercial Renewables and Other 775 1,075 750
Total projected capital and investment expenditures $ 10,475 $ 12,800 $ 12,075

~~DEBT MATURITIES~~

See Note 6 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant components of Current Maturities of Long-Term Debt on the Consolidated Balance Sheets.

~~DIVIDEND PAYMENTS~~Dividend Payments

In ~~2020,~~2022, Duke Energy paid quarterly cash dividends for the ~~94th~~96th consecutive year and expects to continue its policy of paying regular cash dividends in the future. There is no assurance as to the amount of future dividends because they depend on future earnings, capital requirements, financial condition and are subject to the discretion of the Board of Directors.

Duke Energy targets a dividend payout ratio of ~~between~~between 65% and 75%, ~~based~~based upon adjusted ~~EPS, and expects this trend to continue through 2025.~~EPS. Duke Energy increased the dividend by ~~approximately~~approximately 2% ~~annually~~annually in both ~~2020~~2022 and ~~2019,~~2021, and the company remains committed to continued growth of the dividend.

Dividend and Other Funding Restrictions of Duke Energy Subsidiaries

As discussed in Note 34 to the Consolidated Financial Statements, “Regulatory Matters,” Duke Energy’s ~~wholly owned~~ public utility operating companies have restrictions on the amount of funds that can be transferred to Duke Energy through dividends, advances or loans as a result of conditions imposed by various regulators in conjunction with merger transactions. Duke Energy Progress and Duke Energy Florida also have restrictions imposed by their first mortgage bond indentures and Articles of Incorporation, which in certain circumstances, limit their ability to make cash dividends or distributions on common stock. Additionally, certain other Duke Energy subsidiaries have other restrictions, such as minimum working capital and tangible net worth requirements pursuant to debt and other agreements that limit the amount of funds that can be transferred to Duke Energy. At December 31, ~~2020,~~2022, the amount of restricted net assets of ~~wholly owned~~ subsidiaries of Duke Energy that may not be distributed to Duke Energy in the form of a loan or dividend does not exceed a material amount of Duke Energy’s net assets. Duke Energy does not have any legal or other restrictions on paying common stock dividends to shareholders out of its consolidated equity accounts. Although these restrictions cap the amount of funding the various operating subsidiaries can provide to Duke Energy, management does not believe these restrictions will have a significant impact on Duke Energy’s ability to access cash to meet its payment of dividends on common stock and other future funding obligations.


~~MD&A~~			~~LIQUIDITY AND CAPITAL RESOURCES~~

~~CASH FLOWS FROM OPERATING ACTIVITIES~~Cash Flows From Operating Activities

Cash flows from operations of ~~Electric Utilities~~EU&I and ~~Infrastructure and Gas Utilities and Infrastructure~~GU&I are primarily driven by sales of electricity and natural gas, respectively, and costs of operations. These cash flows from operations are relatively stable and comprise a substantial portion of Duke Energy’s operating cash flows. Weather conditions, working capital and commodity price fluctuations and unanticipated expenses including unplanned plant outages, storms, legal costs and related settlements can affect the timing and level of cash flows from operations.

As part of Duke Energy’s continued effort to improve its cash flows from operations and liquidity, Duke Energy works with vendors to improve terms and conditions, including the extension of payment terms. To support this effort, Duke Energy established a supply chain finance program (the “program”) in 2020, under which suppliers, at their sole discretion, may sell their receivables from Duke Energy to the participating financial institution. The financial institution administers the program. Duke Energy does not issue any guarantees with respect to the program and does not participate in negotiations between suppliers and the financial institution. Duke Energy does not have an economic interest in the supplier’s decision to participate in the program and receives no interest, fees or other benefit from the financial institution based on supplier participation in the program. Suppliers’ decisions on which invoices are sold do not impact Duke Energy’s payment terms, which are based on commercial terms negotiated between Duke Energy and the supplier regardless of program participation. A significant deterioration in the credit quality of Duke Energy, economic downturn or changes in the financial markets could limit the financial institutions willingness to participate in the program. Duke Energy does not believe such risk would have a material impact on our cash flows from operations or liquidity, as substantially all our payments are made outside the program.

Duke Energy believes it has sufficient liquidity resources through the commercial paper markets, and ultimately, the Master Credit Facility, to support these operations. Cash flows from operations are subject to a number of other factors, including, but not limited to, regulatory constraints, economic trends and market volatility (see Item 1A, “Risk Factors,” for additional information).

~~DEBT ISSUANCES~~Debt Issuances

Depending on availability based on the issuing entity, the credit rating of the issuing entity, and market conditions, the Subsidiary Registrants prefer to issue first mortgage bonds and secured debt, followed by unsecured debt. This preference is the result of generally higher credit ratings for first mortgage bonds and secured debt, which typically result in lower interest costs. Duke Energy Corporation primarily issues unsecured debt.

In ~~2021,~~2023, Duke Energy anticipates issuing additional securities of $8$6.7 billion through debt capital markets. ~~Additionally,~~In certain instances Duke Energy may utilize instruments other ~~instruments,~~than senior notes, including equity-content securities such as subordinated debt or preferred stock. Proceeds will primarily be for the purpose of funding capital expenditures and debt maturities. See to Note 67 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant debt ~~issuances in 2020.~~issuances.


MD&A			LIQUIDITY AND CAPITAL RESOURCES

Duke Energy’s capitalization is balanced between debt and equity as shown in the table below.


		Projected 2021		Actual 2020		Actual 2019			Projected 2023		Actual 2022		Actual 2021
Equity	Equity	44	%	44	%	44	%	Equity	41	%	41	%	43	%
Debt	Debt	56	%	56	%	56	%	Debt	59	%	59	%	57	%

Restrictive Debt Covenants

Duke Energy’s debt and credit agreements contain various financial and other covenants. Duke Energy's Master Credit Facility contains a covenant requiring the debt-to-total capitalization ratio to not exceed 65% for each borrower, excluding Piedmont, and 70% for Piedmont. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements or sublimits thereto. As of December 31, ~~2020, each~~ 2022, Duke Energy presented approximately $131 million of long-term debt as current on the Consolidated Balance Sheet as a result of a technical default due to the bankruptcy filing of a Duke Energy customer. The Duke Energy Registrants ~~was~~were in compliance with all other covenants related to their debt ~~agreements.~~agreements as of December 31, 2022. In addition, some credit agreements may allow for acceleration of payments or termination of the agreements due to nonpayment, or acceleration of other significant indebtedness of the borrower or some of its subsidiaries. None of the debt or credit agreements contain material adverse change clauses.


~~MD&A~~			~~LIQUIDITY AND CAPITAL RESOURCES~~

Credit Ratings

Moody’s Investors Service, Inc. and S&P provide credit ratings for various Duke Energy Registrants. During January 2021, S&P downgraded the issuer credit rating for Duke Energy (Parent) and all of its subsidiaries senior unsecured debt, excluding Progress Energy, from A- to BBB+. Additionally, S&P downgraded the credit rating for Duke Energy (Parent) and Progress Energy senior unsecured debt from BBB+ to BBB. As part of the credit rating report, S&P affirmed their credit rating on senior secured debt for Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana, while also affirming the short-term and commercial paper credit ratings. These actions followed a December 2020, report by S&P to revise the credit rating outlook from stable to negative for Duke Energy and all its subsidiaries. As a result of the downgrade, credit rating outlooks returned to stable. Additionally, during October 2020, Moody's revised their credit rating outlook for Duke Energy (Parent), Duke Energy Carolinas and Duke Energy Progress from stable to negative and in February 2021, revised the credit rating outlook for these same registrants to review for downgrade. The following table includes Duke Energy and certain subsidiaries’ credit ratings and ratings outlook as of February ~~2021.~~2023.

Moody's

S&P

Duke Energy Corporation

~~Review for Downgrade~~Stable

Stable

Issuer Credit Rating

~~Baa1~~Baa2

BBB+

Senior Unsecured Debt

~~Baa1~~Baa2

BBB

Junior Subordinated Debt/Preferred Stock

Baa3

BBB-

Commercial Paper

P-2

A-2

Duke Energy Carolinas

~~Review for Downgrade~~Stable

Stable

Senior Secured Debt

~~Aa2~~Aa3

Senior Unsecured Debt

A1A2

BBB+

Progress Energy

Stable

Senior Unsecured Debt

Baa1

BBB

Duke Energy Progress

~~Review for Downgrade~~Stable

Stable

Senior Secured Debt

Aa3

~~Senior Unsecured Debt~~

~~BBB+~~

Duke Energy Florida

Stable

Senior Secured Debt

Senior Unsecured Debt

BBB+

Duke Energy Ohio

Stable

Senior Secured Debt

Senior Unsecured Debt

Baa1

BBB+

Duke Energy Indiana

Stable

Senior Secured Debt

Aa3

Senior Unsecured Debt

BBB+

Duke Energy Kentucky

Stable

Senior Unsecured Debt

Baa1

BBB+

Piedmont Natural Gas

Stable

Senior Unsecured

BBB+

Credit ratings are intended to provide credit lenders a framework for comparing the credit quality of securities and are not a recommendation to buy, sell or hold. The Duke Energy Registrants’ credit ratings are dependent on the rating agencies’ assessments of their ability to meet their debt principal and interest obligations when they come due. If, as a result of market conditions or other factors, the Duke Energy Registrants are unable to maintain current balance sheet strength, or if earnings and cash flow outlook materially deteriorates, credit ratings could be negatively impacted.


MD&A			LIQUIDITY AND CAPITAL RESOURCES

Cash Flow Information

The following table summarizes Duke Energy’s cash flows for the two most recently completed fiscal years.

Years Ended December 31,
(in millions) 2020 2019
Cash flows provided by (used in):
Operating activities $ 8,856 $ 8,209
Investing activities (10,604) (11,957)
Financing activities 1,731 3,730
Net decrease in cash, cash equivalents and restricted cash (17) (18)
Cash, cash equivalents and restricted cash at beginning of period 573 591
Cash, cash equivalents and restricted cash at end of period $ 556 $ 573


~~MD&A~~			~~LIQUIDITY AND CAPITAL RESOURCES~~


	Years Ended December 31,


(in millions)	2022		2021
Cash flows provided by (used in):
Operating activities	$	5,927	$	8,290
Investing activities	(11,973)		(10,935)
Financing activities	6,129		2,609

Net increase (decrease) in cash, cash equivalents and restricted cash	83		(36)
Cash, cash equivalents and restricted cash at beginning of period	520		556
Cash, cash equivalents and restricted cash at end of period	$	603	$	520

OPERATING CASH FLOWS

The following table summarizes key components of Duke Energy’s operating cash flows for the two most recently completed fiscal years.


		Years Ended December 31,						Years Ended December 31,

(in millions)	(in millions)	2020		2019		Variance			(in millions)	2022		2021		Variance
Net income	Net income	$	1,082	$	3,571	$	(2,489)		Net income	$	2,455	$	3,579	$	(1,124)
Non-cash adjustments to net income	Non-cash adjustments to net income	8,343		5,737		2,606			Non-cash adjustments to net income	7,385		5,941		1,444

Contributions to qualified pension plans									Contributions to qualified pension plans	(58)		—		(58)
Payments for AROs	Payments for AROs	(610)		(746)		136			Payments for AROs	(584)		(540)		(44)

Refund of AMT credit carryforwards		572		573		(1)

Working capital	Working capital	(531)		(926)		395			Working capital	(2,081)		(897)		(1,184)
Other assets and Other liabilities									Other assets and Other liabilities	(1,190)		207		(1,397)
Net cash provided by operating activities	Net cash provided by operating activities	$	8,856	$	8,209	$	647		Net cash provided by operating activities	$	5,927	$	8,290	$	(2,363)

The variance was driven primarily by:

•a ~~$117~~$1,184 million increase in cash outflows from working capital and a $1,397 million increase in cash outflows from Other assets and Other liabilities primarily due to an increase in under-collected fuel used in generation due to higher commodity costs.

Partially offset by:

•a $320 million increase in net income after adjustment for non-cash items primarily due to ~~increases~~higher revenues from rate cases in ~~current year non-cash adjustments,~~various jurisdictions, favorable weather and volumes, partially offset by ~~decreases in revenues due to lower sales volumes, accelerated refund of fuel costs at Duke Energy Florida in response to~~an estimated impairment on the ~~COVID-19 pandemic and lower wholesale revenue driven by the CCR Settlement Agreement;~~

•~~a $395 million decrease in cash outflows from working capital primarily due to fluctuations in inventory levels, accounts payable levels and lower income taxes paid in the current year; and~~

•~~a $136 million decrease in payments for AROs.~~Commercial Renewables Disposal Groups.

INVESTING CASH FLOWS

The following table summarizes key components of Duke Energy’s investing cash flows for the two most recently completed fiscal years.


		Years Ended December 31,							Years Ended December 31,

(in millions)	(in millions)	2020		2019		Variance		(in millions)	2022		2021		Variance
Capital, investment and acquisition expenditures, net of return of investment capital	Capital, investment and acquisition expenditures, net of return of investment capital	$	(10,144)	$	(11,435)	$	1,291	Capital, investment and acquisition expenditures, net of return of investment capital	$	(11,419)	$	(9,752)	$	(1,667)
Debt and equity securities, net	Debt and equity securities, net	(62)		(5)		(57)		Debt and equity securities, net	90		5		85

Disbursements to canceled equity method investments								Disbursements to canceled equity method investments	—		(855)		855
Other investing items	Other investing items	(398)		(517)		119		Other investing items	(644)		(333)		(311)
Net cash used in investing activities	Net cash used in investing activities	$	(10,604)	$	(11,957)	$	1,353	Net cash used in investing activities	$	(11,973)	$	(10,935)	$	(1,038)

The variance relates primarily to an increase in capital expenditures due to higher investments in EU&I, partially offset by a payment made in 2021 to fund ACP's outstanding debt. The primary use of cash related to investing activities is typically capital, investment and acquisition expenditures, net of return of investment capital detailed by reportable business segment in the following table. The decrease relates primarily to decreases in capital expenditures due to lower overall investments in the Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables segments.


		Years Ended December 31,						Years Ended December 31,

(in millions)	(in millions)	2020		2019		Variance			(in millions)	2022		2021		Variance
Electric Utilities and Infrastructure	Electric Utilities and Infrastructure	$	7,629	$	8,258	$	(629)		Electric Utilities and Infrastructure	$	8,985	$	7,653	$	1,332
Gas Utilities and Infrastructure	Gas Utilities and Infrastructure	1,309		1,533		(224)			Gas Utilities and Infrastructure	1,295		1,271		24
Commercial Renewables		1,075		1,423		(348)

Other	Other	264		221		43			Other	1,139		828		311
Total capital, investment and acquisition expenditures, net of return of investment capital	Total capital, investment and acquisition expenditures, net of return of investment capital	$	10,277	$	11,435	$	(1,158)		Total capital, investment and acquisition expenditures, net of return of investment capital	$	11,419	$	9,752	$	1,667


MD&A			LIQUIDITY AND CAPITAL RESOURCES

FINANCING CASH FLOWS

The following table summarizes key components of Duke Energy’s financing cash flows for the two most recently completed fiscal years.

Years Ended December 31,
(in millions) 2020 2019 Variance
Issuance of common stock $ 2,745 $ 384 $ 2,361
Issuance of preferred stock — 1,962 (1,962)
Issuances of long-term debt, net 1,824 3,615 (1,791)
Notes payable and commercial paper (319) (380) 61
Dividends paid (2,812) (2,668) (144)
Contributions from noncontrolling interests 426 843 (417)
Other financing items (133) (26) (107)
Net cash provided by financing activities $ 1,731 $ 3,730 $ (1,999)


~~MD&A~~			~~LIQUIDITY AND CAPITAL RESOURCES~~


	Years Ended December 31,


(in millions)	2022		2021		Variance


Issuances of long-term debt, net	$	7,478	$	3,758	$	3,720
Notes payable and commercial paper	574		479		95
Dividends paid	(3,179)		(3,114)		(65)

Contributions from noncontrolling interests	1,377		1,575		(198)
Other financing items	(121)		(89)		(32)
Net cash provided by financing activities	$	6,129	$	2,609	$	3,520

The variance was driven primarily by:

•a ~~$1,962 million decrease in proceeds from the issuance of preferred stock;~~

•~~a $1,791~~$3,720 million net ~~decrease~~increase in proceeds from issuances of long-term debt, primarily due to timing of issuances and redemptions of long-term ~~debt; and~~debt.

Partially offset by:

•a ~~$417~~$198 million decrease in contributions from noncontrolling interests, primarily due to ~~$415 million related to the sale of a noncontrolling interest~~fewer project investments financed by tax equity being placed into service in the ~~Commercial Renewables segment in 2019.~~

~~Partially offset by:~~

•~~a $2,361 million increase in proceeds from the issuance of common stock, primarily from the settlement of equity forwards.~~

~~Off-Balance Sheet Arrangements~~

Duke Energy and certain of its subsidiaries enter into guarantee arrangements in the normal course of business to facilitate commercial transactions with third parties. These arrangements include performance guarantees, standby letters of credit, debt guarantees, surety bonds and indemnifications.

Most of the guarantee arrangements entered into by Duke Energy enhance the credit standing of certain subsidiaries, non-consolidated entities or less than wholly owned entities, enabling them to conduct business. As such, these guarantee arrangements involve elements of performance and credit risk, which are not always included on the Consolidated Balance Sheets. The possibility of Duke Energy, either on its own or on behalf of Spectra Capital through indemnification agreements entered into as part of the January 2, 2007, spin-off of Spectra Energy Corp, having to honor its contingencies is largely dependent upon the future operations of the subsidiaries, investees and other third parties, or the occurrence of certain future events.

Other than the guarantee arrangements discussed above and off-balance sheet debt related to non-consolidated VIEs, Duke Energy does not have any material off-balance sheet financing entities or structures. For additional information, see Note 17 to the Consolidated Financial Statements, "Variable Interest Entities."

~~Contractual Obligations~~

Duke Energy enters into contracts that require payment of cash at certain specified periods, based on certain specified minimum quantities and prices. The following table summarizes Duke Energy’s contractual cash obligations as of December 31, 2020.

Payments Due By Period
More than
Less than 2-3 years 4-5 years 5 years
1 year (2022 & (2024 & (2026 &
(in millions) Total (2021) 2023) 2025) beyond)
Long-term debt(a)
$ 58,134 $ 4,110 $ 8,011 $ 4,408 $ 41,605
Interest payments on long-term debt(b)
33,858 2,099 3,898 3,577 24,284
Finance leases(c)
1,465 186 347 170 762
Operating leases(c)
1,861 229 414 348 870
Purchase obligations:(d)

Fuel and purchased power(e)(f)
16,591 3,489 4,248 2,998 5,856
Other purchase obligations(g)
9,916 8,850 974 52 40
Nuclear decommissioning trust annual funding(h)
363 20 40 40 263
Land easements(i)
400 12 24 24 340
Total contractual cash obligations(j)(k)
$ 122,588 $ 18,995 $ 17,956 $ 11,617 $ 74,020

~~(a)See Note 6 to the Consolidated Financial Statements, “Debt and Credit Facilities.”~~

~~(b)Interest payments on variable rate debt instruments were calculated using December 31, 2020, interest rates and holding them constant for the life of the instruments.~~

~~(c)~~See Note 5 to the Consolidated Financial Statements, “Leases.” Amounts in the table above include the interest component of finance leases based on the interest rates stated in the lease agreements and exclude certain related executory costs. Amounts exclude contingent lease obligations.

~~(d)Current liabilities, except for~~ current ~~maturities of long-term debt, and purchase obligations reflected on the Consolidated Balance Sheets have been excluded from the above table.~~


~~MD&A~~			~~OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS~~

~~(e)~~Includes firm capacity payments that provide Duke Energy with uninterrupted firm access to electricity transmission capacity and natural gas transportation contracts, as well as undesignated contracts and contracts that qualify as NPNS. For contracts where the price paid is based on an index, the amount is based on market prices at December 31, 2020, or the best projections of the index. For certain of these amounts, Duke Energy may settle on a net cash basis since Duke Energy has entered into payment netting arrangements with counterparties that permit Duke Energy to offset receivables and payables with such counterparties.

~~(f)Amounts exclude obligations under the OVEC PPA. See Note 17 to the Consolidated Financial Statements, "Variable Interest Entities," for additional information.~~

~~(g)~~Includes contracts for software, telephone, data and consulting or advisory services. Amount also includes contractual obligations for EPC costs for new generation plants, wind and solar facilities, plant refurbishments, maintenance and day-to-day contract work and commitments to buy certain products. Amount excludes certain open purchase orders for services that are provided on demand for which the timing of the purchase cannot be determined.

~~(h)Related to future annual funding obligations to NDTF through nuclear power stations' relicensing dates. See Note 9 to the Consolidated Financial Statements, "Asset Retirement Obligations."~~

~~(i)Related to Commercial Renewables wind facilities.~~

~~(j)~~Unrecognized tax benefits of $125 million are not reflected in this table as Duke Energy cannot predict when open income tax years will close with completed examinations. See Note 23 to the Consolidated Financial Statements, "Income Taxes."

~~(k)~~The table above excludes reserves for litigation, environmental remediation, asbestos-related injuries and damages claims and self-insurance claims (see Note 4 to the Consolidated Financial Statements, “Commitments and Contingencies”) because Duke Energy is uncertain as to the timing and amount of cash payments that will be required. Additionally, the table above excludes annual insurance premiums that are necessary to operate the business, including nuclear insurance (see Note 4 to the Consolidated Financial Statements, “Commitments and Contingencies”), funding of pension and other post-retirement benefit plans (see Note 22 to the Consolidated Financial Statements, "Employee Benefit Plans"), AROs, including ash management expenditures (see Note 9 to the Consolidated Financial Statements, "Asset Retirement Obligations") and regulatory liabilities (see Note 3 to the Consolidated Financial Statements, “Regulatory Matters”) because the amount and timing of the cash payments are uncertain. Also excluded are Deferred Income Taxes and ITCs recorded on the Consolidated Balance Sheets since cash payments for income taxes are determined based primarily on taxable income for each discrete fiscal year.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Management Policies

The Enterprise Risk Management policy framework at Duke Energy includes strategy, operational, project execution and financial or transaction related risks. Enterprise Risk Management includes market risk as part of the financial and transaction related risks in its framework.

Duke Energy is exposed to market risks associated with commodity prices, interest rates and equity prices. Duke Energy has established comprehensive risk management policies to monitor and manage these market risks. Duke Energy’s Chief Executive Officer and Chief Financial Officer are responsible for the overall approval of market risk management policies and the delegation of approval and authorization levels. The Finance and Risk Management Committee of the Board of Directors receives periodic updates from the Chief Risk Officer and other members of management on market risk positions, corporate exposures and overall risk management activities. The Chief Risk Officer is responsible for the overall governance of managing commodity price risk, including monitoring exposure limits.

The following disclosures about market risk contain forward-looking statements that involve estimates, projections, goals, forecasts, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. See Item 1A, “Risk Factors,” and “Cautionary Statement Regarding Forward-Looking Information” for a discussion of the factors that may impact any such forward-looking statements made herein.

Commodity Price Risk

Price risk represents the potential risk of loss from adverse changes in the market price of electricity or other energy commodities. Duke Energy’s exposure to commodity price risk is influenced by a number of factors, including the effects of regulation, commodity contract size and length, market liquidity, market conditions, location and unique or specific contract terms. Duke Energy is exposed to the impact of market fluctuations in the prices of electricity, coal, natural gas and other energy-related products marketed and purchased as a result of its ownership of energy-related assets.

Duke Energy’s exposure to these fluctuations through its regulated utility operations is ~~primarily~~ limited ~~by the~~since these operations are subject to cost-based regulation ~~of its regulated operations as these operations~~and are typically allowed to recover substantially all of these costs through various ~~cost-recovery~~cost recovery clauses, including fuel clauses, formula-based contracts, or other cost-sharing mechanisms. While there may be a delay in timing between when these costs are incurred and when they are recovered through rates, changes from year to year generally do not have a material impact on operating results of these regulated operations. Within Duke Energy’s Commercial Renewables segment, the company has limited exposure to market price fluctuations in prices of energy-related products as a result of its ownership of renewable assets.

Price risk represents the potential risk of loss from adverse changes in the market price of electricity or other energy commodities. Duke Energy’s exposure to commodity price risk is influenced by a number of factors, including contract size, length, market liquidity, market conditions, location and unique or specific contract terms. Duke Energy employs established policies and procedures to manage risks associated with these market fluctuations, which may include using various commodity derivatives, such as swaps, futures, forwards and options. For additional information, see Note 1415 to the Consolidated Financial Statements, “Derivatives and Hedging.”

Generation Portfolio Risks

For the EU&I segment, the generation portfolio not utilized to serve retail operations or committed load is subject to commodity price fluctuations. However, the impact on the Consolidated Statements of Operations is limited due to mechanisms in these regulated jurisdictions that result in the sharing of most of the net profits from these activities with retail customers.

Hedging Strategies

Duke Energy ~~closely~~ monitors risks associated with commodity price changes on its future operations and, where appropriate, uses various commodity instruments such as electricity, coal and natural gas ~~forward~~hedging contracts and options to mitigate the effect of such fluctuations on operations. Duke Energy’s primary use of energy commodity derivatives is to hedge against exposure to the prices of power, fuel for generation and natural gas for customers. ~~Additionally, Duke Energy’s Commercial Renewables business may enter into short-term or long-term hedge agreements to manage price risk associated with project output.~~

6961


MD&A			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Duke Energy also manages its exposure to basis risk through the use of congestion hedge products in RTOs such as financial transmission rights (PJM and MISO),which result in payments based on differentials in locational marginal prices. The majority of instruments used to manage Duke Energy’s commodity price exposure are either not designated as hedges or do not qualify for hedge accounting. These instruments are referred to as undesignated contracts. Mark-to-market changes for undesignated contracts entered into by regulated businesses are reflected as regulatory assets or liabilities on the Consolidated Balance Sheets. ~~Undesignated contracts entered into by nonregulated businesses are marked-to-market each period, with changes in the fair value of the derivative instruments reflected in earnings.~~

Duke Energy may also enter into other contracts that qualify for the NPNS exception. When a contract meets the criteria to qualify as NPNS, Duke Energy applies such exception. Income recognition and realization related to NPNS contracts generally coincide with the physical delivery of the commodity. For contracts qualifying for the NPNS exception, no recognition of the contract’s fair value in the Consolidated Financial Statements is required until settlement of the contract as long as the transaction remains probable of occurring.

~~Generation Portfolio Risks~~

The Duke Energy Registrants optimize the value of their generation portfolios, which include generation assets, fuel and emission allowances. Modeled forecasts of future generation output and fuel requirements are based on forward power and fuel markets. The component pieces of the portfolio are bought and sold based on models and forecasts of generation in order to manage the economic value of the portfolio in accordance with the strategies of the business units.

For the Electric Utilities and Infrastructure segment, the generation portfolio not utilized to serve retail operations or committed load is subject to commodity price fluctuations. However, the impact on the Consolidated Statements of Operations is partially offset by mechanisms in these regulated jurisdictions that result in the sharing of net profits from these activities with retail customers.

Interest Rate Risk

Duke Energy is exposed to risk resulting from changes in interest rates as a result of its issuance or anticipated issuance of variable and fixed-rate debt and commercial paper. Duke Energy manages interest rate exposure by limiting variable-rate exposures to a percentage of total debt and by monitoring the effects of market changes in interest rates. Duke Energy also enters into financial derivative instruments, which may include instruments such as, but not limited to, interest rate swaps, swaptions and U.S. Treasury lock agreements to manage and mitigate interest rate risk exposure. See Notes 1, ~~6, 14~~7, 15 and 1617 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies,” “Debt and Credit Facilities,” “Derivatives and Hedging,” and “Fair Value Measurements.”

Duke Energy hah~~d $7.6~~ad $9.2 billion of unhedged long- and short-term floating interest rate exposure at December 31, ~~2020.~~2022. The impact of a 100-basis point change in interest rates on pretax income is approximately ~~$76~~$92 million at December 31, ~~2020.~~2022. This amount was estimated by considering the impact of the hypothetical interest rates on variable-rate securities outstanding, adjusted for interest rate hedges as of December 31, ~~2020.~~2022.

~~Certain~~ Foreign Currency Exchange Risk

Duke Energy ~~Registrants have variable-rate~~is exposed to risk resulting from changes in the foreign currency exchange rates as a result of its issuances of long-term debt ~~and manage interest rate~~denominated in a foreign currency. Duke Energy manages foreign currency exchange risk exposure by entering into cross-currency swaps, a type of financial ~~contracts including interest rate swaps.~~derivative instrument, which mitigate foreign currency exchange exposure. See Notes 67, 15 and 1417 to the Consolidated Financial Statements, ~~"Debt~~“Debt and Credit ~~Facilities"~~Facilities,” “Derivatives and ~~"Derivatives~~Hedging” and ~~Hedging.~~“Fair Value Measurements," Such financial arrangements generally are indexed based upon LIBOR, which is expected to be phased out by the end of 2021. The Secured Overnight Financing Rate (SOFR) has been identified by regulators and industry participants as the preferred successor rate for U.S. dollar-based LIBOR at that time. Impacted financial arrangements extending beyond 2021 may require contractual amendment or termination and renegotiation to fully adapt to a post-LIBOR environment, and there may be uncertainty regarding the effectiveness of any such alternative index methodologies. Alternative index provisions are being assessed and incorporated into new financial arrangements that extend beyond 2021. Additionally, the progress of the phaseout is being monitored, including proposed transition relief from the FASB.respectively.

Credit Risk

Credit risk represents the loss that the Duke Energy Registrants would incur if a counterparty fails to perform under its contractual obligations. Where exposed to credit risk, the Duke Energy Registrants analyze the counterparty's financial condition prior to entering into an agreement and monitor exposure on an ongoing basis. The Duke Energy Registrants establish credit limits where appropriate in the context of contractual arrangements and monitor such limits.

To reduce credit exposure, the Duke Energy Registrants seek to include netting provisions with counterparties, which permit the offset of receivables and payables with such counterparties. The Duke Energy Registrants also frequently use master agreements with credit support annexes to further mitigate certain credit exposures. The master agreements provide for a counterparty to post cash or letters of credit to the exposed party for exposure in excess of an established threshold. The threshold amount represents a negotiated unsecured credit limit for each party to the agreement, determined in accordance with the Duke Energy Registrants’ internal corporate credit practices and standards. Collateral agreements generally also provide that the failure to post collateral when required is sufficient cause to terminate transactions and liquidate all positions.

The Duke Energy Registrants also obtain cash, letters of credit, or surety bonds from certain counterparties to provide credit support outside of collateral agreements, where appropriate, based on a financial analysis of the counterparty and the regulatory or contractual terms and conditions applicable to each transaction. See Note 1415 to the Consolidated Financial Statements, “Derivatives and Hedging,” for additional information regarding credit risk related to derivative instruments.

The Duke Energy Registrants’ principal counterparties for its electric and natural gas businesses are RTOs, distribution companies, municipalities, electric cooperatives and utilities located throughout the U.S. Exposure to these entities consists primarily of amounts due to Duke Energy Registrants for delivered electricity. Additionally, there may be potential risks associated with remarketing of energy and capacity in the event of default by wholesale power customers. The Duke Energy Registrants have concentrations of receivables from certain of such entities that may affect the Duke Energy Registrants’ credit risk.


~~MD&A~~			~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

The Duke Energy Registrants are also subject to credit risk from transactions with their suppliers that involve prepayments or milestone payments in conjunction with outsourcing arrangements, major construction projects and certain commodity purchases. The Duke Energy Registrants’ credit exposure to such suppliers may take the form of increased costs or project delays in the event of nonperformance. The Duke Energy Registrants' frequently require guarantees or letters of credit from suppliers to mitigate this credit risk.

Credit risk associated with the Duke Energy Registrants’ service to residential, commercial and industrial customers is generally limited to outstanding accounts receivable. The Duke Energy Registrants mitigate this credit risk by requiring tariff customers to provide a cash deposit, letter of credit or surety bond until a satisfactory payment history is established, subject to the rules and regulations in effect in each retail jurisdiction at which time the deposit is typically refunded. Charge-offs for retail customers have historically been insignificant to the operations of the Duke Energy Registrants and are typically recovered through retail rates. Management continually monitors customer charge-offs, payment patterns and the impact of current economic conditions on customers' ability to pay their outstanding balance to ensure the adequacy of bad debt reserves.


MD&A			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In response to the COVID-19 pandemic that began in March 2020, the Duke Energy Registrants announced a suspension of disconnections for nonpayment to ~~be effective throughout~~assist customers during the national emergency. While disconnections have resumed, the company ~~continues~~continued to offer flexible options to customers struggling with the pandemic and the economic fallout, including extended payment arrangements to satisfy delinquent ~~balances. In addition,~~balances through June 2021. Since then, the company has resumed standard payment arrangement options. The Duke Energy Registrants are monitoring the effects of the resultant economic slowdown on counterparties’ abilities to perform under their contractual obligations. The Duke Energy Registrants ~~have observed a significant increase in~~experienced higher charge-offs during 2022, and higher utility account balances in arrears ~~which were roughly double historical levels~~ as of December 31, ~~2020.~~2022. There is an expectation ~~of an~~for the increase in charge-offs to continue in the ~~future.~~near term. The Duke Energy Registrants have reserved for these estimated losses in the allowance for doubtful account balance. See Notes ~~1, 3~~4 and 1819 to the Consolidated Financial Statements, ~~"Summary of Significant Accounting Policies,"~~ "Regulatory Matters" and "Revenue," respectively, for more information. Duke Energy Ohio and Duke Energy Indiana sell certain of their accounts receivable and related collections through CRC, a Duke Energy consolidated VIE. Losses on collection are first absorbed by the equity of CRC and next by the subordinated retained interests held by Duke Energy Ohio, Duke Energy Kentucky and Duke Energy Indiana. See Note 1718 to the Consolidated Financial Statements, “Variable Interest Entities.”

The Duke Energy Registrants provide certain non-tariff services, primarily to large commercial and industrial customers in which incurred costs, including invested capital, are intended to be recovered from the individual customer and therefore are not subject to rate recovery in the event of customer default. Customer creditworthiness is assessed prior to entering into these transactions. Credit concentration related to these transactions exists for certain of these customers.

Duke Energy’s Commercial Renewables segment enters into long-term agreements with certain creditworthy buyers that may not include the right to call for collateral in the event of a credit rating downgrade. Credit concentration exists to certain counterparties on these agreements, including entities that could be subject to wildfire liability. Additionally, Commercial Renewables may invest in projects for which buyers are below investment grade, although such buyers are required to post negotiated amounts of credit support. Also, power sales agreements and/or hedges of project output are generally for an initial term that does not cover the entire life of the asset. As a result, Commercial Renewables is exposed to market price risk and credit risk related to these agreements.

~~Duke~~ Energy Carolinas has third-party insurance to cover certain losses related to asbestos-related injuries and damages above an aggregate self-insured retention. See Note 45 to the Consolidated Financial Statements, "Commitments and Contingencies" for information on asbestos-related injuries and damages claims.

The Duke Energy Registrants also have credit risk exposure through issuance of performance and financial guarantees, letters of credit and surety bonds on behalf of less than wholly owned entities and third parties. Where the Duke Energy Registrants have issued these guarantees, it is possible that they could be required to perform under these guarantee obligations in the event the obligor under the guarantee fails to perform. Where the Duke Energy Registrants have issued guarantees related to assets or operations that have been disposed of via sale, they attempt to secure indemnification from the buyer against all future performance obligations under the guarantees. See Note 78 to the Consolidated Financial Statements, “Guarantees and Indemnifications,” for further information on guarantees issued by the Duke Energy Registrants.

Duke Energy is subject to credit risk from transactions with counterparties to cross-currency swaps related to future interest and principal payments. The credit exposure to such counterparties may take the form of higher costs to meet Duke Energy's future euro-denominated interest and principal payments in the event of counterparty default. Duke Energy selects highly rated banks as counterparties and allocates the hedge for each debt issuance across multiple counterparties. The master agreements with the counterparties impose collateral requirements on the parties in certain circumstances indicative of material deterioration in a party's creditworthiness.

Based on the Duke Energy Registrants’ policies for managing credit risk, their exposures and their credit and other reserves, the Duke Energy Registrants do not currently anticipate a materially adverse effect on their consolidated financial position or results of operations as a result of nonperformance by any counterparty.

Marketable Securities Price Risk

As described further in Note 1516 to the Consolidated Financial Statements, “Investments in Debt and Equity Securities,” Duke Energy invests in debt and equity securities as part of various investment portfolios to fund certain obligations. The vast majority of investments in equity securities are within the NDTF and assets of the various pension and other post-retirement benefit plans.

Pension Plan Assets

Duke Energy maintains investments to facilitate funding the costs of providing non-contributory defined benefit retirement and other post-retirement benefit plans. These investments are exposed to price fluctuations in equity markets and changes in interest rates. The equity securities held in these pension plans are diversified to achieve broad market participation and reduce the impact of any single investment, sector or geographic region. Duke Energy has established asset allocation targets for its pension plan holdings, which take into consideration the investment objectives and the risk profile with respect to the trust in which the assets are held. See Note 2223 to the Consolidated Financial Statements, “Employee Benefit Plans,” for additional information regarding investment strategy of pension plan assets.

A significant decline in the value of plan asset holdings could require Duke Energy to increase funding of its pension plans in future periods, which could adversely affect cash flows in those periods. Additionally, a decline in the fair value of plan assets, absent additional cash contributions to the plan, could increase the amount of pension cost required to be recorded in future periods, which could adversely affect Duke Energy’s results of operations in those periods.


~~MD&A~~			~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

Nuclear Decommissioning Trust Funds

As required by the NRC, NCUC, PSCSC and FPSC, subsidiaries of Duke Energy maintain trust funds to fund the costs of nuclear decommissioning. As of December 31, ~~2020,~~2022, these funds were invested primarily in domestic and international equity securities, debt securities, cash and cash equivalents and short-term investments. Per the NRC, Internal Revenue Code, NCUC, PSCSC and FPSC requirements, these funds may be used only for activities related to nuclear decommissioning. These investments are exposed to price fluctuations in equity markets and changes in interest rates. Duke Energy actively monitors its portfolios by benchmarking the performance of its investments against certain indices and by maintaining, and periodically reviewing, target allocation percentages for various asset classes.

Accounting for nuclear decommissioning recognizes that costs are recovered through retail and wholesale rates; therefore, fluctuations in investment prices do not materially affect the Consolidated Statements of Operations, as changes in the fair value of these investments are primarily deferred as regulatory assets or regulatory liabilities pursuant to Orders by the NCUC, PSCSC, FPSC and FERC. Earnings or losses of the funds will ultimately impact the amount of costs recovered through retail and wholesale rates. See Note 910 to the Consolidated Financial Statements, “Asset Retirement Obligations,” for additional information regarding nuclear decommissioning costs. See Note 1516 to the Consolidated Financial Statements, “Investments in Debt and Equity Securities,” for additional information regarding NDTF assets.


MD&A			OTHER MATTERS

OTHER MATTERS

Environmental Regulations

The Duke Energy Registrants are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal, coal ash and other environmental matters. These regulations can be changed from time to time and result in new obligations of the Duke Energy Registrants.

On May 14, 2020, the five-year probation period following the Dan River coal ash spill ended. The court-appointed monitor confirmed in U.S. District Court for the Eastern District of North Carolina that Duke Energy met or exceeded every obligation throughout the process. Separately, in a final report to the EPA, it was noted that the company made significant enhancements to its Ethics and Compliance Program and its environmental compliance programs.

The following sections outline various proposed and recently enacted legislation and regulations that may impact the Duke Energy Registrants. Refer to Note 34 to the Consolidated Financial Statements, "Regulatory Matters," for further information regarding potential plant retirements and regulatory filings related to the Duke Energy Registrants.

Coal Combustion Residuals

In April 2015, EPA published a rule to regulate the disposal of CCR from electric utilities as solid waste. The federal regulation classifies CCR as nonhazardous waste and allows for beneficial use of CCR with some restrictions. The regulation applies to all new and existing landfills, new and existing surface impoundments receiving CCR and existing surface impoundments located at stations generating electricity (regardless of fuel source), which were no longer receiving CCR but contained liquids as of the effective date of the rule. The rule establishes requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures to ensure the safe disposal and management of CCR.

On July 17, 2018, EPA issued a final rule (Phase 1, Part 1) revising certain closure deadlines and groundwater protection standards in the CCR rule. The rule does not change the primary requirements for groundwater monitoring, corrective action, inspections and maintenance, and closure, and thus does not materially affect Duke Energy’s coal ash basin closure plans or compliance obligations under the CCR rule. On October 22, 2018, a coalition of environmental groups filed a petition for review in the U.S. Court of Appeals for the District of Columbia (D.C. Circuit Court) challenging EPA's final Phase 1, Part 1 revisions to the CCR rule. On March 13, 2019, the D.C. Circuit Court issued an order in the Phase 1, Part 1 litigation granting EPA’s motion to remand the rule without vacatur. To date, EPA has finalized two notice-and-comment rulemakings to implement the court’s decision on remand. The “Part A” rule, which was promulgated on August 28, 2020, establishes an April 11, 2021 deadline to cease placement of CCR and non-CCR waste streams into unlined ash basins and initiate closure, and the “Part B” rule, which was promulgated on November 12, 2020, establishes procedures to allow facilities to request approval to operate an existing CCR surface impoundment with an alternate liner. A future rulemaking is expected to address legacy impoundments. Duke Energy does not expect these rulemakings to have a material impact in light of its progress in closing CCR units across the enterprise.

In addition to the requirements of the federal CCR rule, CCR landfills and surface impoundments will continue to be regulated by the states. Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions and via wholesale contracts, which permit recovery of necessary and prudently incurred costs associated with Duke ~~Energy’s~~Energy��s regulated operations. For more information, see Notes 34 and 910 to the Consolidated Financial Statements, "Regulatory Matters" and "Asset Retirement Obligations," respectively.

Coal Ash ~~Management~~ Act ~~of 2014~~

AROs recorded on the Duke Energy Carolinas and Duke Energy Progress Consolidated Balance Sheets at December 31, ~~2020,~~2022, and December 31, ~~2019,~~2021, include the legal obligation for closure of coal ash basins and the disposal of related ash as a result of the Coal Ash Act, the EPA CCR rule and other agreements. The Coal Ash Act includes a variance procedure for compliance deadlines and other issues surrounding the management of CCR and CCR surface impoundments and prohibits cost recovery in customer rates for unlawful discharge of ash impoundment waters occurring after January 1, 2014. The Coal Ash Act leaves the decision on cost recovery determinations related to closure of ash impoundments to the normal ratemaking processes before utility regulatory commissions.

Consistent with the requirements of the Coal Ash Act, Duke Energy previously submitted comprehensive site assessments and groundwater corrective action plans to NCDEQ. ~~In addition, on~~On December 31, 2019, Duke Energy submitted updated groundwater corrective action plans for six sites in North Carolina and site-specific coal ash impoundment closure plans for all 14 North Carolina sites to NCDEQ.


~~MD&A~~			~~OTHER MATTERS~~

In addition, from 2020 through 2022, Duke Energy submitted updated comprehensive site assessments and groundwater corrective action plans for the remaining North Carolina sites, except for Buck Steam Station, which Duke Energy expects to submit in June 2023.

On April 1, 2019, NCDEQ issued a closure determination requiring Duke Energy Carolinas and Duke Energy Progress to excavate all remaining coal ash impoundments at the Allen, Belews Creek, Rogers, Marshall, Mayo and Roxboro facilities in North Carolina. On April 26, 2019, Duke Energy Carolinas and Duke Energy Progress filed Petitions for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ's April 1 Order. On December 31, 2019, Duke Energy Carolinas and Duke Energy Progress entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Carolinas and Duke Energy Progress agreed to excavate seven of the nine remaining coal ash basins at these sites with ash moved to on-site lined landfills, including two at Allen, one at Belews Creek, one at Mayo, one at Roxboro, and two at Rogers. At the two remaining basins at Marshall and Roxboro, uncapped basin ash will be excavated and moved to lined landfills. Those portions of the basins at Marshall and Roxboro, which were previously filled with ash and on which permitted facilities were constructed, will not be disturbed and will be closed pursuant to other state regulations.

Following NCDEQ's April 1 Order, Duke Energy estimated the incremental undiscounted cost to close the nine remaining impoundments by excavation would be approximately $4 billion to $5 billion, potentially increasing the total estimated costs to permanently close all ash basins in North Carolina and South Carolina to $9.5 billion to $10.5 billion. The settlement ~~lowers~~lowered the estimated total undiscounted cost to close the nine remaining basins by excavation by approximately $1.5 billion as compared to Duke Energy’s original estimate that followed the order. As a result, the estimated total cost to permanently close all ash basins in North Carolina and South Carolina iswas estimated to be approximately $8 billion to $9 billion, of which approximately ~~$2.8~~$3.5 billion has been spent through ~~2020.~~2022. The majority of the remaining spend is expected to occur over the next 1510 to 2015 years.

Duke Energy has completed excavation of all coal ash at the Riverbend, Dan River, Asheville and Sutton ~~plants~~plants.

For further information on ash basins and recovery, see Notes 34 and 910 to the Consolidated Financial Statements, "Regulatory Matters" and “Asset Retirement Obligations,” respectively.


MD&A			OTHER MATTERS

North Carolina House Bill 951

On October 13, 2021, North Carolina House Bill 951 (HB 951) was signed into law (the “Legislation”). This Legislation establishes a framework overseen by the NCUC to advance state CO2 emission reductions from electric generating facilities in the state through the use of least cost planning while providing for continued reliability and affordable rates for customers served by such generation. It also authorizes the use of performance-based regulation in North Carolina. Among other things, the Legislation requires the NCUC to:

•develop an initial carbon plan that would target a 70% reduction in CO2 emissions from public utilities' electric generation in the state by 2030 and carbon neutrality by 2050, considering all resource options and the latest technology;

•adopt rules to implement the requirements of the Legislation authorizing PBR that includes MYRP with a maximum three-year term, performance incentive mechanisms to track utility performance, and revenue decoupling for the residential customer class;

•establish rules to securitize costs associated with the early retirement of subcritical coal-fired electric generating facilities necessary to achieve the authorized carbon reduction goals at 50% of remaining net book value, with the remaining net book value recovered through normal cost-of-service basis; and

•initiate a process for updating rates and terms of certain existing solar power purchase agreements executed under PURPA.

In October 2022 and January 2023, Duke Energy Progress and Duke Energy Carolinas, respectively, filed applications with the NCUC, which proposed implementation of the Legislation’s provisions around PBR, including MYRP, residential decoupling and performance incentive mechanisms. Additionally, on December 30, 2022, the NCUC issued an order adopting the first Carbon Plan as directed by the Legislation.

See Note 4, "Regulatory Matters" to the Consolidated Financial Statements for more information.

Other Environmental Regulations

The Duke Energy Registrants are also subject to various federal, state and local laws regarding air and water quality, hazardous and solid waste disposal and other environmental ~~matters, including the following:~~

•~~CWA~~

•~~Steam Effluent Limitation Guidelines~~

•~~Cross-State Air Pollution Rule~~

matters. Duke Energy continues to comply with enacted environmental statutes and regulations even as certain of these regulations are in various stages of clarification, revision or legal challenge. The Duke Energy Registrants cannot predict the outcome of these matters.

~~Section 126 Petitions~~Global Climate Change and Regulation of GHG Emissions

~~On November 16, 2016,~~In 2021, President Biden recommitted the ~~state~~United States to the Paris Agreement and announced a new target for the United States of ~~Maryland filed~~50% to 52% reduction in economywide net GHG emissions from 2005 levels by 2030. The U.S. submittal to support this Paris target includes a ~~petition with~~goal for 100% carbon-free electricity by 2035. These actions have been supplemented by a number of executive orders by President Biden and an indication by a number of regulatory agencies, including the EPA, ~~under Section 126 of the Clean Air Act alleging~~ that ~~19 power plants, including two plants (three units) that~~they would impose additional regulations on CO2 and methane emissions to which Duke Energy Registrants own and operate, contribute to violations of EPA’s National Ambient Air Quality Standards (NAAQS) for ozone in the state of Maryland. On March 12, 2018, the state of New York filed a petition with EPA, also under Section 126 of the Clean Air Act, alleging that over 60 power plants, including five that Duke Energy Registrants own and operate, contribute to violations of EPA’s ozone NAAQS in the state of New York. Both Maryland and New York sought EPA orders requiring the states in which the named power plants operate impose more stringent nitrogen oxide emission limitations on the plants. On October 5, 2018, EPA denied the Maryland petition. That same day, Maryland appealed EPA's denial. On October 18, 2019, EPA denied the New York petition, and New York appealed that decision on October 29, 2019. On May 19, 2020, the U.S. Court of Appeals for the D.C. Circuit issued its decision, finding, with one exception, that EPA reasonably denied the Maryland petition. The court remanded one issue to EPA regarding target sources lacking catalytic controls. All of the Duke Energy units targeted have selective catalytic reduction, so the decision is favorable for these units.

A different panel of the same court heard oral argument in New York’s appeal of EPA’s denial of its Section 126 Petition on May 7, 2020, and on July 14, 2020, the panel issued its decision remanding the Petition to EPA for further review.will be subject. The Duke Energy Registrants are monitoring these matters and cannot predict the outcome, ~~of this matter.~~

~~North Carolina Clean Energy Plan (NCCEP)~~

~~On October 29, 2018, Governor Roy Cooper signed an executive order calling for~~however, there could be a ~~40% reduction in statewide greenhouse gas emissions by 2025. The order tasked the NCDEQ with developing a~~material impact on our clean energy plan for North Carolina. In October 2019, the NCDEQ published its plan, which includes the reduction of electric power sector greenhouse gas emissions by 70% below 2005 levels by 2030 and attainment of carbon neutrality by 2050, fostering long-term energy affordability and price stability for North Carolina’s residents and businesses by modernizing regulatory and planning processes, and acceleration of clean energy innovatiotransition.

CO~~n to c~~2reate economic opportunities for both rural and urban areas. Duke Energy Carolinas and Duke Energy Progress are significant stakeholders in this process. The magnitude and timing of investment in response to the NCCEP will depend on the speed of adoption and consensus developed by other stakeholders on how best to successfully transition to this clean energy future while establishing a regulatory model that incentivizes business decisions that benefit both the utilities and the public. Emissions Reductions

The Duke Energy ~~Registrants cannot predict the outcome~~Registrants’ direct GHG emissions consist primarily of ~~this matter.~~CO

~~Global Climate Change~~

~~On September 17,~~2 that results primarily from operating a fleet of coal-fired and natural gas-fired power plants to serve its customers reliably and affordably. In 2019, Duke Energy announced an updated climate strategy with new goals of at least 50% reduction in carbon emissions from 2005 levels from electric generation by 2030 and net-zero carbon emissions from electric generation by 2050. ~~On October 9, 2020, Duke Energy announced a new goal to achieve net-zero methane~~In February 2022, we added Scope 2 and certain Scope 3 emissions, including emissions from ~~its natural gas distribution system by 2030. Timelines~~upstream purchased power and ~~initiatives,~~fossil fuel purchases, as well as ~~implementation~~downstream customer use of ~~new technologies, will vary in each state in which the company operates and will involve collaboration with regulators, customers and other stakeholders.~~


~~MD&A~~			~~OTHER MATTERS~~

~~The~~natural gas, to our 2050 net-zero goal. In October 2022, we announced an additional interim target to reduce carbon emissions from electric generation by 80% from 2005 levels by 2040. Duke Energy ~~Registrants’ GHG~~also adopted an interim goal of reducing Scope 2 and Scope 3 emissions ~~consist primarily of CO~~2 ~~and result primarily from operating a fleet of coal-fired and natural gas-fired power plants. Future~~mentioned above by 50% below 2021 levels ~~of CO~~2 ~~emissions will be influenced~~ by variables that include economic conditions that affect electricity demand, fuel prices, market prices, compliance with new or existing regulations and the technologies deployed to generate the electricity necessary to meet customer demand.2035.

The Duke Energy Registrants have taken actions that have resulted in a reduction of CO2 emissions over time. Between 2005 and 2022, the Duke Energy Registrants have collectively lowered the CO2 emissions from their electricity generation by 44%. Timelines and initiatives, as well as implementation of new technologies, for future reductions of GHG emissions will vary in each state in which the company operates and will involve collaboration with regulators, customers and other stakeholders. The goals announced in 2019, and updated in 2022, as well as the actions taken to reduce CO2 emissions, potentially lower the exposure to any future mandatory CO2 emission reduction requirements, whether as a result of federal legislation, EPA regulation, state regulation or other as yet unknown emission reduction requirement.

Actions to reduce CO2 emissions have included the retirement of 5156 coal-fired electric generating units with a combined generating capacity of ~~6,539 MW. Much of that capacity has been replaced with~~7,500 MW, while investing in renewables and state-of-the-art highly efficient natural gas-fired generation that produces far fewer CO2 emissions per unit of electricity ~~generated.~~generated than coal. Duke Energy also has made investments to ~~expand its portfolio of wind and solar projects,~~ increase EE offerings and ensure continued operations of its zero-CO2 emissions hydropower and nuclear plants. These efforts have diversified its system and significantly reduced CO2 emissions. ~~Between 2005 and 2020, the Duke Energy Registrants have collectively lowered the CO~~

2 ~~emissions from their electricity generation by more than 40%, which potentially lowers the exposure to any future mandatory CO~~2 ~~emission reduction requirements or carbon tax, whether as a result of federal legislation, EPA regulation, state regulation or other as yet unknown emission reduction requirement.~~ Duke Energy will continue to explore the use of currently available and commercially demonstrated technology to reduce CO2 emissions, including EE, wind, solar and storage, as well as evolving technologies like carbon capture, utilization and ~~sequestration,~~storage, the use of hydrogen and other low-carbon fuels, long-duration storage and advanced ~~nuclear.~~nuclear, in its efforts to achieve its net-zero goal as well as to comply with any future regulations. Duke Energy ~~will~~plans to adjust to and incorporate evolving and innovative technologies in a way that balances the reliability and affordability ~~that meet~~while meeting regulatory requirements and customer demands. Under any future scenario involving mandatory CO2 limitations, the Duke Energy Registrants would plan to seek recovery of their compliance costs through appropriate regulatory mechanisms.

~~The~~ Future levels of GHG emissions by the Duke Energy Registrants ~~recognize~~will be influenced by variables that ~~scientists associate severe weather events with increasing levels of GHGs~~include capacity needs in the ~~atmosphere~~jurisdictions in which they operate, public policy, tax incentives, economic conditions that affect electricity demand, fuel prices, market prices, availability of resources and ~~forecast~~labor, compliance with new or existing regulations, the ~~possibility these weather events could have a material impact on future results of operations should they occur more frequently~~ability to make enhancements to transmission and ~~with greater severity. However, the uncertain nature of potential changes in extreme weather events (such as~~distribution systems to support increased ~~frequency, duration and severity), the long period of time over which any potential changes might take place~~renewables, and the ~~inability~~existence of new technologies that can be deployed to ~~predict potential changes with any degree of accuracy, make estimating with any certainty any potential future financial risk~~generate the electricity necessary to meet customer demand.


MD&A			OTHER MATTERS

Currently, the Duke Energy ~~Registrants’ operations difficult.~~Registrants do not purchase carbon credits or offsets for use in connection with the company's net-zero emissions goals. Though they may purchase carbon credits or offsets for such uses in the future, the amount or cost of which is not expected to be material at this time.

Generation Mix Planning Process

The Duke Energy Registrants annually, biennially or triennially prepare lengthy, forward-looking IRPs. These detailed, highly technical plans are based on the company’s thorough analysis of numerous factors that can impact the cost of producing and delivering electricity that influence long-term generation resource planning decisions. The IRP process helps to evaluate a range of options, taking into account stakeholder input as well as forecasts of future electricity demand, fuel prices, transmission improvements, new generating capacity, integration of renewables, energy storage, EE and demand response initiatives. The IRP process also helps evaluate potential environmental and regulatory scenarios to better mitigate policy and economic risks. The IRPs we file with regulators look out 10 to 20 years depending on the jurisdiction.

For a number of years, the Duke Energy Registrants have included a price on CO2 emissions in their IRP planning process to account for the potential regulation of CO2 emissions. Incorporating a price on CO2 emissions in the IRPs allows for the evaluation of existing and future resource needs against potential climate change policy risk in the absence of policy certainty. One of the challenges with using a CO2 price, especially in the absence of a clear and certain policy, is determining the appropriate price to use. To address this uncertainty and ensure the company remains agile, the Duke Energy Registrants typically use a range of potential CO2 prices to reflect a range of potential policy outcomes.

In September 2020, Duke Energy Carolinas and Duke Energy Progress filed their IRPs in North Carolina and South Carolina, and, in December 2021, Duke Energy Indiana filed its IRP, outlining an accelerated energy transition, which aligns with the company's 2030 CO2 emissions goal. In December 2021, the PSCSC rejected Duke Energy Carolinas and Duke Energy Progress’ preferred accelerated coal retirements IRP scenario and instead found that the base case without a price on CO2 emissions was the most reasonable IRP scenario.

In 2021, the state of North Carolina passed HB 951, which among other things, directs the NCUC to develop and approve a carbon reduction plan by the end of 2022 that would target a 70% reduction in CO2 emissions from Duke Energy Progress' and Duke Energy Carolinas' electric generation in the state by 2030 and carbon neutrality by 2050, considering all resource options and the latest technology. In light of this legislation, in November 2021, the NCUC declined to make a determination on the portfolios presented in the 2020 IRP noting that the legislation may impact the schedule for coal plant retirements and new resources and limited its order to short-term actions for use on an interim basis pending preparation of the carbon plan. The NCUC approved its initial carbon reduction plan in December 2022, which considered feedback from extensive stakeholder engagement and was informed by Duke Energy's initial proposed carbon plan, filed with the NCUC on May 16, 2022, and built on the IRPs that were filed in 2020 by Duke Energy Carolinas and Duke Energy Progress.

CO2 and Methane Emissions Reductions from the Natural Gas Distribution Business

In addition to CO2 emissions resulting primarily from our operations of coal-fired and natural gas-fired power plants, the Duke Energy Registrants are also responsible for certain methane emissions from the distribution of natural gas to customers. In October 2020, Duke Energy announced a new goal to achieve net-zero methane emissions from its natural gas distribution business by 2030. The Duke Energy Registrants have taken actions that have resulted in methane emission reductions, including the replacement of cast iron and bare steel pipelines and associated services with plastic or coated steel, advanced methane leak detection efforts, reducing time to repair nonhazardous leaks and operational releases of methane, and investment in renewable natural gas.

Timelines and initiatives, as well as implementation of new technologies, for future reductions of upstream methane emissions will vary in each state in which the company’s natural gas distribution business operates and will involve collaboration with regulators, customers and other stakeholders. EPA has also proposed regulations that would require reduction of methane emissions upstream of the Duke Energy Registrants' natural gas distribution business. The impact of these regulations on natural gas fuel prices is not currently quantifiable.

In addition to possible EPA regulation of methane emissions, certain local governments, none within the jurisdictions in which the Duke Energy Registrants operate, have enacted or are considering initiatives to eliminate natural gas use in new buildings and focus on electrification. Enactment of similar regulations in the areas in which the Duke Energy Registrants' natural gas distribution operates could have a significant impact on the natural gas distribution business and its operations. At this time, such impacts are not able to be quantified; however, the net-zero methane goals announced in 2020 for the natural gas distribution business, as well as the actions taken to reduce these GHG emissions, potentially lowers the exposure to any future mandatory GHG emission reduction requirements. The Duke Energy Registrants would plan to seek recovery of their compliance costs with any new regulations through the regulatory process.

Physical Impacts of Climate Change

The Duke Energy Registrants recognize that scientists associate severe weather events with increasing levels of GHGs in the atmosphere. It is possible that these weather events could have a material impact on future results of operations should they occur more frequently and with greater severity. However, the uncertain nature of potential changes in extreme weather events (such as increased frequency, duration and severity), the long period of time over which any potential changes might take place and the inability to predict potential changes with any degree of accuracy, make estimating with any certainty any potential future financial risk to the Duke Energy Registrants’ operations difficult. Additionally, the Duke Energy Registrants would plan to continue to seek recovery of storm costs through the appropriate regulatory mechanisms. For more information on storm securitization in North Carolina and storm cost recovery in Florida, see Note 4 to the Consolidated Financial Statements, "Regulatory Matters."

The Duke Energy Registrants routinely take steps to reduce the potential impact of severe weather events on their electric transmission and distribution systems and natural gas facilities. The steps include modernizing the electric grid through smart meters, storm hardening, self-healing systems and targeted undergrounding and applying lessons learned from previous storms to restoration efforts. The Duke Energy Registrants’ electric generating facilities and natural gas facilities are designed to withstand extreme weather events without significant damage. The Duke Energy Registrants maintain inventories of coal, oil and liquified natural gas to mitigate the effects of any potential short-term disruption in fuel supply so they can continue to provide customers with an uninterrupted supply of electricity and/or natural gas.

~~State Legislation~~

In 2017, the North Carolina General Assembly passed House Bill 589, and it was subsequently signed into law by the governor. The law includes, among other things, overall reform of the application of PURPA for new solar projects in the state, a requirement for the utility to procure renewable energy through a competitive bidding process administered by an independent third party and recovery of costs related to the competitive bidding process through a competitive procurement rider. The process used was approved by the NCUC to select projects that would deliver the lowest cost of renewable energy for customers.


MD&A			OTHER MATTERS

In accordance with the provisions of House Bill 589, Duke Energy estimates the total competitive procurement will be approximately 1,185 to 1,385 MW. Duke Energy will own or purchase at least 1,185 MW of energy from renewable energy projects under the North Carolina’s CPRE program. Two tranches of the CPRE process have been completed with contracts executed for winning proposals. Five Duke Energy projects, totaling about 190 MW, were selected during the first tranche and none were selected during the second tranche. Two of the Duke Energy winning projects achieved commercial operation in December 2020 and the remaining three will be online by the third quarter 2021. The need for a third tranche of CPRE will be determined prior to November 2021.

In various states, legislation is being considered to allow third-party sales of electricity. Deregulation or restructuring in the electric industry may result in increased competition and unrecovered costs. The Duke Energy Registrants cannot predict the outcome of these initiatives.

New Accounting Standards

See Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies,” for a discussion of the impact of new accounting standards.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Management’s Discussion and Analysis of Results of Operations and Financial Condition – Quantitative and Qualitative Disclosures About Market Risk.”

7467


FINANCIAL STATEMENTS

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Duke Energy
Report of Independent Registered Public Accounting Firm			7770
Consolidated Statements of Operations			7973
Consolidated Statements of Comprehensive Income			74
Consolidated Balance Sheets			75
Consolidated Statements of Cash Flows			76
Consolidated Statements of Changes in Equity			77

Duke Energy Carolinas
Report of Independent Registered Public Accounting Firm			78
Consolidated Statements of Operations and Comprehensive Income			80
Consolidated Balance Sheets			81
Consolidated Statements of Cash Flows			82
Consolidated Statements of Changes in Equity			83

~~Duke~~Progress Energy ~~Carolinas~~
Report of Independent Registered Public Accounting Firm			84
Consolidated Statements of Operations and Comprehensive Income			86
Consolidated Balance Sheets			87
Consolidated Statements of Cash Flows			88
Consolidated Statements of Changes in Equity			89

Duke Energy Progress ~~Energy~~
Report of Independent Registered Public Accounting Firm			90
Consolidated Statements of Operations and Comprehensive Income			92
Consolidated Balance Sheets			93
Consolidated Statements of Cash Flows			94
Consolidated Statements of Changes in Equity			95

Duke Energy ~~Progress~~Florida
Report of Independent Registered Public Accounting Firm			96
Consolidated Statements of Operations and Comprehensive Income			98
Consolidated Balance Sheets			99
Consolidated Statements of Cash Flows			100
Consolidated Statements of Changes in Equity			101

Duke Energy ~~Florida~~Ohio
Report of Independent Registered Public Accounting Firm			102
Consolidated Statements of Operations and Comprehensive Income			104
Consolidated Balance Sheets			105
Consolidated Statements of Cash Flows			106
Consolidated Statements of Changes in Equity			107

Duke Energy ~~Ohio~~Indiana
Report of Independent Registered Public Accounting Firm			108
Consolidated Statements of Operations and Comprehensive Income			110
Consolidated Balance Sheets			111
Consolidated Statements of Cash Flows			112
Consolidated Statements of Changes in Equity			113

~~Duke Energy Indiana~~Piedmont
Report of Independent Registered Public Accounting Firm			114
Consolidated Statements of Operations and Comprehensive Income			116
Consolidated Balance Sheets			117
Consolidated Statements of Cash Flows			118
Consolidated Statements of Changes in Equity			119

~~Piedmont~~
~~Report of Independent Registered Public Accounting Firm~~			~~120~~
~~Consolidated Statements of Operations and Comprehensive Income~~			~~122~~
~~Consolidated Balance Sheets~~			~~123~~
~~Consolidated Statements of Cash Flows~~			~~124~~
~~Consolidated Statements of Changes in Equity~~			~~125~~

7568


FINANCIAL STATEMENTS



Combined Notes to Consolidated Financial Statements
Note 1 – Summary of Significant Accounting Policies			~~126~~120

Note 2 – ~~Business Segments~~Dispositions			~~135~~128
Note 3 – ~~Regulatory Matters~~Business Segments			~~139~~130
Note 4 – ~~Commitments and Contingencies~~Regulatory Matters			~~163~~134
Note 5 – ~~Leases~~Commitments and Contingencies			~~168~~151
Note 6 – Leases			156
Note 7 – Debt and Credit Facilities			~~173~~160
Note 78 – Guarantees and Indemnifications			~~179~~166
Note 89 – Joint Ownership of Generating and Transmission Facilities			~~180~~166
Note 910 – Asset Retirement Obligations			~~180~~167
Note 1011 – Property, Plant and Equipment			~~183~~170
Note 1112 – Goodwill and Intangible Assets			~~185~~172
Note 1213 – Investments in Unconsolidated Affiliates			~~186~~173
Note 1314 – Related Party Transactions			~~189~~174
Note 1415 – Derivatives and Hedging			~~190~~175
Note 1516 – Investments in Debt and Equity Securities			~~195~~181
Note 1617 – Fair Value Measurements			185
Note 18 – Variable Interest Entities			190
Note 19 – Revenue			193
Note 20 – Stockholders' Equity			198
Note 21 – Severance			200
Note 22 – Stock-Based Compensation			201
Note ~~17 – Variable Interest Entities~~			~~207~~
~~Note 18 – Revenue~~			~~211~~
~~Note 19 – Stockholders' Equity~~			~~217~~
~~Note 20 – Severance~~			~~219~~
~~Note 21 – Stock-Based Compensation~~			~~219~~
~~Note 22~~23 – Employee Benefit Plans			~~221~~203
Note 2324 – Income Taxes			~~235~~216
Note 2425 – Other Income and Expenses, Net			~~242~~222
Note 2526 – Subsequent Events			~~242~~223
Note 27 – Quarterly Financial Data (Unaudited)			223

7669


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Duke Energy Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Corporation and subsidiaries (the "Company") as of December 31, ~~2020~~2022, and ~~2019,~~2021, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, ~~2020,~~2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2020~~2022, and ~~2019,~~2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2020,~~2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, ~~2020,~~2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February ~~25, 2021,~~27, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Dispositions – Assessment of Held for Sale and Discontinued Operations Classification and Impairment Charge – Refer to Note 2 to the financial statements.

Critical Audit Matter Description

In November 2022, Duke Energy committed to a plan to sell the Commercial Renewables business segment, excluding the offshore wind contract for Carolina Long Bay (“Commercial Renewables business segment”). As a result, the Commercial Renewables business segment was classified as held for sale and reported as discontinued operations and pretax impairment charges of approximately $1.7 billion were recorded to reduce the carrying amount of the assets to their estimated fair value, based on the expected selling price less cost to sell.

We identified the assessment of held for sale and discontinued operations classification and associated impairment charges as a critical audit matter because of the extensive effort required to audit the subjective and complex judgments associated with those matters, including:

•The assessment of whether the sale is probable and the transfer of assets will be completed within one year from period-end;

•The assessment of whether the sale of the segment represents a discontinued operation;

•The determination of the impairment charges; and

•The assessment of the fair value of the Commercial Renewables business segment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the classification of the Commercial Renewables business segment as held for sale and the associated impairment charges included the following, among others:

•We tested the effectiveness of management’s controls over (1) the evaluation and disclosure of the held for sale and discontinued operations classification and (2) the determination of the impairment charges, including controls over the reasonableness of the inputs and assumptions used in management’s estimates.

•We evaluated management’s assessment of held for sale and discontinued operations classification as follows:

–Inquired of executive officers, key members of management and members of the Board of Directors to obtain an understanding of plans to sell the Commercial Renewables business segment.


REPORTS

–Assessed management’s judgments in determining whether the Commercial Renewables business segment meets the held for sale and discontinued operations classification criteria through procedures performed, including, but not limited to, reviewing minutes from meetings of the Board of Directors, reviewing communications regarding the progression of the selling process, and assessing the Commercial Renewables business segment relative to the Company’s operations and financial results.

–Compared management’s conclusions against relevant guidance and tested the completeness and accuracy of information used in the Company’s evaluation.

•We evaluated the reasonableness of the determination of the fair value of the long-lived assets by using an internal fair value specialist to assess the reasonableness of the overall methodology and discount rates. Additionally, we evaluated the mathematical accuracy of the underlying calculations. Further, we tested forecasted information used to determine fair value.

•We evaluated the accuracy and completeness of the Company's reclassification of balances and activity and related disclosures.

•We obtained representation from management asserting to the appropriate presentation, measurement and timing of the Commercial Renewables business segment.

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to regulation by federal and state utility regulatory agencies (the “Commissions”), which have jurisdiction with respect to the rates of the Company’s electric and natural gas distribution companies. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, 2022, the Company has approximately $18.1 billion of recorded regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matters Were Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We also evaluated the external information and compared it to management’s recorded balances for completeness.

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.


REPORTS

•We obtained an analysis from management and letters from internal legal counsel for asset retirement obligations specific to coal ash costs, regarding probability of recovery for deferred costs not yet addressed in a regulatory order to assess management’s assertion that amounts are probable of recovery.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1947.


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS


	Years Ended December 31,
(in millions, except per share amounts)	2022		2021		2020
Operating Revenues
Regulated electric	$	25,759	$	22,319	$	21,461
Regulated natural gas	2,724		2,008		1,642
Nonregulated electric and other	285		294		263
Total operating revenues	28,768		24,621		23,366
Operating Expenses
Fuel used in electric generation and purchased power	8,782		6,255		6,051
Cost of natural gas	1,276		705		460
Operation, maintenance and other	5,734		5,703		5,502
Depreciation and amortization	5,086		4,762		4,504
Property and other taxes	1,466		1,355		1,311
Impairment of assets and other charges	434		353		978
Total operating expenses	22,778		19,133		18,806
Gains on Sales of Other Assets and Other, net	22		12		11
Operating Income	6,012		5,500		4,571
Other Income and Expenses
Equity in earnings (losses) of unconsolidated affiliates	113		62		(2,005)

Other income and expenses, net	392		636		451
Total other income and expenses	505		698		(1,554)
Interest Expense	2,439		2,207		2,097
Income From Continuing Operations Before Income Taxes	4,078		3,991		920
Income Tax Expense (Benefit) From Continuing Operations	300		268		(169)
Income From Continuing Operations	3,778		3,723		1,089
Loss From Discontinued Operations, net of tax	(1,323)		(144)		(7)
Net Income	2,455		3,579		1,082
Add: Net Loss Attributable to Noncontrolling Interests	95		329		295
Net Income Attributable to Duke Energy Corporation	2,550		3,908		1,377
Less: Preferred Dividends	106		106		107
Net Income Available to Duke Energy Corporation Common Stockholders	$	2,444	$	3,802	$	1,270

Earnings Per Share – Basic and Diluted
Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and Diluted	$	4.74	$	4.68	$	1.33

(Loss) Income from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic and Diluted	$	(1.57)	$	0.26	$	0.39

Net income available to Duke Energy Corporation common stockholders
Basic and Diluted	$	3.17	$	4.94	$	1.72

Weighted average shares outstanding
Basic	770		769		737
Diluted	770		769		738

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Net Income	$	2,455	$	3,579	$	1,082
Other Comprehensive Income (Loss), net of tax(a)

Pension and OPEB adjustments	(19)		7		6
Net unrealized gains (losses) on cash flow hedges	285		(68)		(138)
Reclassification into earnings from cash flow hedges	(38)		13		11
Net unrealized losses on fair value hedges	(33)		—		—
Unrealized (losses) gains on available-for-sale securities	(21)		(8)		3

Other Comprehensive Income (Loss), net of tax	174		(56)		(118)
Comprehensive Income	2,629		3,523		964
Add: Comprehensive Loss Attributable to Noncontrolling Interests	84		319		306
Comprehensive Income Attributable to Duke Energy Corporation	2,713		3,842		1,270
Less: Preferred Dividends	106		106		107
Comprehensive Income Available to Duke Energy Corporation Common Stockholders	$	2,607	$	3,736	$	1,163

(a) Net of income tax expense of approximately $52 million for the year ended December 31, 2022, and income tax benefit of approximately $17 million and $35 million for the years ended December 31, 2021, and 2020, respectively.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	409	$	341

Receivables (net of allowance for doubtful accounts of $40 at 2022 and $45 at 2021)	1,309		1,085
Receivables of VIEs (net of allowance for doubtful accounts of $176 at 2022 and $76 at 2021)	3,106		2,437
Inventory	3,584		3,111
Regulatory assets (includes $106 at 2022 and $105 at 2021 related to VIEs)	3,485		2,150
Assets held for sale	262		232
Other (includes $116 at 2022 and $41 at 2021 related to VIEs)	1,067		584
Total current assets	13,222		9,940
Property, Plant and Equipment
Cost	163,839		154,496
Accumulated depreciation and amortization	(52,100)		(49,104)
Facilities to be retired, net	9		144
Net property, plant and equipment	111,748		105,536
Other Noncurrent Assets
Goodwill	19,303		19,303
Regulatory assets (includes $1,715 at 2022 and $1,824 at 2021 related to VIEs)	14,645		12,487
Nuclear decommissioning trust funds	8,637		10,401
Operating lease right-of-use assets, net	1,042		1,136
Investments in equity method unconsolidated affiliates	455		457
Assets held for sale	5,634		6,695
Other (includes $52 at 2022 and $30 at 2021 related to VIEs)	3,400		3,632
Total other noncurrent assets	53,116		54,111
Total Assets	$	178,086	$	169,587
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	4,754	$	3,531
Notes payable and commercial paper	3,952		3,304
Taxes accrued	722		731
Interest accrued	626		530
Current maturities of long-term debt (includes $350 at 2022 and $76 at 2021 related to VIEs)	4,154		3,387
Asset retirement obligations	773		647
Regulatory liabilities	1,466		1,211
Liabilities associated with assets held for sale	259		167
Other	2,167		2,423
Total current liabilities	18,873		15,931
Long-Term Debt (includes $3,108 at 2022 and $3,379 at 2021 related to VIEs)	67,061		60,448
Other Noncurrent Liabilities
Deferred income taxes	9,964		9,379
Asset retirement obligations	11,955		11,953
Regulatory liabilities	13,582		16,152
Operating lease liabilities	876		940
Accrued pension and other post-retirement benefit costs	832		855
Investment tax credits	849		833
Liabilities associated with assets held for sale	739		612
Other	1,502		1,348
Total other noncurrent liabilities	40,299		42,072
Commitments and Contingencies

Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2022 and 2021	973		973
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2022 and 2021	989		989
Common stock, $0.001 par value, 2 billion shares authorized; 770 million and 769 million shares outstanding at 2022 and 2021	1		1
Additional paid-in capital	44,862		44,371
Retained earnings	2,637		3,265
Accumulated other comprehensive loss	(140)		(303)
Total Duke Energy Corporation stockholders' equity	49,322		49,296
Noncontrolling interests	2,531		1,840
Total equity	51,853		51,136
Total Liabilities and Equity	$	178,086	$	169,587

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,455	$	3,579	$	1,082
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	5,843		5,663		5,486
Equity in (earnings) losses of unconsolidated affiliates	(114)		(28)		2,005
Equity component of AFUDC	(197)		(171)		(154)

Impairment of assets and other charges	2,183		356		984
Deferred income taxes	(200)		191		54
Contributions to qualified pension plans	(58)		—		—
Payments for asset retirement obligations	(584)		(540)		(610)
Provision for rate refunds	(130)		(70)		(22)
Refund of AMT credit carryforwards	—		—		572
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	19		50		63
Receivables	(788)		(297)		(56)
Inventory	(476)		(34)		66
Other current assets(a)	(1,498)		(1,136)		205
Increase (decrease) in
Accounts payable	805		249		(21)
Taxes accrued	10		284		117
Other current liabilities	(153)		(13)		(65)
Other assets(a)	(1,600)		112		(408)
Other liabilities	410		95		(442)
Net cash provided by operating activities	5,927		8,290		8,856
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(11,367)		(9,715)		(9,907)
Contributions to equity method investments	(58)		(81)		(370)

Return of investment capital	6		44		133
Purchases of debt and equity securities	(4,243)		(6,098)		(8,011)
Proceeds from sales and maturities of debt and equity securities	4,333		6,103		7,949

Disbursements to canceled equity method investments	—		(855)		—
Other	(644)		(333)		(398)
Net cash used in investing activities	(11,973)		(10,935)		(10,604)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	11,874		9,052		6,330

Issuance of common stock	9		5		2,745
Payments for the redemption of long-term debt	(4,396)		(5,294)		(4,506)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	80		332		3,009
Payments for the redemption of short-term debt with original maturities greater than 90 days	(287)		(997)		(2,147)
Notes payable and commercial paper	781		1,144		(1,181)

Contributions from noncontrolling interests	1,377		1,575		426
Dividends paid	(3,179)		(3,114)		(2,812)

Other	(130)		(94)		(133)
Net cash provided by financing activities	6,129		2,609		1,731

Net increase (decrease) in cash, cash equivalents and restricted cash	83		(36)		(17)
Cash, cash equivalents and restricted cash at beginning of period	520		556		573
Cash, cash equivalents and restricted cash at end of period	$	603	$	520	$	556
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	2,361	$	2,248	$	2,186
Cash received from income taxes	(6)		(3)		(585)
Significant non-cash transactions:
Accrued capital expenditures	1,766		1,325		1,116
Non-cash dividends	—		—		110

(a) Includes approximately $2.6 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


										Duke Energy Corporation Stockholders' Accumulated Other Comprehensive Income (Loss)
												Net Unrealized				Total
										Net Gains		Gains (Losses)				Duke Energy
			Common			Additional				(Losses)		on Available-		Pension and		Corporation
	Preferred		Stock	Common		Paid-in		Retained		on		for-Sale-		OPEB		Stockholders'		Noncontrolling		Total
(in millions)	Stock		Shares	Stock		Capital		Earnings		Hedges(d)		Securities		Adjustments		Equity		Interests		Equity
Balance at December 31, 2019	$	1,962	733	$	1	$	40,881	$	4,108	$	(51)	$	3	$	(82)	$	46,822	$	1,129	$	47,951
Net income (loss)	—		—	—		—		1,270		—		—		—		1,270		(295)		975
Other comprehensive (loss) income	—		—	—		—		—		(116)		3		6		(107)		(11)		(118)


Common stock issuances, including dividend reinvestment and employee benefits	—		36	—		2,902		—		—		—		—		2,902		—		2,902

Common stock dividends	—		—	—		—		(2,815)		—		—		—		(2,815)		—		(2,815)

Contribution from noncontrolling interest(a)	—		—	—		(17)		—		—		—		—		(17)		426		409
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(30)		(30)
Other(b)	—		—	—		1		(92)		—		—		—		(91)		1		(90)
Balance at December 31, 2020	$	1,962	769	$	1	$	43,767	$	2,471	$	(167)	$	6	$	(76)	$	47,964	$	1,220	$	49,184
Net income (loss)	—		—	—		—		3,802		—		—		—		3,802		(329)		3,473
Other comprehensive (loss) income	—		—	—		—		—		(65)		(8)		7		(66)		10		(56)


Common stock issuances, including dividend reinvestment and employee benefits	—		—	—		68		—		—		—		—		68		—		68

Common stock dividends	—		—	—		—		(3,008)		—		—		—		(3,008)		—		(3,008)
Sale of noncontrolling interest(c)	—		—	—		545		—		—		—		—		545		454		999
Contribution from noncontrolling interest, net of transaction costs(a)	—		—	—		—		—		—		—		—		—		550		550
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(66)		(66)
Other	—		—	—		(9)		—		—		—		—		(9)		1		(8)
Balance at December 31, 2021	$	1,962	769	$	1	$	44,371	$	3,265	$	(232)	$	(2)	$	(69)	$	49,296	$	1,840	$	51,136
Net income (loss)	—		—	—		—		2,444		—		—		—		2,444		(95)		2,349
Other comprehensive income (loss)	—		—	—		—		—		203		(21)		(19)		163		11		174


Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		76		—		—		—		—		76		—		76

Common stock dividends	—		—	—		—		(3,073)		—		—		—		(3,073)		—		(3,073)
Sale of noncontrolling interest(c)	—		—	—		465		—		—		—		—		465		569		1,034
Purchase of noncontrolling interest	—		—	—		(51)		—		—		—		—		(51)		31		(20)
Contribution from noncontrolling interest, net of transaction costs(a)	—		—	—		—		—		—		—		—		—		314		314
Distributions to noncontrolling interests in subsidiaries	—		—	—		—		—		—		—		—		—		(140)		(140)
Other	—		—	—		1		1		—		—		—		2		1		3
Balance at December 31, 2022	$	1,962	770	$	1	$	44,862	$	2,637	$	(29)	$	(23)	$	(88)	$	49,322	$	2,531	$	51,853

(a) Relates to tax equity financing activity in the Commercial Renewables Disposal Groups.

(b) Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.

(c) Relates primarily to the sale of a noncontrolling interest in Duke Energy Indiana. See Note 2 for additional discussion.

(d) See Duke Energy Consolidated Statements of Comprehensive Income for detailed activity related to Cash Flow and Fair Value Hedges.

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Carolinas, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Carolinas, LLC and subsidiaries (the "Company") as of December 31, 2022, and 2021, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit ~~Matter~~

Matters

The critical audit ~~matter~~matters communicated below ~~is a matter~~are matters arising from the current-period audit of the financial statements that ~~was~~were communicated or required to be communicated to the audit committee and that (1) ~~relates~~relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit ~~matter~~matters below, providing a separate opinion on the critical audit ~~matter~~matters or on the accounts or disclosures to which ~~it relates.~~they relate.

Dispositions – Assessment of Held for Sale and Discontinued Operations Classification and Impairment Charge – Refer to Note 2 to the financial statements.

Critical Audit Matter Description

•The assessment of whether the sale is probable and the transfer of assets will be completed within one year from period-end;

•The assessment of whether the sale of the segment represents a discontinued operation;

•The determination of the impairment charges; and

•The assessment of the fair value of the Commercial Renewables business segment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the classification of the Commercial Renewables business segment as held for sale and the associated impairment charges included the following, among others:

•We evaluated management’s assessment of held for sale and discontinued operations classification as follows:

–Inquired of executive officers, key members of management and members of the Board of Directors to obtain an understanding of plans to sell the Commercial Renewables business segment.


REPORTS

–Compared management’s conclusions against relevant guidance and tested the completeness and accuracy of information used in the Company’s evaluation.

•We evaluated the accuracy and completeness of the Company's reclassification of balances and activity and related disclosures.

•We obtained representation from management asserting to the appropriate presentation, measurement and timing of the Commercial Renewables business segment.

Regulatory Matters —– Impact of Rate Regulation on the Financial Statements —– Refer to Notes 1, 3,4 and 910 to the financial statements.

Critical Audit Matter Description

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3,4, regulatory proceedings in recent years ~~in North Carolina and South Carolina~~ have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders ~~in North Carolina and South Carolina~~ requires significant management judgment.

As of December 31, 2022, the Company has approximately $18.1 billion of recorded regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. ~~As such,~~Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities ~~a high degree of auditor judgment, and an increased extent of effort.~~

as it relates to regulatory assets.

How the Critical Audit ~~Matter Was~~Matters Were Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates ~~of regulatory assets~~ and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.


~~REPORTS~~

•We evaluated the Company’s disclosures related to the impacts of rate regulation including the balances recorded and regulatory developments.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

◦–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

◦–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

◦–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

◦–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.


REPORTS

•We obtained representation from management asserting that regulatory assets recorded onin the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February ~~25, 2021~~

27, 2023

We have served as the Company's auditor since 1947.

7872


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS


		Years Ended December 31,							Years Ended December 31,
(in millions, except per share amounts)	(in millions, except per share amounts)	2020		2019		2018		(in millions, except per share amounts)	2022		2021		2020
Operating Revenues	Operating Revenues							Operating Revenues
Regulated electric	Regulated electric	$	21,461	$	22,615	$	22,097	Regulated electric	$	25,759	$	22,319	$	21,461
Regulated natural gas	Regulated natural gas	1,642		1,759		1,773		Regulated natural gas	2,724		2,008		1,642
Nonregulated electric and other	Nonregulated electric and other	765		705		651		Nonregulated electric and other	285		294		263
Total operating revenues	Total operating revenues	23,868		25,079		24,521		Total operating revenues	28,768		24,621		23,366
Operating Expenses	Operating Expenses							Operating Expenses
Fuel used in electric generation and purchased power	Fuel used in electric generation and purchased power	6,051		6,826		6,831		Fuel used in electric generation and purchased power	8,782		6,255		6,051
Cost of natural gas	Cost of natural gas	460		627		697		Cost of natural gas	1,276		705		460
Operation, maintenance and other	Operation, maintenance and other	5,788		6,066		6,463		Operation, maintenance and other	5,734		5,703		5,502
Depreciation and amortization	Depreciation and amortization	4,705		4,548		4,074		Depreciation and amortization	5,086		4,762		4,504
Property and other taxes	Property and other taxes	1,337		1,307		1,280		Property and other taxes	1,466		1,355		1,311
Impairment charges		984		(8)		402
Impairment of assets and other charges								Impairment of assets and other charges	434		353		978
Total operating expenses	Total operating expenses	19,325		19,366		19,747		Total operating expenses	22,778		19,133		18,806
Gains (Losses) on Sales of Other Assets and Other, net		10		(4)		(89)
Gains on Sales of Other Assets and Other, net								Gains on Sales of Other Assets and Other, net	22		12		11
Operating Income	Operating Income	4,553		5,709		4,685		Operating Income	6,012		5,500		4,571
Other Income and Expenses	Other Income and Expenses							Other Income and Expenses
Equity in (losses) earnings of unconsolidated affiliates		(2,005)		162		83
Equity in earnings (losses) of unconsolidated affiliates								Equity in earnings (losses) of unconsolidated affiliates	113		62		(2,005)

Other income and expenses, net	Other income and expenses, net	453		430		399		Other income and expenses, net	392		636		451
Total other income and expenses	Total other income and expenses	(1,552)		592		482		Total other income and expenses	505		698		(1,554)
Interest Expense	Interest Expense	2,162		2,204		2,094		Interest Expense	2,439		2,207		2,097
Income From Continuing Operations Before Income Taxes	Income From Continuing Operations Before Income Taxes	839		4,097		3,073		Income From Continuing Operations Before Income Taxes	4,078		3,991		920
Income Tax (Benefit) Expense From Continuing Operations		(236)		519		448
Income Tax Expense (Benefit) From Continuing Operations								Income Tax Expense (Benefit) From Continuing Operations	300		268		(169)
Income From Continuing Operations	Income From Continuing Operations	1,075		3,578		2,625		Income From Continuing Operations	3,778		3,723		1,089
Income (Loss) From Discontinued Operations, net of tax		7		(7)		19
Loss From Discontinued Operations, net of tax								Loss From Discontinued Operations, net of tax	(1,323)		(144)		(7)
Net Income	Net Income	1,082		3,571		2,644		Net Income	2,455		3,579		1,082
Add: Net Loss Attributable to Noncontrolling Interests	Add: Net Loss Attributable to Noncontrolling Interests	295		177		22		Add: Net Loss Attributable to Noncontrolling Interests	95		329		295
Net Income Attributable to Duke Energy Corporation	Net Income Attributable to Duke Energy Corporation	1,377		3,748		2,666		Net Income Attributable to Duke Energy Corporation	2,550		3,908		1,377
Less: Preferred Dividends	Less: Preferred Dividends	107		41		—		Less: Preferred Dividends	106		106		107
Net Income Available to Duke Energy Corporation Common Stockholders	Net Income Available to Duke Energy Corporation Common Stockholders	$	1,270	$	3,707	$	2,666	Net Income Available to Duke Energy Corporation Common Stockholders	$	2,444	$	3,802	$	1,270

Earnings Per Share – Basic and Diluted	Earnings Per Share – Basic and Diluted							Earnings Per Share – Basic and Diluted
Income from continuing operations available to Duke Energy Corporation common stockholders	Income from continuing operations available to Duke Energy Corporation common stockholders							Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and Diluted	Basic and Diluted	$	1.71	$	5.07	$	3.73	Basic and Diluted	$	4.74	$	4.68	$	1.33

Income (Loss) from discontinued operations attributable to Duke Energy Corporation common stockholders
(Loss) Income from discontinued operations attributable to Duke Energy Corporation common stockholders								(Loss) Income from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic and Diluted	Basic and Diluted	$	0.01	$	(0.01)	$	0.03	Basic and Diluted	$	(1.57)	$	0.26	$	0.39

Net income available to Duke Energy Corporation common stockholders	Net income available to Duke Energy Corporation common stockholders							Net income available to Duke Energy Corporation common stockholders
Basic and Diluted	Basic and Diluted	$	1.72	$	5.06	$	3.76	Basic and Diluted	$	3.17	$	4.94	$	1.72

Weighted average shares outstanding	Weighted average shares outstanding							Weighted average shares outstanding
Basic	Basic	737		729		708		Basic	770		769		737
Diluted	Diluted	738		729		708		Diluted	770		769		738

See Notes to Consolidated Financial Statements

7973


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		2018		(in millions)	2022		2021		2020
Net Income	Net Income	$	1,082	$	3,571	$	2,644	Net Income	$	2,455	$	3,579	$	1,082
Other Comprehensive (Loss) Income, net of tax(a)
Other Comprehensive Income (Loss), net of tax(a)								Other Comprehensive Income (Loss), net of tax(a)

Pension and OPEB adjustments	Pension and OPEB adjustments	6		9		(6)		Pension and OPEB adjustments	(19)		7		6
Net unrealized losses on cash flow hedges		(138)		(47)		(10)
Net unrealized gains (losses) on cash flow hedges								Net unrealized gains (losses) on cash flow hedges	285		(68)		(138)
Reclassification into earnings from cash flow hedges	Reclassification into earnings from cash flow hedges	11		6		6		Reclassification into earnings from cash flow hedges	(38)		13		11
Unrealized gains (losses) on available-for-sale securities		3		8		(3)
Net unrealized losses on fair value hedges								Net unrealized losses on fair value hedges	(33)		—		—
Unrealized (losses) gains on available-for-sale securities								Unrealized (losses) gains on available-for-sale securities	(21)		(8)		3

Other Comprehensive Loss, net of tax		(118)		(24)		(13)
Other Comprehensive Income (Loss), net of tax								Other Comprehensive Income (Loss), net of tax	174		(56)		(118)
Comprehensive Income	Comprehensive Income	964		3,547		2,631		Comprehensive Income	2,629		3,523		964
Add: Comprehensive Loss Attributable to Noncontrolling Interests	Add: Comprehensive Loss Attributable to Noncontrolling Interests	306		177		22		Add: Comprehensive Loss Attributable to Noncontrolling Interests	84		319		306
Comprehensive Income Attributable to Duke Energy Corporation	Comprehensive Income Attributable to Duke Energy Corporation	1,270		3,724		2,653		Comprehensive Income Attributable to Duke Energy Corporation	2,713		3,842		1,270
Less: Preferred Dividends	Less: Preferred Dividends	107		41		—		Less: Preferred Dividends	106		106		107
Comprehensive Income Available to Duke Energy Corporation Common Stockholders	Comprehensive Income Available to Duke Energy Corporation Common Stockholders	$	1,163	$	3,683	$	2,653	Comprehensive Income Available to Duke Energy Corporation Common Stockholders	$	2,607	$	3,736	$	1,163

(a) Net of income tax ~~impacts~~expense of approximately ~~$35~~$52 million for the year ended December 31, ~~2020. Tax impacts are immaterial~~2022, and income tax benefit of approximately $17 million and $35 million for ~~other periods presented.~~the years ended December 31, 2021, and 2020, respectively.

See Notes to Consolidated Financial Statements

8074


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS


		December 31,					December 31,
(in millions)	(in millions)	2020		2019		(in millions)	2022		2021
ASSETS	ASSETS					ASSETS
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	259	$	311	Cash and cash equivalents	$	409	$	341

Receivables (net of allowance for doubtful accounts of $29 at 2020 and $22 at 2019)		1,009		1,066
Receivables of VIEs (net of allowance for doubtful accounts of $117 at 2020 and $54 at 2019)		2,144		1,994
Receivables (net of allowance for doubtful accounts of $40 at 2022 and $45 at 2021)						Receivables (net of allowance for doubtful accounts of $40 at 2022 and $45 at 2021)	1,309		1,085
Receivables of VIEs (net of allowance for doubtful accounts of $176 at 2022 and $76 at 2021)						Receivables of VIEs (net of allowance for doubtful accounts of $176 at 2022 and $76 at 2021)	3,106		2,437
Inventory	Inventory	3,167		3,232		Inventory	3,584		3,111

Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)		1,641		1,796
Other (includes $296 at 2020 and $242 at 2019 related to VIEs)		462		764
Regulatory assets (includes $106 at 2022 and $105 at 2021 related to VIEs)						Regulatory assets (includes $106 at 2022 and $105 at 2021 related to VIEs)	3,485		2,150
Assets held for sale						Assets held for sale	262		232
Other (includes $116 at 2022 and $41 at 2021 related to VIEs)						Other (includes $116 at 2022 and $41 at 2021 related to VIEs)	1,067		584
Total current assets	Total current assets	8,682		9,163		Total current assets	13,222		9,940
Property, Plant and Equipment	Property, Plant and Equipment					Property, Plant and Equipment
Cost	Cost	155,580		147,654		Cost	163,839		154,496
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(48,827)		(45,773)		Accumulated depreciation and amortization	(52,100)		(49,104)
Generation facilities to be retired, net		29		246
Facilities to be retired, net						Facilities to be retired, net	9		144
Net property, plant and equipment	Net property, plant and equipment	106,782		102,127		Net property, plant and equipment	111,748		105,536
Other Noncurrent Assets	Other Noncurrent Assets					Other Noncurrent Assets
Goodwill	Goodwill	19,303		19,303		Goodwill	19,303		19,303
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs)		12,421		13,222
Regulatory assets (includes $1,715 at 2022 and $1,824 at 2021 related to VIEs)						Regulatory assets (includes $1,715 at 2022 and $1,824 at 2021 related to VIEs)	14,645		12,487
Nuclear decommissioning trust funds	Nuclear decommissioning trust funds	9,114		8,140		Nuclear decommissioning trust funds	8,637		10,401
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	1,524		1,658		Operating lease right-of-use assets, net	1,042		1,136
Investments in equity method unconsolidated affiliates	Investments in equity method unconsolidated affiliates	961		1,936		Investments in equity method unconsolidated affiliates	455		457

Other (includes $81 at 2020 and $110 at 2019 related to VIEs)		3,601		3,289
Assets held for sale						Assets held for sale	5,634		6,695
Other (includes $52 at 2022 and $30 at 2021 related to VIEs)						Other (includes $52 at 2022 and $30 at 2021 related to VIEs)	3,400		3,632
Total other noncurrent assets	Total other noncurrent assets	46,924		47,548		Total other noncurrent assets	53,116		54,111
Total Assets	Total Assets	$	162,388	$	158,838	Total Assets	$	178,086	$	169,587
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current Liabilities	Current Liabilities					Current Liabilities
Accounts payable	Accounts payable	$	3,144	$	3,487	Accounts payable	$	4,754	$	3,531
Notes payable and commercial paper	Notes payable and commercial paper	2,873		3,135		Notes payable and commercial paper	3,952		3,304
Taxes accrued	Taxes accrued	482		392		Taxes accrued	722		731
Interest accrued	Interest accrued	537		565		Interest accrued	626		530
Current maturities of long-term debt (includes $472 at 2020 and $216 at 2019 related to VIEs)		4,238		3,141

Current maturities of long-term debt (includes $350 at 2022 and $76 at 2021 related to VIEs)						Current maturities of long-term debt (includes $350 at 2022 and $76 at 2021 related to VIEs)	4,154		3,387
Asset retirement obligations	Asset retirement obligations	718		881		Asset retirement obligations	773		647
Regulatory liabilities	Regulatory liabilities	1,377		784		Regulatory liabilities	1,466		1,211
Liabilities associated with assets held for sale						Liabilities associated with assets held for sale	259		167
Other	Other	2,936		2,367		Other	2,167		2,423
Total current liabilities	Total current liabilities	16,305		14,752		Total current liabilities	18,873		15,931
Long-Term Debt (includes $3,535 at 2020 and $3,997 at 2019 related to VIEs)		55,625		54,985
Long-Term Debt (includes $3,108 at 2022 and $3,379 at 2021 related to VIEs)						Long-Term Debt (includes $3,108 at 2022 and $3,379 at 2021 related to VIEs)	67,061		60,448
Other Noncurrent Liabilities	Other Noncurrent Liabilities					Other Noncurrent Liabilities
Deferred income taxes	Deferred income taxes	9,244		8,878		Deferred income taxes	9,964		9,379
Asset retirement obligations	Asset retirement obligations	12,286		12,437		Asset retirement obligations	11,955		11,953
Regulatory liabilities	Regulatory liabilities	15,029		15,264		Regulatory liabilities	13,582		16,152
Operating lease liabilities	Operating lease liabilities	1,340		1,432		Operating lease liabilities	876		940
Accrued pension and other post-retirement benefit costs	Accrued pension and other post-retirement benefit costs	969		934		Accrued pension and other post-retirement benefit costs	832		855
Investment tax credits	Investment tax credits	687		624		Investment tax credits	849		833

Other (includes $316 at 2020 and $228 at 2019 related to VIEs)		1,719		1,581
Liabilities associated with assets held for sale						Liabilities associated with assets held for sale	739		612
Other						Other	1,502		1,348
Total other noncurrent liabilities	Total other noncurrent liabilities	41,274		41,150		Total other noncurrent liabilities	40,299		42,072
Commitments and Contingencies	Commitments and Contingencies	0		0		Commitments and Contingencies

Equity	Equity					Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2020 and 2019		973		973
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2020 and 2019		989		989
Common stock, $0.001 par value, 2 billion shares authorized; 769 million shares outstanding at 2020 and 733 million shares outstanding at 2019		1		1
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2022 and 2021						Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2022 and 2021	973		973
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2022 and 2021						Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2022 and 2021	989		989
Common stock, $0.001 par value, 2 billion shares authorized; 770 million and 769 million shares outstanding at 2022 and 2021						Common stock, $0.001 par value, 2 billion shares authorized; 770 million and 769 million shares outstanding at 2022 and 2021	1		1
Additional paid-in capital	Additional paid-in capital	43,767		40,881		Additional paid-in capital	44,862		44,371
Retained earnings	Retained earnings	2,471		4,108		Retained earnings	2,637		3,265
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(237)		(130)		Accumulated other comprehensive loss	(140)		(303)
Total Duke Energy Corporation stockholders' equity	Total Duke Energy Corporation stockholders' equity	47,964		46,822		Total Duke Energy Corporation stockholders' equity	49,322		49,296
Noncontrolling interests	Noncontrolling interests	1,220		1,129		Noncontrolling interests	2,531		1,840
Total equity	Total equity	49,184		47,951		Total equity	51,853		51,136
Total Liabilities and Equity	Total Liabilities and Equity	$	162,388	$	158,838	Total Liabilities and Equity	$	178,086	$	169,587

See Notes to Consolidated Financial Statements

8175


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		2018		(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES							CASH FLOWS FROM OPERATING ACTIVITIES
Net income	Net income	$	1,082	$	3,571	$	2,644	Net income	$	2,455	$	3,579	$	1,082
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	Depreciation, amortization and accretion (including amortization of nuclear fuel)	5,486		5,176		4,696		Depreciation, amortization and accretion (including amortization of nuclear fuel)	5,843		5,663		5,486
Equity in losses (earnings) of unconsolidated affiliates		2,005		(162)		(83)
Equity in (earnings) losses of unconsolidated affiliates								Equity in (earnings) losses of unconsolidated affiliates	(114)		(28)		2,005
Equity component of AFUDC	Equity component of AFUDC	(154)		(139)		(221)		Equity component of AFUDC	(197)		(171)		(154)

(Gains) Losses on sales of other assets		(10)		4		88
Impairment charges		984		(8)		402
Impairment of assets and other charges								Impairment of assets and other charges	2,183		356		984
Deferred income taxes	Deferred income taxes	54		806		1,079		Deferred income taxes	(200)		191		54

Contributions to qualified pension plans								Contributions to qualified pension plans	(58)		—		—
Payments for asset retirement obligations	Payments for asset retirement obligations	(610)		(746)		(533)		Payments for asset retirement obligations	(584)		(540)		(610)
Payment for the disposal of other assets		—		—		(105)

Provision for rate refunds	Provision for rate refunds	(22)		60		425		Provision for rate refunds	(130)		(70)		(22)
Refund of AMT credit carryforwards	Refund of AMT credit carryforwards	572		573		—		Refund of AMT credit carryforwards	—		—		572
(Increase) decrease in	(Increase) decrease in							(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	Net realized and unrealized mark-to-market and hedging transactions	63		(48)		22		Net realized and unrealized mark-to-market and hedging transactions	19		50		63
Receivables	Receivables	(56)		78		(345)		Receivables	(788)		(297)		(56)
Inventory	Inventory	66		(122)		156		Inventory	(476)		(34)		66
Other current assets		205		10		(721)
Other current assets(a)								Other current assets(a)	(1,498)		(1,136)		205
Increase (decrease) in	Increase (decrease) in							Increase (decrease) in
Accounts payable	Accounts payable	(21)		(164)		479		Accounts payable	805		249		(21)
Taxes accrued	Taxes accrued	117		(224)		23		Taxes accrued	10		284		117
Other current liabilities	Other current liabilities	(65)		172		270		Other current liabilities	(153)		(13)		(65)
Other assets		(398)		(559)		(1,062)
Other assets(a)								Other assets(a)	(1,600)		112		(408)
Other liabilities	Other liabilities	(442)		(69)		(28)		Other liabilities	410		95		(442)
Net cash provided by operating activities	Net cash provided by operating activities	8,856		8,209		7,186		Net cash provided by operating activities	5,927		8,290		8,856
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES							CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(9,907)		(11,122)		(9,389)		Capital expenditures	(11,367)		(9,715)		(9,907)
Contributions to equity method investments	Contributions to equity method investments	(370)		(324)		(416)		Contributions to equity method investments	(58)		(81)		(370)

Return of investment capital	Return of investment capital	133		11		137		Return of investment capital	6		44		133
Purchases of debt and equity securities	Purchases of debt and equity securities	(8,011)		(3,348)		(3,762)		Purchases of debt and equity securities	(4,243)		(6,098)		(8,011)
Proceeds from sales and maturities of debt and equity securities	Proceeds from sales and maturities of debt and equity securities	7,949		3,343		3,747		Proceeds from sales and maturities of debt and equity securities	4,333		6,103		7,949

Disbursements to canceled equity method investments								Disbursements to canceled equity method investments	—		(855)		—
Other	Other	(398)		(517)		(377)		Other	(644)		(333)		(398)
Net cash used in investing activities	Net cash used in investing activities	(10,604)		(11,957)		(10,060)		Net cash used in investing activities	(11,973)		(10,935)		(10,604)
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES							CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:	Proceeds from the:							Proceeds from the:
Issuance of long-term debt	Issuance of long-term debt	6,330		7,091		5,299		Issuance of long-term debt	11,874		9,052		6,330
Issuance of preferred stock		—		1,962		—

Issuance of common stock	Issuance of common stock	2,745		384		1,838		Issuance of common stock	9		5		2,745

Payments for the redemption of long-term debt	Payments for the redemption of long-term debt	(4,506)		(3,476)		(2,906)		Payments for the redemption of long-term debt	(4,396)		(5,294)		(4,506)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	Proceeds from the issuance of short-term debt with original maturities greater than 90 days	3,009		397		472		Proceeds from the issuance of short-term debt with original maturities greater than 90 days	80		332		3,009
Payments for the redemption of short-term debt with original maturities greater than 90 days	Payments for the redemption of short-term debt with original maturities greater than 90 days	(2,147)		(479)		(282)		Payments for the redemption of short-term debt with original maturities greater than 90 days	(287)		(997)		(2,147)
Notes payable and commercial paper	Notes payable and commercial paper	(1,181)		(298)		981		Notes payable and commercial paper	781		1,144		(1,181)

Contributions from noncontrolling interests	Contributions from noncontrolling interests	426		843		41		Contributions from noncontrolling interests	1,377		1,575		426
Dividends paid	Dividends paid	(2,812)		(2,668)		(2,471)		Dividends paid	(3,179)		(3,114)		(2,812)

Other	Other	(133)		(26)		(12)		Other	(130)		(94)		(133)
Net cash provided by financing activities	Net cash provided by financing activities	1,731		3,730		2,960		Net cash provided by financing activities	6,129		2,609		1,731

Net (decrease) increase in cash, cash equivalents, and restricted cash		(17)		(18)		86
Cash, cash equivalents, and restricted cash at beginning of period		573		591		505
Cash, cash equivalents, and restricted cash at end of period		$	556	$	573	$	591
Net increase (decrease) in cash, cash equivalents and restricted cash								Net increase (decrease) in cash, cash equivalents and restricted cash	83		(36)		(17)
Cash, cash equivalents and restricted cash at beginning of period								Cash, cash equivalents and restricted cash at beginning of period	520		556		573
Cash, cash equivalents and restricted cash at end of period								Cash, cash equivalents and restricted cash at end of period	$	603	$	520	$	556
Supplemental Disclosures:	Supplemental Disclosures:							Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	Cash paid for interest, net of amount capitalized	$	2,186	$	2,195	$	2,086	Cash paid for interest, net of amount capitalized	$	2,361	$	2,248	$	2,186
Cash received from income taxes	Cash received from income taxes	(585)		(651)		(266)		Cash received from income taxes	(6)		(3)		(585)
Significant non-cash transactions:	Significant non-cash transactions:							Significant non-cash transactions:
Accrued capital expenditures	Accrued capital expenditures	1,116		1,356		1,112		Accrued capital expenditures	1,766		1,325		1,116
Non-cash dividends	Non-cash dividends	110		108		107		Non-cash dividends	—		—		110

(a) Includes approximately $2.6 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements

8276


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


											Duke Energy Corporation Stockholders' Accumulated Other Comprehensive Income (Loss)																																Duke Energy Corporation Stockholders' Accumulated Other Comprehensive Income (Loss)
													Net Unrealized				Total																														Net Unrealized								Total
											Net		Gains (Losses)				Duke Energy																										Net Gains				Gains (Losses)								Duke Energy
				Common			Additional				Losses on		on Available-		Pension and		Corporation													Common					Additional								(Losses)				on Available-				Pension and				Corporation
		Preferred		Stock	Common		Paid-in		Retained		Cash Flow		for-Sale-		OPEB		Stockholders'		Noncontrolling			Total					Preferred			Stock	Common				Paid-in				Retained				on				for-Sale-				OPEB				Stockholders'				Noncontrolling				Total
(in millions)	(in millions)	Stock		Shares	Stock		Capital		Earnings		Hedges		Securities		Adjustments		Equity		Interests			Equity			(in millions)		Stock			Shares	Stock				Capital				Earnings				Hedges(d)				Securities				Adjustments				Equity				Interests				Equity
Balance at December 31, 2017		$	—	700	$	1	$	38,792	$	3,013	$	(10)	$	12	$	(69)	$	41,739	$	(2)		$	41,737
Net income		—		—	—		—		2,666		—		—		—		2,666		(22)			2,644
Other comprehensive loss		—		—	—		—		—		(4)		(3)		(6)		(13)		—			(13)
Common stock issuances, including dividend reinvestment and employee benefits		—		27	—		2,003		—		—		—		—		2,003		—			2,003

Common stock dividends		—		—	—		—		(2,578)		—		—		—		(2,578)		—			(2,578)

Distributions to noncontrolling interest in subsidiaries		—		—	—		—		—		—		—		—		—		(1)			(1)
Other(a)		—		—	—		—		12		—		(12)		—		—		42			42
Balance at December 31, 2018		$	—	727	$	1	$	40,795	$	3,113	$	(14)	$	(3)	$	(75)	$	43,817	$	17		$	43,834
Net income		—		—	—		—		3,707		—		—		—		3,707		(177)			3,530
Other comprehensive (loss) Income		—		—	—		—		—		(41)		8		9		(24)		—			(24)
Preferred stock, Series A, issuances, net of issuance costs(b)		973		—	—		—		—		—		—		—		973		—			973
Preferred stock, Series B, issuances, net of issuance costs(b)		989		—	—		—		—		—		—		—		989		—			989
Common stock issuances, including dividend reinvestment and employee benefits		—		6	—		552		—		—		—		—		552		—			552

Common stock dividends		—		—	—		—		(2,735)		—		—		—		(2,735)		—			(2,735)
Sale of noncontrolling interest(c)		—		—	—		(466)		—		10		—		—		(456)		863			407
Contribution from noncontrolling interest (f)		—		—	—		—		—		—		—		—		—		428			428
Distributions to noncontrolling interest in subsidiaries		—		—	—		—		—		—		—		—		—		(4)			(4)
Other(d)		—		—	—		—		23		(6)		(2)		(16)		(1)		2			1
Balance at December 31, 2019	Balance at December 31, 2019	$	1,962	733	$	1	$	40,881	$	4,108	$	(51)	$	3	$	(82)	$	46,822	$	1,129		$	47,951		Balance at December 31, 2019		$	1,962		733	$	1			$	40,881			$	4,108			$	(51)			$	3			$	(82)			$	46,822			$	1,129			$	47,951
Net income		—		—	—		—		1,270		—		—		—		1,270		(295)			975
Net income (loss)																					Net income (loss)		—			—			—				—				1,270				—				—				—				1,270				(295)				975
Other comprehensive (loss) income	Other comprehensive (loss) income	—		—	—		—		—		(116)		3		6		(107)		(11)			(118)			Other comprehensive (loss) income		—			—	—				—				—				(116)				3				6				(107)				(11)				(118)

Common stock issuances, including dividend reinvestment and employee benefits	Common stock issuances, including dividend reinvestment and employee benefits	—		36	—		2,902		—		—		—		—		2,902		—			2,902			Common stock issuances, including dividend reinvestment and employee benefits		—			36	—				2,902				—				—				—				—				2,902				—				2,902

Common stock dividends	Common stock dividends	—		—	—		—		(2,815)		—		—		—		(2,815)		—			(2,815)			Common stock dividends		—			—	—				—				(2,815)				—				—				—				(2,815)				—				(2,815)

Contribution from noncontrolling interest, net of transaction costs(f)		—		—	—		(17)		—		—		—		—		(17)		426			409
Contribution from noncontrolling interest(a)																					Contribution from noncontrolling interest(a)		—			—			—				(17)				—				—				—				—				(17)				426				409
Distributions to noncontrolling interest in subsidiaries																					Distributions to noncontrolling interest in subsidiaries		—			—			—				—				—				—				—				—				—				(30)				(30)
Other(b)																					Other(b)		—			—			—				1				(92)				—				—				—				(91)				1				(90)
Balance at December 31, 2020																					Balance at December 31, 2020		$	1,962		769			$	1			$	43,767			$	2,471			$	(167)			$	6			$	(76)			$	47,964			$	1,220			$	49,184
Net income (loss)																					Net income (loss)		—			—			—				—				3,802				—				—				—				3,802				(329)				3,473
Other comprehensive (loss) income																					Other comprehensive (loss) income		—			—			—				—				—				(65)				(8)				7				(66)				10				(56)

Common stock issuances, including dividend reinvestment and employee benefits																					Common stock issuances, including dividend reinvestment and employee benefits		—			—			—				68				—				—				—				—				68				—				68

Common stock dividends																					Common stock dividends		—			—			—				—				(3,008)				—				—				—				(3,008)				—				(3,008)
Sale of noncontrolling interest(c)																					Sale of noncontrolling interest(c)		—			—			—				545				—				—				—				—				545				454				999
Contribution from noncontrolling interest, net of transaction costs(a)																					Contribution from noncontrolling interest, net of transaction costs(a)		—			—			—				—				—				—				—				—				—				550				550
Distributions to noncontrolling interest in subsidiaries																					Distributions to noncontrolling interest in subsidiaries		—			—			—				—				—				—				—				—				—				(66)				(66)
Other																					Other		—			—			—				(9)				—				—				—				—				(9)				1				(8)
Balance at December 31, 2021																					Balance at December 31, 2021		$	1,962		769			$	1			$	44,371			$	3,265			$	(232)			$	(2)			$	(69)			$	49,296			$	1,840			$	51,136
Net income (loss)																					Net income (loss)		—			—			—				—				2,444				—				—				—				2,444				(95)				2,349
Other comprehensive income (loss)																					Other comprehensive income (loss)		—			—			—				—				—				203				(21)				(19)				163				11				174

Common stock issuances, including dividend reinvestment and employee benefits																					Common stock issuances, including dividend reinvestment and employee benefits		—			1			—				76				—				—				—				—				76				—				76

Common stock dividends																					Common stock dividends		—			—			—				—				(3,073)				—				—				—				(3,073)				—				(3,073)
Sale of noncontrolling interest(c)																					Sale of noncontrolling interest(c)		—			—			—				465				—				—				—				—				465				569				1,034
Purchase of noncontrolling interest																					Purchase of noncontrolling interest		—			—			—				(51)				—				—				—				—				(51)				31				(20)
Contribution from noncontrolling interest, net of transaction costs(a)																					Contribution from noncontrolling interest, net of transaction costs(a)		—			—			—				—				—				—				—				—				—				314				314
Distributions to noncontrolling interests in subsidiaries	Distributions to noncontrolling interests in subsidiaries	—		—	—		—		—		—		—		—		—		(30)			(30)			Distributions to noncontrolling interests in subsidiaries		—			—	—				—				—				—				—				—				—				(140)				(140)
Other(e)		—		—	—		1		(92)		—		—		—		(91)		1			(90)
Balance at December 31, 2020		$	1,962	769	$	1	$	43,767	$	2,471	$	(167)	$	6	$	(76)	$	47,964	$	1,220		$	49,184
Other																					Other		—			—			—				1				1				—				—				—				2				1				3
Balance at December 31, 2022																					Balance at December 31, 2022		$	1,962		770			$	1			$	44,862			$	2,637			$	(29)			$	(23)			$	(88)			$	49,322			$	2,531			$	51,853

(a) Amounts in Retained Earnings and AOCI represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information. Amount in Noncontrolling Interests primarily relatesRelates to tax equity financing activity in the Commercial Renewables ~~segment.~~Disposal Groups.

(b) ~~Duke Energy issued 40 million depositary shares of preferred stock, Series A, in the first quarter of 2019 and 1 million shares of preferred stock, Series B, in the third quarter of 2019.~~

~~(c) See Note 1 for additional discussion of the transaction.~~

(d) Amounts in Retained Earnings and AOCI primarily represent impacts to accumulated other comprehensive income due to implementation of a new accounting standard related to Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

~~(e)~~ Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.

~~(f)~~(c) Relates primarily to ~~tax equity financing~~the sale of a noncontrolling interest in Duke Energy Indiana. See Note 2 for additional discussion.

(d) See Duke Energy Consolidated Statements of Comprehensive Income for detailed activity ~~in the Commercial Renewables segment.~~related to Cash Flow and Fair Value Hedges.

See Notes to Consolidated Financial Statements

8377


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Carolinas, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Carolinas, LLC and subsidiaries (the "Company") as of December 31, ~~2020~~2022, and ~~2019,~~2021, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, ~~2020,~~2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2020~~2022, and ~~2019,~~2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2020,~~2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

~~Critical AuditMatter~~

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

~~Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements~~.

~~Critical Audit Matter Description~~

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $3.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. As such, auditing these judgments required specialized knowledge of accounting for rate regulation due to its inherent complexities, a high degree of auditor judgment, and an increased extent of effort.

~~How the Critical Audit Matter Was Addressed in the Audit~~

~~Our audit procedures related to the recovery of regulatory assets included the following, among others:~~

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of the recovery in future rates of regulatory assets and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•~~We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.~~


~~REPORTS~~

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•~~We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:~~

◦~~We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.~~

◦~~We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.~~

◦~~We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.~~

◦~~We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.~~

•~~We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.~~

~~/s/ Deloitte & Touche LLP~~

~~Charlotte, North Carolina~~

~~February 25, 2021~~

~~We have served as the Company's auditor since 1947.~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY CAROLINAS, LLC~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME~~

Years Ended December 31,
(in millions) 2020 2019 2018
Operating Revenues $ 7,015 $ 7,395 $ 7,300
Operating Expenses
Fuel used in electric generation and purchased power 1,682 1,804 1,821
Operation, maintenance and other 1,743 1,868 2,130
Depreciation and amortization 1,462 1,388 1,201
Property and other taxes 299 292 295
Impairment charges 476 17 192
Total operating expenses 5,662 5,369 5,639
Gains (Losses) on Sales of Other Assets and Other, net 1 — (1)
Operating Income 1,354 2,026 1,660
Other Income and Expenses, net 177 151 153
Interest Expense 487 463 439
Income Before Income Taxes 1,044 1,714 1,374
Income Tax Expense 88 311 303
Net Income $ 956 $ 1,403 $ 1,071
Other Comprehensive Income, net of tax
Reclassification into earnings from cash flow hedges — — 1
Other Comprehensive Income, net of tax — — 1
Comprehensive Income $ 956 $ 1,403 $ 1,072

~~See Notes to Consolidated Financial Statements~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY CAROLINAS, LLC~~

~~CONSOLIDATED BALANCE SHEETS~~

December 31,
(in millions) 2020 2019
ASSETS
Current Assets
Cash and cash equivalents $ 21 $ 18
Receivables (net of allowance for doubtful accounts of $1 at 2020 and $3 at 2019) 247 324
Receivables of VIEs (net of allowance for doubtful accounts of $22 at 2020 and $7 at 2019) 696 642
Receivables from affiliated companies 124 114
Inventory 1,010 996
Regulatory assets 473 550
Other 20 21
Total current assets 2,591 2,665
Property, Plant and Equipment
Cost 50,640 48,922
Accumulated depreciation and amortization (17,453) (16,525)
Net property, plant and equipment 33,187 32,397
Other Noncurrent Assets
Regulatory assets 2,996 3,360
Nuclear decommissioning trust funds 4,977 4,359
Operating lease right-of-use assets, net 110 123
Other 1,187 1,149
Total other noncurrent assets 9,270 8,991
Total Assets $ 45,048 $ 44,053
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 1,000 $ 954
Accounts payable to affiliated companies 199 210
Notes payable to affiliated companies 506 29
Taxes accrued 76 46
Interest accrued 117 115
Current maturities of long-term debt 506 458
Asset retirement obligations 264 206
Regulatory liabilities 473 255
Other 546 611
Total current liabilities 3,687 2,884
Long-Term Debt 11,412 11,142
Long-Term Debt Payable to Affiliated Companies 300 300
Other Noncurrent Liabilities
Deferred income taxes 3,842 3,921
Asset retirement obligations 5,086 5,528
Regulatory liabilities 6,535 6,423
Operating lease liabilities 97 102
Accrued pension and other post-retirement benefit costs 73 84
Investment tax credits 236 231
Other 626 627
Total other noncurrent liabilities 16,495 16,916
Commitments and Contingencies 0 0
Equity
Member's equity 13,161 12,818
Accumulated other comprehensive loss (7) (7)
Total equity 13,154 12,811
Total Liabilities and Equity $ 45,048 $ 44,053

~~See Notes to Consolidated Financial Statements~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY CAROLINAS, LLC~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Years Ended December 31,
(in millions) 2020 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 956 $ 1,403 $ 1,071
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel) 1,731 1,671 1,487
Equity component of AFUDC (62) (42) (73)
(Gains) Losses on sales of other assets (1) — 1
Impairment charges 476 17 192
Deferred income taxes (260) 133 305
Payments for asset retirement obligations (162) (278) (230)
Provision for rate refunds (5) 36 182
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions (4) (8) 2
Receivables 52 (21) (86)
Receivables from affiliated companies (10) 68 (87)
Inventory (14) (48) 25
Other current assets 209 (73) (161)
Increase (decrease) in
Accounts payable 55 (50) 168
Accounts payable to affiliated companies (11) (20) 21
Taxes accrued 30 (127) (65)
Other current liabilities (56) 127 89
Other assets (101) (42) (221)
Other liabilities (47) (37) (90)
Net cash provided by operating activities 2,776 2,709 2,530
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (2,669) (2,714) (2,706)
Purchases of debt and equity securities (1,602) (1,658) (1,810)
Proceeds from sales and maturities of debt and equity securities 1,602 1,658 1,810
Other (164) (204) (147)
Net cash used in investing activities (2,833) (2,918) (2,853)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 998 886 1,983
Payments for the redemption of long-term debt (813) (6) (1,205)
Notes payable to affiliated companies 477 (410) 335
Distributions to parent (600) (275) (750)
Other (2) (1) (23)
Net cash provided by financing activities 60 194 340
Net increase (decrease) in cash and cash equivalents 3 (15) 17
Cash and cash equivalents at beginning of period 18 33 16
Cash and cash equivalents at end of period $ 21 $ 18 $ 33
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized $ 481 $ 433 $ 452
Cash paid for income taxes 321 122 89
Significant non-cash transactions:
Accrued capital expenditures 365 347 302

~~See Notes to Consolidated Financial Statements~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY CAROLINAS, LLC~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY~~

Accumulated Other
Comprehensive
Loss
Net Gains
(Losses) on
Member's Cash Flow Total
(in millions) Equity Hedges Equity
Balance at December 31, 2017 $ 11,368 $ (7) $ 11,361
Net income 1,071 — 1,071
Other comprehensive income — 1 1
Distributions to parent (750) — (750)
Balance at December 31, 2018 $ 11,689 $ (6) $ 11,683
Net income 1,403 — 1,403
Distributions to parent (275) — (275)
Other 1 (1) 0
Balance at December 31, 2019 $ 12,818 $ (7) $ 12,811
Net income 956 — 956
Distributions to parent (600) — (600)
Other(a)
(13) — (13)
Balance at December 31, 2020 $ 13,161 $ (7) $ 13,154

~~(a) Amounts primarily represent impacts due to implementation of a new accounting standard related to Credit Losses. See Note 1 for additional discussion.~~

~~See Notes to Consolidated Financial Statements~~


~~REPORTS~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the shareholder and the Board of Directors of Progress Energy, Inc.~~

~~Opinion on the Financial Statements~~

We have audited the accompanying consolidated balance sheets of Progress Energy, Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

~~Basis for Opinion~~

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

~~Critical AuditMatter~~

~~Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements~~.

~~Critical Audit Matter Description~~

The Company is subject to rate regulation by the North Carolina Utilities Commission, South Carolina Public Service Commission and Florida Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $6.5 billion recorded as regulatory assets.

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

~~How the Critical Audit Matter Was Addressed in the Audit~~

~~Our audit procedures related to the recovery of regulatory assets included the following, among others:~~

•~~We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.~~


~~REPORTS~~

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•~~We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:~~

◦~~We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.~~

◦~~We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.~~

◦~~We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.~~

◦~~We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.~~

•~~We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.~~

~~/s/ Deloitte & Touche LLP~~

~~Charlotte, North Carolina~~

~~February 25, 2021~~

~~We have served as the Company's auditor since 1930.~~


~~FINANCIAL STATEMENTS~~

~~PROGRESS ENERGY, INC.~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME~~

Years Ended December 31,
(in millions) 2020 2019 2018
Operating Revenues $ 10,627 $ 11,202 $ 10,728
Operating Expenses
Fuel used in electric generation and purchased power 3,479 4,024 3,976
Operation, maintenance and other 2,479 2,495 2,613
Depreciation and amortization 1,818 1,845 1,619
Property and other taxes 545 561 529
Impairment charges 495 (24) 87
Total operating expenses 8,816 8,901 8,824
Gains on Sales of Other Assets and Other, net 9 — 24
Operating Income 1,820 2,301 1,928
Other Income and Expenses, net 129 141 165
Interest Expense 790 862 842
Income Before Income Taxes 1,159 1,580 1,251
Income Tax Expense 113 253 218
Net Income 1,046 1,327 1,033
Less: Net Income Attributable to Noncontrolling Interests 1 — 6
Net Income Attributable to Parent $ 1,045 $ 1,327 $ 1,027
Net Income $ 1,046 $ 1,327 $ 1,033
Other Comprehensive Income, net of tax
Pension and OPEB adjustments (1) 2 5
Net unrealized gain on cash flow hedges 5 5 6
Unrealized (losses) gains on available-for-sale securities (1) 1 (1)
Other Comprehensive Income, net of tax 3 8 10
Comprehensive Income 1,049 1,335 1,043
Less: Comprehensive Income Attributable to Noncontrolling Interests 1 — 6
Comprehensive Income Attributable to Parent $ 1,048 $ 1,335 $ 1,037

~~See Notes to Consolidated Financial Statements~~


~~FINANCIAL STATEMENTS~~

~~PROGRESS ENERGY, INC.~~

~~CONSOLIDATED BALANCE SHEETS~~

December 31,
(in millions) 2020 2019
ASSETS
Current Assets
Cash and cash equivalents $ 59 $ 48
Receivables (net of allowance for doubtful accounts of $8 at 2020 and $7 at 2019) 228 220
Receivables of VIEs (net of allowance for doubtful accounts of $29 at 2020 and $9 at 2019) 901 830
Receivables from affiliated companies 157 76
Notes receivable from affiliated companies — 164
Inventory 1,375 1,423
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs) 758 946
Other (includes $39 at 2020 and 2019 related to VIEs) 109 210
Total current assets 3,587 3,917
Property, Plant and Equipment
Cost 57,892 55,070
Accumulated depreciation and amortization (18,368) (17,159)
Generation facilities to be retired, net 29 246
Net property, plant and equipment 39,553 38,157
Other Noncurrent Assets
Goodwill 3,655 3,655
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs) 5,775 6,346
Nuclear decommissioning trust funds 4,137 3,782
Operating lease right-of-use assets, net 690 788
Other 1,227 1,049
Total other noncurrent assets 15,484 15,620
Total Assets $ 58,624 $ 57,694
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 919 $ 1,104
Accounts payable to affiliated companies 289 310
Notes payable to affiliated companies 2,969 1,821
Taxes accrued 121 46
Interest accrued 202 228
Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs) 1,426 1,577
Asset retirement obligations 283 485
Regulatory liabilities 640 330
Other 793 902
Total current liabilities 7,642 6,803
Long-Term Debt (includes $1,252 at 2020 and $1,632 at 2019 related to VIEs) 17,688 17,907
Long-Term Debt Payable to Affiliated Companies 150 150
Other Noncurrent Liabilities
Deferred income taxes 4,396 4,462
Asset retirement obligations 5,866 5,986
Regulatory liabilities 5,051 5,225
Operating lease liabilities 623 697
Accrued pension and other post-retirement benefit costs 505 488
Other 462 383
Total other noncurrent liabilities 16,903 17,241
Commitments and Contingencies 0 0
Equity
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2020 and 2019 — —
Additional paid-in capital 9,143 9,143
Retained earnings 7,109 6,465
Accumulated other comprehensive loss (15) (18)
Total Progress Energy, Inc. stockholder's equity 16,237 15,590
Noncontrolling interests 4 3
Total equity 16,241 15,593
Total Liabilities and Equity $ 58,624 $ 57,694

~~See Notes to Consolidated Financial Statements~~


~~FINANCIAL STATEMENTS~~

~~PROGRESS ENERGY, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Years Ended December 31,
(in millions) 2020 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,046 $ 1,327 $ 1,033
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel) 2,327 2,207 1,987
Equity component of AFUDC (42) (66) (104)
Gains on sales of other assets (9) — (24)
Impairment charges 495 (24) 87
Deferred income taxes (197) 433 358
Payments for asset retirement obligations (384) (412) (230)
Provision for rate refunds 2 15 122
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions (9) (34) 18
Receivables (69) 47 (207)
Receivables from affiliated companies (81) 81 (137)
Inventory 49 62 121
Other current assets 223 184 (12)
Increase (decrease) in
Accounts payable (62) (4) 217
Accounts payable to affiliated companies (21) (50) 109
Taxes accrued 75 (74) 8
Other current liabilities 139 25 129
Other assets (128) (341) (896)
Other liabilities (177) (167) (35)
Net cash provided by operating activities 3,177 3,209 2,544
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (3,488) (3,952) (3,854)
Purchases of debt and equity securities (5,998) (1,511) (1,753)
Proceeds from sales and maturities of debt and equity securities 6,010 1,504 1,769
Notes receivable from affiliated companies 164 (164) 240
Other (160) (190) (162)
Net cash used in investing activities (3,472) (4,313) (3,760)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 1,791 2,187 1,833
Payments for the redemption of long-term debt (2,157) (1,667) (771)
Notes payable to affiliated companies 1,148 586 430
Dividends to parent (400) — (250)
Other (13) 12 (1)
Net cash provided by financing activities 369 1,118 1,241
Net increase in cash, cash equivalents, and restricted cash 74 14 25
Cash, cash equivalents, and restricted cash at beginning of period 126 112 87
Cash, cash equivalents, and restricted cash at end of period $ 200 $ 126 $ 112
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized $ 819 $ 892 $ 798
Cash paid for (received from) income taxes 149 (79) (348)
Significant non-cash transactions:
Accrued capital expenditures 363 447 478

~~See Notes to Consolidated Financial Statements~~


~~FINANCIAL STATEMENTS~~

~~PROGRESS ENERGY, INC.~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY~~

Accumulated Other Comprehensive Income (Loss)
Net Gains Net Unrealized Total Progress
Additional (Losses) on Gains (Losses) Pension and Energy, Inc.
Paid-in Retained Cash Flow on Available-for- OPEB Stockholder's Noncontrolling Total
(in millions) Capital Earnings Hedges Sale Securities Adjustments Equity Interests Equity
Balance at December 31, 2017 $ 9,143 $ 4,350 $ (18) $ 5 $ (12) $ 13,468 $ (3) $ 13,465
Net income — 1,027 — — — 1,027 6 1,033
Other comprehensive income (loss) — — 6 (1) 5 10 — 10
Distributions to noncontrolling interests — — — — — — (1) (1)
Dividends to parent — (250) — — — (250) — (250)
Other(a)
— 4 — (5) — (1) 1 0
Balance at December 31, 2018 $ 9,143 $ 5,131 $ (12) $ (1) $ (7) $ 14,254 $ 3 $ 14,257
Net income — 1,327 — — — 1,327 — 1,327
Other comprehensive income — — 5 1 2 8 — 8
Other(b)
— 7 (3) (1) (2) 1 — 1
Balance at December 31, 2019 $ 9,143 $ 6,465 $ (10) $ (1) $ (7) $ 15,590 $ 3 $ 15,593
Net income — 1,045 — — — 1,045 1 1,046
Other comprehensive income (loss) — — 5 (1) (1) 3 — 3
Dividends to parent — (400) — — — (400) — (400)
Other — (1) — — — (1) — (1)
Balance at December 31, 2020 $ 9,143 $ 7,109 $ (5) $ (2) $ (8) $ 16,237 $ 4 $ 16,241

(b) Amounts in Retained Earnings and AOCI primarily represent impacts to accumulated other comprehensive income due to implementation of a new accounting standard related to Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

~~See Notes to Consolidated Financial Statements~~


~~REPORTS~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the shareholder and the Board of Directors of Duke Energy Progress, LLC~~

~~Opinion on the Financial Statements~~

We have audited the accompanying consolidated balance sheets of Duke Energy Progress, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

~~Basis for Opinion~~

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

~~Critical AuditMatter~~

~~Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1, 3, and 9 to the financial statements~~.

~~Critical Audit Matter Description~~

The Company’s rates are subject to regulatory rate-setting processes and annual earnings oversight. Rates charged to customers are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on the Company’s investment in the utility business. Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment and the timing and amount of assets to be recovered by rates. The regulation of rates is premised on the full recovery of prudently incurred costs and a reasonable rate of return on invested capital. As discussed in Note 3, regulatory proceedings in recent years in North Carolina and South Carolina have focused on the recoverability of asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders in North Carolina and South Carolina requires significant management judgment.

~~How the Critical Audit Matter Was Addressed in the Audit~~

~~Our audit procedures related to the recovery of regulatory assets included the following, among others:~~

•~~We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.~~


~~REPORTS~~

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

•~~We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:~~

◦~~We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.~~

◦~~We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.~~

◦~~We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.~~

◦~~We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.~~

•~~We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.~~

~~/s/ Deloitte & Touche LLP~~

~~Charlotte, North Carolina~~

~~February 25, 2021~~

~~We have served as the Company's auditor since 1930.~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY PROGRESS, LLC~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME~~

Years Ended December 31,
(in millions) 2020 2019 2018
Operating Revenues $ 5,422 $ 5,957 $ 5,699
Operating Expenses
Fuel used in electric generation and purchased power 1,743 2,012 1,892
Operation, maintenance and other 1,332 1,446 1,578
Depreciation and amortization 1,116 1,143 991
Property and other taxes 167 176 155
Impairment charges 499 12 33
Total operating expenses 4,857 4,789 4,649
Gains on Sales of Other Assets and Other, net 8 — 9
Operating Income 573 1,168 1,059
Other Income and Expenses, net 75 100 87
Interest Expense 269 306 319
Income Before Income Taxes 379 962 827
Income Tax (Benefit) Expense (36) 157 160
Net Income and Comprehensive Income $ 415 $ 805 $ 667

~~See Notes to Consolidated Financial Statements~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY PROGRESS, LLC~~

~~CONSOLIDATED BALANCE SHEETS~~

December 31,
(in millions) 2020 2019
ASSETS
Current Assets
Cash and cash equivalents $ 39 $ 22
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019) 132 123
Receivables of VIEs (net of allowance for doubtful accounts of $19 at 2020 and $5 at 2019) 500 489
Receivables from affiliated companies 50 52
Inventory 911 934
Regulatory assets 492 526
Other 60 60
Total current assets 2,184 2,206
Property, Plant and Equipment
Cost 35,759 34,603
Accumulated depreciation and amortization (12,801) (11,915)
Generation facilities to be retired, net 29 246
Net property, plant and equipment 22,987 22,934
Other Noncurrent Assets
Regulatory assets 3,976 4,152
Nuclear decommissioning trust funds 3,500 3,047
Operating lease right-of-use assets, net 346 387
Other 740 651
Total other noncurrent assets 8,562 8,237
Total Assets $ 33,733 $ 33,377
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 454 $ 629
Accounts payable to affiliated companies 215 203
Notes payable to affiliated companies 295 66
Taxes accrued 85 17
Interest accrued 99 110
Current maturities of long-term debt 603 1,006
Asset retirement obligations 283 485
Regulatory liabilities 530 236
Other 411 478
Total current liabilities 2,975 3,230
Long-Term Debt 8,505 7,902
Long-Term Debt Payable to Affiliated Companies 150 150
Other Noncurrent Liabilities
Deferred income taxes 2,298 2,388
Asset retirement obligations 5,352 5,408
Regulatory liabilities 4,394 4,232
Operating lease liabilities 323 354
Accrued pension and other post-retirement benefit costs 242 238
Investment tax credits 132 137
Other 102 92
Total other noncurrent liabilities 12,843 12,849
Commitments and Contingencies 0 0
Equity
Member's Equity 9,260 9,246
Total Liabilities and Equity $ 33,733 $ 33,377

~~See Notes to Consolidated Financial Statements~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY PROGRESS, LLC~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Years Ended December 31,
(in millions) 2020 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 415 $ 805 $ 667
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel) 1,299 1,329 1,183
Equity component of AFUDC (29) (60) (57)
Gains on sales of other assets (8) — (9)
Impairment charges 499 12 33
Deferred income taxes (234) 197 236
Payments for asset retirement obligations (304) (390) (195)
Provisions for rate refunds 2 12 122
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions 1 (6) 5
Receivables (4) 21 (107)
Receivables from affiliated companies 2 (29) (20)
Inventory 23 20 63
Other current assets 98 101 (201)
Increase (decrease) in
Accounts payable (127) 32 219
Accounts payable to affiliated companies 12 (75) 99
Taxes accrued 68 (46) (11)
Other current liabilities 157 68 46
Other assets (207) (205) (465)
Other liabilities 3 37 20
Net cash provided by operating activities 1,666 1,823 1,628
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,581) (2,108) (2,220)
Purchases of debt and equity securities (1,555) (842) (1,236)
Proceeds from sales and maturities of debt and equity securities 1,516 810 1,206
Other (57) (119) (95)
Net cash used in investing activities (1,677) (2,259) (2,345)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 1,296 1,269 845
Payments for the redemption of long-term debt (1,085) (605) (3)
Notes payable to affiliated companies 229 (228) 54
Distributions to parent (400) — (175)
Other (12) (1) (1)
Net cash provided by financing activities 28 435 720
Net increase (decrease) in cash and cash equivalents 17 (1) 3
Cash and cash equivalents at beginning of period 22 23 20
Cash and cash equivalents at end of period $ 39 $ 22 $ 23
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized $ 301 $ 331 $ 303
Cash paid for (received from) income taxes 123 (30) (112)
Significant non-cash transactions:
Accrued capital expenditures 149 175 220

~~See Notes to Consolidated Financial Statements~~

~~100~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY PROGRESS, LLC~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY~~

~~Member's~~

~~(in millions)~~

~~Equity~~

~~Balance at December 31, 2017~~

~~7,949~~

~~Net income~~

~~667~~

~~Distribution to parent~~

~~(175)~~

~~Balance at December 31, 2018~~

~~8,441~~

~~Net income~~

~~805~~

~~Balance at December 31, 2019~~

~~9,246~~

~~Net income~~

~~415~~

~~Distribution to parent~~

~~(400)~~

~~Other~~

~~(1)~~

~~Balance at December 31, 2020~~

~~9,260~~

~~See Notes to Consolidated Financial Statements~~

~~101~~


~~REPORTS~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the shareholder and the Board of Directors of Duke Energy Florida, LLC~~

~~Opinion on the Financial Statements~~

We have audited the accompanying consolidated balance sheets of Duke Energy Florida, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

~~Basis for Opinion~~

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

~~Critical AuditMatter~~

~~Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements~~.

~~Critical Audit Matter Description~~

The Company is subject to rate regulation by the Florida Public Service Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $2.1 billion recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

~~How the Critical Audit Matter Was Addressed in the Audit~~

~~Our audit procedures related to the recovery of regulatory assets included the following, among others:~~

•~~We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.~~

•We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commission’s treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

~~102~~


~~REPORTS~~

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commission, including the settlement agreement filed with the Commission subsequent to December 31, 2020, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•~~We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:~~

◦~~We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.~~

◦~~We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.~~

◦~~We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.~~

◦~~We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.~~

•~~We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.~~

~~/s/ Deloitte & Touche LLP~~

~~Charlotte, North Carolina~~

~~February 25, 2021~~

~~We have served as the Company's auditor since 2001.~~

~~103~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY FLORIDA, LLC~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME~~

Years Ended December 31,
(in millions) 2020 2019 2018
Operating Revenues $ 5,188 $ 5,231 $ 5,021
Operating Expenses
Fuel used in electric generation and purchased power 1,737 2,012 2,085
Operation, maintenance and other 1,131 1,034 1,025
Depreciation and amortization 702 702 628
Property and other taxes 381 392 374
Impairment charges (4) (36) 54
Total operating expenses 3,947 4,104 4,166
Gains on Sales of Other Assets and Other, net 1 — 1
Operating Income 1,242 1,127 856
Other Income and Expenses, net 53 48 86
Interest Expense 326 328 287
Income Before Income Taxes 969 847 655
Income Tax Expense 198 155 101
Net Income $ 771 $ 692 $ 554
Other Comprehensive Income (Loss), net of tax
Unrealized (losses) gains on available-for-sale securities (1) 1 (1)
Other Comprehensive (Loss) Income, net of tax (1) 1 (1)
Comprehensive Income $ 770 $ 693 $ 553

~~See Notes to Consolidated Financial Statements~~

~~104~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY FLORIDA, LLC~~

~~CONSOLIDATED BALANCE SHEETS~~

December 31,
(in millions) 2020 2019
ASSETS
Current Assets
Cash and cash equivalents $ 11 $ 17
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019) 94 96
Receivables of VIEs (net of allowance for doubtful accounts of $10 at 2020 and $4 at 2019) 401 341
Receivables from affiliated companies 3 —
Notes receivable from affiliated companies — 173
Inventory 464 489
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs) 265 419
Other (includes $39 at 2020 and 2019 related to VIEs) 41 58
Total current assets 1,279 1,593
Property, Plant and Equipment
Cost 22,123 20,457
Accumulated depreciation and amortization (5,560) (5,236)
Net property, plant and equipment 16,563 15,221
Other Noncurrent Assets
Regulatory assets (includes $937 at 2020 and $989 at 2019 related to VIEs) 1,799 2,194
Nuclear decommissioning trust funds 637 734
Operating lease right-of-use assets, net 344 401
Other 335 311
Total other noncurrent assets 3,115 3,640
Total Assets $ 20,957 $ 20,454
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 465 $ 474
Accounts payable to affiliated companies 85 131
Notes payable to affiliated companies 196 —
Taxes accrued 82 43
Interest accrued 69 75
Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs) 823 571
Regulatory liabilities 110 94
Other 374 415
Total current liabilities 2,204 1,803
Long-Term Debt (includes $1,002 at 2020 and $1,307 at 2019 related to VIEs) 7,092 7,416
Other Noncurrent Liabilities
Deferred income taxes 2,191 2,179
Asset retirement obligations 514 578
Regulatory liabilities 658 993
Operating lease liabilities 300 343
Accrued pension and other post-retirement benefit costs 231 218
Other 209 136
Total other noncurrent liabilities 4,103 4,447
Commitments and Contingencies 0 0
Equity
Member's equity 7,560 6,789
Accumulated other comprehensive loss (2) (1)
Total equity 7,558 6,788
Total Liabilities and Equity $ 20,957 $ 20,454

~~See Notes to Consolidated Financial Statements~~

~~105~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY FLORIDA, LLC~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Years Ended December 31,
(in millions) 2020 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 771 $ 692 $ 554
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 1,019 869 793
Equity component of AFUDC (12) (6) (47)
Gains on sales of other assets (1) — (1)
Impairment charges (4) (36) 54
Deferred income taxes 27 180 159
Payments for asset retirement obligations (80) (22) (35)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions (14) (33) 7
Receivables (64) 26 (100)
Receivables from affiliated companies (3) 17 (26)
Inventory 26 42 58
Other current assets 40 156 59
Increase (decrease) in
Accounts payable 66 (36) (1)
Accounts payable to affiliated companies (46) 40 17
Taxes accrued 39 (31) 40
Other current liabilities (7) (36) 82
Other assets 85 (131) (429)
Other liabilities (181) (213) (75)
Net cash provided by operating activities 1,661 1,478 1,109
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,907) (1,844) (1,634)
Purchases of debt and equity securities (4,443) (669) (517)
Proceeds from sales and maturities of debt and equity securities 4,495 695 563
Notes receivable from affiliated companies 173 (173) 313
Other (103) (67) (65)
Net cash used in investing activities (1,785) (2,058) (1,340)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 495 918 988
Payments for the redemption of long-term debt (572) (262) (769)
Notes payable to affiliated companies 196 (108) 108
Distribution to parent — — (75)
Other (1) 13 1
Net cash provided by financing activities 118 561 253
Net (decrease) increase in cash, cash equivalents, and restricted cash (6) (19) 22
Cash, cash equivalents, and restricted cash at beginning of period 56 75 53
Cash, cash equivalents, and restricted cash at end of period $ 50 $ 56 $ 75
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized $ 321 $ 332 $ 270
Cash paid for (received from) income taxes 138 1 (120)
Significant non-cash transactions:
Accrued capital expenditures 214 272 258

~~See Notes to Consolidated Financial Statements~~

~~106~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY FLORIDA, LLC~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY~~

Accumulated
Other
Comprehensive
Income (Loss)
Net Unrealized
Gains (Losses) on
Member's Available-for- Total
(in millions) Equity Sale Securities Equity
Balance at December 31, 2017 $ 5,614 $ 4 $ 5,618
Net income 554 — 554
Other comprehensive loss — (1) (1)
Distribution to parent (75) — (75)
Other(a)
4 (5) (1)
Balance at December 31, 2018 $ 6,097 $ (2) $ 6,095
Net income 692 — 692
Other comprehensive income — 1 1
Balance at December 31, 2019 $ 6,789 $ (1) $ 6,788
Net income 771 — 771
Other comprehensive loss — (1) (1)
Balance at December 31, 2020 $ 7,560 $ (2) $ 7,558

(a) Amounts represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.

~~See Notes to Consolidated Financial Statements~~

~~107~~


~~REPORTS~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the shareholder and the Board of Directors of Duke Energy Ohio, Inc.~~

~~Opinion on the Financial Statements~~

We have audited the accompanying consolidated balance sheets of Duke Energy Ohio, Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

~~Basis for Opinion~~

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

~~CriticalAuditMatter~~

~~Regulatory Matters — Impact of Rate Regulation on the Financial Statements — Refer to Notes 1 and 3 to the financial statements~~.

~~Critical Audit Matter Description~~

The Company is subject to rate regulation by the Public Utilities Commission of Ohio and by the Kentucky Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric and gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2020, the Company has approximately $650 million recorded as regulatory assets.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

~~How the Critical Audit Matter Was Addressed in the Audit~~

~~Our audit procedures related to the recovery of regulatory assets included the following, among others:~~

•~~We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.~~

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset balances for completeness.

~~108~~


~~REPORTS~~

•~~We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:~~

◦~~We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.~~

◦~~We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.~~

◦~~We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.~~

◦~~We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.~~

•~~We obtained representation from management asserting that regulatory assets recorded on the financial statements are probable of recovery.~~

~~/s/ Deloitte & Touche LLP~~

~~Charlotte, North Carolina~~

~~February 25, 2021~~

~~We have served as the Company's auditor since 2002.~~

~~109~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY OHIO, INC.~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME~~

Years Ended December 31,
(in millions) 2020 2019 2018
Operating Revenues
Regulated electric $ 1,405 $ 1,456 $ 1,450
Regulated natural gas 453 484 506
Nonregulated electric and other — — 1
Total operating revenues 1,858 1,940 1,957
Operating Expenses
Fuel used in electric generation and purchased power – regulated 339 388 412
Cost of natural gas 73 95 113
Operation, maintenance and other 463 520 480
Depreciation and amortization 278 265 268
Property and other taxes 324 308 290
Total operating expenses 1,477 1,576 1,563
Losses on Sales of Other Assets and Other, net — — (106)
Operating Income 381 364 288
Other Income and Expenses, net 16 24 23
Interest Expense 102 109 92
Income From Continuing Operations Before Income Taxes 295 279 219
Income Tax Expense From Continuing Operations 43 40 43
Income From Continuing Operations 252 239 176
Loss From Discontinued Operations, net of tax — (1) —
Net Income and Comprehensive Income $ 252 $ 238 $ 176

~~See Notes to Consolidated Financial Statements~~

~~110~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY OHIO, INC.~~

~~CONSOLIDATED BALANCE SHEETS~~

December 31,
(in millions) 2020 2019
ASSETS
Current Assets
Cash and cash equivalents $ 14 $ 17
Receivables (net of allowance for doubtful accounts of $4 at 2020 and $4 at 2019) 98 84
Receivables from affiliated companies 102 92
Inventory 110 135
Regulatory assets 39 49
Other 31 21
Total current assets 394 398
Property, Plant and Equipment
Cost 11,022 10,241
Accumulated depreciation and amortization (3,013) (2,843)
Net property, plant and equipment 8,009 7,398
Other Noncurrent Assets
Goodwill 920 920
Regulatory assets 610 549
Operating lease right-of-use assets, net 20 21
Other 72 52
Total other noncurrent assets 1,622 1,542
Total Assets $ 10,025 $ 9,338
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 279 $ 288
Accounts payable to affiliated companies 68 68
Notes payable to affiliated companies 169 312
Taxes accrued 247 219
Interest accrued 31 30
Current maturities of long-term debt 50 —
Asset retirement obligations 3 1
Regulatory liabilities 65 64
Other 70 75
Total current liabilities 982 1,057
Long-Term Debt 3,014 2,594
Long-Term Debt Payable to Affiliated Companies 25 25
Other Noncurrent Liabilities
Deferred income taxes 981 922
Asset retirement obligations 108 79
Regulatory liabilities 748 763
Operating lease liabilities 20 21
Accrued pension and other post-retirement benefit costs 113 100
Other 99 94
Total other noncurrent liabilities 2,069 1,979
Commitments and Contingencies 0 0
Equity
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2020 and 2019 762 762
Additional paid-in capital 2,776 2,776
Retained earnings 397 145
Total equity 3,935 3,683
Total Liabilities and Equity $ 10,025 $ 9,338

~~See Notes to Consolidated Financial Statements~~

~~111~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY OHIO, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

Years Ended December 31,
(in millions) 2020 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 252 $ 238 $ 176
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 283 269 271
Equity component of AFUDC (7) (13) (11)
Losses on sales of other assets 0 0 106
Deferred income taxes 31 81 25
Payments for asset retirement obligations (2) (8) (3)
Provision for rate refunds 14 7 24
(Increase) decrease in
Receivables (13) 20 (33)
Receivables from affiliated companies 9 22 19
Inventory 25 (9) 7
Other current assets (18) (5) 16
Increase (decrease) in
Accounts payable 2 (17) (19)
Accounts payable to affiliated companies 0 (10) 16
Taxes accrued 30 17 12
Other current liabilities 3 1 14
Other assets (32) (26) (24)
Other liabilities (2) (41) (26)
Net cash provided by operating activities 575 526 570
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (834) (952) (827)
Notes receivable from affiliated companies (19) — 14
Other (48) (68) (89)
Net cash used in investing activities (901) (1,020) (902)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 467 1,003 99
Payments for the redemption of long-term debt — (551) (3)
Notes payable to affiliated companies (144) 38 245
Net cash provided by financing activities 323 490 341
Net (decrease) increase in cash and cash equivalents (3) (4) 9
Cash and cash equivalents at beginning of period 17 21 12
Cash and cash equivalents at end of period $ 14 $ 17 $ 21
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized $ 97 $ 97 $ 87
Cash received from income taxes — (37) (6)
Significant non-cash transactions:
Accrued capital expenditures 104 109 95
Non-cash equity contribution from parent — — 106

~~See Notes to Consolidated Financial Statements~~

~~112~~


~~FINANCIAL STATEMENTS~~

~~DUKE ENERGY OHIO, INC.~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY~~

Additional Retained
Common Paid-in Earnings Total
(in millions) Stock Capital (Deficit) Equity
Balance at December 31, 2017 $ 762 $ 2,670 $ (269) $ 3,163
Net income — — 176 176
Contribution from parent — 106 — 106
Balance at December 31, 2018 $ 762 $ 2,776 $ (93) $ 3,445
Net income — — 238 238
Balance at December 31, 2019 $ 762 $ 2,776 $ 145 $ 3,683
Net income — — 252 252
Balance at December 31, 2020 $ 762 $ 2,776 $ 397 $ 3,935

~~See Notes to Consolidated Financial Statements~~

~~113~~


~~REPORTS~~

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~

~~To the shareholder and the Board of Directors of Duke Energy Indiana, LLC~~

~~Opinion on the Financial Statements~~

We have audited the accompanying consolidated balance sheets of Duke Energy Indiana, LLC and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

~~Basis for Opinion~~

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate ~~opinions~~opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Dispositions – Assessment of Held for Sale and Discontinued Operations Classification and Impairment Charge – Refer to Note 2 to the financial statements.

Critical Audit Matter Description

•The assessment of whether the sale is probable and the transfer of assets will be completed within one year from period-end;

•The assessment of whether the sale of the segment represents a discontinued operation;

•The determination of the impairment charges; and

•The assessment of the fair value of the Commercial Renewables business segment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the classification of the Commercial Renewables business segment as held for sale and the associated impairment charges included the following, among others:

•We evaluated management’s assessment of held for sale and discontinued operations classification as follows:

–Inquired of executive officers, key members of management and members of the Board of Directors to obtain an understanding of plans to sell the Commercial Renewables business segment.


REPORTS

–Compared management’s conclusions against relevant guidance and tested the completeness and accuracy of information used in the Company’s evaluation.

•We evaluated the accuracy and completeness of the Company's reclassification of balances and activity and related disclosures.

•We obtained representation from management asserting to the appropriate presentation, measurement and timing of the Commercial Renewables business segment.

Regulatory Matters —– Impact of Rate Regulation on the Financial Statements —– Refer to Notes 1, 4 and 310 to the financial statements.

Critical Audit Matter Description

The Company is subject to ~~rate~~ regulation by ~~the Indiana Utility Regulatory Commission~~federal and state utility regulatory agencies (the ~~“Commission”~~“Commissions”), which ~~has~~have jurisdiction with respect to the ~~electric~~ rates of the ~~Company.~~Company’s electric and natural gas distribution companies. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, ~~2020,~~2022, the Company has approximately ~~$1.3~~$18.1 billion of recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the ~~Commission;~~Commissions; to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the ~~Commission,~~Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent ~~complexities.~~

complexities as it relates to regulatory assets.

How the Critical Audit ~~Matter Was~~Matters Were Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the ~~Commission,~~Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the ~~Commission’s~~Commissions’ treatment of similar costs under similar circumstances. We also evaluated the external information and compared it to management’s recorded ~~regulatory asset~~ balances for completeness.

~~114~~


~~REPORTS~~

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the ~~Commission,~~Commissions, that may impact the Company’s future rates, for any evidence that might contradict management’s ~~assertions~~.

assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

◦–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

◦–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

◦–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

◦–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.


REPORTS

•We obtained representation from management asserting that regulatory assets recorded onin the financial statements are probable of recovery.

~~Duke Energy Indiana Coal Ash Asset Retirement Obligations – Refer to Notes 3, 4, and 9 to the financial statements~~

~~Critical Audit Matter Description~~

Duke Energy Indiana has asset retirement obligations associated with coal ash impoundments at operating and retired coal generation facilities. These legal obligations are the result of Indiana state and federal regulations. There is significant judgment in determining the assumptions used in estimating the closure costs for each site since Duke Energy Indiana does not have approved closure plans for certain sites. Potential changes to the projected closure costs for each site as well as probability weightings for the cash flows associated with the different potential closure methods (“probability weightings”) creates estimation uncertainty. The liability for coal ash asset retirement obligations at Duke Energy Indiana was $1,140 million at December 31, 2020.

We identified the asset retirement obligations associated with coal ash impoundments at Duke Energy Indiana as a critical audit matter because of the significant management estimates and assumptions, including projected closure costs as well as the different potential closure methods. The audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to potential changes to the projected closure costs for each site as well as probability weightings for the cash flows associated with the different potential closure methods required a high degree of auditor judgment and an increased extent of effort, including the need to involve our environmental specialists.

~~How the Critical Audit Matter Was Addressed in the Audit~~

~~Our audit procedures related to the underlying estimated closure costs for coal ash asset retirement obligations at Duke Energy Indiana included the following, among others:~~

•We tested the effectiveness of controls over management’s coal ash asset retirement obligation estimate, including those over management’s determination of the estimated closure costs and probability weightings.

•~~We evaluated management’s ability to accurately estimate future closure costs by comparing actual closure costs to management’s historical estimates.~~

•~~We tested the mathematical accuracy of management’s coal ash asset retirement obligation calculations, including the application of probability weightings.~~

•~~We made inquiries of internal and external legal counsel regarding the status of the legal matters associated with the probability weightings.~~

•~~We inspected the opinions from internal and external legal counsel supporting the probability weightings.~~

•We inspected the Company’s filings with and orders from the Indiana Department of Environmental Management, for evidence that might contradict management’s assertions regarding the estimated closure costs and probability weightings.

•With the assistance of our environmental specialists, we evaluated the reasonableness of management’s estimated closure costs by comparing the costs to actual costs incurred at comparable coal ash impoundments, underlying contracts, and publicly available industry cost data, as applicable.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February ~~25, 2021~~27, 2023

We have served as the Company's auditor since ~~2002.~~

1947.

~~115~~72


FINANCIAL STATEMENTS

DUKE ENERGY ~~INDIANA, LLC~~CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS ~~AND COMPREHENSIVE INCOME~~


		Years Ended December 31,							Years Ended December 31,
(in millions)		2020		2019		2018
(in millions, except per share amounts)								(in millions, except per share amounts)	2022		2021		2020
Operating Revenues	Operating Revenues	$	2,795	$	3,004	$	3,059	Operating Revenues
Regulated electric								Regulated electric	$	25,759	$	22,319	$	21,461
Regulated natural gas								Regulated natural gas	2,724		2,008		1,642
Nonregulated electric and other								Nonregulated electric and other	285		294		263
Total operating revenues								Total operating revenues	28,768		24,621		23,366
Operating Expenses	Operating Expenses							Operating Expenses
Fuel used in electric generation and purchased power	Fuel used in electric generation and purchased power	767		935		1,000		Fuel used in electric generation and purchased power	8,782		6,255		6,051
Cost of natural gas								Cost of natural gas	1,276		705		460
Operation, maintenance and other	Operation, maintenance and other	762		790		788		Operation, maintenance and other	5,734		5,703		5,502
Depreciation and amortization	Depreciation and amortization	569		525		520		Depreciation and amortization	5,086		4,762		4,504
Property and other taxes	Property and other taxes	81		69		78		Property and other taxes	1,466		1,355		1,311
Impairment charges		—		—		30
Impairment of assets and other charges								Impairment of assets and other charges	434		353		978
Total operating expenses	Total operating expenses	2,179		2,319		2,416		Total operating expenses	22,778		19,133		18,806
Gains on Sales of Other Assets and Other, net								Gains on Sales of Other Assets and Other, net	22		12		11
Operating Income								Operating Income	6,012		5,500		4,571
Other Income and Expenses								Other Income and Expenses
Equity in earnings (losses) of unconsolidated affiliates								Equity in earnings (losses) of unconsolidated affiliates	113		62		(2,005)

Operating Income		616		685		643
Other Income and Expenses, net		37		41		45
Other income and expenses, net								Other income and expenses, net	392		636		451
Total other income and expenses								Total other income and expenses	505		698		(1,554)
Interest Expense	Interest Expense	161		156		167		Interest Expense	2,439		2,207		2,097
Income Before Income Taxes		492		570		521
Income Tax Expense		84		134		128
Net Income and Comprehensive Income		$	408	$	436	$	393
Income From Continuing Operations Before Income Taxes								Income From Continuing Operations Before Income Taxes	4,078		3,991		920
Income Tax Expense (Benefit) From Continuing Operations								Income Tax Expense (Benefit) From Continuing Operations	300		268		(169)
Income From Continuing Operations								Income From Continuing Operations	3,778		3,723		1,089
Loss From Discontinued Operations, net of tax								Loss From Discontinued Operations, net of tax	(1,323)		(144)		(7)
Net Income								Net Income	2,455		3,579		1,082
Add: Net Loss Attributable to Noncontrolling Interests								Add: Net Loss Attributable to Noncontrolling Interests	95		329		295
Net Income Attributable to Duke Energy Corporation								Net Income Attributable to Duke Energy Corporation	2,550		3,908		1,377
Less: Preferred Dividends								Less: Preferred Dividends	106		106		107
Net Income Available to Duke Energy Corporation Common Stockholders								Net Income Available to Duke Energy Corporation Common Stockholders	$	2,444	$	3,802	$	1,270

Earnings Per Share – Basic and Diluted								Earnings Per Share – Basic and Diluted
Income from continuing operations available to Duke Energy Corporation common stockholders								Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and Diluted								Basic and Diluted	$	4.74	$	4.68	$	1.33

(Loss) Income from discontinued operations attributable to Duke Energy Corporation common stockholders								(Loss) Income from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic and Diluted								Basic and Diluted	$	(1.57)	$	0.26	$	0.39

Net income available to Duke Energy Corporation common stockholders								Net income available to Duke Energy Corporation common stockholders
Basic and Diluted								Basic and Diluted	$	3.17	$	4.94	$	1.72

Weighted average shares outstanding								Weighted average shares outstanding
Basic								Basic	770		769		737
Diluted								Diluted	770		769		738

See Notes to Consolidated Financial Statements

~~116~~73


FINANCIAL STATEMENTS

DUKE ENERGY ~~INDIANA, LLC~~CORPORATION

CONSOLIDATED ~~BALANCE SHEETS~~STATEMENTS OF COMPREHENSIVE INCOME

December 31,
(in millions) 2020 2019
ASSETS
Current Assets
Cash and cash equivalents $ 7 $ 25
Receivables (net of allowance for doubtful accounts of $3 at 2020 and $3 at 2019) 55 60
Receivables from affiliated companies 112 79
Inventory 473 517
Regulatory assets 125 90
Other 37 60
Total current assets 809 831
Property, Plant and Equipment
Cost 17,382 16,305
Accumulated depreciation and amortization (5,661) (5,233)
Net property, plant and equipment 11,721 11,072
Other Noncurrent Assets
Regulatory assets 1,203 1,082
Operating lease right-of-use assets, net 55 57
Other 253 234
Total other noncurrent assets 1,511 1,373
Total Assets $ 14,041 $ 13,276
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 188 $ 201
Accounts payable to affiliated companies 88 87
Notes payable to affiliated companies 131 30
Taxes accrued 62 49
Interest accrued 51 58
Current maturities of long-term debt 70 503
Asset retirement obligations 168 189
Regulatory liabilities 111 55
Other 83 112
Total current liabilities 952 1,284
Long-Term Debt 3,871 3,404
Long-Term Debt Payable to Affiliated Companies 150 150
Other Noncurrent Liabilities
Deferred income taxes 1,228 1,150
Asset retirement obligations 1,008 643
Regulatory liabilities 1,627 1,685
Operating lease liabilities 53 55
Accrued pension and other post-retirement benefit costs 171 148
Investment tax credits 168 164
Other 30 18
Total other noncurrent liabilities 4,285 3,863
Commitments and Contingencies 0 0
Equity
Member's Equity 4,783 4,575
Total Liabilities and Equity $ 14,041 $ 13,276


	Years Ended December 31,
(in millions)	2022		2021		2020
Net Income	$	2,455	$	3,579	$	1,082
Other Comprehensive Income (Loss), net of tax(a)

Pension and OPEB adjustments	(19)		7		6
Net unrealized gains (losses) on cash flow hedges	285		(68)		(138)
Reclassification into earnings from cash flow hedges	(38)		13		11
Net unrealized losses on fair value hedges	(33)		—		—
Unrealized (losses) gains on available-for-sale securities	(21)		(8)		3

Other Comprehensive Income (Loss), net of tax	174		(56)		(118)
Comprehensive Income	2,629		3,523		964
Add: Comprehensive Loss Attributable to Noncontrolling Interests	84		319		306
Comprehensive Income Attributable to Duke Energy Corporation	2,713		3,842		1,270
Less: Preferred Dividends	106		106		107
Comprehensive Income Available to Duke Energy Corporation Common Stockholders	$	2,607	$	3,736	$	1,163

See Notes to Consolidated Financial Statements

~~117~~74


FINANCIAL STATEMENTS

DUKE ENERGY ~~INDIANA, LLC~~CORPORATION

CONSOLIDATED ~~STATEMENTS OF CASH FLOWS~~BALANCE SHEETS

Years Ended December 31,
(in millions) 2020 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 408 $ 436 $ 393
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion 572 531 524
Equity component of AFUDC (23) (18) (32)
Impairment charges — — 30
Deferred income taxes 29 156 95
Payments for asset retirement obligations (63) (48) (69)
Provision for rate refunds — — 53
(Increase) decrease in
Receivables 8 (8) 7
Receivables from affiliated companies 0 41 3
Inventory 44 (95) 28
Other current assets (3) 76 (25)
Increase (decrease) in
Accounts payable (12) (10) 37
Accounts payable to affiliated companies 1 4 5
Taxes accrued 13 (25) (52)
Other current liabilities 6 15 14
Other assets (68) (74) 26
Other liabilities 26 16 (31)
Net cash provided by operating activities 938 997 1,006
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (888) (876) (832)
Purchases of debt and equity securities (37) (26) (48)
Proceeds from sales and maturities of debt and equity securities 22 20 44
Notes receivable from affiliated companies (33) — —
Other 48 (49) 18
Net cash used in investing activities (888) (931) (818)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 544 485 —
Payments for the redemption of long-term debt (513) (213) (3)
Notes payable to affiliated companies 101 (137) 6
Distributions to parent (200) (200) (175)
Other — — (1)
Net cash used in financing activities (68) (65) (173)
Net (decrease) increase in cash and cash equivalents (18) 1 15
Cash and cash equivalents at beginning of period 25 24 9
Cash and cash equivalents at end of period $ 7 $ 25 $ 24
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized $ 164 $ 150 $ 162
Cash paid for (received from) income taxes 36 (6) 75
Significant non-cash transactions:
Accrued capital expenditures 101 102 88


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	409	$	341

Receivables (net of allowance for doubtful accounts of $40 at 2022 and $45 at 2021)	1,309		1,085
Receivables of VIEs (net of allowance for doubtful accounts of $176 at 2022 and $76 at 2021)	3,106		2,437
Inventory	3,584		3,111
Regulatory assets (includes $106 at 2022 and $105 at 2021 related to VIEs)	3,485		2,150
Assets held for sale	262		232
Other (includes $116 at 2022 and $41 at 2021 related to VIEs)	1,067		584
Total current assets	13,222		9,940
Property, Plant and Equipment
Cost	163,839		154,496
Accumulated depreciation and amortization	(52,100)		(49,104)
Facilities to be retired, net	9		144
Net property, plant and equipment	111,748		105,536
Other Noncurrent Assets
Goodwill	19,303		19,303
Regulatory assets (includes $1,715 at 2022 and $1,824 at 2021 related to VIEs)	14,645		12,487
Nuclear decommissioning trust funds	8,637		10,401
Operating lease right-of-use assets, net	1,042		1,136
Investments in equity method unconsolidated affiliates	455		457
Assets held for sale	5,634		6,695
Other (includes $52 at 2022 and $30 at 2021 related to VIEs)	3,400		3,632
Total other noncurrent assets	53,116		54,111
Total Assets	$	178,086	$	169,587
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	4,754	$	3,531
Notes payable and commercial paper	3,952		3,304
Taxes accrued	722		731
Interest accrued	626		530
Current maturities of long-term debt (includes $350 at 2022 and $76 at 2021 related to VIEs)	4,154		3,387
Asset retirement obligations	773		647
Regulatory liabilities	1,466		1,211
Liabilities associated with assets held for sale	259		167
Other	2,167		2,423
Total current liabilities	18,873		15,931
Long-Term Debt (includes $3,108 at 2022 and $3,379 at 2021 related to VIEs)	67,061		60,448
Other Noncurrent Liabilities
Deferred income taxes	9,964		9,379
Asset retirement obligations	11,955		11,953
Regulatory liabilities	13,582		16,152
Operating lease liabilities	876		940
Accrued pension and other post-retirement benefit costs	832		855
Investment tax credits	849		833
Liabilities associated with assets held for sale	739		612
Other	1,502		1,348
Total other noncurrent liabilities	40,299		42,072
Commitments and Contingencies

Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2022 and 2021	973		973
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2022 and 2021	989		989
Common stock, $0.001 par value, 2 billion shares authorized; 770 million and 769 million shares outstanding at 2022 and 2021	1		1
Additional paid-in capital	44,862		44,371
Retained earnings	2,637		3,265
Accumulated other comprehensive loss	(140)		(303)
Total Duke Energy Corporation stockholders' equity	49,322		49,296
Noncontrolling interests	2,531		1,840
Total equity	51,853		51,136
Total Liabilities and Equity	$	178,086	$	169,587

See Notes to Consolidated Financial Statements

~~118~~75


FINANCIAL STATEMENTS

DUKE ENERGY ~~INDIANA, LLC~~CORPORATION

CONSOLIDATED STATEMENTS OF ~~CHANGES IN EQUITY~~CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,455	$	3,579	$	1,082
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	5,843		5,663		5,486
Equity in (earnings) losses of unconsolidated affiliates	(114)		(28)		2,005
Equity component of AFUDC	(197)		(171)		(154)

Impairment of assets and other charges	2,183		356		984
Deferred income taxes	(200)		191		54
Contributions to qualified pension plans	(58)		—		—
Payments for asset retirement obligations	(584)		(540)		(610)
Provision for rate refunds	(130)		(70)		(22)
Refund of AMT credit carryforwards	—		—		572
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	19		50		63
Receivables	(788)		(297)		(56)
Inventory	(476)		(34)		66
Other current assets(a)	(1,498)		(1,136)		205
Increase (decrease) in
Accounts payable	805		249		(21)
Taxes accrued	10		284		117
Other current liabilities	(153)		(13)		(65)
Other assets(a)	(1,600)		112		(408)
Other liabilities	410		95		(442)
Net cash provided by operating activities	5,927		8,290		8,856
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(11,367)		(9,715)		(9,907)
Contributions to equity method investments	(58)		(81)		(370)

Return of investment capital	6		44		133
Purchases of debt and equity securities	(4,243)		(6,098)		(8,011)
Proceeds from sales and maturities of debt and equity securities	4,333		6,103		7,949

Disbursements to canceled equity method investments	—		(855)		—
Other	(644)		(333)		(398)
Net cash used in investing activities	(11,973)		(10,935)		(10,604)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	11,874		9,052		6,330

Issuance of common stock	9		5		2,745
Payments for the redemption of long-term debt	(4,396)		(5,294)		(4,506)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	80		332		3,009
Payments for the redemption of short-term debt with original maturities greater than 90 days	(287)		(997)		(2,147)
Notes payable and commercial paper	781		1,144		(1,181)

Contributions from noncontrolling interests	1,377		1,575		426
Dividends paid	(3,179)		(3,114)		(2,812)

Other	(130)		(94)		(133)
Net cash provided by financing activities	6,129		2,609		1,731

Net increase (decrease) in cash, cash equivalents and restricted cash	83		(36)		(17)
Cash, cash equivalents and restricted cash at beginning of period	520		556		573
Cash, cash equivalents and restricted cash at end of period	$	603	$	520	$	556
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	2,361	$	2,248	$	2,186
Cash received from income taxes	(6)		(3)		(585)
Significant non-cash transactions:
Accrued capital expenditures	1,766		1,325		1,116
Non-cash dividends	—		—		110

(a) Includes approximately $2.6 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements

~~Member's~~

~~(in millions)~~

~~Equity~~

~~Balance at December 31, 2017~~

~~4,121~~

~~Net income~~

~~393~~

~~Distributions to parent~~FINANCIAL STATEMENTS

~~(175)~~

~~Balance at December 31, 2018~~

~~4,339~~

~~Net income~~

~~436~~

~~Distributions to parent~~

~~(200)~~

~~Balance at December 31, 2019~~

~~4,575~~

~~Net income~~

~~408~~

~~Distributions to parent~~

~~(200)~~

~~Balance at December 31, 2020~~

~~4,783~~

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


										Duke Energy Corporation Stockholders' Accumulated Other Comprehensive Income (Loss)
												Net Unrealized				Total
										Net Gains		Gains (Losses)				Duke Energy
			Common			Additional				(Losses)		on Available-		Pension and		Corporation
	Preferred		Stock	Common		Paid-in		Retained		on		for-Sale-		OPEB		Stockholders'		Noncontrolling		Total
(in millions)	Stock		Shares	Stock		Capital		Earnings		Hedges(d)		Securities		Adjustments		Equity		Interests		Equity
Balance at December 31, 2019	$	1,962	733	$	1	$	40,881	$	4,108	$	(51)	$	3	$	(82)	$	46,822	$	1,129	$	47,951
Net income (loss)	—		—	—		—		1,270		—		—		—		1,270		(295)		975
Other comprehensive (loss) income	—		—	—		—		—		(116)		3		6		(107)		(11)		(118)


Common stock issuances, including dividend reinvestment and employee benefits	—		36	—		2,902		—		—		—		—		2,902		—		2,902

Common stock dividends	—		—	—		—		(2,815)		—		—		—		(2,815)		—		(2,815)

Contribution from noncontrolling interest(a)	—		—	—		(17)		—		—		—		—		(17)		426		409
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(30)		(30)
Other(b)	—		—	—		1		(92)		—		—		—		(91)		1		(90)
Balance at December 31, 2020	$	1,962	769	$	1	$	43,767	$	2,471	$	(167)	$	6	$	(76)	$	47,964	$	1,220	$	49,184
Net income (loss)	—		—	—		—		3,802		—		—		—		3,802		(329)		3,473
Other comprehensive (loss) income	—		—	—		—		—		(65)		(8)		7		(66)		10		(56)


Common stock issuances, including dividend reinvestment and employee benefits	—		—	—		68		—		—		—		—		68		—		68

Common stock dividends	—		—	—		—		(3,008)		—		—		—		(3,008)		—		(3,008)
Sale of noncontrolling interest(c)	—		—	—		545		—		—		—		—		545		454		999
Contribution from noncontrolling interest, net of transaction costs(a)	—		—	—		—		—		—		—		—		—		550		550
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(66)		(66)
Other	—		—	—		(9)		—		—		—		—		(9)		1		(8)
Balance at December 31, 2021	$	1,962	769	$	1	$	44,371	$	3,265	$	(232)	$	(2)	$	(69)	$	49,296	$	1,840	$	51,136
Net income (loss)	—		—	—		—		2,444		—		—		—		2,444		(95)		2,349
Other comprehensive income (loss)	—		—	—		—		—		203		(21)		(19)		163		11		174


Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		76		—		—		—		—		76		—		76

Common stock dividends	—		—	—		—		(3,073)		—		—		—		(3,073)		—		(3,073)
Sale of noncontrolling interest(c)	—		—	—		465		—		—		—		—		465		569		1,034
Purchase of noncontrolling interest	—		—	—		(51)		—		—		—		—		(51)		31		(20)
Contribution from noncontrolling interest, net of transaction costs(a)	—		—	—		—		—		—		—		—		—		314		314
Distributions to noncontrolling interests in subsidiaries	—		—	—		—		—		—		—		—		—		(140)		(140)
Other	—		—	—		1		1		—		—		—		2		1		3
Balance at December 31, 2022	$	1,962	770	$	1	$	44,862	$	2,637	$	(29)	$	(23)	$	(88)	$	49,322	$	2,531	$	51,853

(a) Relates to tax equity financing activity in the Commercial Renewables Disposal Groups.

(b) Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.

(c) Relates primarily to the sale of a noncontrolling interest in Duke Energy Indiana. See Note 2 for additional discussion.

(d) See Duke Energy Consolidated Statements of Comprehensive Income for detailed activity related to Cash Flow and Fair Value Hedges.

See Notes to Consolidated Financial Statements

~~119~~77


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of ~~Piedmont Natural Gas Company, Inc.~~

Duke Energy Carolinas, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ~~Piedmont Natural Gas Company, Inc.~~Duke Energy Carolinas, LLC and subsidiaries (the "Company") as of December 31, ~~2020~~2022, and ~~2019,~~2021, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, ~~2020,~~2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2020~~2022, and ~~2019,~~2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2020,~~2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical AuditMatter

Regulatory Matters —– Impact of Rate Regulation on the Financial Statements —– Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, 2022, the Company has approximately $5.4 billion recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.


REPORTS

•For regulatory matters in process, we inspected the Company’s and intervenors’ filings with the Commission, that may impact the Company’s future rates, for any evidence that might contradict management’s assertions.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1947.


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	7,857	$	7,102	$	7,015
Operating Expenses
Fuel used in electric generation and purchased power	2,015		1,601		1,682
Operation, maintenance and other	1,892		1,833		1,743
Depreciation and amortization	1,526		1,468		1,462
Property and other taxes	340		320		299
Impairment of assets and other charges	26		227		476
Total operating expenses	5,799		5,449		5,662
Gains on Sales of Other Assets and Other, net	4		2		1
Operating Income	2,062		1,655		1,354
Other Income and Expenses, net	221		270		177
Interest Expense	557		538		487
Income Before Income Taxes	1,726		1,387		1,044
Income Tax Expense	126		51		88
Net Income	$	1,600	$	1,336	$	956
Other Comprehensive Income, net of tax


Net unrealized gain on cash flow hedges	—		1		—
Other Comprehensive Income, net of tax	—		1		—
Comprehensive Income	$	1,600	$	1,337	$	956

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	44	$	7
Receivables (net of allowance for doubtful accounts of $3 at 2022 and $1 at 2021)	338		300
Receivables of VIEs (net of allowance for doubtful accounts of $65 at 2022 and $41 at 2021)	928		844
Receivables from affiliated companies	390		190

Inventory	1,164		1,026
Regulatory assets (includes $12 at 2022 and 2021 related to VIEs)	1,095		544
Other (includes $8 at 2022 related to VIEs)	216		95
Total current assets	4,175		3,006
Property, Plant and Equipment
Cost	54,650		51,874
Accumulated depreciation and amortization	(18,669)		(17,854)
Facilities to be retired, net	—		102
Net property, plant and equipment	35,981		34,122
Other Noncurrent Assets

Regulatory assets (includes $208 at 2022 and $220 at 2021 related to VIEs)	4,293		2,935
Nuclear decommissioning trust funds	4,783		5,759
Operating lease right-of-use assets, net	78		92
Other	1,036		1,248
Total other noncurrent assets	10,190		10,034
Total Assets	$	50,346	$	47,162
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,472	$	988
Accounts payable to affiliated companies	209		266
Notes payable to affiliated companies	1,233		226
Taxes accrued	228		274
Interest accrued	120		125
Current maturities of long-term debt (includes $10 at 2022 and $5 at 2021 related to VIEs)	1,018		362
Asset retirement obligations	261		249
Regulatory liabilities	530		487
Other	580		546
Total current liabilities	5,651		3,523
Long-Term Debt (includes $689 at 2022 and $703 at 2021 related to VIEs)	12,948		12,595
Long-Term Debt Payable to Affiliated Companies	300		318
Other Noncurrent Liabilities
Deferred income taxes	4,153		3,634
Asset retirement obligations	5,121		5,052
Regulatory liabilities	5,783		7,198
Operating lease liabilities	83		78
Accrued pension and other post-retirement benefit costs	38		50
Investment tax credits	300		287
Other	527		536
Total other noncurrent liabilities	16,005		16,835
Commitments and Contingencies
Equity
Member's equity	15,448		13,897
Accumulated other comprehensive loss	(6)		(6)
Total equity	15,442		13,891
Total Liabilities and Equity	$	50,346	$	47,162

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,600	$	1,336	$	956
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	1,787		1,743		1,731
Equity component of AFUDC	(98)		(65)		(62)

Impairment of assets and other charges	26		227		476
Deferred income taxes	210		(213)		(260)
Contributions to qualified pension plans	(15)		—		—
Payments for asset retirement obligations	(200)		(182)		(162)
Provision for rate refunds	(74)		(46)		(5)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—		—		(4)
Receivables	(102)		(99)		52
Receivables from affiliated companies	(200)		(66)		(10)
Inventory	(138)		(16)		(14)
Other current assets(a)	(592)		(309)		209
Increase (decrease) in
Accounts payable	377		5		55
Accounts payable to affiliated companies	(75)		85		(11)
Taxes accrued	(46)		206		30
Other current liabilities	(91)		(39)		(56)
Other assets(a)	(764)		21		(102)
Other liabilities	(36)		116		(47)
Net cash provided by operating activities	1,569		2,704		2,776
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(3,304)		(2,693)		(2,669)

Purchases of debt and equity securities	(2,633)		(3,425)		(1,602)
Proceeds from sales and maturities of debt and equity securities	2,633		3,425		1,602


Other	(181)		(177)		(164)
Net cash used in investing activities	(3,485)		(2,870)		(2,833)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,441		1,651		998
Payments for the redemption of long-term debt	(436)		(617)		(813)
Notes payable to affiliated companies	1,007		(280)		477
Distributions to parent	(50)		(600)		(600)
Other	(1)		(1)		(2)
Net cash provided by financing activities	1,961		153		60
Net increase (decrease) in cash, cash equivalents and restricted cash	45		(13)		3
Cash, cash equivalents and restricted cash at beginning of period	8		21		18
Cash, cash equivalents and restricted cash at end of period	$	53	$	8	$	21
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	546	$	508	$	481
Cash (received from) paid for income taxes	(60)		233		321
Significant non-cash transactions:
Accrued capital expenditures	475		359		365

(a) Includes approximately $1.3 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


			Accumulated Other
			Comprehensive
			Income (Loss)
			Net Gains
			(Losses) on
	Member's		Cash Flow		Total
(in millions)	Equity		Hedges		Equity
Balance at December 31, 2019	$	12,818	$	(7)	$	12,811
Net income	956		—		956

Distributions to parent	(600)		—		(600)
Other(a)	(13)		—		(13)
Balance at December 31, 2020	$	13,161	$	(7)	$	13,154
Net income	1,336		—		1,336
Other comprehensive income	—		1		1
Distributions to parent	(600)		—		(600)

Balance at December 31, 2021	$	13,897	$	(6)	$	13,891
Net income	1,600		—		1,600

Distributions to parent	(50)		—		(50)
Other	1		—		1
Balance at December 31, 2022	$	15,448	$	(6)	$	15,442

(a) Amounts primarily represent impacts due to implementation of a new accounting standard related to Credit Losses. See Note 1 for additional discussion.

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Progress Energy, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Progress Energy, Inc. and subsidiaries (the "Company") as of December 31, 2022, and 2021, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, South Carolina Public Service Commission and Florida Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, 2022, the Company has approximately $9 billion recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded balances for completeness.


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1930.


FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	13,125	$	11,057	$	10,627
Operating Expenses
Fuel used in electric generation and purchased power	5,078		3,584		3,479
Operation, maintenance and other	2,458		2,529		2,479
Depreciation and amortization	2,142		1,929		1,818
Property and other taxes	607		542		545
Impairment of assets and other charges	12		82		495
Total operating expenses	10,297		8,666		8,816
Gains on Sales of Other Assets and Other, net	11		14		9
Operating Income	2,839		2,405		1,820
Other Income and Expenses, net	181		215		129
Interest Expense	844		794		790
Income Before Income Taxes	2,176		1,826		1,159
Income Tax Expense	348		227		113


Net Income	1,828		1,599		1,046
Less: Net Income Attributable to Noncontrolling Interests	—		1		1
Net Income Attributable to Parent	$	1,828	$	1,598	$	1,045

Net Income	$	1,828	$	1,599	$	1,046
Other Comprehensive Income, net of tax
Pension and OPEB adjustments	5		1		(1)
Net unrealized gain on cash flow hedges	1		3		5


Unrealized (losses) gains on available-for-sale securities	(6)		—		(1)

Other Comprehensive Income, net of tax	—		4		3
Comprehensive Income	1,828		1,603		1,049
Less: Comprehensive Income Attributable to Noncontrolling Interests	—		1		1
Comprehensive Income Attributable to Parent	$	1,828	$	1,602	$	1,048

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	108	$	70
Receivables (net of allowance for doubtful accounts of $13 at 2022 and $11 at 2021)	318		247
Receivables of VIEs (net of allowance for doubtful accounts of $68 at 2022 and $25 at 2021)	1,289		1,006
Receivables from affiliated companies	22		121

Inventory	1,579		1,398
Regulatory assets (includes $94 at 2022 and $93 at 2021 related to VIEs)	1,833		1,030
Other (includes $88 at 2022 and $39 at 2021 related to VIEs)	342		125
Total current assets	5,491		3,997
Property, Plant and Equipment
Cost	64,822		60,894
Accumulated depreciation and amortization	(20,584)		(19,214)
Facilities to be retired, net	—		26
Net property, plant and equipment	44,238		41,706
Other Noncurrent Assets
Goodwill	3,655		3,655
Regulatory assets (includes $1,507 at 2022 and $1,603 at 2021 related to VIEs)	7,146		5,909
Nuclear decommissioning trust funds	3,855		4,642
Operating lease right-of-use assets, net	628		691
Other	1,066		1,242
Total other noncurrent assets	16,350		16,139
Total Assets	$	66,079	$	61,842
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,481	$	1,099
Accounts payable to affiliated companies	712		506
Notes payable to affiliated companies	843		2,809
Taxes accrued	135		128
Interest accrued	206		192
Current maturities of long-term debt (includes $340 at 2022 and $71 at 2021 related to VIEs)	697		1,082
Asset retirement obligations	289		275
Regulatory liabilities	576		478
Other	782		868
Total current liabilities	5,721		7,437
Long-Term Debt (includes $2,003 at 2022 and $2,293 at 2021 related to VIEs)	21,592		19,591
Long-Term Debt Payable to Affiliated Companies	150		150
Other Noncurrent Liabilities
Deferred income taxes	5,147		4,564
Asset retirement obligations	5,892		5,837
Regulatory liabilities	4,753		5,566
Operating lease liabilities	546		606
Accrued pension and other post-retirement benefit costs	292		417
Investment tax credits	358		364
Other	222		162
Total other noncurrent liabilities	17,210		17,516
Commitments and Contingencies
Equity
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2022 and 2021	—		—
Additional paid-in capital	11,832		9,149
Retained earnings	9,585		8,007
Accumulated other comprehensive loss	(11)		(11)
Total Progress Energy, Inc. stockholder's equity	21,406		17,145
Noncontrolling interests	—		3
Total equity	21,406		17,148
Total Liabilities and Equity	$	66,079	$	61,842

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,828	$	1,599	$	1,046
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	2,405		2,302		2,327
Equity component of AFUDC	(68)		(51)		(42)

Impairment of assets and other charges	12		82		495
Deferred income taxes	364		247		(197)
Contributions to qualified pension plans	(13)		—		—
Payments for asset retirement obligations	(291)		(288)		(384)
Provision for rate refunds	(58)		(36)		2
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—		51		(9)
Receivables	(322)		(97)		(69)
Receivables from affiliated companies	117		18		(81)
Inventory	(183)		(26)		49
Other current assets(a)	(937)		(551)		223
Increase (decrease) in
Accounts payable	222		59		(62)
Accounts payable to affiliated companies	206		217		(21)
Taxes accrued	8		13		75
Other current liabilities	96		(32)		139
Other assets(a)	(1,116)		(110)		(137)
Other liabilities	573		(99)		(177)
Net cash provided by operating activities	2,843		3,298		3,177
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(4,317)		(3,668)		(3,488)

Purchases of debt and equity securities	(1,341)		(2,233)		(5,998)
Proceeds from sales and maturities of debt and equity securities	1,417		2,322		6,010

Notes receivable from affiliated companies	—		—		164
Other	(137)		(156)		(160)
Net cash used in investing activities	(4,378)		(3,735)		(3,472)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	2,775		3,095		1,791
Payments for the redemption of long-term debt	(1,173)		(1,883)		(2,157)
Notes payable to affiliated companies	465		(160)		1,148
Dividends to parent	(425)		(700)		(400)
Other	(36)		(2)		(13)
Net cash provided by financing activities	1,606		350		369
Net increase (decrease) in cash, cash equivalents and restricted cash	71		(87)		74
Cash, cash equivalents and restricted cash at beginning of period	113		200		126
Cash, cash equivalents and restricted cash at end of period	$	184	$	113	$	200
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	854	$	813	$	819
Cash paid for income taxes	79		14		149
Significant non-cash transactions:
Accrued capital expenditures	663		501		363

(a) Includes approximately $1.3 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


					Accumulated Other Comprehensive Income (Loss)
					Net Gains		Net Unrealized				Total Progress
	Additional				(Losses) on		Gains (Losses)		Pension and		Energy, Inc.
	Paid-in		Retained		Cash Flow		on Available-for-		OPEB		Stockholder's		Noncontrolling		Total
(in millions)	Capital		Earnings		Hedges		Sale Securities		Adjustments		Equity		Interests		Equity
Balance at December 31, 2019	$	9,143	$	6,465	$	(10)	$	(1)	$	(7)	$	15,590	$	3	$	15,593
Net income	—		1,045		—		—		—		1,045		1		1,046
Other comprehensive income (loss)	—		—		5		(1)		(1)		3		—		3



Dividends to parent	—		(400)		—		—		—		(400)		—		(400)

Other	—		(1)		—		—		—		(1)		—		(1)
Balance at December 31, 2020	$	9,143	$	7,109	$	(5)	$	(2)	$	(8)	$	16,237	$	4	$	16,241
Net income	—		1,598		—		—		—		1,598		1		1,599
Other comprehensive income	—		—		3		—		1		4		—		4

Distributions to noncontrolling interests	—		—		—		—		—		—		(1)		(1)
Dividends to parent	—		(700)		—		—		—		(700)		—		(700)

Other	6		—		—		—		—		6		(1)		5
Balance at December 31, 2021	$	9,149	$	8,007	$	(2)	$	(2)	$	(7)	$	17,145	$	3	$	17,148
Net income	—		1,828		—		—		—		1,828		—		1,828
Other comprehensive income (loss)	—		—		1		(6)		5		—		—		—
Distributions to noncontrolling interests	—		—		—		—		—		—		(34)		(34)
Dividends to parent	(175)		(250)		—		—		—		(425)		—		(425)
Equitization of certain notes payable to affiliates	2,907		—		—		—		—		2,907		—		2,907
Purchase of a noncontrolling interest	(51)		—		—		—		—		(51)		31		(20)
Other	2		—		—		—		—		2		—		2
Balance at December 31, 2022	$	11,832	$	9,585	$	(1)	$	(8)	$	(2)	$	21,406	$	—	$	21,406

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Progress, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Progress, LLC and subsidiaries (the "Company") as of December 31, 2022, and 2021, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, 2022, the Company has approximately $5.4 billion recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded balances for completeness.


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1930.


FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	6,753	$	5,780	$	5,422
Operating Expenses
Fuel used in electric generation and purchased power	2,492		1,778		1,743
Operation, maintenance and other	1,475		1,467		1,332
Depreciation and amortization	1,187		1,097		1,116
Property and other taxes	190		159		167
Impairment of assets and other charges	7		63		499
Total operating expenses	5,351		4,564		4,857
Gains on Sales of Other Assets and Other, net	4		13		8
Operating Income	1,406		1,229		573
Other Income and Expenses, net	114		143		75
Interest Expense	354		306		269
Income Before Income Taxes	1,166		1,066		379
Income Tax Expense (Benefit)	158		75		(36)
Net Income and Comprehensive Income	$	1,008	$	991	$	415

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	49	$	35
Receivables (net of allowance for doubtful accounts of $4 at 2022 and 2021)	167		127
Receivables of VIEs (net of allowance for doubtful accounts of $40 at 2022 and $17 at 2021)	793		574
Receivables from affiliated companies	25		65

Inventory	1,006		921
Regulatory assets (includes $39 at 2022 and 2021 related to VIEs)	690		533
Other (includes $42 at 2022 related to VIEs)	174		83
Total current assets	2,904		2,338
Property, Plant and Equipment
Cost	38,875		37,018
Accumulated depreciation and amortization	(14,201)		(13,387)
Facilities to be retired, net	—		26
Net property, plant and equipment	24,674		23,657
Other Noncurrent Assets
Regulatory assets (includes $681 at 2022 and $720 at 2021 related to VIEs)	4,724		4,118
Nuclear decommissioning trust funds	3,430		4,089
Operating lease right-of-use assets, net	370		389
Other	650		792
Total other noncurrent assets	9,174		9,388
Total Assets	$	36,752	$	35,383
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	601	$	476
Accounts payable to affiliated companies	508		310
Notes payable to affiliated companies	238		172
Taxes accrued	77		163
Interest accrued	101		96
Current maturities of long-term debt (includes $34 at 2022 and $15 at 2021 related to VIEs)	369		556
Asset retirement obligations	288		274
Regulatory liabilities	332		381
Other	384		448
Total current liabilities	2,898		2,876
Long-Term Debt (includes $1,114 at 2022 and $1,097 at 2021 related to VIEs)	10,568		9,543
Long-Term Debt Payable to Affiliated Companies	150		150
Other Noncurrent Liabilities
Deferred income taxes	2,477		2,208
Asset retirement obligations	5,535		5,401
Regulatory liabilities	4,120		4,868
Operating lease liabilities	335		350
Accrued pension and other post-retirement benefit costs	160		221
Investment tax credits	124		128
Other	76		87
Total other noncurrent liabilities	12,827		13,263
Commitments and Contingencies
Equity
Member's Equity	10,309		9,551



Total Liabilities and Equity	$	36,752	$	35,383

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,008	$	991	$	415
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	1,371		1,286		1,299
Equity component of AFUDC	(52)		(34)		(29)

Impairment of assets and other charges	7		63		499
Deferred income taxes	121		(46)		(234)
Contributions to qualified pension plans	(8)		—		—
Payments for asset retirement obligations	(193)		(187)		(304)
Provisions for rate refunds	(58)		(36)		2
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—		48		1
Receivables	(228)		(52)		(4)
Receivables from affiliated companies	58		(33)		2
Inventory	(85)		(11)		23
Other current assets(a)	(207)		(147)		98
Increase (decrease) in
Accounts payable	20		12		(127)
Accounts payable to affiliated companies	198		95		12
Taxes accrued	(86)		83		68
Other current liabilities	13		(23)		157
Other assets(a)	(416)		(37)		(215)
Other liabilities	38		(16)		3
Net cash provided by operating activities	1,501		1,956		1,666
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,070)		(1,746)		(1,581)

Purchases of debt and equity securities	(1,148)		(1,931)		(1,555)
Proceeds from sales and maturities of debt and equity securities	1,138		1,914		1,516


Other	(29)		(20)		(57)
Net cash used in investing activities	(2,109)		(1,783)		(1,677)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,477		1,959		1,296
Payments for the redemption of long-term debt	(645)		(1,308)		(1,085)
Notes payable to affiliated companies	67		(123)		229
Distributions to parent	(250)		(700)		(400)
Other	(1)		(1)		(12)
Net cash provided by (used in) financing activities	648		(173)		28
Net increase in cash, cash equivalents and restricted cash	40		—		17
Cash, cash equivalents and restricted cash at beginning of period	39		39		22
Cash, cash equivalents and restricted cash at end of period	$	79	$	39	$	39
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	386	$	335	$	301
Cash paid for income taxes	157		83		123
Significant non-cash transactions:
Accrued capital expenditures	269		163		149

(a) Includes approximately $402 million for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


	Member's
(in millions)	Equity
Balance at December 31, 2019	$	9,246
Net income	415
Distribution to parent	(400)

Other	(1)
Balance at December 31, 2020	$	9,260
Net income	991
Distribution to parent	(700)


Balance at December 31, 2021	$	9,551
Net income	1,008
Distribution to parent	(250)


Balance at December 31, 2022	$	10,309

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Florida, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Florida, LLC and subsidiaries (the "Company") as of December 31, 2022, and 2021, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1 and 34 to the financial ~~statements~~.

statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Florida Public Service Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm and fuel costs. As a result, assessing the potential outcomes of future regulatory orders in Florida requires significant management judgment. As of December 31, 2022, the Company has approximately $3.6 billion recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 2001.


FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	6,353	$	5,259	$	5,188
Operating Expenses
Fuel used in electric generation and purchased power	2,586		1,806		1,737
Operation, maintenance and other	967		1,048		1,131
Depreciation and amortization	955		831		702
Property and other taxes	421		383		381
Impairment of assets and other charges	4		19		(4)
Total operating expenses	4,933		4,087		3,947
Gains on Sales of Other Assets and Other, net	2		1		1
Operating Income	1,422		1,173		1,242
Other Income and Expenses, net	74		71		53
Interest Expense	362		319		326
Income Before Income Taxes	1,134		925		969
Income Tax Expense	225		187		198
Net Income	$	909	$	738	$	771




Other Comprehensive Loss, net of tax
Unrealized losses on available-for-sale securities	(5)		(1)		(1)


Other Comprehensive Loss, net of tax	(5)		(1)		(1)
Comprehensive Income	$	904	$	737	$	770

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	45	$	23
Receivables (net of allowance for doubtful accounts of $8 at 2022 and 2021)	148		117
Receivables of VIEs (net of allowance for doubtful accounts of $28 at 2022 and $8 at 2021)	496		432
Receivables from affiliated companies	2		16

Inventory	573		477
Regulatory assets (includes $55 at 2022 and $54 at 2021 related to VIEs)	1,143		497
Other (includes $46 at 2022 and $39 at 2021 related to VIEs)	108		80
Total current assets	2,515		1,642
Property, Plant and Equipment
Cost	25,940		23,865
Accumulated depreciation and amortization	(6,377)		(5,819)
Net property, plant and equipment	19,563		18,046
Other Noncurrent Assets

Regulatory assets (includes $826 at 2022 and $883 at 2021 related to VIEs)	2,422		1,791
Nuclear decommissioning trust funds	424		553
Operating lease right-of-use assets, net	258		302
Other	372		399
Total other noncurrent assets	3,476		3,045
Total Assets	$	25,554	$	22,733
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	880	$	623
Accounts payable to affiliated companies	177		209
Notes payable to affiliated companies	605		199
Taxes accrued	53		51
Interest accrued	80		68
Current maturities of long-term debt (includes $306 at 2022 and $56 at 2021 related to VIEs)	328		76
Asset retirement obligations	1		1
Regulatory liabilities	244		98
Other	363		408
Total current liabilities	2,731		1,733
Long-Term Debt (includes $890 at 2022 and $1,196 at 2021 related to VIEs)	9,381		8,406
Other Noncurrent Liabilities
Deferred income taxes	2,789		2,434

Asset retirement obligations	357		436
Regulatory liabilities	633		698
Operating lease liabilities	211		256
Accrued pension and other post-retirement benefit costs	111		166

Investment tax credits	234		236
Other	84		73
Total other noncurrent liabilities	4,419		4,299
Commitments and Contingencies

Equity
Member's equity	9,031		8,298


Accumulated other comprehensive loss	(8)		(3)
Total equity	9,023		8,295
Total Liabilities and Equity	$	25,554	$	22,733

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	909	$	738	$	771
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	1,032		1,011		1,019
Equity component of AFUDC	(16)		(16)		(12)

Impairment of assets and other charges	4		19		(4)
Deferred income taxes	285		279		27
Contributions to qualified pension plans	(5)		—		—
Payments for asset retirement obligations	(98)		(101)		(80)

(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—		—		(14)
Receivables	(93)		(45)		(64)
Receivables from affiliated companies	14		(13)		(3)
Inventory	(98)		(15)		26
Other current assets(a)	(640)		(451)		40
Increase (decrease) in
Accounts payable	202		47		66
Accounts payable to affiliated companies	(32)		124		(46)
Taxes accrued	2		(30)		39
Other current liabilities	62		(7)		(7)
Other assets(a)	(704)		(69)		84
Other liabilities	18		(69)		(181)
Net cash provided by operating activities	842		1,402		1,661
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,247)		(1,923)		(1,907)

Purchases of debt and equity securities	(193)		(302)		(4,443)
Proceeds from sales and maturities of debt and equity securities	279		408		4,495

Notes receivable from affiliated companies	—		—		173
Other	(108)		(136)		(103)
Net cash used in investing activities	(2,269)		(1,953)		(1,785)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,298		1,135		495
Payments for the redemption of long-term debt	(77)		(575)		(572)
Notes payable to affiliated companies	406		3		196
Distributions to parent	(175)		—		—
Other	(1)		—		(1)
Net cash provided by financing activities	1,451		563		118
Net increase (decrease) in cash, cash equivalents and restricted cash	24		12		(6)
Cash, cash equivalents and restricted cash at beginning of period	62		50		56
Cash, cash equivalents and restricted cash at end of period	$	86	$	62	$	50
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	339	$	308	$	321
Cash (received from) paid for income taxes	(83)		(15)		138
Significant non-cash transactions:
Accrued capital expenditures	394		337		214

(a) Includes approximately $942 million for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements

100


FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


			Accumulated
			Other
			Comprehensive
			Income (Loss)
			Net Unrealized
			Gains (Losses) on
	Member's		Available-for-		Total
(in millions)	Equity		Sale Securities		Equity
Balance at December 31, 2019	$	6,789	$	(1)	$	6,788
Net income	771		—		771
Other comprehensive loss	—		(1)		(1)







Balance at December 31, 2020	$	7,560	$	(2)	$	7,558
Net income	738		—		738
Other comprehensive loss	—		(1)		(1)



Balance at December 31, 2021	$	8,298	$	(3)	$	8,295
Net income	909		—		909
Other comprehensive loss	—		(5)		(5)

Distribution to parent	(175)		—		(175)
Other	(1)		—		(1)

Balance at December 31, 2022	$	9,031	$	(8)	$	9,023

See Notes to Consolidated Financial Statements

101


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Ohio, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Ohio, Inc. and subsidiaries (the "Company") as of December 31, 2022, and 2021, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1 and 4 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Public Utilities Commission of Ohio and by the Kentucky Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric and natural gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2022, the Company has approximately $684 million recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of recovery in future rates and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded balances for completeness.

102


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 2002.

103


FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues
Regulated electric	$	1,798	$	1,493	$	1,405
Regulated natural gas	716		544		453

Total operating revenues	2,514		2,037		1,858
Operating Expenses
Fuel used in electric generation and purchased power	657		409		339

Cost of natural gas	261		136		73
Operation, maintenance and other	523		479		463
Depreciation and amortization	324		307		278
Property and other taxes	369		355		324
Impairment of assets and other charges	(10)		25		—
Total operating expenses	2,124		1,711		1,477
Gains on Sales of Other Assets and Other, net	1		1		—
Operating Income	391		327		381
Other Income and Expenses, net	19		18		16
Interest Expense	129		111		102
Income Before Income Taxes	281		234		295
Income Tax (Benefit) Expense	(21)		30		43


Net Income and Comprehensive Income	$	302	$	204	$	252

See Notes to Consolidated Financial Statements

104


FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	16	$	13
Receivables (net of allowance for doubtful accounts of $6 at 2022 and $4 at 2021)	73		96
Receivables from affiliated companies	247		122
Notes receivable from affiliated companies	—		15
Inventory	144		116

Regulatory assets	103		72
Other	86		57
Total current assets	669		491
Property, Plant and Equipment
Cost	12,497		11,725
Accumulated depreciation and amortization	(3,250)		(3,106)
Facilities to be retired, net	—		6
Net property, plant and equipment	9,247		8,625
Other Noncurrent Assets
Goodwill	920		920
Regulatory assets	581		635
Operating lease right-of-use assets, net	18		19



Other	71		84
Total other noncurrent assets	1,590		1,658
Total Assets	$	11,506	$	10,774
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	380	$	348
Accounts payable to affiliated companies	72		64
Notes payable to affiliated companies	497		103
Taxes accrued	317		275
Interest accrued	29		30
Current maturities of long-term debt	475		—

Asset retirement obligations	17		13
Regulatory liabilities	99		62
Other	74		82
Total current liabilities	1,960		977
Long-Term Debt	2,745		3,168
Long-Term Debt Payable to Affiliated Companies	25		25
Other Noncurrent Liabilities
Deferred income taxes	1,136		1,050
Asset retirement obligations	137		123
Regulatory liabilities	534		739
Operating lease liabilities	17		18
Accrued pension and other post-retirement benefit costs	90		109


Other	96		101
Total other noncurrent liabilities	2,010		2,140
Commitments and Contingencies
Equity
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2022 and 2021	762		762
Additional paid-in capital	3,100		3,100
Retained earnings	904		602

Total equity	4,766		4,464
Total Liabilities and Equity	$	11,506	$	10,774

See Notes to Consolidated Financial Statements

105


FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	302	$	204	$	252
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	328		311		283
Equity component of AFUDC	(7)		(7)		(7)

Impairment of assets and other charges	(10)		25		—
Deferred income taxes	(22)		42		31
Contributions to qualified pension plans	(3)		—		—
Payments for asset retirement obligations	(12)		(2)		(2)
Provision for rate refunds	5		16		14
(Increase) decrease in

Receivables	23		6		(13)
Receivables from affiliated companies	(5)		(25)		9
Inventory	(28)		(6)		25
Other current assets	(55)		(60)		(18)
Increase (decrease) in
Accounts payable	44		38		2
Accounts payable to affiliated companies	8		(4)		—
Taxes accrued	42		26		30
Other current liabilities	(63)		11		3
Other assets	(29)		(43)		(32)
Other liabilities	64		27		(2)
Net cash provided by operating activities	582		559		575
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(850)		(848)		(834)




Notes receivable from affiliated companies	(105)		(10)		(19)
Other	(67)		(60)		(48)
Net cash used in investing activities	(1,022)		(918)		(901)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	50		150		467
Payments for the redemption of long-term debt	—		(50)		—
Notes payable to affiliated companies	395		(67)		(144)
Capital contribution from parent	—		325		—

Other	(2)		—		—
Net cash provided by financing activities	443		358		323
Net increase (decrease) in cash and cash equivalents	3		(1)		(3)
Cash and cash equivalents at beginning of period	13		14		17
Cash and cash equivalents at end of period	$	16	$	13	$	14
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	126	$	107	$	97
Cash (received from) paid for income taxes	(35)		9		—
Significant non-cash transactions:
Accrued capital expenditures	123		135		104

See Notes to Consolidated Financial Statements

106


FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY






			Additional
	Common		Paid-in		Retained		Total
(in millions)	Stock		Capital		Earnings		Equity
Balance at December 31, 2019	$	762	$	2,776	$	145	$	3,683
Net income	—		—		252		252



Balance at December 31, 2020	$	762	$	2,776	$	397	$	3,935
Net income	—		—		204		204
Contribution from parent	—		325		—		325

Other	—		(1)		1		—
Balance at December 31, 2021	$	762	$	3,100	$	602	$	4,464
Net income	—		—		302		302



Balance at December 31, 2022	$	762	$	3,100	$	904	$	4,766

See Notes to Consolidated Financial Statements

107


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Indiana, LLC

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Indiana, LLC and subsidiary (the "Company") as of December 31, 2022, and 2021, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Indiana Utility Regulatory Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years in Indiana have focused on the recoverability of fuel costs and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, 2022, the Company has approximately $1.1 billion recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

108


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 2002.

109


FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	3,922	$	3,174	$	2,795
Operating Expenses
Fuel used in electric generation and purchased power	1,819		985		767
Operation, maintenance and other	729		750		762
Depreciation and amortization	645		615		569
Property and other taxes	75		73		81
Impairment of assets and other charges	388		9		—
Total operating expenses	3,656		2,432		2,179

Operating Income	266		742		616
Other Income and Expenses, net	36		42		37
Interest Expense	189		196		161
Income Before Income Taxes	113		588		492
Income Tax (Benefit) Expense	(24)		107		84
Net Income and Comprehensive Income	$	137	$	481	$	408

See Notes to Consolidated Financial Statements

110


FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	31	$	6
Receivables (net of allowance for doubtful accounts of $4 at 2022 and $3 at 2021)	112		100
Receivables from affiliated companies	298		98
Notes receivable from affiliated companies	—		134
Inventory	489		418
Regulatory assets	249		277
Other	197		68
Total current assets	1,376		1,101
Property, Plant and Equipment
Cost	18,121		17,343
Accumulated depreciation and amortization	(6,021)		(5,583)

Net property, plant and equipment	12,100		11,760
Other Noncurrent Assets
Regulatory assets	875		1,278
Operating lease right-of-use assets, net	49		53

Other	254		296
Total other noncurrent assets	1,178		1,627
Total Assets	$	14,654	$	14,488
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	391	$	282
Accounts payable to affiliated companies	206		221
Notes payable to affiliated companies	435		—
Taxes accrued	92		73
Interest accrued	48		49
Current maturities of long-term debt	303		84
Asset retirement obligations	207		110
Regulatory liabilities	187		127
Other	161		105
Total current liabilities	2,030		1,051
Long-Term Debt	3,854		4,089
Long-Term Debt Payable to Affiliated Companies	150		150
Other Noncurrent Liabilities
Deferred income taxes	1,299		1,303
Asset retirement obligations	744		877
Regulatory liabilities	1,454		1,565
Operating lease liabilities	47		50
Accrued pension and other post-retirement benefit costs	122		167
Investment tax credits	186		177
Other	65		44
Total other noncurrent liabilities	3,917		4,183
Commitments and Contingencies
Equity
Member's equity	4,702		5,015
Accumulated other comprehensive income	1		—
Total equity	4,703		5,015
Total Liabilities and Equity	$	14,654	$	14,488

See Notes to Consolidated Financial Statements

111


FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	137	$	481	$	408
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	648		619		572
Equity component of AFUDC	(13)		(27)		(23)

Impairment of assets and other charges	388		9		—
Deferred income taxes	(64)		34		29
Contributions to qualified pension plans	(5)		—		—
Payments for asset retirement obligations	(82)		(67)		(63)

(Increase) decrease in

Receivables	(3)		(33)		8
Receivables from affiliated companies	20		—		—
Inventory	(70)		55		44
Other current assets	(3)		(181)		(3)
Increase (decrease) in
Accounts payable	105		76		(12)
Accounts payable to affiliated companies	(3)		8		1
Taxes accrued	34		12		13
Other current liabilities	9		13		6
Other assets	(10)		20		(68)
Other liabilities	13		(15)		26
Net cash provided by operating activities	1,101		1,004		938
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(877)		(818)		(888)

Purchases of debt and equity securities	(61)		(142)		(37)
Proceeds from sales and maturities of debt and equity securities	48		65		22

Notes receivable from affiliated companies	(86)		(120)		(33)
Other	(55)		36		48
Net cash used in investing activities	(1,031)		(979)		(888)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	67		300		544
Payments for the redemption of long-term debt	(84)		(70)		(513)
Notes payable to affiliated companies	435		(131)		101
Distributions to parent	(462)		(125)		(200)
Other	(1)		—		—
Net cash used in financing activities	(45)		(26)		(68)
Net increase (decrease) in cash and cash equivalents	25		(1)		(18)
Cash and cash equivalents at beginning of period	6		7		25
Cash and cash equivalents at end of period	$	31	$	6	$	7
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	186	$	194	$	164
Cash paid for income taxes	35		56		36
Significant non-cash transactions:
Accrued capital expenditures	122		118		101

See Notes to Consolidated Financial Statements

112


FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


			Accumulated
			Other
			Comprehensive
			Income
			Pension
	Member's		and OPEB		Total
(in millions)	Equity		Adjustments		Equity
Balance at December 31, 2019	$	4,575	$	—	$	4,575
Net income	408		—		408

Distributions to parent	(200)		—		(200)

Balance at December 31, 2020	$	4,783	$	—	$	4,783
Net income	481		—		481

Distributions to parent	(250)		—		(250)
Other	1		—		1
Balance at December 31, 2021	$	5,015	$	—	$	5,015
Net income	137		—		137
Distributions to parent	(450)		—		(450)
Other	—		1		1
Balance at December 31, 2022	$	4,702	$	1	$	4,703

See Notes to Consolidated Financial Statements

113


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Piedmont Natural Gas Company, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Piedmont Natural Gas Company, Inc. and subsidiaries (the "Company") as of December 31, 2022, and 2021, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1 and 4 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, the Public Service Commission of South Carolina, and the Tennessee Public Utility Commission (collectively the “Commissions”), which have jurisdiction with respect to the gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, ~~2020,~~2022, the Company has approximately ~~$450~~$511 million recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the ~~Commissions;~~Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent ~~complexities.~~

complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the likelihood of ~~the~~ recovery in future rates ~~of regulatory assets~~ and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates.

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the ~~Commissions,~~Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded ~~regulatory asset~~ balances for completeness.

~~120~~


~~REPORTS~~

114


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

◦–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

◦–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

◦–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

◦–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded onin the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February ~~25, 2021~~27, 2023

We have served as the Company's auditor since 1951.

~~121~~115


FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		2018		(in millions)	2022		2021		2020
Operating Revenues	Operating Revenues							Operating Revenues
Regulated natural gas	Regulated natural gas	$	1,286	$	1,369	$	1,365	Regulated natural gas	$	2,100	$	1,555	$	1,286
Nonregulated natural gas and other	Nonregulated natural gas and other	11		12		10		Nonregulated natural gas and other	24		14		11

Total operating revenues	Total operating revenues	1,297		1,381		1,375		Total operating revenues	2,124		1,569		1,297
Operating Expenses	Operating Expenses							Operating Expenses
Cost of natural gas	Cost of natural gas	386		532		584		Cost of natural gas	1,015		569		386
Operation, maintenance and other	Operation, maintenance and other	322		328		357		Operation, maintenance and other	368		327		322
Depreciation and amortization	Depreciation and amortization	180		172		159		Depreciation and amortization	222		213		180
Property and other taxes	Property and other taxes	53		45		49		Property and other taxes	57		55		53
Impairment charges		7		—		—
Impairment of assets and other charges								Impairment of assets and other charges	18		10		7
Total operating expenses	Total operating expenses	948		1,077		1,149		Total operating expenses	1,680		1,174		948

Gains on Sales of Other Assets and Other, net								Gains on Sales of Other Assets and Other, net	4		—		—
Operating Income	Operating Income	349		304		226		Operating Income	448		395		349
Equity in earnings of unconsolidated affiliates	Equity in earnings of unconsolidated affiliates	9		8		7		Equity in earnings of unconsolidated affiliates	8		9		9

Other income and expense, net	Other income and expense, net	51		20		14		Other income and expense, net	46		55		51
Total other income and expenses	Total other income and expenses	60		28		21		Total other income and expenses	54		64		60
Interest Expense	Interest Expense	118		87		81		Interest Expense	140		119		118
Income Before Income Taxes	Income Before Income Taxes	291		245		166		Income Before Income Taxes	362		340		291
Income Tax Expense	Income Tax Expense	18		43		37		Income Tax Expense	39		30		18
Net Income and Comprehensive Income	Net Income and Comprehensive Income	$	273	$	202	$	129	Net Income and Comprehensive Income	$	323	$	310	$	273

See Notes to Consolidated Financial Statements

~~122~~116


FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

CONSOLIDATED BALANCE SHEETS


		December 31,					December 31,
(in millions)	(in millions)	2020		2019		(in millions)	2022		2021
ASSETS	ASSETS					ASSETS
Current Assets	Current Assets					Current Assets

Receivables (net of allowance for doubtful accounts of $12 at 2020 and $6 at 2019)		$	250	$	241
Receivables (net of allowance for doubtful accounts of $14 at 2022 and $15 at 2021)						Receivables (net of allowance for doubtful accounts of $14 at 2022 and $15 at 2021)	$	436	$	318
Receivables from affiliated companies	Receivables from affiliated companies	10		10		Receivables from affiliated companies	11		11
Inventory	Inventory	68		72		Inventory	172		109
Regulatory assets	Regulatory assets	153		73		Regulatory assets	119		141

Other	Other	20		28		Other	4		9
Total current assets	Total current assets	501		424		Total current assets	742		588
Property, Plant and Equipment	Property, Plant and Equipment					Property, Plant and Equipment
Cost	Cost	9,134		8,446		Cost	10,869		9,918
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(1,749)		(1,681)		Accumulated depreciation and amortization	(2,081)		(1,899)
Facilities to be retired, net						Facilities to be retired, net	9		11
Net property, plant and equipment	Net property, plant and equipment	7,385		6,765		Net property, plant and equipment	8,797		8,030
Other Noncurrent Assets	Other Noncurrent Assets					Other Noncurrent Assets
Goodwill	Goodwill	49		49		Goodwill	49		49
Regulatory assets	Regulatory assets	302		290		Regulatory assets	392		316
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	20		24		Operating lease right-of-use assets, net	4		16
Investments in equity method unconsolidated affiliates	Investments in equity method unconsolidated affiliates	88		83		Investments in equity method unconsolidated affiliates	79		95
Other	Other	270		121		Other	272		288
Total other noncurrent assets	Total other noncurrent assets	729		567		Total other noncurrent assets	796		764
Total Assets	Total Assets	$	8,615	$	7,756	Total Assets	$	10,335	$	9,382
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current Liabilities	Current Liabilities					Current Liabilities
Accounts payable	Accounts payable	$	230	$	215	Accounts payable	$	345	$	196
Accounts payable to affiliated companies	Accounts payable to affiliated companies	79		3		Accounts payable to affiliated companies	51		40

Notes payable to affiliated companies	Notes payable to affiliated companies	530		476		Notes payable to affiliated companies	514		518
Taxes accrued	Taxes accrued	23		24		Taxes accrued	74		63
Interest accrued	Interest accrued	34		33		Interest accrued	40		37
Current maturities of long-term debt	Current maturities of long-term debt	160		0		Current maturities of long-term debt	45		—
Regulatory liabilities	Regulatory liabilities	88		81		Regulatory liabilities	74		56
Other	Other	69		67		Other	81		81
Total current liabilities	Total current liabilities	1,213		899		Total current liabilities	1,224		991
Long-Term Debt	Long-Term Debt	2,620		2,384		Long-Term Debt	3,318		2,968

Other Noncurrent Liabilities	Other Noncurrent Liabilities					Other Noncurrent Liabilities
Deferred income taxes	Deferred income taxes	821		708		Deferred income taxes	870		815
Asset retirement obligations	Asset retirement obligations	20		17		Asset retirement obligations	26		22
Regulatory liabilities	Regulatory liabilities	1,044		1,131		Regulatory liabilities	1,024		1,058
Operating lease liabilities	Operating lease liabilities	19		23		Operating lease liabilities	13		14
Accrued pension and other post-retirement benefit costs	Accrued pension and other post-retirement benefit costs	8		3		Accrued pension and other post-retirement benefit costs	7		7
Other	Other	155		148		Other	180		158
Total other noncurrent liabilities	Total other noncurrent liabilities	2,067		2,030		Total other noncurrent liabilities	2,120		2,074
Commitments and Contingencies	Commitments and Contingencies	0		0		Commitments and Contingencies
Equity	Equity					Equity
Common stock, 0 par value: 100 shares authorized and outstanding at 2020 and 2019		1,310		1,310
Common stock, no par value: 100 shares authorized and outstanding at 2022 and 2021						Common stock, no par value: 100 shares authorized and outstanding at 2022 and 2021	1,635		1,635

Retained earnings	Retained earnings	1,405		1,133		Retained earnings	2,037		1,714

Total Piedmont Natural Gas Company, Inc. stockholder's equity						Total Piedmont Natural Gas Company, Inc. stockholder's equity	3,672		3,349
Noncontrolling interests						Noncontrolling interests	1		—
Total equity	Total equity	2,715		2,443		Total equity	3,673		3,349
Total Liabilities and Equity	Total Liabilities and Equity	$	8,615	$	7,756	Total Liabilities and Equity	$	10,335	$	9,382

See Notes to Consolidated Financial Statements

~~123~~117


FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		2018		(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES							CASH FLOWS FROM OPERATING ACTIVITIES
Net income	Net income	$	273	$	202	$	129	Net income	$	323	$	310	$	273
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	182		174		161		Depreciation and amortization	225		216		182
Equity component of AFUDC	Equity component of AFUDC	(19)		—		—		Equity component of AFUDC	(11)		(20)		(19)

Impairment charges		7		—		—
Gains on sales of other assets								Gains on sales of other assets	(4)		—		—
Impairment of assets and other charges								Impairment of assets and other charges	18		10		7
Deferred income taxes	Deferred income taxes	53		136		(31)		Deferred income taxes	5		4		53
Equity in (earnings) losses from unconsolidated affiliates		(9)		(8)		(7)

Contributions to qualified pension plans								Contributions to qualified pension plans	(2)		—		—
Equity in earnings from unconsolidated affiliates								Equity in earnings from unconsolidated affiliates	(8)		(9)		(9)

Provision for rate refunds	Provision for rate refunds	(33)		2		43		Provision for rate refunds	(3)		(4)		(33)
(Increase) decrease in	(Increase) decrease in							(Increase) decrease in

Receivables	Receivables	10		28		7		Receivables	(111)		(77)		10
Receivables from affiliated companies	Receivables from affiliated companies	—		12		(15)		Receivables from affiliated companies	—		(1)		—
Inventory	Inventory	3		(2)		(4)		Inventory	(63)		(40)		3
Other current assets	Other current assets	(66)		(25)		71		Other current assets	32		33		(66)
Increase (decrease) in	Increase (decrease) in							Increase (decrease) in
Accounts payable	Accounts payable	16		(7)		15		Accounts payable	40		(25)		16
Accounts payable to affiliated companies	Accounts payable to affiliated companies	76		(35)		25		Accounts payable to affiliated companies	11		(39)		76
Taxes accrued	Taxes accrued	3		(60)		65		Taxes accrued	11		37		3
Other current liabilities	Other current liabilities	(11)		1		21		Other current liabilities	36		(26)		(11)
Other assets	Other assets	(11)		1		3		Other assets	9		26		(11)
Other liabilities	Other liabilities	7		(10)		(5)		Other liabilities	(1)		(4)		7
Net cash provided by operating activities	Net cash provided by operating activities	481		409		478		Net cash provided by operating activities	507		391		481
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES							CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	Capital expenditures	(901)		(1,053)		(721)		Capital expenditures	(862)		(850)		(901)
Contributions to equity method investments	Contributions to equity method investments	—		(16)		—		Contributions to equity method investments	(8)		(9)		—

Other	Other	(28)		(14)		(10)		Other	(26)		(31)		(28)
Net cash used in investing activities	Net cash used in investing activities	(929)		(1,083)		(731)		Net cash used in investing activities	(896)		(890)		(929)
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES							CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	Proceeds from the issuance of long-term debt	394		596		100		Proceeds from the issuance of long-term debt	394		347		394

Payments for the redemption of long-term debt	Payments for the redemption of long-term debt	—		(350)		—		Payments for the redemption of long-term debt	—		(160)		—

Notes payable to affiliated companies	Notes payable to affiliated companies	54		278		(166)		Notes payable to affiliated companies	(4)		(13)		54

Capital contribution from parent	Capital contribution from parent	—		150		300		Capital contribution from parent	—		325		—

Other								Other	(1)		—		—
Net cash provided by financing activities	Net cash provided by financing activities	448		674		234		Net cash provided by financing activities	389		499		448
Net decrease in cash and cash equivalents		—		—		(19)
Net increase (decrease) in cash and cash equivalents								Net increase (decrease) in cash and cash equivalents	—		—		—
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	—		—		19		Cash and cash equivalents at beginning of period	—		—		—
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	—	$	—	$	—	Cash and cash equivalents at end of period	$	—	$	—	$	—
Supplemental Disclosures:	Supplemental Disclosures:							Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	Cash paid for interest, net of amount capitalized	$	115	$	84	$	79	Cash paid for interest, net of amount capitalized	$	135	$	114	$	115
Cash received from income taxes		(36)		(31)		(16)
Cash paid for (received from) income taxes								Cash paid for (received from) income taxes	23		(13)		(36)
Significant non-cash transactions:	Significant non-cash transactions:							Significant non-cash transactions:
Accrued capital expenditures	Accrued capital expenditures	106		109		96		Accrued capital expenditures	207		97		106

See Notes to Consolidated Financial Statements

~~124~~118


FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


													Total
													Piedmont
													Natural Gas
		Common		Retained		Total			Common		Retained		Company, Inc.		Noncontrolling		Total
(in millions)	(in millions)	Stock		Earnings		Equity		(in millions)	Stock		Earnings		Equity		Interests		Equity
Balance at December 31, 2017		$	860	$	802	$	1,662
Net income		—		129		129

Contribution from parent		300		—		300

Balance at December 31, 2018		$	1,160	$	931	$	2,091
Net income		—		202		202

Contribution from parent		150		—		150

Balance at December 31, 2019	Balance at December 31, 2019	$	1,310	$	1,133	$	2,443	Balance at December 31, 2019	$	1,310	$	1,133	$	2,443	$	—	$	2,443
Net income	Net income	—		273		273		Net income	—		273		273		—		273

Other	Other	—		(1)		(1)		Other	—		(1)		(1)		—		(1)
Balance at December 31, 2020	Balance at December 31, 2020	$	1,310	$	1,405	$	2,715	Balance at December 31, 2020	$	1,310	$	1,405	$	2,715	$	—	$	2,715
Net income								Net income	—		310		310		—		310

Contribution from parent								Contribution from parent	325		—		325		—		325

Other								Other	—		(1)		(1)		—		(1)
Balance at December 31, 2021								Balance at December 31, 2021	$	1,635	$	1,714	$	3,349	$	—	$	3,349
Net income								Net income	—		323		323		—		323

Other								Other	—		—		—		1		1
Balance at December 31, 2022								Balance at December 31, 2022	$	1,635	$	2,037	$	3,672	$	1	$	3,673

See Notes to Consolidated Financial Statements

~~125~~119


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Index to Combined Notes To Consolidated Financial Statements

The notes to the consolidated financial statements are a combined presentation. The following table indicates the registrants to which the notes apply.

Applicable Notes

Registrant

Duke Energy

•

Duke Energy

•

Duke Energy Carolinas

•

Duke Energy Carolinas

•

Progress Energy

•

Progress Energy

•

Duke Energy Progress

•

Duke Energy Progress

•

Duke Energy Florida

•

Duke Energy Florida

•

Duke Energy Ohio

•

Duke Energy Ohio

•

Duke Energy Indiana

•

Duke Energy Indiana

•

Piedmont

•

Piedmont

•

Tables within the notes may not sum across due to (i) Progress Energy's consolidation of Duke Energy Progress, Duke Energy Florida and other subsidiaries that are not registrants and (ii) subsidiaries that are not registrants but included in the consolidated Duke Energy balances.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Basis of Consolidation

Duke Energy is an energy company headquartered in Charlotte, North Carolina, subject to regulation by the FERC and other regulatory agencies listed below. Duke Energy operates in the U.S. primarily through its direct and indirect subsidiaries. Certain Duke Energy subsidiaries are also subsidiary registrants, including Duke Energy Carolinas; Progress Energy; Duke Energy Progress; Duke Energy Florida; Duke Energy Ohio; Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of its separate Subsidiary Registrants, which along with Duke Energy, are collectively referred to as the Duke Energy Registrants.

The information in these combined notes relates to each of the Duke Energy Registrants as noted in the Index to Combined Notes to Consolidated Financial Statements. However, none of the Subsidiary Registrants make any representation as to information related solely to Duke Energy or the Subsidiary Registrants of Duke Energy other than itself.

These Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the Duke Energy Registrants and subsidiaries or VIEs where the respective Duke Energy Registrants have control. See Note 1718 for additional information on VIEs. These Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities. See Note 89 for additional information on joint ownership. Substantially all of the Subsidiary Registrants' operations qualify for regulatory accounting.

Progress Energy is a public utility holding company, which conducts operations through its wholly owned subsidiaries, Duke Energy Progress and Duke Energy Florida. Progress Energy is subject to regulation by FERC and other regulatory agencies listed below.

Duke Energy Ohio is a regulated public utility primarily engaged in the transmission and distribution of electricity in portions of Ohio and Kentucky, the generation and sale of electricity in portions of Kentucky and the transportation and sale of natural gas in portions of Ohio and Kentucky. Duke Energy Ohio conducts competitive auctions for retail electricity supply in Ohio whereby the energy price is recovered from retail customers and recorded in Operating Revenues on the Consolidated Statements of Operations and Comprehensive Income. Operations in Kentucky are conducted through its wholly owned subsidiary, Duke Energy Kentucky. References herein to Duke Energy Ohio collectively include Duke Energy Ohio and its subsidiaries, unless otherwise noted. Duke Energy Ohio is subject to the regulatory provisions of the PUCO, KPSC and FERC.

Piedmont is a regulated public utility primarily engaged in the distribution of natural gas in portions of North Carolina, South Carolina and Tennessee. Piedmont is subject to the regulatory provisions of the NCUC, PSCSC, TPUC and FERC.

Certain prior year amounts have been reclassified to conform to the current year presentation.

~~126~~120


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~COVID-19~~

The COVID-19 pandemic is having a significant impact on global health and economic environments. In March 2020, the World Health Organization declared COVID-19 a global pandemic, and the federal government proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency. The Duke Energy Registrants are monitoring developments closely and responding appropriately. The company incurred approximately $112 million of incremental COVID-19 costs before deferral for the year ended December 31, 2020, included in Operation, maintenance and other on the Consolidated Statements of Operations. Further, the company waived approximately $64 million of late payment fees for the year ended December 31, 2020. The company has deferred approximately $76 million of the incremental costs, which were primarily bad debt expense, personal protective equipment and cleaning supplies, and a cost component of late payment fees. See Notes 3, 6, 17, 18 and 23 for additional information as well as steps taken to mitigate the impacts to our business and customers from the COVID-19 pandemic.

Other Current Assets and Liabilities

The following table provides a description of amounts included in Other within Current Assets or Current Liabilities that exceed 5% of total Current Assets or Current Liabilities on the Duke Energy Registrants' Consolidated Balance Sheets at either December 31, ~~2020,~~2022, or ~~2019.~~2021.


			December 31,						December 31,
(in millions)	(in millions)	Location	2020		2019		(in millions)	Location	2022		2021
Duke Energy	Duke Energy						Duke Energy
Accrued compensation							Accrued compensation	Current Liabilities	$	778	$	915

Other accrued liabilities		Current Liabilities	$	1,455	$	604
Accrued compensation		Current Liabilities	662		862
Duke Energy Carolinas	Duke Energy Carolinas						Duke Energy Carolinas
Accrued compensation	Accrued compensation	Current Liabilities	$	213	$	271	Accrued compensation	Current Liabilities	$	247	$	277

Duke Energy Progress							Duke Energy Progress
Customer deposits							Customer deposits	Current Liabilities	$	106	$	144
Other accrued liabilities	Other accrued liabilities	Current Liabilities	178		147		Other accrued liabilities	Current Liabilities	124		163
Progress Energy

Customer deposits		Current Liabilities	$	347	$	354

Duke Energy Florida	Duke Energy Florida						Duke Energy Florida
Customer deposits	Customer deposits	Current Liabilities	$	203	$	209	Customer deposits	Current Liabilities	$	200	$	200

Other accrued liabilities							Other accrued liabilities	Current Liabilities	61		89
Duke Energy Ohio	Duke Energy Ohio						Duke Energy Ohio
Gas Storage	Gas Storage	Current Assets	$	21	$	0	Gas Storage	Current Assets	$	57	$	25
Collateral liabilities							Collateral liabilities	Current Liabilities	53		57
Duke Energy Indiana							Duke Energy Indiana
Mark-to-market transactions							Mark-to-market transactions	Current Assets	$	110	$	23

Duke Energy Indiana
Income taxes receivable		Current Assets	$	9	$	44

Discontinued Operations

Duke Energy has elected to present cash flows of discontinued operations combined with cash flows of continuing operations. Unless otherwise noted, the notes to these consolidated financial statements exclude amounts related to discontinued operations for all periods presented. For the years ended December 31, 2022, 2021 and 2020, ~~2019 and 2018,~~ the ~~Income (Loss)~~Loss From Discontinued Operations, net of tax on Duke Energy's Consolidated Statements of Operations ~~is entirely attributable~~includes amounts related to ~~controlling interest.~~noncontrolling interests. A portion of Noncontrolling interests on Duke Energy's Consolidated Balance Sheets relates to discontinued operations for the periods presented. See Note 2 for discussion of discontinued operations related to the Commercial Renewables Disposal Groups.

Noncontrolling Interest

Several operating agreements of Duke Energy's subsidiaries with noncontrolling interest are subject to allocations of tax attributes and cash flows in accordance with contractual agreements that vary throughout the lives of the subsidiaries. Therefore, Duke Energy and the other investors' (the owners) interests in the subsidiaries are not fixed, and the subsidiaries apply the HLBV method in allocating income or loss and other comprehensive income or loss (all measured on a pretax basis) to the owners. The HLBV method measures the amounts that each owner would hypothetically claim at each balance sheet reporting date, including tax benefits realized by the owners, most of which is over the IRS recapture period, upon a hypothetical liquidation of the subsidiary at the net book value of its underlying assets. The change in the amount that each owner would hypothetically receive at the reporting date compared to the amount it would have received on the previous reporting date represents the amount of income or loss allocated to each owner for the reporting period.

~~Other operating~~ Operating agreements of Duke Energy's subsidiaries with noncontrolling interest allocate profit and loss based on their pro rata shares of the ownership interest in the respective subsidiary. Therefore, Duke Energy allocates net income or loss and other comprehensive income or loss of these subsidiaries to the owners based on their pro rata shares.

~~127~~


~~FINANCIAL STATEMENTS~~			~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

During the third quarter of 2019, Duke Energy completed a sale of minority interest in a portion of certain renewable assets within the Commercial Renewables Segment for pretax proceeds to Duke Energy of $415 million. The portion of Duke Energy's commercial renewables energy portfolio sold includes 49% of 37 operating wind, solar and battery storage assets and 33% of 11 operating solar assets across the U.S. Duke Energy retained control of these assets, and, therefore, no gain or loss was recognized on the Consolidated Statements of Operations. The difference between the consideration received and the carrying value of the noncontrolling interest claim on net assets is $466 million, net of tax benefit of $8 million, and was recorded to equity.

~~The following table presents cash received for the sale of noncontrolling interest and allocated losses to noncontrolling interest for the years ended December 31, 2020, and 2019.~~

December 31,
(in millions) 2020 2019
Noncontrolling Interest Capital Contributions
Cash received for the sale of noncontrolling interest to tax equity members $ 426 $ 428
Cash received for the sale of noncontrolling interest to pro rata share members — 415
Total Noncontrolling Interest Capital Contributions $ 426 $ 843
Noncontrolling Interest Allocation of Income
Allocated losses to noncontrolling tax equity members utilizing the HLBV method $ 271 $ 165
Allocated losses to noncontrolling members based on pro rata shares of ownership 24 12
Total Noncontrolling Interest Allocated Losses $ 295 $ 177

~~2021 Sale of Minority Interest in Duke Energy Indiana~~

In January 2021, Duke Energy entered into a definitive agreement providing for the sale of a 19.9% minority interest in Duke Energy Indiana with an affiliate of GIC, Singapore's sovereign wealth fund and an experienced investor in U.S. infrastructure. To facilitate the transaction, Duke Energy will issue and sell membership interests in Duke Energy Indiana Holdco, LLC. a newly created holding company that will own 100% of the issued and outstanding membership interests in Duke Energy Indiana. The transaction will be completed following two closings for an aggregate purchase price of approximately $2 billion. The first closing is expected to be completed in the second quarter of 2021 and Duke Energy will issue and sell 11.1% of the membership interests in exchange for 50% of the purchase price. Under the terms of the agreement, Duke Energy has the discretion to determine the timing of the second closing, but it will occur no later than January 2023. At the second closing, Duke Energy will issue and sell additional membership interests such that GIC will own 19.9% of the membership interests for the remaining 50% of the purchase price. Duke Energy will continue to operate and retain control of Duke Energy Indiana and, therefore, no gain or loss is expected to be recognized in the Consolidated Statements of Operations. Additionally, the transaction will be reflected within Duke Energy Corporations' stockholders' equity as a sale of a noncontrolling interest.

~~Acquisitions~~

~~The Duke Energy Registrants consolidate assets and liabilities from acquisitions as of the purchase date and include earnings from acquisitions in consolidated earnings after the purchase date.~~

Significant Accounting Policies

Use of Estimates

In preparing financial statements that conform to GAAP, the Duke Energy Registrants must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Regulatory Accounting

The majority of the Duke Energy Registrants’ operations are subject to price regulation for the sale of electricity and natural gas by state utility commissions or FERC. When prices are set on the basis of specific costs of the regulated operations and an effective franchise is in place such that sufficient natural gas or electric services can be sold to recover those costs, the Duke Energy Registrants apply regulatory accounting. Regulatory accounting changes the timing of the recognition of costs or revenues relative to a company that does not apply regulatory accounting. As a result, regulatory assets and regulatory liabilities are recognized on the Consolidated Balance Sheets. Regulatory assets and liabilities are amortized consistent with the treatment of the related cost in the ratemaking process. Regulatory assets are reviewed for recoverability each reporting period. If a regulatory asset is no longer deemed probable of recovery, the deferred cost is charged to earnings. See Note 34 for further information.

Regulatory accounting rules also require recognition of a disallowance (also called "impairment") loss if it becomes probable that part of the cost of a plant under construction (or a recently completed plant or an abandoned plant) will be disallowed for ratemaking purposes and a reasonable estimate of the amount of the disallowance can be made. For example, if a cost cap is set for a plant still under construction, the amount of the disallowance is a result of a judgment as to the ultimate cost of the plant. These disallowances can require judgments on allowed future rate recovery.

~~128~~121


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

When it becomes probable that regulated generation, transmission or distribution assets will be abandoned, the cost of the asset is removed from plant in service. The value that may be retained as a regulatory asset on the balance sheet for the abandoned property is dependent upon amounts that may be recovered through regulated rates, including any return. As such, an impairment charge could be partially or fully offset by the establishment of a regulatory asset if rate recovery is probable. The impairment charge for a disallowance of costs for regulated plants under construction, recently completed or abandoned is based on discounted cash flows.

The Duke Energy Registrants utilize cost-tracking mechanisms, commonly referred to as fuel adjustment clauses or PGA clauses. These clauses allow for the recovery of fuel and fuel-related costs, portions of purchased power, natural gas costs and hedging costs through surcharges on customer rates. The difference between the costs incurred and the surcharge revenues is recorded either as an adjustment to Operating Revenues, Operating Expenses – Fuel used in electric generation or Operating Expenses – Cost of natural gas on the Consolidated Statements of Operations, with an off-setting impact on regulatory assets or liabilities.

Cash, Cash Equivalents and Restricted Cash

All highly liquid investments with maturities of three months or less at the date of acquisition are considered cash equivalents. Duke Energy, Progress Energy and Duke Energy Florida have restricted cash balances related primarily to collateral assets, escrow deposits and VIEs. Duke Energy Carolinas and Duke Energy Progress have restricted cash balances related to VIEs from storm recovery bonds issued. See Note 1718 for additional information. Restricted cash amounts are included in Other within Current Assets and Other Noncurrent Assets on the Consolidated Balance Sheets. The following table presents the components of cash, cash equivalents and restricted cash included in the Consolidated Balance Sheets.


		December 31, 2020						December 31, 2019							December 31, 2022
						Duke						Duke					Duke				Duke		Duke
		Duke		Progress		Energy		Duke		Progress		Energy			Duke		Energy		Progress		Energy		Energy
		Energy				Florida		Energy				Florida			Energy		Carolinas		Energy		Progress		Florida
Current Assets	Current Assets													Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	259	$	59	$	11	$	311	$	48	$	17	Cash and cash equivalents	$	409	$	44	$	108	$	49	$	45
Other	Other	194		39		39		222		39		39		Other	173		8		74		28		41
Other Noncurrent Assets	Other Noncurrent Assets													Other Noncurrent Assets
Other	Other	103		102		—		40		39		—		Other	11		1		2		2		—
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	556	$	200	$	50	$	573	$	126	$	56	Total cash, cash equivalents and restricted cash	$	593	$	53	$	184	$	79	$	86


	December 31, 2021
			Duke				Duke		Duke
	Duke		Energy		Progress		Energy		Energy
	Energy		Carolinas		Energy		Progress		Florida
Current Assets
Cash and cash equivalents	$	341	$	7	$	70	$	35	$	23
Other	170		—		39		—		39
Other Noncurrent Assets
Other	6		1		4		4		—
Total cash, cash equivalents and restricted cash	$	517	$	8	$	113	$	39	$	62

Inventory

Inventory related to regulated operations is valued at historical cost. Inventory related to nonregulated operations is valued at the lower of cost or market. Inventory is charged to expense or capitalized to property, plant and equipment when issued, primarily using the average cost method. Excess or obsolete inventory is written down to the lower of cost or net realizable value. Once inventory has been written down, it creates a new cost basis for the inventory that is not subsequently written up. Provisions for inventory write-offs were not material at December 31, ~~2020,~~2022, and ~~2019,~~2021, respectively. The components of inventory are presented in the tables below.

December 31, 2020
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Materials and supplies $ 2,312 $ 785 $ 999 $ 673 $ 325 $ 78 $ 307 $ 12
Coal 561 186 193 131 63 16 165 —
Natural gas, oil and other 294 39 183 107 76 16 1 56
Total inventory $ 3,167 $ 1,010 $ 1,375 $ 911 $ 464 $ 110 $ 473 $ 68


		December 31, 2019																	December 31, 2022
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	Materials and supplies	$	2,297	$	768	$	1,038	$	686	$	351	$	79	$	318	$	5	Materials and supplies	$	2,604	$	876	$	1,232	$	819	$	413	$	105	$	342	$	12
Coal	Coal	586		187		186		138		48		15		198		—		Coal	620		253		190		99		91		34		144		—
Natural gas, oil and other	Natural gas, oil and other	349		41		199		110		90		41		1		67		Natural gas, oil and other	360		35		157		88		69		5		3		160
Total inventory	Total inventory	$	3,232	$	996	$	1,423	$	934	$	489	$	135	$	517	$	72	Total inventory	$	3,584	$	1,164	$	1,579	$	1,006	$	573	$	144	$	489	$	172

~~129~~122


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


	December 31, 2021
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,309	$	793	$	1,067	$	729	$	338	$	80	$	311	$	14
Coal	486		195		167		94		73		19		105		—
Natural gas, oil and other	316		38		164		98		66		17		2		95
Total inventory	$	3,111	$	1,026	$	1,398	$	921	$	477	$	116	$	418	$	109

Investments in Debt and Equity Securities

The Duke Energy Registrants classify investments in equity securities as FV-NI and investments in debt securities as AFS. Both categories are recorded at fair value on the Consolidated Balance Sheets. Realized and unrealized gains and losses on securities classified as FV-NI are reported through net income. Unrealized gains and losses for debt securities classified as AFS are included in AOCI until realized, unless it is determined the carrying value of an investment has a credit loss. For certain investments of regulated operations, such as substantially all of the NDTF, realized and unrealized gains and losses (including any credit losses) on debt securities are recorded as a regulatory asset or liability. The credit loss portion of debt securities of nonregulated operations are included in earnings. Investments in debt and equity securities are classified as either current or noncurrent based on management’s intent and ability to sell these securities, taking into consideration current market liquidity. See Note 1516 for further information.

Goodwill

Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont perform annual goodwill impairment tests as of August 31 each year at the reporting unit level, which is determined to be a business segment or one level below. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update these tests between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. See Note 1112 for further information.

Intangible Assets

Intangible assets are included in Other in Other Noncurrent Assets on the Consolidated Balance Sheets. Generally, intangible assets are amortized using an amortization method that reflects the pattern in which the economic benefits of the intangible asset are consumed or on a straight-line basis if that pattern is not readily determinable. Amortization of intangibles is reflected in Depreciation and amortization on the Consolidated Statements of Operations. Intangible assets are subject to impairment testing and if impaired, the carrying value is accordingly reduced.

RECs are used to measure compliance with renewable energy standards and are held primarily for consumption. See Note 1112 for further information.

Long-Lived Asset Impairments

The Duke Energy Registrants evaluate long-lived assets that are held and used, excluding goodwill, for impairment when circumstances indicate the carrying value of those assets may not be recoverable. An impairment exists when a long-lived asset’s carrying value exceeds the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. The estimated cash flows may be based on alternative expected outcomes that are probability weighted. If the carrying value of the long-lived asset is not recoverable based on these estimated future undiscounted cash flows, the carrying value of the asset is written down to its then current estimated fair value and an impairment charge is recognized.

The Duke Energy Registrants assess fair value of long-lived assets that are held and used using various methods, including recent comparable third-party sales, internally developed discounted cash flow analysis and analysis from outside advisors. Triggering events to reassess cash flows may include, but are not limited to, significant changes in commodity prices, the condition of an asset or management’s interest in selling the asset.

~~Equity Method Investment Impairments~~

Investments in affiliates that are not controlled by Duke Energy, but over which it has significant influence, are accounted for using the equity method. Equity method investments are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. If the decline in value is considered to be other than temporary, the investment is written down to its estimated fair value, which establishes a new cost basis in the investment.

Impairment assessments use a discounted cash flow income approach and include consideration of the severity and duration of any decline in the fair value of the investments. The estimated cash flows may be based on alternative expected outcomes that are probability weighted. Key inputs that involve estimates and significant management judgment include cash flow projections, selection of a discount rate, probability weighting of potential outcomes, and whether any decline in value is considered temporary.

~~130~~123


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Property, Plant and Equipment

Property, plant and equipment are stated at the lower of depreciated historical cost net of any disallowances or fair value, if impaired. The Duke Energy Registrants capitalize all construction-related direct labor and material costs, as well as indirect construction costs such as general engineering, taxes and financing costs. See “Allowance for Funds Used During Construction and Interest Capitalized” section below for information on capitalized financing costs. Costs of renewals and betterments that extend the useful life of property, plant and equipment are also capitalized. The cost of repairs, replacements and major maintenance projects, which do not extend the useful life or increase the expected output of the asset, are expensed as incurred. Depreciation is generally computed over the estimated useful life of the asset using the composite straight-line method. Depreciation studies are conducted periodically to update composite rates and are approved by state utility commissions and/or the FERC when required. The composite weighted average depreciation rates, excluding nuclear fuel, are included in the table that follows.


		Years Ended December 31,							Years Ended December 31,
		2020		2019		2018			2022		2021		2020
Duke Energy	Duke Energy	3.0	%	3.1	%	3.0	%	Duke Energy	3.0	%	2.9	%	3.0	%
Duke Energy Carolinas	Duke Energy Carolinas	2.8	%	2.8	%	2.8	%	Duke Energy Carolinas	2.7	%	2.7	%	2.8	%
Progress Energy	Progress Energy	3.2	%	3.1	%	2.9	%	Progress Energy	3.2	%	3.1	%	3.2	%
Duke Energy Progress	Duke Energy Progress	3.1	%	3.1	%	2.9	%	Duke Energy Progress	3.0	%	3.0	%	3.1	%
Duke Energy Florida	Duke Energy Florida	3.3	%	3.1	%	3.0	%	Duke Energy Florida	3.5	%	3.3	%	3.3	%
Duke Energy Ohio	Duke Energy Ohio	2.9	%	2.6	%	2.8	%	Duke Energy Ohio	2.9	%	2.9	%	2.9	%
Duke Energy Indiana	Duke Energy Indiana	3.5	%	3.3	%	3.3	%	Duke Energy Indiana	3.6	%	3.6	%	3.5	%
Piedmont	Piedmont	2.3	%	2.4	%	2.5	%	Piedmont	2.1	%	2.1	%	2.3	%

In general, when the Duke Energy Registrants retire regulated property, plant and equipment, the original cost plus the cost of retirement, less salvage value and any depreciation already recognized, is charged to accumulated depreciation. However, when it becomes probable the asset will be retired substantially in advance of its original expected useful life or is abandoned, the cost of the asset and the corresponding accumulated depreciation is recognized as a separate asset. If the asset is still in operation, the net amount is classified as ~~Generation facilities~~Facilities to be retired, net on the Consolidated Balance Sheets. If the asset is no longer operating, the net amount is classified in Regulatory assets on the Consolidated Balance Sheets if deemed recoverable (see discussion of long-lived asset impairments above). The carrying value of the asset is based on historical cost if the Duke Energy Registrants are allowed to recover the remaining net book value and a return equal to at least the incremental borrowing rate. If not, an impairment is recognized to the extent the net book value of the asset exceeds the present value of future revenues discounted at the incremental borrowing rate.

When the Duke Energy Registrants sell entire regulated operating units, or retire or sell nonregulated properties, the original cost and accumulated depreciation and amortization balances are removed from Property, Plant and Equipment on the Consolidated Balance Sheets. Any gain or loss is recorded in earnings, unless otherwise required by the applicable regulatory body. See Note 1011 for additional information.

Other Noncurrent Assets

Duke Energy, through a nonregulated subsidiary, was the winner of the Carolina Long Bay offshore wind auction in May 2022 and recorded an

asset of $150 million related to the contract in Other within Other noncurrent assets. In November 2022, Duke Energy committed to a plan to sell the Commercial Renewables business segment, excluding the offshore wind contract for Carolina Long Bay, which was moved to the Electric Utilities and Infrastructure (EU&I) segment. See Notes 2 and 3 for further information.

Leases

Duke Energy determines if an arrangement is a lease at contract inception based on whether the arrangement involves the use of a physically distinct identified asset and whether Duke Energy has the right to obtain substantially all of the economic benefits from the use of the asset throughout the period as well as the right to direct the use of the asset. As a policy election, Duke Energy does not evaluate arrangements with initial contract terms of less than one year as leases.

Operating leases are included in Operating lease ROU assets, net, Other current liabilities and Operating lease liabilities on the Consolidated Balance Sheets. Finance leases are included in Property, plant and equipment, Current maturities of long-term debt and Long-Term Debt on the Consolidated Balance Sheets.

For lessee and lessor arrangements, Duke Energy has elected a policy to not separate lease and non-lease components for all asset classes. For lessor arrangements, lease and non-lease components are only combined under one arrangement and accounted for under the lease accounting framework if the non-lease components are not the predominant component of the arrangement and the lease component would be classified as an operating lease.

Nuclear Fuel

Nuclear fuel is classified as Property, Plant and Equipment on the Consolidated Balance Sheets.

Nuclear fuel in the front-end fuel processing phase is considered work in progress and not amortized until placed in service. Amortization of nuclear fuel is included within Fuel used in electric generation and purchased power on the Consolidated Statements of Operations. Amortization is recorded using the units-of-production method.

124


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Allowance for Funds Used During Construction and Interest Capitalized

For regulated operations, the debt and equity costs of financing the construction of property, plant and equipment are reflected as AFUDC and capitalized as a component of the cost of property, plant and equipment. AFUDC equity is reported on the Consolidated Statements of Operations as non-cash income in Other income and expenses, net. AFUDC debt is reported as a non-cash offset to Interest Expense. After construction is completed, the Duke Energy Registrants are permitted to recover these costs through their inclusion in rate base and the corresponding subsequent depreciation or amortization of those regulated assets.

~~131~~


~~FINANCIAL STATEMENTS~~			~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

AFUDC equity, a permanent difference for income taxes, reduces the ETR when capitalized and increases the ETR when depreciated or amortized. See Note 2324 for additional information.

~~For nonregulated operations, interest is capitalized during the construction phase with an offsetting non-cash credit to Interest Expense on the Consolidated Statements of Operations.~~

Asset Retirement Obligations

AROs are recognized for legal obligations associated with the retirement of property, plant and equipment. Substantially all AROs are related to regulated operations. When recording an ARO, the present value of the projected liability is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The liability is accreted over time. For operating plants, the present value of the liability is added to the cost of the associated asset and depreciated over the remaining life of the asset. For retired plants, the present value of the liability is recorded as a regulatory asset unless determined not to be probable of recovery.

The present value of the initial obligation and subsequent updates are based on discounted cash flows, which include estimates regarding timing of future cash flows, selection of discount rates and cost escalation rates, among other factors. These estimates are subject to change. Depreciation expense is adjusted prospectively for any changes to the carrying amount of the associated asset. The Duke Energy Registrants receive amounts to fund the cost of the ARO for regulated operations through a combination of regulated revenues and earnings on the NDTF. As a result, amounts recovered in regulated revenues, earnings on the NDTF, accretion expense and depreciation of the associated asset are netted and deferred as a regulatory asset or liability.

Accounts Payable

During 2020, Duke Energy established a supply chain finance program (the “program”) with a global financial institution. The program is voluntary and allows Duke Energy suppliers, at their sole discretion, to sell their receivables from Duke Energy to the financial institution at a rate that leverages Duke Energy’s credit rating and, which may result in favorable terms compared to the rate available to the supplier on their own credit rating. Suppliers participating in the program, determine at their sole discretion which invoices they will sell to the financial institution. Suppliers’ decisions on which invoices are sold do not impact Duke Energy’s payment terms, which are based on commercial terms negotiated between Duke Energy and the supplier regardless of program participation. The commercial terms negotiated between Duke Energy and its suppliers are consistent regardless of whether the supplier elects to participate in the program. Duke Energy does not issue any guarantees with respect to the program and does not participate in negotiations between suppliers and the financial institution. Duke Energy does not have an economic interest in the supplier’s decision to participate in the program and receives no interest, fees or other benefit from the financial institution based on supplier participation in the program.

~~At December 31, 2020, $15 million, $1 million and $14 million of~~The following table presents the outstanding ~~Accounts~~accounts payable balance ~~for Duke Energy, Duke Energy Ohio and Piedmont, respectively, was~~ sold to the financial institution by our ~~suppliers. Suppliers~~suppliers and the supplier invoices sold to the financial institution under the program totaled $45 million, $9 million and $36 million for the year ended December 31, 2020, for Duke Energy, Duke Energy Ohio and Piedmont, respectively. All activity related to amounts due to suppliers who elected to participate in the program are included within Net cash provided by operating activities on the Consolidated Statements of Cash ~~Flows.~~Flows as of December 31, 2022, and December 31, 2021.


	December 31, 2022
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Outstanding Accounts Payable Balance Sold	$	87	$	6	$	19	$	8	$	11	$	5	$	—	$	57
Suppliers Invoices Settled Through The Program	301		29		85		26		59		38		2		147


	December 30, 2021
					Duke		Duke
	Duke		Progress		Energy		Energy
(in millions)	Energy		Energy		Florida		Ohio		Piedmont
Outstanding Accounts Payable Balance Sold	$	19	$	9	$	9	$	6	$	4
Suppliers Invoices Settled Through The Program	122		10		10		12		100

Revenue Recognition

Duke Energy recognizes revenue as customers obtain control of promised goods and services in an amount that reflects consideration expected in exchange for those goods or services. Generally, the delivery of electricity and natural gas results in the transfer of control to customers at the time the commodity is delivered and the amount of revenue recognized is equal to the amount billed to each customer, including estimated volumes delivered when billings have not yet occurred. See Note 1819 for further information.

125


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Derivatives and Hedging

Derivative and non-derivative instruments may be used in connection with commodity price and interest rate activities, including swaps, futures, forwards and options. All derivative instruments, except those that qualify for the NPNS exception, are recorded on the Consolidated Balance Sheets at fair value. Qualifying derivative instruments may be designated as either cash flow hedges or fair value hedges. Other derivative instruments (undesignated contracts) either have not been designated or do not qualify as hedges. The effective portion of the change in the fair value of cash flow hedges is recorded in AOCI. The effective portion of the change in the fair value of a fair value hedge is offset in net income by changes in the hedged item. For activity subject to regulatory accounting, gains and losses on derivative contracts are reflected as regulatory assets or liabilities and not as other comprehensive income or current period income. As a result, changes in fair value of these derivatives have no immediate earnings impact.

Formal documentation, including transaction type and risk management strategy, is maintained for all contracts accounted for as a hedge. At inception and at least every three months thereafter, the hedge contract is assessed to see if it is highly effective in offsetting changes in cash flows or fair values of hedged items.

See Note 1415 for further information.

Captive Insurance Reserves

Duke Energy has captive insurance subsidiaries that provide coverage, on an indemnity basis, to the Subsidiary Registrants as well as certain third parties, on a limited basis, for financial losses, primarily related to property, workers’ compensation and general liability. Liabilities include provisions for estimated losses incurred but not reported (IBNR), as well as estimated provisions for known claims. IBNR reserve estimates are primarily based upon historical loss experience, industry data and other actuarial assumptions. Reserve estimates are adjusted in future periods as actual losses differ from experience.

~~132~~


~~FINANCIAL STATEMENTS~~			~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

Duke Energy, through its captive insurance entities, also has reinsurance coverage with third parties for certain losses above a per occurrence and/or aggregate retention. Receivables for reinsurance coverage are recognized when realization is deemed probable.

~~Unamortized Debt Premium, Discount and Expense~~

Premiums, discounts and expenses incurred with the issuance of outstanding long-term debt are amortized over the term of the debt issue. The gain or loss on extinguishment associated with refinancing higher-cost debt obligations in the regulated operations is amortized over the remaining life of the original instrument. Amortization expense is recorded as Interest Expense in the Consolidated Statements of Operations and is reflected as Depreciation, amortization and accretion within Net cash provided by operating activities on the Consolidated Statements of Cash Flows.

~~Premiums, discounts and expenses are presented as an adjustment to the carrying value of the debt amount and included in Long-Term Debt on the Consolidated Balance Sheets presented.~~

Preferred Stock

Preferred stock is reviewed to determine the appropriate balance sheet classification and embedded features, such as call options, are evaluated to determine if they should be bifurcated and accounted for separately. Costs directly related to the issuance of preferred stock isare recorded as a reduction of the proceeds received. The liability for the dividend is recognized when declared. The accumulated dividends on the cumulative preferred stock is recognized to net income available to Duke Energy Corporation in the EPS calculation. See Note 1920 for further information.

~~Loss Contingencies~~New Accounting Standards

See Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies,” for a discussion of the impact of new accounting standards.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Management’s Discussion and ~~Environmental Liabilities~~Analysis of Results of Operations and Financial Condition – Quantitative and Qualitative Disclosures About Market Risk.”

~~Contingent losses~~


FINANCIAL STATEMENTS

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Duke Energy
Report of Independent Registered Public Accounting Firm			70
Consolidated Statements of Operations			73
Consolidated Statements of Comprehensive Income			74
Consolidated Balance Sheets			75
Consolidated Statements of Cash Flows			76
Consolidated Statements of Changes in Equity			77

Duke Energy Carolinas
Report of Independent Registered Public Accounting Firm			78
Consolidated Statements of Operations and Comprehensive Income			80
Consolidated Balance Sheets			81
Consolidated Statements of Cash Flows			82
Consolidated Statements of Changes in Equity			83

Progress Energy
Report of Independent Registered Public Accounting Firm			84
Consolidated Statements of Operations and Comprehensive Income			86
Consolidated Balance Sheets			87
Consolidated Statements of Cash Flows			88
Consolidated Statements of Changes in Equity			89

Duke Energy Progress
Report of Independent Registered Public Accounting Firm			90
Consolidated Statements of Operations and Comprehensive Income			92
Consolidated Balance Sheets			93
Consolidated Statements of Cash Flows			94
Consolidated Statements of Changes in Equity			95

Duke Energy Florida
Report of Independent Registered Public Accounting Firm			96
Consolidated Statements of Operations and Comprehensive Income			98
Consolidated Balance Sheets			99
Consolidated Statements of Cash Flows			100
Consolidated Statements of Changes in Equity			101

Duke Energy Ohio
Report of Independent Registered Public Accounting Firm			102
Consolidated Statements of Operations and Comprehensive Income			104
Consolidated Balance Sheets			105
Consolidated Statements of Cash Flows			106
Consolidated Statements of Changes in Equity			107

Duke Energy Indiana
Report of Independent Registered Public Accounting Firm			108
Consolidated Statements of Operations and Comprehensive Income			110
Consolidated Balance Sheets			111
Consolidated Statements of Cash Flows			112
Consolidated Statements of Changes in Equity			113

Piedmont
Report of Independent Registered Public Accounting Firm			114
Consolidated Statements of Operations and Comprehensive Income			116
Consolidated Balance Sheets			117
Consolidated Statements of Cash Flows			118
Consolidated Statements of Changes in Equity			119


FINANCIAL STATEMENTS



Combined Notes to Consolidated Financial Statements
Note 1 – Summary of Significant Accounting Policies			120
Note 2 – Dispositions			128
Note 3 – Business Segments			130
Note 4 – Regulatory Matters			134
Note 5 – Commitments and Contingencies			151
Note 6 – Leases			156
Note 7 – Debt and Credit Facilities			160
Note 8 – Guarantees and Indemnifications			166
Note 9 – Joint Ownership of Generating and Transmission Facilities			166
Note 10 – Asset Retirement Obligations			167
Note 11 – Property, Plant and Equipment			170
Note 12 – Goodwill and Intangible Assets			172
Note 13 – Investments in Unconsolidated Affiliates			173
Note 14 – Related Party Transactions			174
Note 15 – Derivatives and Hedging			175
Note 16 – Investments in Debt and Equity Securities			181
Note 17 – Fair Value Measurements			185
Note 18 – Variable Interest Entities			190
Note 19 – Revenue			193
Note 20 – Stockholders' Equity			198
Note 21 – Severance			200
Note 22 – Stock-Based Compensation			201
Note 23 – Employee Benefit Plans			203
Note 24 – Income Taxes			216
Note 25 – Other Income and Expenses, Net			222
Note 26 – Subsequent Events			223
Note 27 – Quarterly Financial Data (Unaudited)			223


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Duke Energy Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Duke Energy Corporation and subsidiaries (the "Company") as of December 31, 2022, and 2021, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

Critical Audit Matters

Dispositions – Assessment of Held for Sale and Discontinued Operations Classification and Impairment Charge – Refer to Note 2 to the financial statements.

Critical Audit Matter Description

In November 2022, Duke Energy committed to a plan to sell the Commercial Renewables business segment, excluding the offshore wind contract for Carolina Long Bay (“Commercial Renewables business segment”). As a result, the Commercial Renewables business segment was classified as held for sale and reported as discontinued operations and pretax impairment charges of approximately $1.7 billion were recorded ~~when it~~to reduce the carrying amount of the assets to their estimated fair value, based on the expected selling price less cost to sell.

•The assessment of whether the sale is probable and the transfer of assets will be completed within one year from period-end;

•The assessment of whether the sale of the segment represents a ~~loss~~discontinued operation;

•The determination of the impairment charges; and

•The assessment of the fair value of the Commercial Renewables business segment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the classification of the Commercial Renewables business segment as held for sale and the associated impairment charges included the following, among others:

•We evaluated management’s assessment of held for sale and discontinued operations classification as follows:

–Inquired of executive officers, key members of management and members of the Board of Directors to obtain an understanding of plans to sell the Commercial Renewables business segment.


REPORTS

–Compared management’s conclusions against relevant guidance and tested the completeness and accuracy of information used in the Company’s evaluation.

•We evaluated the accuracy and completeness of the Company's reclassification of balances and activity and related disclosures.

•We obtained representation from management asserting to the appropriate presentation, measurement and timing of the Commercial Renewables business segment.

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to regulation by federal and state utility regulatory agencies (the “Commissions”), which have jurisdiction with respect to the rates of the Company’s electric and natural gas distribution companies. Management has ~~occurred and~~determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be ~~reasonably estimated. When~~required to determine if otherwise recognizable incurred costs qualify to be presented as a ~~range~~regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, 2022, the Company has approximately $18.1 billion of recorded regulatory assets.

How the Critical Audit Matters Were Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation including the balances recorded and regulatory developments.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.


REPORTS

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1947.


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS


	Years Ended December 31,
(in millions, except per share amounts)	2022		2021		2020
Operating Revenues
Regulated electric	$	25,759	$	22,319	$	21,461
Regulated natural gas	2,724		2,008		1,642
Nonregulated electric and other	285		294		263
Total operating revenues	28,768		24,621		23,366
Operating Expenses
Fuel used in electric generation and purchased power	8,782		6,255		6,051
Cost of natural gas	1,276		705		460
Operation, maintenance and other	5,734		5,703		5,502
Depreciation and amortization	5,086		4,762		4,504
Property and other taxes	1,466		1,355		1,311
Impairment of assets and other charges	434		353		978
Total operating expenses	22,778		19,133		18,806
Gains on Sales of Other Assets and Other, net	22		12		11
Operating Income	6,012		5,500		4,571
Other Income and Expenses
Equity in earnings (losses) of unconsolidated affiliates	113		62		(2,005)

Other income and expenses, net	392		636		451
Total other income and expenses	505		698		(1,554)
Interest Expense	2,439		2,207		2,097
Income From Continuing Operations Before Income Taxes	4,078		3,991		920
Income Tax Expense (Benefit) From Continuing Operations	300		268		(169)
Income From Continuing Operations	3,778		3,723		1,089
Loss From Discontinued Operations, net of tax	(1,323)		(144)		(7)
Net Income	2,455		3,579		1,082
Add: Net Loss Attributable to Noncontrolling Interests	95		329		295
Net Income Attributable to Duke Energy Corporation	2,550		3,908		1,377
Less: Preferred Dividends	106		106		107
Net Income Available to Duke Energy Corporation Common Stockholders	$	2,444	$	3,802	$	1,270

Earnings Per Share – Basic and Diluted
Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and Diluted	$	4.74	$	4.68	$	1.33

(Loss) Income from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic and Diluted	$	(1.57)	$	0.26	$	0.39

Net income available to Duke Energy Corporation common stockholders
Basic and Diluted	$	3.17	$	4.94	$	1.72

Weighted average shares outstanding
Basic	770		769		737
Diluted	770		769		738

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Net Income	$	2,455	$	3,579	$	1,082
Other Comprehensive Income (Loss), net of tax(a)

Pension and OPEB adjustments	(19)		7		6
Net unrealized gains (losses) on cash flow hedges	285		(68)		(138)
Reclassification into earnings from cash flow hedges	(38)		13		11
Net unrealized losses on fair value hedges	(33)		—		—
Unrealized (losses) gains on available-for-sale securities	(21)		(8)		3

Other Comprehensive Income (Loss), net of tax	174		(56)		(118)
Comprehensive Income	2,629		3,523		964
Add: Comprehensive Loss Attributable to Noncontrolling Interests	84		319		306
Comprehensive Income Attributable to Duke Energy Corporation	2,713		3,842		1,270
Less: Preferred Dividends	106		106		107
Comprehensive Income Available to Duke Energy Corporation Common Stockholders	$	2,607	$	3,736	$	1,163

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	409	$	341

Receivables (net of allowance for doubtful accounts of $40 at 2022 and $45 at 2021)	1,309		1,085
Receivables of VIEs (net of allowance for doubtful accounts of $176 at 2022 and $76 at 2021)	3,106		2,437
Inventory	3,584		3,111
Regulatory assets (includes $106 at 2022 and $105 at 2021 related to VIEs)	3,485		2,150
Assets held for sale	262		232
Other (includes $116 at 2022 and $41 at 2021 related to VIEs)	1,067		584
Total current assets	13,222		9,940
Property, Plant and Equipment
Cost	163,839		154,496
Accumulated depreciation and amortization	(52,100)		(49,104)
Facilities to be retired, net	9		144
Net property, plant and equipment	111,748		105,536
Other Noncurrent Assets
Goodwill	19,303		19,303
Regulatory assets (includes $1,715 at 2022 and $1,824 at 2021 related to VIEs)	14,645		12,487
Nuclear decommissioning trust funds	8,637		10,401
Operating lease right-of-use assets, net	1,042		1,136
Investments in equity method unconsolidated affiliates	455		457
Assets held for sale	5,634		6,695
Other (includes $52 at 2022 and $30 at 2021 related to VIEs)	3,400		3,632
Total other noncurrent assets	53,116		54,111
Total Assets	$	178,086	$	169,587
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	4,754	$	3,531
Notes payable and commercial paper	3,952		3,304
Taxes accrued	722		731
Interest accrued	626		530
Current maturities of long-term debt (includes $350 at 2022 and $76 at 2021 related to VIEs)	4,154		3,387
Asset retirement obligations	773		647
Regulatory liabilities	1,466		1,211
Liabilities associated with assets held for sale	259		167
Other	2,167		2,423
Total current liabilities	18,873		15,931
Long-Term Debt (includes $3,108 at 2022 and $3,379 at 2021 related to VIEs)	67,061		60,448
Other Noncurrent Liabilities
Deferred income taxes	9,964		9,379
Asset retirement obligations	11,955		11,953
Regulatory liabilities	13,582		16,152
Operating lease liabilities	876		940
Accrued pension and other post-retirement benefit costs	832		855
Investment tax credits	849		833
Liabilities associated with assets held for sale	739		612
Other	1,502		1,348
Total other noncurrent liabilities	40,299		42,072
Commitments and Contingencies

Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2022 and 2021	973		973
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2022 and 2021	989		989
Common stock, $0.001 par value, 2 billion shares authorized; 770 million and 769 million shares outstanding at 2022 and 2021	1		1
Additional paid-in capital	44,862		44,371
Retained earnings	2,637		3,265
Accumulated other comprehensive loss	(140)		(303)
Total Duke Energy Corporation stockholders' equity	49,322		49,296
Noncontrolling interests	2,531		1,840
Total equity	51,853		51,136
Total Liabilities and Equity	$	178,086	$	169,587

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,455	$	3,579	$	1,082
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	5,843		5,663		5,486
Equity in (earnings) losses of unconsolidated affiliates	(114)		(28)		2,005
Equity component of AFUDC	(197)		(171)		(154)

Impairment of assets and other charges	2,183		356		984
Deferred income taxes	(200)		191		54
Contributions to qualified pension plans	(58)		—		—
Payments for asset retirement obligations	(584)		(540)		(610)
Provision for rate refunds	(130)		(70)		(22)
Refund of AMT credit carryforwards	—		—		572
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	19		50		63
Receivables	(788)		(297)		(56)
Inventory	(476)		(34)		66
Other current assets(a)	(1,498)		(1,136)		205
Increase (decrease) in
Accounts payable	805		249		(21)
Taxes accrued	10		284		117
Other current liabilities	(153)		(13)		(65)
Other assets(a)	(1,600)		112		(408)
Other liabilities	410		95		(442)
Net cash provided by operating activities	5,927		8,290		8,856
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(11,367)		(9,715)		(9,907)
Contributions to equity method investments	(58)		(81)		(370)

Return of investment capital	6		44		133
Purchases of debt and equity securities	(4,243)		(6,098)		(8,011)
Proceeds from sales and maturities of debt and equity securities	4,333		6,103		7,949

Disbursements to canceled equity method investments	—		(855)		—
Other	(644)		(333)		(398)
Net cash used in investing activities	(11,973)		(10,935)		(10,604)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	11,874		9,052		6,330

Issuance of common stock	9		5		2,745
Payments for the redemption of long-term debt	(4,396)		(5,294)		(4,506)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	80		332		3,009
Payments for the redemption of short-term debt with original maturities greater than 90 days	(287)		(997)		(2,147)
Notes payable and commercial paper	781		1,144		(1,181)

Contributions from noncontrolling interests	1,377		1,575		426
Dividends paid	(3,179)		(3,114)		(2,812)

Other	(130)		(94)		(133)
Net cash provided by financing activities	6,129		2,609		1,731

Net increase (decrease) in cash, cash equivalents and restricted cash	83		(36)		(17)
Cash, cash equivalents and restricted cash at beginning of period	520		556		573
Cash, cash equivalents and restricted cash at end of period	$	603	$	520	$	556
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	2,361	$	2,248	$	2,186
Cash received from income taxes	(6)		(3)		(585)
Significant non-cash transactions:
Accrued capital expenditures	1,766		1,325		1,116
Non-cash dividends	—		—		110

(a) Includes approximately $2.6 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


										Duke Energy Corporation Stockholders' Accumulated Other Comprehensive Income (Loss)
												Net Unrealized				Total
										Net Gains		Gains (Losses)				Duke Energy
			Common			Additional				(Losses)		on Available-		Pension and		Corporation
	Preferred		Stock	Common		Paid-in		Retained		on		for-Sale-		OPEB		Stockholders'		Noncontrolling		Total
(in millions)	Stock		Shares	Stock		Capital		Earnings		Hedges(d)		Securities		Adjustments		Equity		Interests		Equity
Balance at December 31, 2019	$	1,962	733	$	1	$	40,881	$	4,108	$	(51)	$	3	$	(82)	$	46,822	$	1,129	$	47,951
Net income (loss)	—		—	—		—		1,270		—		—		—		1,270		(295)		975
Other comprehensive (loss) income	—		—	—		—		—		(116)		3		6		(107)		(11)		(118)


Common stock issuances, including dividend reinvestment and employee benefits	—		36	—		2,902		—		—		—		—		2,902		—		2,902

Common stock dividends	—		—	—		—		(2,815)		—		—		—		(2,815)		—		(2,815)

Contribution from noncontrolling interest(a)	—		—	—		(17)		—		—		—		—		(17)		426		409
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(30)		(30)
Other(b)	—		—	—		1		(92)		—		—		—		(91)		1		(90)
Balance at December 31, 2020	$	1,962	769	$	1	$	43,767	$	2,471	$	(167)	$	6	$	(76)	$	47,964	$	1,220	$	49,184
Net income (loss)	—		—	—		—		3,802		—		—		—		3,802		(329)		3,473
Other comprehensive (loss) income	—		—	—		—		—		(65)		(8)		7		(66)		10		(56)


Common stock issuances, including dividend reinvestment and employee benefits	—		—	—		68		—		—		—		—		68		—		68

Common stock dividends	—		—	—		—		(3,008)		—		—		—		(3,008)		—		(3,008)
Sale of noncontrolling interest(c)	—		—	—		545		—		—		—		—		545		454		999
Contribution from noncontrolling interest, net of transaction costs(a)	—		—	—		—		—		—		—		—		—		550		550
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(66)		(66)
Other	—		—	—		(9)		—		—		—		—		(9)		1		(8)
Balance at December 31, 2021	$	1,962	769	$	1	$	44,371	$	3,265	$	(232)	$	(2)	$	(69)	$	49,296	$	1,840	$	51,136
Net income (loss)	—		—	—		—		2,444		—		—		—		2,444		(95)		2,349
Other comprehensive income (loss)	—		—	—		—		—		203		(21)		(19)		163		11		174


Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		76		—		—		—		—		76		—		76

Common stock dividends	—		—	—		—		(3,073)		—		—		—		(3,073)		—		(3,073)
Sale of noncontrolling interest(c)	—		—	—		465		—		—		—		—		465		569		1,034
Purchase of noncontrolling interest	—		—	—		(51)		—		—		—		—		(51)		31		(20)
Contribution from noncontrolling interest, net of transaction costs(a)	—		—	—		—		—		—		—		—		—		314		314
Distributions to noncontrolling interests in subsidiaries	—		—	—		—		—		—		—		—		—		(140)		(140)
Other	—		—	—		1		1		—		—		—		2		1		3
Balance at December 31, 2022	$	1,962	770	$	1	$	44,862	$	2,637	$	(29)	$	(23)	$	(88)	$	49,322	$	2,531	$	51,853

(a) Relates to tax equity financing activity in the Commercial Renewables Disposal Groups.

(b) Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.

(c) Relates primarily to the sale of a noncontrolling interest in Duke Energy Indiana. See Note 2 for additional discussion.

(d) See Duke Energy Consolidated Statements of Comprehensive Income for detailed activity related to Cash Flow and Fair Value Hedges.

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Carolinas, LLC

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no ~~amount within~~such opinion.

Our audits included performing procedures to assess the ~~range~~risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a ~~better estimate than~~matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any ~~other amount,~~way our opinion on the ~~minimum amount~~financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

~~Environmental liabilities are recorded on an undiscounted basis when environmental remediation or other liabilities become probable and~~United States of America. Significant judgment can be ~~reasonably estimated. Environmental expenditures related~~required to ~~past operations that do not generate current or~~determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future ~~revenues are expensed. Environmental expenditures related~~recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to ~~operations that generate current or~~coal ash. As a result, assessing the potential outcomes of future ~~revenues are expensed or capitalized, as appropriate. Certain environmental expenditures receive~~ regulatory ~~accounting treatment and are~~orders requires significant management judgment. As of December 31, 2022, the Company has approximately $5.4 billion recorded as regulatory assets.

~~See Notes 3 and 4 for further information.~~

~~Pension and Other Post-Retirement Benefit Plans~~

~~Duke Energy maintains qualified, non-qualified and other post-retirement benefit plans. Eligible employees~~We identified the impact of the Subsidiary Registrants participate in the respective qualified, non-qualified and other post-retirement benefit plans and the Subsidiary Registrants are allocated their proportionate share of benefit costs. See Note 22 for further information, including significant accounting policies associated with these plans.

~~Severance and Special Termination Benefits~~

~~Duke Energy has severance plans under which in general, the longer~~rate regulation related to regulatory assets as a terminated employee worked prior to termination the greater the amount of severance benefits. A liability for involuntary severance is recorded once an involuntary severance plan is committed to by management if involuntary severances are probable and can be reasonably estimated. For involuntary severance benefits incremental to its ongoing severance plan benefits, the fair value of the obligation is expensed at the communication date if there are no future service requirements or over the required future service period. Duke Energy also offers special termination benefits under voluntary severance programs. Special termination benefits are recorded immediately upon employee acceptance absent a significant retention period. Otherwise, the cost is recorded over the remaining service period. Employee acceptance of voluntary severance benefits is determined by management based on the facts and circumstances of the benefits being offered. See Note 20 for further information.

~~Guarantees~~

If necessary, liabilities are recognized at the time of issuance or material modification of a guarantee for the estimated fair value of the obligation it assumes. Fair value is estimated using a probability weighted approach. The obligation is reduced over the term of the guarantee or related contract in a systematic and rational method as risk is reduced. Duke Energy recognizes a liability for the best estimate of its losscritical audit matter due to the ~~nonperformance~~significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We tested the effectiveness of management’s controls over the evaluation of the ~~guaranteed party. This liability is recognized at~~likelihood of the ~~inception~~recovery in future rates and the monitoring and evaluation of ~~a guarantee and is updated periodically. See Note 7 for further information.~~regulatory developments that may affect the likelihood of recovering costs in future rates.

~~Stock-Based Compensation~~

~~Stock-based compensation represents costs~~•We evaluated the Company’s disclosures related to ~~stock-based awards granted~~the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by intervenors, and other publicly available information to ~~employees~~assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and ~~Board of Directors members. Duke Energy recognizes stock-based compensation based upon the estimated fair value of awards, net of estimated forfeitures at the date of issuance. The recognition period~~compared it to management’s recorded balances for these costs begins at either the applicable service inception date or grant date and continues throughout the requisite service period. Compensation cost is recognized as expense or capitalized as a component of property, plant and equipment. See Note 21 for further information.completeness.

~~133~~78


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1947.


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	7,857	$	7,102	$	7,015
Operating Expenses
Fuel used in electric generation and purchased power	2,015		1,601		1,682
Operation, maintenance and other	1,892		1,833		1,743
Depreciation and amortization	1,526		1,468		1,462
Property and other taxes	340		320		299
Impairment of assets and other charges	26		227		476
Total operating expenses	5,799		5,449		5,662
Gains on Sales of Other Assets and Other, net	4		2		1
Operating Income	2,062		1,655		1,354
Other Income and Expenses, net	221		270		177
Interest Expense	557		538		487
Income Before Income Taxes	1,726		1,387		1,044
Income Tax Expense	126		51		88
Net Income	$	1,600	$	1,336	$	956
Other Comprehensive Income, net of tax


Net unrealized gain on cash flow hedges	—		1		—
Other Comprehensive Income, net of tax	—		1		—
Comprehensive Income	$	1,600	$	1,337	$	956

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	44	$	7
Receivables (net of allowance for doubtful accounts of $3 at 2022 and $1 at 2021)	338		300
Receivables of VIEs (net of allowance for doubtful accounts of $65 at 2022 and $41 at 2021)	928		844
Receivables from affiliated companies	390		190

Inventory	1,164		1,026
Regulatory assets (includes $12 at 2022 and 2021 related to VIEs)	1,095		544
Other (includes $8 at 2022 related to VIEs)	216		95
Total current assets	4,175		3,006
Property, Plant and Equipment
Cost	54,650		51,874
Accumulated depreciation and amortization	(18,669)		(17,854)
Facilities to be retired, net	—		102
Net property, plant and equipment	35,981		34,122
Other Noncurrent Assets

Regulatory assets (includes $208 at 2022 and $220 at 2021 related to VIEs)	4,293		2,935
Nuclear decommissioning trust funds	4,783		5,759
Operating lease right-of-use assets, net	78		92
Other	1,036		1,248
Total other noncurrent assets	10,190		10,034
Total Assets	$	50,346	$	47,162
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,472	$	988
Accounts payable to affiliated companies	209		266
Notes payable to affiliated companies	1,233		226
Taxes accrued	228		274
Interest accrued	120		125
Current maturities of long-term debt (includes $10 at 2022 and $5 at 2021 related to VIEs)	1,018		362
Asset retirement obligations	261		249
Regulatory liabilities	530		487
Other	580		546
Total current liabilities	5,651		3,523
Long-Term Debt (includes $689 at 2022 and $703 at 2021 related to VIEs)	12,948		12,595
Long-Term Debt Payable to Affiliated Companies	300		318
Other Noncurrent Liabilities
Deferred income taxes	4,153		3,634
Asset retirement obligations	5,121		5,052
Regulatory liabilities	5,783		7,198
Operating lease liabilities	83		78
Accrued pension and other post-retirement benefit costs	38		50
Investment tax credits	300		287
Other	527		536
Total other noncurrent liabilities	16,005		16,835
Commitments and Contingencies
Equity
Member's equity	15,448		13,897
Accumulated other comprehensive loss	(6)		(6)
Total equity	15,442		13,891
Total Liabilities and Equity	$	50,346	$	47,162

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,600	$	1,336	$	956
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	1,787		1,743		1,731
Equity component of AFUDC	(98)		(65)		(62)

Impairment of assets and other charges	26		227		476
Deferred income taxes	210		(213)		(260)
Contributions to qualified pension plans	(15)		—		—
Payments for asset retirement obligations	(200)		(182)		(162)
Provision for rate refunds	(74)		(46)		(5)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—		—		(4)
Receivables	(102)		(99)		52
Receivables from affiliated companies	(200)		(66)		(10)
Inventory	(138)		(16)		(14)
Other current assets(a)	(592)		(309)		209
Increase (decrease) in
Accounts payable	377		5		55
Accounts payable to affiliated companies	(75)		85		(11)
Taxes accrued	(46)		206		30
Other current liabilities	(91)		(39)		(56)
Other assets(a)	(764)		21		(102)
Other liabilities	(36)		116		(47)
Net cash provided by operating activities	1,569		2,704		2,776
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(3,304)		(2,693)		(2,669)

Purchases of debt and equity securities	(2,633)		(3,425)		(1,602)
Proceeds from sales and maturities of debt and equity securities	2,633		3,425		1,602


Other	(181)		(177)		(164)
Net cash used in investing activities	(3,485)		(2,870)		(2,833)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,441		1,651		998
Payments for the redemption of long-term debt	(436)		(617)		(813)
Notes payable to affiliated companies	1,007		(280)		477
Distributions to parent	(50)		(600)		(600)
Other	(1)		(1)		(2)
Net cash provided by financing activities	1,961		153		60
Net increase (decrease) in cash, cash equivalents and restricted cash	45		(13)		3
Cash, cash equivalents and restricted cash at beginning of period	8		21		18
Cash, cash equivalents and restricted cash at end of period	$	53	$	8	$	21
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	546	$	508	$	481
Cash (received from) paid for income taxes	(60)		233		321
Significant non-cash transactions:
Accrued capital expenditures	475		359		365

(a) Includes approximately $1.3 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


			Accumulated Other
			Comprehensive
			Income (Loss)
			Net Gains
			(Losses) on
	Member's		Cash Flow		Total
(in millions)	Equity		Hedges		Equity
Balance at December 31, 2019	$	12,818	$	(7)	$	12,811
Net income	956		—		956

Distributions to parent	(600)		—		(600)
Other(a)	(13)		—		(13)
Balance at December 31, 2020	$	13,161	$	(7)	$	13,154
Net income	1,336		—		1,336
Other comprehensive income	—		1		1
Distributions to parent	(600)		—		(600)

Balance at December 31, 2021	$	13,897	$	(6)	$	13,891
Net income	1,600		—		1,600

Distributions to parent	(50)		—		(50)
Other	1		—		1
Balance at December 31, 2022	$	15,448	$	(6)	$	15,442

(a) Amounts primarily represent impacts due to implementation of a new accounting standard related to Credit Losses. See Note 1 for additional discussion.

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Progress Energy, Inc.

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, South Carolina Public Service Commission and Florida Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, 2022, the Company has approximately $9 billion recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded balances for completeness.


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1930.


FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	13,125	$	11,057	$	10,627
Operating Expenses
Fuel used in electric generation and purchased power	5,078		3,584		3,479
Operation, maintenance and other	2,458		2,529		2,479
Depreciation and amortization	2,142		1,929		1,818
Property and other taxes	607		542		545
Impairment of assets and other charges	12		82		495
Total operating expenses	10,297		8,666		8,816
Gains on Sales of Other Assets and Other, net	11		14		9
Operating Income	2,839		2,405		1,820
Other Income and Expenses, net	181		215		129
Interest Expense	844		794		790
Income Before Income Taxes	2,176		1,826		1,159
Income Tax Expense	348		227		113


Net Income	1,828		1,599		1,046
Less: Net Income Attributable to Noncontrolling Interests	—		1		1
Net Income Attributable to Parent	$	1,828	$	1,598	$	1,045

Net Income	$	1,828	$	1,599	$	1,046
Other Comprehensive Income, net of tax
Pension and OPEB adjustments	5		1		(1)
Net unrealized gain on cash flow hedges	1		3		5


Unrealized (losses) gains on available-for-sale securities	(6)		—		(1)

Other Comprehensive Income, net of tax	—		4		3
Comprehensive Income	1,828		1,603		1,049
Less: Comprehensive Income Attributable to Noncontrolling Interests	—		1		1
Comprehensive Income Attributable to Parent	$	1,828	$	1,602	$	1,048

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	108	$	70
Receivables (net of allowance for doubtful accounts of $13 at 2022 and $11 at 2021)	318		247
Receivables of VIEs (net of allowance for doubtful accounts of $68 at 2022 and $25 at 2021)	1,289		1,006
Receivables from affiliated companies	22		121

Inventory	1,579		1,398
Regulatory assets (includes $94 at 2022 and $93 at 2021 related to VIEs)	1,833		1,030
Other (includes $88 at 2022 and $39 at 2021 related to VIEs)	342		125
Total current assets	5,491		3,997
Property, Plant and Equipment
Cost	64,822		60,894
Accumulated depreciation and amortization	(20,584)		(19,214)
Facilities to be retired, net	—		26
Net property, plant and equipment	44,238		41,706
Other Noncurrent Assets
Goodwill	3,655		3,655
Regulatory assets (includes $1,507 at 2022 and $1,603 at 2021 related to VIEs)	7,146		5,909
Nuclear decommissioning trust funds	3,855		4,642
Operating lease right-of-use assets, net	628		691
Other	1,066		1,242
Total other noncurrent assets	16,350		16,139
Total Assets	$	66,079	$	61,842
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,481	$	1,099
Accounts payable to affiliated companies	712		506
Notes payable to affiliated companies	843		2,809
Taxes accrued	135		128
Interest accrued	206		192
Current maturities of long-term debt (includes $340 at 2022 and $71 at 2021 related to VIEs)	697		1,082
Asset retirement obligations	289		275
Regulatory liabilities	576		478
Other	782		868
Total current liabilities	5,721		7,437
Long-Term Debt (includes $2,003 at 2022 and $2,293 at 2021 related to VIEs)	21,592		19,591
Long-Term Debt Payable to Affiliated Companies	150		150
Other Noncurrent Liabilities
Deferred income taxes	5,147		4,564
Asset retirement obligations	5,892		5,837
Regulatory liabilities	4,753		5,566
Operating lease liabilities	546		606
Accrued pension and other post-retirement benefit costs	292		417
Investment tax credits	358		364
Other	222		162
Total other noncurrent liabilities	17,210		17,516
Commitments and Contingencies
Equity
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2022 and 2021	—		—
Additional paid-in capital	11,832		9,149
Retained earnings	9,585		8,007
Accumulated other comprehensive loss	(11)		(11)
Total Progress Energy, Inc. stockholder's equity	21,406		17,145
Noncontrolling interests	—		3
Total equity	21,406		17,148
Total Liabilities and Equity	$	66,079	$	61,842

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,828	$	1,599	$	1,046
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	2,405		2,302		2,327
Equity component of AFUDC	(68)		(51)		(42)

Impairment of assets and other charges	12		82		495
Deferred income taxes	364		247		(197)
Contributions to qualified pension plans	(13)		—		—
Payments for asset retirement obligations	(291)		(288)		(384)
Provision for rate refunds	(58)		(36)		2
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—		51		(9)
Receivables	(322)		(97)		(69)
Receivables from affiliated companies	117		18		(81)
Inventory	(183)		(26)		49
Other current assets(a)	(937)		(551)		223
Increase (decrease) in
Accounts payable	222		59		(62)
Accounts payable to affiliated companies	206		217		(21)
Taxes accrued	8		13		75
Other current liabilities	96		(32)		139
Other assets(a)	(1,116)		(110)		(137)
Other liabilities	573		(99)		(177)
Net cash provided by operating activities	2,843		3,298		3,177
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(4,317)		(3,668)		(3,488)

Purchases of debt and equity securities	(1,341)		(2,233)		(5,998)
Proceeds from sales and maturities of debt and equity securities	1,417		2,322		6,010

Notes receivable from affiliated companies	—		—		164
Other	(137)		(156)		(160)
Net cash used in investing activities	(4,378)		(3,735)		(3,472)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	2,775		3,095		1,791
Payments for the redemption of long-term debt	(1,173)		(1,883)		(2,157)
Notes payable to affiliated companies	465		(160)		1,148
Dividends to parent	(425)		(700)		(400)
Other	(36)		(2)		(13)
Net cash provided by financing activities	1,606		350		369
Net increase (decrease) in cash, cash equivalents and restricted cash	71		(87)		74
Cash, cash equivalents and restricted cash at beginning of period	113		200		126
Cash, cash equivalents and restricted cash at end of period	$	184	$	113	$	200
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	854	$	813	$	819
Cash paid for income taxes	79		14		149
Significant non-cash transactions:
Accrued capital expenditures	663		501		363

(a) Includes approximately $1.3 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


					Accumulated Other Comprehensive Income (Loss)
					Net Gains		Net Unrealized				Total Progress
	Additional				(Losses) on		Gains (Losses)		Pension and		Energy, Inc.
	Paid-in		Retained		Cash Flow		on Available-for-		OPEB		Stockholder's		Noncontrolling		Total
(in millions)	Capital		Earnings		Hedges		Sale Securities		Adjustments		Equity		Interests		Equity
Balance at December 31, 2019	$	9,143	$	6,465	$	(10)	$	(1)	$	(7)	$	15,590	$	3	$	15,593
Net income	—		1,045		—		—		—		1,045		1		1,046
Other comprehensive income (loss)	—		—		5		(1)		(1)		3		—		3



Dividends to parent	—		(400)		—		—		—		(400)		—		(400)

Other	—		(1)		—		—		—		(1)		—		(1)
Balance at December 31, 2020	$	9,143	$	7,109	$	(5)	$	(2)	$	(8)	$	16,237	$	4	$	16,241
Net income	—		1,598		—		—		—		1,598		1		1,599
Other comprehensive income	—		—		3		—		1		4		—		4

Distributions to noncontrolling interests	—		—		—		—		—		—		(1)		(1)
Dividends to parent	—		(700)		—		—		—		(700)		—		(700)

Other	6		—		—		—		—		6		(1)		5
Balance at December 31, 2021	$	9,149	$	8,007	$	(2)	$	(2)	$	(7)	$	17,145	$	3	$	17,148
Net income	—		1,828		—		—		—		1,828		—		1,828
Other comprehensive income (loss)	—		—		1		(6)		5		—		—		—
Distributions to noncontrolling interests	—		—		—		—		—		—		(34)		(34)
Dividends to parent	(175)		(250)		—		—		—		(425)		—		(425)
Equitization of certain notes payable to affiliates	2,907		—		—		—		—		2,907		—		2,907
Purchase of a noncontrolling interest	(51)		—		—		—		—		(51)		31		(20)
Other	2		—		—		—		—		2		—		2
Balance at December 31, 2022	$	11,832	$	9,585	$	(1)	$	(8)	$	(2)	$	21,406	$	—	$	21,406

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Progress, LLC

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, 2022, the Company has approximately $5.4 billion recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded balances for completeness.


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1930.


FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	6,753	$	5,780	$	5,422
Operating Expenses
Fuel used in electric generation and purchased power	2,492		1,778		1,743
Operation, maintenance and other	1,475		1,467		1,332
Depreciation and amortization	1,187		1,097		1,116
Property and other taxes	190		159		167
Impairment of assets and other charges	7		63		499
Total operating expenses	5,351		4,564		4,857
Gains on Sales of Other Assets and Other, net	4		13		8
Operating Income	1,406		1,229		573
Other Income and Expenses, net	114		143		75
Interest Expense	354		306		269
Income Before Income Taxes	1,166		1,066		379
Income Tax Expense (Benefit)	158		75		(36)
Net Income and Comprehensive Income	$	1,008	$	991	$	415

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	49	$	35
Receivables (net of allowance for doubtful accounts of $4 at 2022 and 2021)	167		127
Receivables of VIEs (net of allowance for doubtful accounts of $40 at 2022 and $17 at 2021)	793		574
Receivables from affiliated companies	25		65

Inventory	1,006		921
Regulatory assets (includes $39 at 2022 and 2021 related to VIEs)	690		533
Other (includes $42 at 2022 related to VIEs)	174		83
Total current assets	2,904		2,338
Property, Plant and Equipment
Cost	38,875		37,018
Accumulated depreciation and amortization	(14,201)		(13,387)
Facilities to be retired, net	—		26
Net property, plant and equipment	24,674		23,657
Other Noncurrent Assets
Regulatory assets (includes $681 at 2022 and $720 at 2021 related to VIEs)	4,724		4,118
Nuclear decommissioning trust funds	3,430		4,089
Operating lease right-of-use assets, net	370		389
Other	650		792
Total other noncurrent assets	9,174		9,388
Total Assets	$	36,752	$	35,383
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	601	$	476
Accounts payable to affiliated companies	508		310
Notes payable to affiliated companies	238		172
Taxes accrued	77		163
Interest accrued	101		96
Current maturities of long-term debt (includes $34 at 2022 and $15 at 2021 related to VIEs)	369		556
Asset retirement obligations	288		274
Regulatory liabilities	332		381
Other	384		448
Total current liabilities	2,898		2,876
Long-Term Debt (includes $1,114 at 2022 and $1,097 at 2021 related to VIEs)	10,568		9,543
Long-Term Debt Payable to Affiliated Companies	150		150
Other Noncurrent Liabilities
Deferred income taxes	2,477		2,208
Asset retirement obligations	5,535		5,401
Regulatory liabilities	4,120		4,868
Operating lease liabilities	335		350
Accrued pension and other post-retirement benefit costs	160		221
Investment tax credits	124		128
Other	76		87
Total other noncurrent liabilities	12,827		13,263
Commitments and Contingencies
Equity
Member's Equity	10,309		9,551



Total Liabilities and Equity	$	36,752	$	35,383

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,008	$	991	$	415
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	1,371		1,286		1,299
Equity component of AFUDC	(52)		(34)		(29)

Impairment of assets and other charges	7		63		499
Deferred income taxes	121		(46)		(234)
Contributions to qualified pension plans	(8)		—		—
Payments for asset retirement obligations	(193)		(187)		(304)
Provisions for rate refunds	(58)		(36)		2
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—		48		1
Receivables	(228)		(52)		(4)
Receivables from affiliated companies	58		(33)		2
Inventory	(85)		(11)		23
Other current assets(a)	(207)		(147)		98
Increase (decrease) in
Accounts payable	20		12		(127)
Accounts payable to affiliated companies	198		95		12
Taxes accrued	(86)		83		68
Other current liabilities	13		(23)		157
Other assets(a)	(416)		(37)		(215)
Other liabilities	38		(16)		3
Net cash provided by operating activities	1,501		1,956		1,666
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,070)		(1,746)		(1,581)

Purchases of debt and equity securities	(1,148)		(1,931)		(1,555)
Proceeds from sales and maturities of debt and equity securities	1,138		1,914		1,516


Other	(29)		(20)		(57)
Net cash used in investing activities	(2,109)		(1,783)		(1,677)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,477		1,959		1,296
Payments for the redemption of long-term debt	(645)		(1,308)		(1,085)
Notes payable to affiliated companies	67		(123)		229
Distributions to parent	(250)		(700)		(400)
Other	(1)		(1)		(12)
Net cash provided by (used in) financing activities	648		(173)		28
Net increase in cash, cash equivalents and restricted cash	40		—		17
Cash, cash equivalents and restricted cash at beginning of period	39		39		22
Cash, cash equivalents and restricted cash at end of period	$	79	$	39	$	39
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	386	$	335	$	301
Cash paid for income taxes	157		83		123
Significant non-cash transactions:
Accrued capital expenditures	269		163		149

(a) Includes approximately $402 million for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


	Member's
(in millions)	Equity
Balance at December 31, 2019	$	9,246
Net income	415
Distribution to parent	(400)

Other	(1)
Balance at December 31, 2020	$	9,260
Net income	991
Distribution to parent	(700)


Balance at December 31, 2021	$	9,551
Net income	1,008
Distribution to parent	(250)


Balance at December 31, 2022	$	10,309

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Florida, LLC

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1 and 4 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Florida Public Service Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm and fuel costs. As a result, assessing the potential outcomes of future regulatory orders in Florida requires significant management judgment. As of December 31, 2022, the Company has approximately $3.6 billion recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 2001.


FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	6,353	$	5,259	$	5,188
Operating Expenses
Fuel used in electric generation and purchased power	2,586		1,806		1,737
Operation, maintenance and other	967		1,048		1,131
Depreciation and amortization	955		831		702
Property and other taxes	421		383		381
Impairment of assets and other charges	4		19		(4)
Total operating expenses	4,933		4,087		3,947
Gains on Sales of Other Assets and Other, net	2		1		1
Operating Income	1,422		1,173		1,242
Other Income and Expenses, net	74		71		53
Interest Expense	362		319		326
Income Before Income Taxes	1,134		925		969
Income Tax Expense	225		187		198
Net Income	$	909	$	738	$	771




Other Comprehensive Loss, net of tax
Unrealized losses on available-for-sale securities	(5)		(1)		(1)


Other Comprehensive Loss, net of tax	(5)		(1)		(1)
Comprehensive Income	$	904	$	737	$	770

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	45	$	23
Receivables (net of allowance for doubtful accounts of $8 at 2022 and 2021)	148		117
Receivables of VIEs (net of allowance for doubtful accounts of $28 at 2022 and $8 at 2021)	496		432
Receivables from affiliated companies	2		16

Inventory	573		477
Regulatory assets (includes $55 at 2022 and $54 at 2021 related to VIEs)	1,143		497
Other (includes $46 at 2022 and $39 at 2021 related to VIEs)	108		80
Total current assets	2,515		1,642
Property, Plant and Equipment
Cost	25,940		23,865
Accumulated depreciation and amortization	(6,377)		(5,819)
Net property, plant and equipment	19,563		18,046
Other Noncurrent Assets

Regulatory assets (includes $826 at 2022 and $883 at 2021 related to VIEs)	2,422		1,791
Nuclear decommissioning trust funds	424		553
Operating lease right-of-use assets, net	258		302
Other	372		399
Total other noncurrent assets	3,476		3,045
Total Assets	$	25,554	$	22,733
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	880	$	623
Accounts payable to affiliated companies	177		209
Notes payable to affiliated companies	605		199
Taxes accrued	53		51
Interest accrued	80		68
Current maturities of long-term debt (includes $306 at 2022 and $56 at 2021 related to VIEs)	328		76
Asset retirement obligations	1		1
Regulatory liabilities	244		98
Other	363		408
Total current liabilities	2,731		1,733
Long-Term Debt (includes $890 at 2022 and $1,196 at 2021 related to VIEs)	9,381		8,406
Other Noncurrent Liabilities
Deferred income taxes	2,789		2,434

Asset retirement obligations	357		436
Regulatory liabilities	633		698
Operating lease liabilities	211		256
Accrued pension and other post-retirement benefit costs	111		166

Investment tax credits	234		236
Other	84		73
Total other noncurrent liabilities	4,419		4,299
Commitments and Contingencies

Equity
Member's equity	9,031		8,298


Accumulated other comprehensive loss	(8)		(3)
Total equity	9,023		8,295
Total Liabilities and Equity	$	25,554	$	22,733

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	909	$	738	$	771
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	1,032		1,011		1,019
Equity component of AFUDC	(16)		(16)		(12)

Impairment of assets and other charges	4		19		(4)
Deferred income taxes	285		279		27
Contributions to qualified pension plans	(5)		—		—
Payments for asset retirement obligations	(98)		(101)		(80)

(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—		—		(14)
Receivables	(93)		(45)		(64)
Receivables from affiliated companies	14		(13)		(3)
Inventory	(98)		(15)		26
Other current assets(a)	(640)		(451)		40
Increase (decrease) in
Accounts payable	202		47		66
Accounts payable to affiliated companies	(32)		124		(46)
Taxes accrued	2		(30)		39
Other current liabilities	62		(7)		(7)
Other assets(a)	(704)		(69)		84
Other liabilities	18		(69)		(181)
Net cash provided by operating activities	842		1,402		1,661
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,247)		(1,923)		(1,907)

Purchases of debt and equity securities	(193)		(302)		(4,443)
Proceeds from sales and maturities of debt and equity securities	279		408		4,495

Notes receivable from affiliated companies	—		—		173
Other	(108)		(136)		(103)
Net cash used in investing activities	(2,269)		(1,953)		(1,785)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,298		1,135		495
Payments for the redemption of long-term debt	(77)		(575)		(572)
Notes payable to affiliated companies	406		3		196
Distributions to parent	(175)		—		—
Other	(1)		—		(1)
Net cash provided by financing activities	1,451		563		118
Net increase (decrease) in cash, cash equivalents and restricted cash	24		12		(6)
Cash, cash equivalents and restricted cash at beginning of period	62		50		56
Cash, cash equivalents and restricted cash at end of period	$	86	$	62	$	50
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	339	$	308	$	321
Cash (received from) paid for income taxes	(83)		(15)		138
Significant non-cash transactions:
Accrued capital expenditures	394		337		214

(a) Includes approximately $942 million for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements

100


FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


			Accumulated
			Other
			Comprehensive
			Income (Loss)
			Net Unrealized
			Gains (Losses) on
	Member's		Available-for-		Total
(in millions)	Equity		Sale Securities		Equity
Balance at December 31, 2019	$	6,789	$	(1)	$	6,788
Net income	771		—		771
Other comprehensive loss	—		(1)		(1)







Balance at December 31, 2020	$	7,560	$	(2)	$	7,558
Net income	738		—		738
Other comprehensive loss	—		(1)		(1)



Balance at December 31, 2021	$	8,298	$	(3)	$	8,295
Net income	909		—		909
Other comprehensive loss	—		(5)		(5)

Distribution to parent	(175)		—		(175)
Other	(1)		—		(1)

Balance at December 31, 2022	$	9,031	$	(8)	$	9,023

See Notes to Consolidated Financial Statements

101


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Ohio, Inc.

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1 and 4 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Public Utilities Commission of Ohio and by the Kentucky Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric and natural gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2022, the Company has approximately $684 million recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded balances for completeness.

102


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 2002.

103


FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues
Regulated electric	$	1,798	$	1,493	$	1,405
Regulated natural gas	716		544		453

Total operating revenues	2,514		2,037		1,858
Operating Expenses
Fuel used in electric generation and purchased power	657		409		339

Cost of natural gas	261		136		73
Operation, maintenance and other	523		479		463
Depreciation and amortization	324		307		278
Property and other taxes	369		355		324
Impairment of assets and other charges	(10)		25		—
Total operating expenses	2,124		1,711		1,477
Gains on Sales of Other Assets and Other, net	1		1		—
Operating Income	391		327		381
Other Income and Expenses, net	19		18		16
Interest Expense	129		111		102
Income Before Income Taxes	281		234		295
Income Tax (Benefit) Expense	(21)		30		43


Net Income and Comprehensive Income	$	302	$	204	$	252

See Notes to Consolidated Financial Statements

104


FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	16	$	13
Receivables (net of allowance for doubtful accounts of $6 at 2022 and $4 at 2021)	73		96
Receivables from affiliated companies	247		122
Notes receivable from affiliated companies	—		15
Inventory	144		116

Regulatory assets	103		72
Other	86		57
Total current assets	669		491
Property, Plant and Equipment
Cost	12,497		11,725
Accumulated depreciation and amortization	(3,250)		(3,106)
Facilities to be retired, net	—		6
Net property, plant and equipment	9,247		8,625
Other Noncurrent Assets
Goodwill	920		920
Regulatory assets	581		635
Operating lease right-of-use assets, net	18		19



Other	71		84
Total other noncurrent assets	1,590		1,658
Total Assets	$	11,506	$	10,774
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	380	$	348
Accounts payable to affiliated companies	72		64
Notes payable to affiliated companies	497		103
Taxes accrued	317		275
Interest accrued	29		30
Current maturities of long-term debt	475		—

Asset retirement obligations	17		13
Regulatory liabilities	99		62
Other	74		82
Total current liabilities	1,960		977
Long-Term Debt	2,745		3,168
Long-Term Debt Payable to Affiliated Companies	25		25
Other Noncurrent Liabilities
Deferred income taxes	1,136		1,050
Asset retirement obligations	137		123
Regulatory liabilities	534		739
Operating lease liabilities	17		18
Accrued pension and other post-retirement benefit costs	90		109


Other	96		101
Total other noncurrent liabilities	2,010		2,140
Commitments and Contingencies
Equity
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2022 and 2021	762		762
Additional paid-in capital	3,100		3,100
Retained earnings	904		602

Total equity	4,766		4,464
Total Liabilities and Equity	$	11,506	$	10,774

See Notes to Consolidated Financial Statements

105


FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	302	$	204	$	252
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	328		311		283
Equity component of AFUDC	(7)		(7)		(7)

Impairment of assets and other charges	(10)		25		—
Deferred income taxes	(22)		42		31
Contributions to qualified pension plans	(3)		—		—
Payments for asset retirement obligations	(12)		(2)		(2)
Provision for rate refunds	5		16		14
(Increase) decrease in

Receivables	23		6		(13)
Receivables from affiliated companies	(5)		(25)		9
Inventory	(28)		(6)		25
Other current assets	(55)		(60)		(18)
Increase (decrease) in
Accounts payable	44		38		2
Accounts payable to affiliated companies	8		(4)		—
Taxes accrued	42		26		30
Other current liabilities	(63)		11		3
Other assets	(29)		(43)		(32)
Other liabilities	64		27		(2)
Net cash provided by operating activities	582		559		575
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(850)		(848)		(834)




Notes receivable from affiliated companies	(105)		(10)		(19)
Other	(67)		(60)		(48)
Net cash used in investing activities	(1,022)		(918)		(901)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	50		150		467
Payments for the redemption of long-term debt	—		(50)		—
Notes payable to affiliated companies	395		(67)		(144)
Capital contribution from parent	—		325		—

Other	(2)		—		—
Net cash provided by financing activities	443		358		323
Net increase (decrease) in cash and cash equivalents	3		(1)		(3)
Cash and cash equivalents at beginning of period	13		14		17
Cash and cash equivalents at end of period	$	16	$	13	$	14
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	126	$	107	$	97
Cash (received from) paid for income taxes	(35)		9		—
Significant non-cash transactions:
Accrued capital expenditures	123		135		104

See Notes to Consolidated Financial Statements

106


FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY






			Additional
	Common		Paid-in		Retained		Total
(in millions)	Stock		Capital		Earnings		Equity
Balance at December 31, 2019	$	762	$	2,776	$	145	$	3,683
Net income	—		—		252		252



Balance at December 31, 2020	$	762	$	2,776	$	397	$	3,935
Net income	—		—		204		204
Contribution from parent	—		325		—		325

Other	—		(1)		1		—
Balance at December 31, 2021	$	762	$	3,100	$	602	$	4,464
Net income	—		—		302		302



Balance at December 31, 2022	$	762	$	3,100	$	904	$	4,766

See Notes to Consolidated Financial Statements

107


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Indiana, LLC

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

108


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 2002.

109


FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	3,922	$	3,174	$	2,795
Operating Expenses
Fuel used in electric generation and purchased power	1,819		985		767
Operation, maintenance and other	729		750		762
Depreciation and amortization	645		615		569
Property and other taxes	75		73		81
Impairment of assets and other charges	388		9		—
Total operating expenses	3,656		2,432		2,179

Operating Income	266		742		616
Other Income and Expenses, net	36		42		37
Interest Expense	189		196		161
Income Before Income Taxes	113		588		492
Income Tax (Benefit) Expense	(24)		107		84
Net Income and Comprehensive Income	$	137	$	481	$	408

See Notes to Consolidated Financial Statements

110


FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	31	$	6
Receivables (net of allowance for doubtful accounts of $4 at 2022 and $3 at 2021)	112		100
Receivables from affiliated companies	298		98
Notes receivable from affiliated companies	—		134
Inventory	489		418
Regulatory assets	249		277
Other	197		68
Total current assets	1,376		1,101
Property, Plant and Equipment
Cost	18,121		17,343
Accumulated depreciation and amortization	(6,021)		(5,583)

Net property, plant and equipment	12,100		11,760
Other Noncurrent Assets
Regulatory assets	875		1,278
Operating lease right-of-use assets, net	49		53

Other	254		296
Total other noncurrent assets	1,178		1,627
Total Assets	$	14,654	$	14,488
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	391	$	282
Accounts payable to affiliated companies	206		221
Notes payable to affiliated companies	435		—
Taxes accrued	92		73
Interest accrued	48		49
Current maturities of long-term debt	303		84
Asset retirement obligations	207		110
Regulatory liabilities	187		127
Other	161		105
Total current liabilities	2,030		1,051
Long-Term Debt	3,854		4,089
Long-Term Debt Payable to Affiliated Companies	150		150
Other Noncurrent Liabilities
Deferred income taxes	1,299		1,303
Asset retirement obligations	744		877
Regulatory liabilities	1,454		1,565
Operating lease liabilities	47		50
Accrued pension and other post-retirement benefit costs	122		167
Investment tax credits	186		177
Other	65		44
Total other noncurrent liabilities	3,917		4,183
Commitments and Contingencies
Equity
Member's equity	4,702		5,015
Accumulated other comprehensive income	1		—
Total equity	4,703		5,015
Total Liabilities and Equity	$	14,654	$	14,488

See Notes to Consolidated Financial Statements

111


FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	137	$	481	$	408
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	648		619		572
Equity component of AFUDC	(13)		(27)		(23)

Impairment of assets and other charges	388		9		—
Deferred income taxes	(64)		34		29
Contributions to qualified pension plans	(5)		—		—
Payments for asset retirement obligations	(82)		(67)		(63)

(Increase) decrease in

Receivables	(3)		(33)		8
Receivables from affiliated companies	20		—		—
Inventory	(70)		55		44
Other current assets	(3)		(181)		(3)
Increase (decrease) in
Accounts payable	105		76		(12)
Accounts payable to affiliated companies	(3)		8		1
Taxes accrued	34		12		13
Other current liabilities	9		13		6
Other assets	(10)		20		(68)
Other liabilities	13		(15)		26
Net cash provided by operating activities	1,101		1,004		938
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(877)		(818)		(888)

Purchases of debt and equity securities	(61)		(142)		(37)
Proceeds from sales and maturities of debt and equity securities	48		65		22

Notes receivable from affiliated companies	(86)		(120)		(33)
Other	(55)		36		48
Net cash used in investing activities	(1,031)		(979)		(888)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	67		300		544
Payments for the redemption of long-term debt	(84)		(70)		(513)
Notes payable to affiliated companies	435		(131)		101
Distributions to parent	(462)		(125)		(200)
Other	(1)		—		—
Net cash used in financing activities	(45)		(26)		(68)
Net increase (decrease) in cash and cash equivalents	25		(1)		(18)
Cash and cash equivalents at beginning of period	6		7		25
Cash and cash equivalents at end of period	$	31	$	6	$	7
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	186	$	194	$	164
Cash paid for income taxes	35		56		36
Significant non-cash transactions:
Accrued capital expenditures	122		118		101

See Notes to Consolidated Financial Statements

112


FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


			Accumulated
			Other
			Comprehensive
			Income
			Pension
	Member's		and OPEB		Total
(in millions)	Equity		Adjustments		Equity
Balance at December 31, 2019	$	4,575	$	—	$	4,575
Net income	408		—		408

Distributions to parent	(200)		—		(200)

Balance at December 31, 2020	$	4,783	$	—	$	4,783
Net income	481		—		481

Distributions to parent	(250)		—		(250)
Other	1		—		1
Balance at December 31, 2021	$	5,015	$	—	$	5,015
Net income	137		—		137
Distributions to parent	(450)		—		(450)
Other	—		1		1
Balance at December 31, 2022	$	4,702	$	1	$	4,703

See Notes to Consolidated Financial Statements

113


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Piedmont Natural Gas Company, Inc.

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1 and 4 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, the Public Service Commission of South Carolina, and the Tennessee Public Utility Commission (collectively the “Commissions”), which have jurisdiction with respect to the gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2022, the Company has approximately $511 million recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded balances for completeness.

114


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1951.

115


FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues
Regulated natural gas	$	2,100	$	1,555	$	1,286
Nonregulated natural gas and other	24		14		11

Total operating revenues	2,124		1,569		1,297
Operating Expenses
Cost of natural gas	1,015		569		386
Operation, maintenance and other	368		327		322
Depreciation and amortization	222		213		180
Property and other taxes	57		55		53
Impairment of assets and other charges	18		10		7
Total operating expenses	1,680		1,174		948
Gains on Sales of Other Assets and Other, net	4		—		—
Operating Income	448		395		349
Equity in earnings of unconsolidated affiliates	8		9		9

Other income and expense, net	46		55		51
Total other income and expenses	54		64		60
Interest Expense	140		119		118
Income Before Income Taxes	362		340		291
Income Tax Expense	39		30		18
Net Income and Comprehensive Income	$	323	$	310	$	273

See Notes to Consolidated Financial Statements

116


FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets

Receivables (net of allowance for doubtful accounts of $14 at 2022 and $15 at 2021)	$	436	$	318
Receivables from affiliated companies	11		11
Inventory	172		109
Regulatory assets	119		141

Other	4		9
Total current assets	742		588
Property, Plant and Equipment
Cost	10,869		9,918
Accumulated depreciation and amortization	(2,081)		(1,899)
Facilities to be retired, net	9		11
Net property, plant and equipment	8,797		8,030
Other Noncurrent Assets
Goodwill	49		49
Regulatory assets	392		316
Operating lease right-of-use assets, net	4		16
Investments in equity method unconsolidated affiliates	79		95
Other	272		288
Total other noncurrent assets	796		764
Total Assets	$	10,335	$	9,382
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	345	$	196
Accounts payable to affiliated companies	51		40

Notes payable to affiliated companies	514		518
Taxes accrued	74		63
Interest accrued	40		37
Current maturities of long-term debt	45		—
Regulatory liabilities	74		56
Other	81		81
Total current liabilities	1,224		991
Long-Term Debt	3,318		2,968

Other Noncurrent Liabilities
Deferred income taxes	870		815
Asset retirement obligations	26		22
Regulatory liabilities	1,024		1,058
Operating lease liabilities	13		14
Accrued pension and other post-retirement benefit costs	7		7
Other	180		158
Total other noncurrent liabilities	2,120		2,074
Commitments and Contingencies
Equity
Common stock, no par value: 100 shares authorized and outstanding at 2022 and 2021	1,635		1,635

Retained earnings	2,037		1,714

Total Piedmont Natural Gas Company, Inc. stockholder's equity	3,672		3,349
Noncontrolling interests	1		—
Total equity	3,673		3,349
Total Liabilities and Equity	$	10,335	$	9,382

See Notes to Consolidated Financial Statements

117


FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	323	$	310	$	273
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	225		216		182
Equity component of AFUDC	(11)		(20)		(19)
Gains on sales of other assets	(4)		—		—
Impairment of assets and other charges	18		10		7
Deferred income taxes	5		4		53
Contributions to qualified pension plans	(2)		—		—
Equity in earnings from unconsolidated affiliates	(8)		(9)		(9)

Provision for rate refunds	(3)		(4)		(33)
(Increase) decrease in

Receivables	(111)		(77)		10
Receivables from affiliated companies	—		(1)		—
Inventory	(63)		(40)		3
Other current assets	32		33		(66)
Increase (decrease) in
Accounts payable	40		(25)		16
Accounts payable to affiliated companies	11		(39)		76
Taxes accrued	11		37		3
Other current liabilities	36		(26)		(11)
Other assets	9		26		(11)
Other liabilities	(1)		(4)		7
Net cash provided by operating activities	507		391		481
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(862)		(850)		(901)
Contributions to equity method investments	(8)		(9)		—







Other	(26)		(31)		(28)
Net cash used in investing activities	(896)		(890)		(929)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	394		347		394
Payments for the redemption of long-term debt	—		(160)		—
Notes payable to affiliated companies	(4)		(13)		54


Capital contribution from parent	—		325		—

Other	(1)		—		—
Net cash provided by financing activities	389		499		448
Net increase (decrease) in cash and cash equivalents	—		—		—
Cash and cash equivalents at beginning of period	—		—		—
Cash and cash equivalents at end of period	$	—	$	—	$	—
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	135	$	114	$	115
Cash paid for (received from) income taxes	23		(13)		(36)
Significant non-cash transactions:
Accrued capital expenditures	207		97		106

See Notes to Consolidated Financial Statements

118


FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY








					Total
					Piedmont
					Natural Gas
	Common		Retained		Company, Inc.		Noncontrolling		Total
(in millions)	Stock		Earnings		Equity		Interests		Equity
Balance at December 31, 2019	$	1,310	$	1,133	$	2,443	$	—	$	2,443
Net income	—		273		273		—		273





Other	—		(1)		(1)		—		(1)
Balance at December 31, 2020	$	1,310	$	1,405	$	2,715	$	—	$	2,715
Net income	—		310		310		—		310

Contribution from parent	325		—		325		—		325

Other	—		(1)		(1)		—		(1)
Balance at December 31, 2021	$	1,635	$	1,714	$	3,349	$	—	$	3,349
Net income	—		323		323		—		323



Other	—		—		—		1		1
Balance at December 31, 2022	$	1,635	$	2,037	$	3,672	$	1	$	3,673

See Notes to Consolidated Financial Statements

119


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Index to Combined Notes To Consolidated Financial Statements

~~Income Taxes~~The notes to the consolidated financial statements are a combined presentation. The following table indicates the registrants to which the notes apply.

Applicable Notes

Registrant

Duke Energy

•

Duke Energy Carolinas

•

Progress Energy

•

Duke Energy Progress

•

Duke Energy Florida

•

Duke Energy Ohio

•

Duke Energy Indiana

•

Piedmont

•

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Basis of Consolidation

These Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the Duke Energy Registrants and subsidiaries or VIEs where the respective Duke Energy Registrants have control. See Note 18 for additional information on VIEs. These Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities. See Note 9 for additional information on joint ownership. Substantially all of the Subsidiary Registrants' operations qualify for regulatory accounting.

Duke Energy Ohio is a regulated public utility primarily engaged in the transmission and distribution of electricity in portions of Ohio and Kentucky, the generation and sale of electricity in portions of Kentucky and the transportation and sale of natural gas in portions of Ohio and Kentucky. Duke Energy Ohio conducts competitive auctions for retail electricity supply in Ohio whereby the energy price is recovered from retail customers and recorded in Operating Revenues on the Consolidated Statements of Operations and Comprehensive Income. Operations in Kentucky are conducted through its wholly owned subsidiary, Duke Energy Kentucky. References herein to Duke Energy Ohio collectively include Duke Energy Ohio and its subsidiaries, ~~file~~unless otherwise noted. Duke Energy Ohio is subject to the regulatory provisions of the PUCO, KPSC and FERC.

Certain prior year amounts have been reclassified to conform to the current year presentation.

120


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Other Current Assets and Liabilities


		December 31,
(in millions)	Location	2022		2021
Duke Energy
Accrued compensation	Current Liabilities	$	778	$	915

Duke Energy Carolinas
Accrued compensation	Current Liabilities	$	247	$	277

Duke Energy Progress
Customer deposits	Current Liabilities	$	106	$	144
Other accrued liabilities	Current Liabilities	124		163
Duke Energy Florida
Customer deposits	Current Liabilities	$	200	$	200
Other accrued liabilities	Current Liabilities	61		89
Duke Energy Ohio
Gas Storage	Current Assets	$	57	$	25
Collateral liabilities	Current Liabilities	53		57
Duke Energy Indiana
Mark-to-market transactions	Current Assets	$	110	$	23

Discontinued Operations

Duke Energy has elected to present cash flows of discontinued operations combined with cash flows of continuing operations. Unless otherwise noted, the notes to these consolidated ~~federal~~financial statements exclude amounts related to discontinued operations for all periods presented. For the years ended December 31, 2022, 2021 and 2020, the Loss From Discontinued Operations, net of tax on Duke Energy's Consolidated Statements of Operations includes amounts related to noncontrolling interests. A portion of Noncontrolling interests on Duke Energy's Consolidated Balance Sheets relates to discontinued operations for the periods presented. See Note 2 for discussion of discontinued operations related to the Commercial Renewables Disposal Groups.

Noncontrolling Interest

Duke Energy maintains a controlling financial interest in certain less than wholly owned regulated and nonregulated subsidiaries. As a result, Duke Energy consolidates these subsidiaries and presents the third-party investors' portion of Duke Energy's net income ~~tax return~~(loss), net assets and comprehensive income (loss) as noncontrolling interest. Noncontrolling interest is included as a component of equity on the Consolidated Balance Sheet. Operating agreements of Duke Energy's subsidiaries with noncontrolling interest allocate profit and loss based on their pro rata shares of the ownership interest in the respective subsidiary. Therefore, Duke Energy allocates net income or loss and other ~~state~~comprehensive income or loss of these subsidiaries to the owners based on their pro rata shares.

Significant Accounting Policies

Use of Estimates

In preparing financial statements that conform to GAAP, the Duke Energy Registrants must make estimates and ~~foreign jurisdictional returns. The Subsidiary Registrants are parties to a tax-sharing agreement with Duke Energy. Income taxes recorded represent~~assumptions that affect the reported amounts ~~the Subsidiary Registrants would incur as separate C-Corporations. Deferred income taxes have been provided for temporary differences between GAAP and tax bases~~ of assets and liabilities, ~~because~~ the ~~differences create taxable~~reported amounts of revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Regulatory Accounting

The majority of the Duke Energy Registrants’ operations are subject to price regulation for the sale of electricity and natural gas by state utility commissions or ~~tax-deductible amounts for future periods. ITCs associated with~~FERC. When prices are set on the basis of specific costs of the regulated operations ~~are deferred~~ and ~~amortized as a reduction of income tax expense over~~an effective franchise is in place such that sufficient natural gas or electric services can be sold to recover those costs, the ~~estimated useful lives~~Duke Energy Registrants apply regulatory accounting. Regulatory accounting changes the timing of the ~~related properties. For ITCs associated with nonregulated operations see “Accounting for Renewable Energy Tax Credits.”~~

~~Accumulated deferred income taxes~~recognition of costs or revenues relative to a company that does not apply regulatory accounting. As a result, regulatory assets and regulatory liabilities are ~~valued using~~recognized on the enacted tax rate expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be settled or realized. In the event of a change in tax rates, deferred taxConsolidated Balance Sheets. Regulatory assets and liabilities are ~~remeasured as~~amortized consistent with the treatment of the ~~enactment date~~related cost in the ratemaking process. Regulatory assets are reviewed for recoverability each reporting period. If a regulatory asset is no longer deemed probable of recovery, the deferred cost is charged to earnings. See Note 4 for further information.

Regulatory accounting rules also require recognition of a disallowance (also called "impairment") loss if it becomes probable that part of the ~~new rate. To the extent that the change in the value~~cost of ~~the deferred tax represents~~a plant under construction (or a recently completed plant or an ~~obligation to customers, the impact of the remeasurement is deferred to~~abandoned plant) will be disallowed for ratemaking purposes and a ~~regulatory liability. Remaining impacts are recorded in income from continuing operations. Duke Energy's results of operations could be impacted if the~~reasonable estimate of the ~~tax effect~~amount of ~~reversing temporary differences~~the disallowance can be made. For example, if a cost cap is set for a plant still under construction, the amount of the disallowance is a result of a judgment as to the ultimate cost of the plant. These disallowances can require judgments on allowed future rate recovery.

121


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash, Cash Equivalents and Restricted Cash

All highly liquid investments with maturities of three months or less at the date of acquisition are considered cash equivalents. Duke Energy, Progress Energy and Duke Energy Florida have restricted cash balances related primarily to collateral assets, escrow deposits and VIEs. Duke Energy Carolinas and Duke Energy Progress have restricted cash balances related to VIEs from storm recovery bonds issued. See Note 18 for additional information. Restricted cash amounts are included in Other within Current Assets and Other Noncurrent Assets on the Consolidated Balance Sheets. The following table presents the components of cash, cash equivalents and restricted cash included in the Consolidated Balance Sheets.


	December 31, 2022
			Duke				Duke		Duke
	Duke		Energy		Progress		Energy		Energy
	Energy		Carolinas		Energy		Progress		Florida
Current Assets
Cash and cash equivalents	$	409	$	44	$	108	$	49	$	45
Other	173		8		74		28		41
Other Noncurrent Assets
Other	11		1		2		2		—
Total cash, cash equivalents and restricted cash	$	593	$	53	$	184	$	79	$	86


	December 31, 2021
			Duke				Duke		Duke
	Duke		Energy		Progress		Energy		Energy
	Energy		Carolinas		Energy		Progress		Florida
Current Assets
Cash and cash equivalents	$	341	$	7	$	70	$	35	$	23
Other	170		—		39		—		39
Other Noncurrent Assets
Other	6		1		4		4		—
Total cash, cash equivalents and restricted cash	$	517	$	8	$	113	$	39	$	62

Inventory

Inventory related to regulated operations is valued at historical cost. Inventory related to nonregulated operations is valued at the lower of cost or market. Inventory is charged to expense or capitalized to property, plant and equipment when issued, primarily using the average cost method. Excess or obsolete inventory is written down to the lower of cost or net realizable value. Once inventory has been written down, it creates a new cost basis for the inventory that is not ~~reflective~~subsequently written up. Provisions for inventory write-offs were not material at December 31, 2022, and 2021, respectively. The components of ~~actual outcomes,~~inventory are presented in the tables below.


	December 31, 2022
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,604	$	876	$	1,232	$	819	$	413	$	105	$	342	$	12
Coal	620		253		190		99		91		34		144		—
Natural gas, oil and other	360		35		157		88		69		5		3		160
Total inventory	$	3,584	$	1,164	$	1,579	$	1,006	$	573	$	144	$	489	$	172

122


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


	December 31, 2021
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,309	$	793	$	1,067	$	729	$	338	$	80	$	311	$	14
Coal	486		195		167		94		73		19		105		—
Natural gas, oil and other	316		38		164		98		66		17		2		95
Total inventory	$	3,111	$	1,026	$	1,398	$	921	$	477	$	116	$	418	$	109

Investments in Debt and Equity Securities

The Duke Energy Registrants classify investments in equity securities as FV-NI and investments in debt securities as AFS. Both categories are recorded at fair value on the Consolidated Balance Sheets. Realized and unrealized gains and losses on securities classified as FV-NI are reported through net income. Unrealized gains and losses for debt securities classified as AFS are included in AOCI until realized, unless it is ~~modified to reflect new developments or interpretations~~determined the carrying value of an investment has a credit loss. For certain investments of regulated operations, such as substantially all of the ~~tax law, revised~~NDTF, realized and unrealized gains and losses (including any credit losses) on debt securities are recorded as a regulatory asset or liability. The credit loss portion of debt securities of nonregulated operations are included in earnings. Investments in debt and equity securities are classified as either current or noncurrent based on management’s intent and ability to ~~incorporate new accounting principles,~~sell these securities, taking into consideration current market liquidity. See Note 16 for further information.

Goodwill

Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont perform annual goodwill impairment tests as of August 31 each year at the reporting unit level, which is determined to be a business segment or ~~changes in~~one level below. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update these tests between annual tests if events or circumstances occur that would more likely than not reduce the ~~expected timing or manner~~fair value of a ~~reversal.~~reporting unit below its carrying value. See Note 12 for further information.

~~Tax-related interest~~Intangible Assets

Intangible assets are included in Other in Other Noncurrent Assets on the Consolidated Balance Sheets. Generally, intangible assets are amortized using an amortization method that reflects the pattern in which the economic benefits of the intangible asset are consumed or on a straight-line basis if that pattern is not readily determinable. Amortization of intangibles is reflected in Depreciation and ~~penalties are recorded in Interest Expense and Other Income and Expenses, net in~~amortization on the Consolidated Statements of Operations. Intangible assets are subject to impairment testing and if impaired, the carrying value is accordingly reduced.

RECs are used to measure compliance with renewable energy standards and are held primarily for consumption. See Note 2312 for further information.

~~Accounting~~Long-Lived Asset Impairments

The Duke Energy Registrants evaluate long-lived assets that are held and used, excluding goodwill, for ~~Renewable~~impairment when circumstances indicate the carrying value of those assets may not be recoverable. An impairment exists when a long-lived asset’s carrying value exceeds the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. The estimated cash flows may be based on alternative expected outcomes that are probability weighted. If the carrying value of the long-lived asset is not recoverable based on these estimated future undiscounted cash flows, the carrying value of the asset is written down to its then current estimated fair value and an impairment charge is recognized.

The Duke Energy ~~Tax Credits~~Registrants assess fair value of long-lived assets that are held and used using various methods, including recent comparable third-party sales, internally developed discounted cash flow analysis and analysis from outside advisors. Triggering events to reassess cash flows may include, but are not limited to, significant changes in commodity prices, the condition of an asset or management’s interest in selling the asset.

123


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Property, Plant and Equipment


	Years Ended December 31,
	2022		2021		2020
Duke Energy	3.0	%	2.9	%	3.0	%
Duke Energy Carolinas	2.7	%	2.7	%	2.8	%
Progress Energy	3.2	%	3.1	%	3.2	%
Duke Energy Progress	3.0	%	3.0	%	3.1	%
Duke Energy Florida	3.5	%	3.3	%	3.3	%
Duke Energy Ohio	2.9	%	2.9	%	2.9	%
Duke Energy Indiana	3.6	%	3.6	%	3.5	%
Piedmont	2.1	%	2.1	%	2.3	%

In general, when the Duke Energy Registrants retire regulated property, plant and equipment, the original cost plus the cost of retirement, less salvage value and any depreciation already recognized, is charged to accumulated depreciation. However, when it becomes probable the asset will be retired substantially in advance of its original expected useful life or is abandoned, the cost of the asset and the corresponding accumulated depreciation is recognized as a separate asset. If the asset is still in operation, the net amount is classified as Facilities to be retired, net on the Consolidated Balance Sheets. If the asset is no longer operating, the net amount is classified in Regulatory assets on the Consolidated Balance Sheets if deemed recoverable (see discussion of long-lived asset impairments above). The carrying value of the asset is based on historical cost if the Duke Energy Registrants are allowed to recover the remaining net book value and a return equal to at least the incremental borrowing rate. If not, an impairment is recognized to the extent the net book value of the asset exceeds the present value of future revenues discounted at the incremental borrowing rate.

When the Duke Energy ~~receives ITCs~~Registrants sell entire regulated operating units, or retire or sell nonregulated properties, the original cost and accumulated depreciation and amortization balances are removed from Property, Plant and Equipment on the Consolidated Balance Sheets. Any gain or loss is recorded in earnings, unless otherwise required by the applicable regulatory body. See Note 11 for additional information.

Other Noncurrent Assets

Duke Energy, through a nonregulated subsidiary, was the winner of the Carolina Long Bay offshore wind auction in May 2022 and recorded an

Leases

Nuclear Fuel

Nuclear fuel is classified as Property, Plant and Equipment on the Consolidated Balance Sheets.

124


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Allowance for Funds Used During Construction and Interest Capitalized

AFUDC equity, a permanent difference for income taxes, reduces the ETR when capitalized and increases the ETR when depreciated or amortized. See Note 24 for additional information.

Asset Retirement Obligations

AROs are recognized for legal obligations associated with ~~its nonregulated operations, it reduces~~ the ~~basis~~retirement of property, plant and equipment. Substantially all AROs are related to regulated operations. When recording an ARO, the present value of the ~~property~~projected liability is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The liability is accreted over time. For operating plants, the present value of the liability is added to the cost of the associated asset and depreciated over the remaining life of the asset. For retired plants, the present value of the liability is recorded as a regulatory asset unless determined not to be probable of recovery.

Accounts Payable

The following table presents the outstanding accounts payable balance sold to the financial institution by our suppliers and the supplier invoices sold to the financial institution under the program included within Net cash provided by operating activities on the Consolidated Statements of Cash Flows as of December 31, 2022, and December 31, 2021.


	December 31, 2022
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Outstanding Accounts Payable Balance Sold	$	87	$	6	$	19	$	8	$	11	$	5	$	—	$	57
Suppliers Invoices Settled Through The Program	301		29		85		26		59		38		2		147


	December 30, 2021
					Duke		Duke
	Duke		Progress		Energy		Energy
(in millions)	Energy		Energy		Florida		Ohio		Piedmont
Outstanding Accounts Payable Balance Sold	$	19	$	9	$	9	$	6	$	4
Suppliers Invoices Settled Through The Program	122		10		10		12		100

Revenue Recognition

125


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Derivatives and Hedging

Derivative and non-derivative instruments may be used in connection with commodity price and interest rate activities, including swaps, futures, forwards and options. All derivative instruments, except those that qualify for the NPNS exception, are recorded on the Consolidated Balance Sheets ~~by the amount~~at fair value. Qualifying derivative instruments may be designated as either cash flow hedges or fair value hedges. Other derivative instruments (undesignated contracts) either have not been designated or do not qualify as hedges. The effective portion of the ~~ITC and, therefore, the ITC benefit is ultimately recognized~~change in the ~~statement~~fair value of ~~operations through reduced depreciation expense. Additionally, certain tax credits and government grants result~~cash flow hedges is recorded in ~~an initial tax depreciable base in excess~~AOCI. The effective portion of the ~~book carrying~~change in the fair value of a fair value hedge is offset in net income by changes in the hedged item. For activity subject to regulatory accounting, gains and losses on derivative contracts are reflected as regulatory assets or liabilities and not as other comprehensive income or current period income. As a result, changes in fair value of these derivatives have no immediate earnings impact.

See Note 15 for further information.

Captive Insurance Reserves

Duke Energy has captive insurance subsidiaries that provide coverage, on an ~~amount equal~~indemnity basis, to ~~one half~~the Subsidiary Registrants as well as certain third parties, on a limited basis, for financial losses, primarily related to property, workers’ compensation and general liability. Liabilities include provisions for estimated losses incurred but not reported (IBNR), as well as estimated provisions for known claims. IBNR reserve estimates are primarily based upon historical loss experience, industry data and other actuarial assumptions. Reserve estimates are adjusted in future periods as actual losses differ from experience.

Preferred Stock

Preferred stock is reviewed to determine the appropriate balance sheet classification and embedded features, such as call options, are evaluated to determine if they should be bifurcated and accounted for separately. Costs directly related to the issuance of ~~the ITC. Deferred tax benefits~~preferred stock are recorded as a reduction ~~to income tax expense in the period that the basis difference is created.~~

When Duke Energy receives ITCs on wind or solar facilities associated with its regulated operations, the ITC is deferred and amortized as a reduction of income tax expense over the estimated useful lives of the ~~related properties.~~

~~Duke Energy receives PTCs on wind facilities that are recognized as electricity is produced and records related amounts as a reduction of income tax expense.~~

~~Excise Taxes~~

Certain excise taxes levied by state or local governments are required to be paid even if not collected from the customer. These taxes are recognized on a gross basis. Taxes for which Duke Energy operates merely as a collection agentproceeds received. The liability for the state and local government are accounted for on a net basis. Excise taxes accounted for on a gross basis within both Operating Revenues and Property and other taxes in the Consolidated Statements of Operations were as follows.

Years Ended December 31,
(in millions) 2020 2019 2018
Duke Energy $ 415 $ 421 $ 405
Duke Energy Carolinas 43 39 35
Progress Energy 249 256 241
Duke Energy Progress 26 21 19
Duke Energy Florida 223 235 222
Duke Energy Ohio 96 101 105
Duke Energy Indiana 25 23 22
Piedmont 2 2 2

~~Dividend Restrictions and Unappropriated Retained Earnings~~

~~Duke Energy does not have any current legal, regulatory or other restrictions on paying common stock~~dividend is recognized when declared. The accumulated dividends ~~to shareholders. However, if Duke Energy were to defer dividend payments~~ on the cumulative preferred stock the declaration of common stock dividends would be prohibited. See Note 19 for more information. Additionally, as further described in Note 3, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio, Duke Energy Indiana and Piedmont have restrictions on paying dividends or otherwise advancing fundsis recognized to net income available to Duke Energy ~~due to conditions established by regulators~~Corporation in conjunction with merger transaction approvals. At December 31, 2020, and 2019, an insignificant amount of Duke Energy’s consolidated Retained earnings balance represents undistributed earnings of equity method investments.the EPS calculation. See Note 20 for further information.

New Accounting Standards

See Note 1 to the Consolidated Financial Statements, “Summary of Significant Accounting Policies,” for a discussion of the impact of new accounting standards.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Management’s Discussion and Analysis of Results of Operations and Financial Condition – Quantitative and Qualitative Disclosures About Market Risk.”


FINANCIAL STATEMENTS

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Duke Energy
Report of Independent Registered Public Accounting Firm			70
Consolidated Statements of Operations			73
Consolidated Statements of Comprehensive Income			74
Consolidated Balance Sheets			75
Consolidated Statements of Cash Flows			76
Consolidated Statements of Changes in Equity			77

Duke Energy Carolinas
Report of Independent Registered Public Accounting Firm			78
Consolidated Statements of Operations and Comprehensive Income			80
Consolidated Balance Sheets			81
Consolidated Statements of Cash Flows			82
Consolidated Statements of Changes in Equity			83

Progress Energy
Report of Independent Registered Public Accounting Firm			84
Consolidated Statements of Operations and Comprehensive Income			86
Consolidated Balance Sheets			87
Consolidated Statements of Cash Flows			88
Consolidated Statements of Changes in Equity			89

Duke Energy Progress
Report of Independent Registered Public Accounting Firm			90
Consolidated Statements of Operations and Comprehensive Income			92
Consolidated Balance Sheets			93
Consolidated Statements of Cash Flows			94
Consolidated Statements of Changes in Equity			95

Duke Energy Florida
Report of Independent Registered Public Accounting Firm			96
Consolidated Statements of Operations and Comprehensive Income			98
Consolidated Balance Sheets			99
Consolidated Statements of Cash Flows			100
Consolidated Statements of Changes in Equity			101

Duke Energy Ohio
Report of Independent Registered Public Accounting Firm			102
Consolidated Statements of Operations and Comprehensive Income			104
Consolidated Balance Sheets			105
Consolidated Statements of Cash Flows			106
Consolidated Statements of Changes in Equity			107

Duke Energy Indiana
Report of Independent Registered Public Accounting Firm			108
Consolidated Statements of Operations and Comprehensive Income			110
Consolidated Balance Sheets			111
Consolidated Statements of Cash Flows			112
Consolidated Statements of Changes in Equity			113

Piedmont
Report of Independent Registered Public Accounting Firm			114
Consolidated Statements of Operations and Comprehensive Income			116
Consolidated Balance Sheets			117
Consolidated Statements of Cash Flows			118
Consolidated Statements of Changes in Equity			119


FINANCIAL STATEMENTS



Combined Notes to Consolidated Financial Statements
Note 1 – Summary of Significant Accounting Policies			120
Note 2 – Dispositions			128
Note 3 – Business Segments			130
Note 4 – Regulatory Matters			134
Note 5 – Commitments and Contingencies			151
Note 6 – Leases			156
Note 7 – Debt and Credit Facilities			160
Note 8 – Guarantees and Indemnifications			166
Note 9 – Joint Ownership of Generating and Transmission Facilities			166
Note 10 – Asset Retirement Obligations			167
Note 11 – Property, Plant and Equipment			170
Note 12 – Goodwill and Intangible Assets			172
Note 13 – Investments in Unconsolidated Affiliates			173
Note 14 – Related Party Transactions			174
Note 15 – Derivatives and Hedging			175
Note 16 – Investments in Debt and Equity Securities			181
Note 17 – Fair Value Measurements			185
Note 18 – Variable Interest Entities			190
Note 19 – Revenue			193
Note 20 – Stockholders' Equity			198
Note 21 – Severance			200
Note 22 – Stock-Based Compensation			201
Note 23 – Employee Benefit Plans			203
Note 24 – Income Taxes			216
Note 25 – Other Income and Expenses, Net			222
Note 26 – Subsequent Events			223
Note 27 – Quarterly Financial Data (Unaudited)			223


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Duke Energy Corporation

Opinion on the Financial Statements

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

Critical Audit Matters

Dispositions – Assessment of Held for Sale and Discontinued Operations Classification and Impairment Charge – Refer to Note 2 to the financial statements.

Critical Audit Matter Description

•The assessment of whether the sale is probable and the transfer of assets will be completed within one year from period-end;

•The assessment of whether the sale of the segment represents a discontinued operation;

•The determination of the impairment charges; and

•The assessment of the fair value of the Commercial Renewables business segment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the classification of the Commercial Renewables business segment as held for sale and the associated impairment charges included the following, among others:

•We evaluated management’s assessment of held for sale and discontinued operations classification as follows:

–Inquired of executive officers, key members of management and members of the Board of Directors to obtain an understanding of plans to sell the Commercial Renewables business segment.


REPORTS

–Compared management’s conclusions against relevant guidance and tested the completeness and accuracy of information used in the Company’s evaluation.

•We evaluated the accuracy and completeness of the Company's reclassification of balances and activity and related disclosures.

•We obtained representation from management asserting to the appropriate presentation, measurement and timing of the Commercial Renewables business segment.

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

How the Critical Audit Matters Were Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation including the balances recorded and regulatory developments.

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.


REPORTS

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1947.


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS


	Years Ended December 31,
(in millions, except per share amounts)	2022		2021		2020
Operating Revenues
Regulated electric	$	25,759	$	22,319	$	21,461
Regulated natural gas	2,724		2,008		1,642
Nonregulated electric and other	285		294		263
Total operating revenues	28,768		24,621		23,366
Operating Expenses
Fuel used in electric generation and purchased power	8,782		6,255		6,051
Cost of natural gas	1,276		705		460
Operation, maintenance and other	5,734		5,703		5,502
Depreciation and amortization	5,086		4,762		4,504
Property and other taxes	1,466		1,355		1,311
Impairment of assets and other charges	434		353		978
Total operating expenses	22,778		19,133		18,806
Gains on Sales of Other Assets and Other, net	22		12		11
Operating Income	6,012		5,500		4,571
Other Income and Expenses
Equity in earnings (losses) of unconsolidated affiliates	113		62		(2,005)

Other income and expenses, net	392		636		451
Total other income and expenses	505		698		(1,554)
Interest Expense	2,439		2,207		2,097
Income From Continuing Operations Before Income Taxes	4,078		3,991		920
Income Tax Expense (Benefit) From Continuing Operations	300		268		(169)
Income From Continuing Operations	3,778		3,723		1,089
Loss From Discontinued Operations, net of tax	(1,323)		(144)		(7)
Net Income	2,455		3,579		1,082
Add: Net Loss Attributable to Noncontrolling Interests	95		329		295
Net Income Attributable to Duke Energy Corporation	2,550		3,908		1,377
Less: Preferred Dividends	106		106		107
Net Income Available to Duke Energy Corporation Common Stockholders	$	2,444	$	3,802	$	1,270

Earnings Per Share – Basic and Diluted
Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and Diluted	$	4.74	$	4.68	$	1.33

(Loss) Income from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic and Diluted	$	(1.57)	$	0.26	$	0.39

Net income available to Duke Energy Corporation common stockholders
Basic and Diluted	$	3.17	$	4.94	$	1.72

Weighted average shares outstanding
Basic	770		769		737
Diluted	770		769		738

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Net Income	$	2,455	$	3,579	$	1,082
Other Comprehensive Income (Loss), net of tax(a)

Pension and OPEB adjustments	(19)		7		6
Net unrealized gains (losses) on cash flow hedges	285		(68)		(138)
Reclassification into earnings from cash flow hedges	(38)		13		11
Net unrealized losses on fair value hedges	(33)		—		—
Unrealized (losses) gains on available-for-sale securities	(21)		(8)		3

Other Comprehensive Income (Loss), net of tax	174		(56)		(118)
Comprehensive Income	2,629		3,523		964
Add: Comprehensive Loss Attributable to Noncontrolling Interests	84		319		306
Comprehensive Income Attributable to Duke Energy Corporation	2,713		3,842		1,270
Less: Preferred Dividends	106		106		107
Comprehensive Income Available to Duke Energy Corporation Common Stockholders	$	2,607	$	3,736	$	1,163

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	409	$	341

Receivables (net of allowance for doubtful accounts of $40 at 2022 and $45 at 2021)	1,309		1,085
Receivables of VIEs (net of allowance for doubtful accounts of $176 at 2022 and $76 at 2021)	3,106		2,437
Inventory	3,584		3,111
Regulatory assets (includes $106 at 2022 and $105 at 2021 related to VIEs)	3,485		2,150
Assets held for sale	262		232
Other (includes $116 at 2022 and $41 at 2021 related to VIEs)	1,067		584
Total current assets	13,222		9,940
Property, Plant and Equipment
Cost	163,839		154,496
Accumulated depreciation and amortization	(52,100)		(49,104)
Facilities to be retired, net	9		144
Net property, plant and equipment	111,748		105,536
Other Noncurrent Assets
Goodwill	19,303		19,303
Regulatory assets (includes $1,715 at 2022 and $1,824 at 2021 related to VIEs)	14,645		12,487
Nuclear decommissioning trust funds	8,637		10,401
Operating lease right-of-use assets, net	1,042		1,136
Investments in equity method unconsolidated affiliates	455		457
Assets held for sale	5,634		6,695
Other (includes $52 at 2022 and $30 at 2021 related to VIEs)	3,400		3,632
Total other noncurrent assets	53,116		54,111
Total Assets	$	178,086	$	169,587
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	4,754	$	3,531
Notes payable and commercial paper	3,952		3,304
Taxes accrued	722		731
Interest accrued	626		530
Current maturities of long-term debt (includes $350 at 2022 and $76 at 2021 related to VIEs)	4,154		3,387
Asset retirement obligations	773		647
Regulatory liabilities	1,466		1,211
Liabilities associated with assets held for sale	259		167
Other	2,167		2,423
Total current liabilities	18,873		15,931
Long-Term Debt (includes $3,108 at 2022 and $3,379 at 2021 related to VIEs)	67,061		60,448
Other Noncurrent Liabilities
Deferred income taxes	9,964		9,379
Asset retirement obligations	11,955		11,953
Regulatory liabilities	13,582		16,152
Operating lease liabilities	876		940
Accrued pension and other post-retirement benefit costs	832		855
Investment tax credits	849		833
Liabilities associated with assets held for sale	739		612
Other	1,502		1,348
Total other noncurrent liabilities	40,299		42,072
Commitments and Contingencies

Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2022 and 2021	973		973
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2022 and 2021	989		989
Common stock, $0.001 par value, 2 billion shares authorized; 770 million and 769 million shares outstanding at 2022 and 2021	1		1
Additional paid-in capital	44,862		44,371
Retained earnings	2,637		3,265
Accumulated other comprehensive loss	(140)		(303)
Total Duke Energy Corporation stockholders' equity	49,322		49,296
Noncontrolling interests	2,531		1,840
Total equity	51,853		51,136
Total Liabilities and Equity	$	178,086	$	169,587

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,455	$	3,579	$	1,082
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	5,843		5,663		5,486
Equity in (earnings) losses of unconsolidated affiliates	(114)		(28)		2,005
Equity component of AFUDC	(197)		(171)		(154)

Impairment of assets and other charges	2,183		356		984
Deferred income taxes	(200)		191		54
Contributions to qualified pension plans	(58)		—		—
Payments for asset retirement obligations	(584)		(540)		(610)
Provision for rate refunds	(130)		(70)		(22)
Refund of AMT credit carryforwards	—		—		572
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	19		50		63
Receivables	(788)		(297)		(56)
Inventory	(476)		(34)		66
Other current assets(a)	(1,498)		(1,136)		205
Increase (decrease) in
Accounts payable	805		249		(21)
Taxes accrued	10		284		117
Other current liabilities	(153)		(13)		(65)
Other assets(a)	(1,600)		112		(408)
Other liabilities	410		95		(442)
Net cash provided by operating activities	5,927		8,290		8,856
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(11,367)		(9,715)		(9,907)
Contributions to equity method investments	(58)		(81)		(370)

Return of investment capital	6		44		133
Purchases of debt and equity securities	(4,243)		(6,098)		(8,011)
Proceeds from sales and maturities of debt and equity securities	4,333		6,103		7,949

Disbursements to canceled equity method investments	—		(855)		—
Other	(644)		(333)		(398)
Net cash used in investing activities	(11,973)		(10,935)		(10,604)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	11,874		9,052		6,330

Issuance of common stock	9		5		2,745
Payments for the redemption of long-term debt	(4,396)		(5,294)		(4,506)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	80		332		3,009
Payments for the redemption of short-term debt with original maturities greater than 90 days	(287)		(997)		(2,147)
Notes payable and commercial paper	781		1,144		(1,181)

Contributions from noncontrolling interests	1,377		1,575		426
Dividends paid	(3,179)		(3,114)		(2,812)

Other	(130)		(94)		(133)
Net cash provided by financing activities	6,129		2,609		1,731

Net increase (decrease) in cash, cash equivalents and restricted cash	83		(36)		(17)
Cash, cash equivalents and restricted cash at beginning of period	520		556		573
Cash, cash equivalents and restricted cash at end of period	$	603	$	520	$	556
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	2,361	$	2,248	$	2,186
Cash received from income taxes	(6)		(3)		(585)
Significant non-cash transactions:
Accrued capital expenditures	1,766		1,325		1,116
Non-cash dividends	—		—		110

(a) Includes approximately $2.6 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


										Duke Energy Corporation Stockholders' Accumulated Other Comprehensive Income (Loss)
												Net Unrealized				Total
										Net Gains		Gains (Losses)				Duke Energy
			Common			Additional				(Losses)		on Available-		Pension and		Corporation
	Preferred		Stock	Common		Paid-in		Retained		on		for-Sale-		OPEB		Stockholders'		Noncontrolling		Total
(in millions)	Stock		Shares	Stock		Capital		Earnings		Hedges(d)		Securities		Adjustments		Equity		Interests		Equity
Balance at December 31, 2019	$	1,962	733	$	1	$	40,881	$	4,108	$	(51)	$	3	$	(82)	$	46,822	$	1,129	$	47,951
Net income (loss)	—		—	—		—		1,270		—		—		—		1,270		(295)		975
Other comprehensive (loss) income	—		—	—		—		—		(116)		3		6		(107)		(11)		(118)


Common stock issuances, including dividend reinvestment and employee benefits	—		36	—		2,902		—		—		—		—		2,902		—		2,902

Common stock dividends	—		—	—		—		(2,815)		—		—		—		(2,815)		—		(2,815)

Contribution from noncontrolling interest(a)	—		—	—		(17)		—		—		—		—		(17)		426		409
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(30)		(30)
Other(b)	—		—	—		1		(92)		—		—		—		(91)		1		(90)
Balance at December 31, 2020	$	1,962	769	$	1	$	43,767	$	2,471	$	(167)	$	6	$	(76)	$	47,964	$	1,220	$	49,184
Net income (loss)	—		—	—		—		3,802		—		—		—		3,802		(329)		3,473
Other comprehensive (loss) income	—		—	—		—		—		(65)		(8)		7		(66)		10		(56)


Common stock issuances, including dividend reinvestment and employee benefits	—		—	—		68		—		—		—		—		68		—		68

Common stock dividends	—		—	—		—		(3,008)		—		—		—		(3,008)		—		(3,008)
Sale of noncontrolling interest(c)	—		—	—		545		—		—		—		—		545		454		999
Contribution from noncontrolling interest, net of transaction costs(a)	—		—	—		—		—		—		—		—		—		550		550
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(66)		(66)
Other	—		—	—		(9)		—		—		—		—		(9)		1		(8)
Balance at December 31, 2021	$	1,962	769	$	1	$	44,371	$	3,265	$	(232)	$	(2)	$	(69)	$	49,296	$	1,840	$	51,136
Net income (loss)	—		—	—		—		2,444		—		—		—		2,444		(95)		2,349
Other comprehensive income (loss)	—		—	—		—		—		203		(21)		(19)		163		11		174


Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		76		—		—		—		—		76		—		76

Common stock dividends	—		—	—		—		(3,073)		—		—		—		(3,073)		—		(3,073)
Sale of noncontrolling interest(c)	—		—	—		465		—		—		—		—		465		569		1,034
Purchase of noncontrolling interest	—		—	—		(51)		—		—		—		—		(51)		31		(20)
Contribution from noncontrolling interest, net of transaction costs(a)	—		—	—		—		—		—		—		—		—		314		314
Distributions to noncontrolling interests in subsidiaries	—		—	—		—		—		—		—		—		—		(140)		(140)
Other	—		—	—		1		1		—		—		—		2		1		3
Balance at December 31, 2022	$	1,962	770	$	1	$	44,862	$	2,637	$	(29)	$	(23)	$	(88)	$	49,322	$	2,531	$	51,853

(a) Relates to tax equity financing activity in the Commercial Renewables Disposal Groups.

(b) Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.

(c) Relates primarily to the sale of a noncontrolling interest in Duke Energy Indiana. See Note 2 for additional discussion.

(d) See Duke Energy Consolidated Statements of Comprehensive Income for detailed activity related to Cash Flow and Fair Value Hedges.

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Carolinas, LLC

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, 2022, the Company has approximately $5.4 billion recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1947.


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	7,857	$	7,102	$	7,015
Operating Expenses
Fuel used in electric generation and purchased power	2,015		1,601		1,682
Operation, maintenance and other	1,892		1,833		1,743
Depreciation and amortization	1,526		1,468		1,462
Property and other taxes	340		320		299
Impairment of assets and other charges	26		227		476
Total operating expenses	5,799		5,449		5,662
Gains on Sales of Other Assets and Other, net	4		2		1
Operating Income	2,062		1,655		1,354
Other Income and Expenses, net	221		270		177
Interest Expense	557		538		487
Income Before Income Taxes	1,726		1,387		1,044
Income Tax Expense	126		51		88
Net Income	$	1,600	$	1,336	$	956
Other Comprehensive Income, net of tax


Net unrealized gain on cash flow hedges	—		1		—
Other Comprehensive Income, net of tax	—		1		—
Comprehensive Income	$	1,600	$	1,337	$	956

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	44	$	7
Receivables (net of allowance for doubtful accounts of $3 at 2022 and $1 at 2021)	338		300
Receivables of VIEs (net of allowance for doubtful accounts of $65 at 2022 and $41 at 2021)	928		844
Receivables from affiliated companies	390		190

Inventory	1,164		1,026
Regulatory assets (includes $12 at 2022 and 2021 related to VIEs)	1,095		544
Other (includes $8 at 2022 related to VIEs)	216		95
Total current assets	4,175		3,006
Property, Plant and Equipment
Cost	54,650		51,874
Accumulated depreciation and amortization	(18,669)		(17,854)
Facilities to be retired, net	—		102
Net property, plant and equipment	35,981		34,122
Other Noncurrent Assets

Regulatory assets (includes $208 at 2022 and $220 at 2021 related to VIEs)	4,293		2,935
Nuclear decommissioning trust funds	4,783		5,759
Operating lease right-of-use assets, net	78		92
Other	1,036		1,248
Total other noncurrent assets	10,190		10,034
Total Assets	$	50,346	$	47,162
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,472	$	988
Accounts payable to affiliated companies	209		266
Notes payable to affiliated companies	1,233		226
Taxes accrued	228		274
Interest accrued	120		125
Current maturities of long-term debt (includes $10 at 2022 and $5 at 2021 related to VIEs)	1,018		362
Asset retirement obligations	261		249
Regulatory liabilities	530		487
Other	580		546
Total current liabilities	5,651		3,523
Long-Term Debt (includes $689 at 2022 and $703 at 2021 related to VIEs)	12,948		12,595
Long-Term Debt Payable to Affiliated Companies	300		318
Other Noncurrent Liabilities
Deferred income taxes	4,153		3,634
Asset retirement obligations	5,121		5,052
Regulatory liabilities	5,783		7,198
Operating lease liabilities	83		78
Accrued pension and other post-retirement benefit costs	38		50
Investment tax credits	300		287
Other	527		536
Total other noncurrent liabilities	16,005		16,835
Commitments and Contingencies
Equity
Member's equity	15,448		13,897
Accumulated other comprehensive loss	(6)		(6)
Total equity	15,442		13,891
Total Liabilities and Equity	$	50,346	$	47,162

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,600	$	1,336	$	956
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	1,787		1,743		1,731
Equity component of AFUDC	(98)		(65)		(62)

Impairment of assets and other charges	26		227		476
Deferred income taxes	210		(213)		(260)
Contributions to qualified pension plans	(15)		—		—
Payments for asset retirement obligations	(200)		(182)		(162)
Provision for rate refunds	(74)		(46)		(5)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—		—		(4)
Receivables	(102)		(99)		52
Receivables from affiliated companies	(200)		(66)		(10)
Inventory	(138)		(16)		(14)
Other current assets(a)	(592)		(309)		209
Increase (decrease) in
Accounts payable	377		5		55
Accounts payable to affiliated companies	(75)		85		(11)
Taxes accrued	(46)		206		30
Other current liabilities	(91)		(39)		(56)
Other assets(a)	(764)		21		(102)
Other liabilities	(36)		116		(47)
Net cash provided by operating activities	1,569		2,704		2,776
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(3,304)		(2,693)		(2,669)

Purchases of debt and equity securities	(2,633)		(3,425)		(1,602)
Proceeds from sales and maturities of debt and equity securities	2,633		3,425		1,602


Other	(181)		(177)		(164)
Net cash used in investing activities	(3,485)		(2,870)		(2,833)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,441		1,651		998
Payments for the redemption of long-term debt	(436)		(617)		(813)
Notes payable to affiliated companies	1,007		(280)		477
Distributions to parent	(50)		(600)		(600)
Other	(1)		(1)		(2)
Net cash provided by financing activities	1,961		153		60
Net increase (decrease) in cash, cash equivalents and restricted cash	45		(13)		3
Cash, cash equivalents and restricted cash at beginning of period	8		21		18
Cash, cash equivalents and restricted cash at end of period	$	53	$	8	$	21
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	546	$	508	$	481
Cash (received from) paid for income taxes	(60)		233		321
Significant non-cash transactions:
Accrued capital expenditures	475		359		365

(a) Includes approximately $1.3 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


			Accumulated Other
			Comprehensive
			Income (Loss)
			Net Gains
			(Losses) on
	Member's		Cash Flow		Total
(in millions)	Equity		Hedges		Equity
Balance at December 31, 2019	$	12,818	$	(7)	$	12,811
Net income	956		—		956

Distributions to parent	(600)		—		(600)
Other(a)	(13)		—		(13)
Balance at December 31, 2020	$	13,161	$	(7)	$	13,154
Net income	1,336		—		1,336
Other comprehensive income	—		1		1
Distributions to parent	(600)		—		(600)

Balance at December 31, 2021	$	13,897	$	(6)	$	13,891
Net income	1,600		—		1,600

Distributions to parent	(50)		—		(50)
Other	1		—		1
Balance at December 31, 2022	$	15,448	$	(6)	$	15,442

(a) Amounts primarily represent impacts due to implementation of a new accounting standard related to Credit Losses. See Note 1 for additional discussion.

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Progress Energy, Inc.

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, South Carolina Public Service Commission and Florida Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, 2022, the Company has approximately $9 billion recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded balances for completeness.


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1930.


FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	13,125	$	11,057	$	10,627
Operating Expenses
Fuel used in electric generation and purchased power	5,078		3,584		3,479
Operation, maintenance and other	2,458		2,529		2,479
Depreciation and amortization	2,142		1,929		1,818
Property and other taxes	607		542		545
Impairment of assets and other charges	12		82		495
Total operating expenses	10,297		8,666		8,816
Gains on Sales of Other Assets and Other, net	11		14		9
Operating Income	2,839		2,405		1,820
Other Income and Expenses, net	181		215		129
Interest Expense	844		794		790
Income Before Income Taxes	2,176		1,826		1,159
Income Tax Expense	348		227		113


Net Income	1,828		1,599		1,046
Less: Net Income Attributable to Noncontrolling Interests	—		1		1
Net Income Attributable to Parent	$	1,828	$	1,598	$	1,045

Net Income	$	1,828	$	1,599	$	1,046
Other Comprehensive Income, net of tax
Pension and OPEB adjustments	5		1		(1)
Net unrealized gain on cash flow hedges	1		3		5


Unrealized (losses) gains on available-for-sale securities	(6)		—		(1)

Other Comprehensive Income, net of tax	—		4		3
Comprehensive Income	1,828		1,603		1,049
Less: Comprehensive Income Attributable to Noncontrolling Interests	—		1		1
Comprehensive Income Attributable to Parent	$	1,828	$	1,602	$	1,048

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	108	$	70
Receivables (net of allowance for doubtful accounts of $13 at 2022 and $11 at 2021)	318		247
Receivables of VIEs (net of allowance for doubtful accounts of $68 at 2022 and $25 at 2021)	1,289		1,006
Receivables from affiliated companies	22		121

Inventory	1,579		1,398
Regulatory assets (includes $94 at 2022 and $93 at 2021 related to VIEs)	1,833		1,030
Other (includes $88 at 2022 and $39 at 2021 related to VIEs)	342		125
Total current assets	5,491		3,997
Property, Plant and Equipment
Cost	64,822		60,894
Accumulated depreciation and amortization	(20,584)		(19,214)
Facilities to be retired, net	—		26
Net property, plant and equipment	44,238		41,706
Other Noncurrent Assets
Goodwill	3,655		3,655
Regulatory assets (includes $1,507 at 2022 and $1,603 at 2021 related to VIEs)	7,146		5,909
Nuclear decommissioning trust funds	3,855		4,642
Operating lease right-of-use assets, net	628		691
Other	1,066		1,242
Total other noncurrent assets	16,350		16,139
Total Assets	$	66,079	$	61,842
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,481	$	1,099
Accounts payable to affiliated companies	712		506
Notes payable to affiliated companies	843		2,809
Taxes accrued	135		128
Interest accrued	206		192
Current maturities of long-term debt (includes $340 at 2022 and $71 at 2021 related to VIEs)	697		1,082
Asset retirement obligations	289		275
Regulatory liabilities	576		478
Other	782		868
Total current liabilities	5,721		7,437
Long-Term Debt (includes $2,003 at 2022 and $2,293 at 2021 related to VIEs)	21,592		19,591
Long-Term Debt Payable to Affiliated Companies	150		150
Other Noncurrent Liabilities
Deferred income taxes	5,147		4,564
Asset retirement obligations	5,892		5,837
Regulatory liabilities	4,753		5,566
Operating lease liabilities	546		606
Accrued pension and other post-retirement benefit costs	292		417
Investment tax credits	358		364
Other	222		162
Total other noncurrent liabilities	17,210		17,516
Commitments and Contingencies
Equity
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2022 and 2021	—		—
Additional paid-in capital	11,832		9,149
Retained earnings	9,585		8,007
Accumulated other comprehensive loss	(11)		(11)
Total Progress Energy, Inc. stockholder's equity	21,406		17,145
Noncontrolling interests	—		3
Total equity	21,406		17,148
Total Liabilities and Equity	$	66,079	$	61,842

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,828	$	1,599	$	1,046
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	2,405		2,302		2,327
Equity component of AFUDC	(68)		(51)		(42)

Impairment of assets and other charges	12		82		495
Deferred income taxes	364		247		(197)
Contributions to qualified pension plans	(13)		—		—
Payments for asset retirement obligations	(291)		(288)		(384)
Provision for rate refunds	(58)		(36)		2
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—		51		(9)
Receivables	(322)		(97)		(69)
Receivables from affiliated companies	117		18		(81)
Inventory	(183)		(26)		49
Other current assets(a)	(937)		(551)		223
Increase (decrease) in
Accounts payable	222		59		(62)
Accounts payable to affiliated companies	206		217		(21)
Taxes accrued	8		13		75
Other current liabilities	96		(32)		139
Other assets(a)	(1,116)		(110)		(137)
Other liabilities	573		(99)		(177)
Net cash provided by operating activities	2,843		3,298		3,177
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(4,317)		(3,668)		(3,488)

Purchases of debt and equity securities	(1,341)		(2,233)		(5,998)
Proceeds from sales and maturities of debt and equity securities	1,417		2,322		6,010

Notes receivable from affiliated companies	—		—		164
Other	(137)		(156)		(160)
Net cash used in investing activities	(4,378)		(3,735)		(3,472)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	2,775		3,095		1,791
Payments for the redemption of long-term debt	(1,173)		(1,883)		(2,157)
Notes payable to affiliated companies	465		(160)		1,148
Dividends to parent	(425)		(700)		(400)
Other	(36)		(2)		(13)
Net cash provided by financing activities	1,606		350		369
Net increase (decrease) in cash, cash equivalents and restricted cash	71		(87)		74
Cash, cash equivalents and restricted cash at beginning of period	113		200		126
Cash, cash equivalents and restricted cash at end of period	$	184	$	113	$	200
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	854	$	813	$	819
Cash paid for income taxes	79		14		149
Significant non-cash transactions:
Accrued capital expenditures	663		501		363

(a) Includes approximately $1.3 billion for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


					Accumulated Other Comprehensive Income (Loss)
					Net Gains		Net Unrealized				Total Progress
	Additional				(Losses) on		Gains (Losses)		Pension and		Energy, Inc.
	Paid-in		Retained		Cash Flow		on Available-for-		OPEB		Stockholder's		Noncontrolling		Total
(in millions)	Capital		Earnings		Hedges		Sale Securities		Adjustments		Equity		Interests		Equity
Balance at December 31, 2019	$	9,143	$	6,465	$	(10)	$	(1)	$	(7)	$	15,590	$	3	$	15,593
Net income	—		1,045		—		—		—		1,045		1		1,046
Other comprehensive income (loss)	—		—		5		(1)		(1)		3		—		3



Dividends to parent	—		(400)		—		—		—		(400)		—		(400)

Other	—		(1)		—		—		—		(1)		—		(1)
Balance at December 31, 2020	$	9,143	$	7,109	$	(5)	$	(2)	$	(8)	$	16,237	$	4	$	16,241
Net income	—		1,598		—		—		—		1,598		1		1,599
Other comprehensive income	—		—		3		—		1		4		—		4

Distributions to noncontrolling interests	—		—		—		—		—		—		(1)		(1)
Dividends to parent	—		(700)		—		—		—		(700)		—		(700)

Other	6		—		—		—		—		6		(1)		5
Balance at December 31, 2021	$	9,149	$	8,007	$	(2)	$	(2)	$	(7)	$	17,145	$	3	$	17,148
Net income	—		1,828		—		—		—		1,828		—		1,828
Other comprehensive income (loss)	—		—		1		(6)		5		—		—		—
Distributions to noncontrolling interests	—		—		—		—		—		—		(34)		(34)
Dividends to parent	(175)		(250)		—		—		—		(425)		—		(425)
Equitization of certain notes payable to affiliates	2,907		—		—		—		—		2,907		—		2,907
Purchase of a noncontrolling interest	(51)		—		—		—		—		(51)		31		(20)
Other	2		—		—		—		—		2		—		2
Balance at December 31, 2022	$	11,832	$	9,585	$	(1)	$	(8)	$	(2)	$	21,406	$	—	$	21,406

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Progress, LLC

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission and by the South Carolina Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm costs, fuel costs, and asset retirement obligations specific to coal ash. As a result, assessing the potential outcomes of future regulatory orders requires significant management judgment. As of December 31, 2022, the Company has approximately $5.4 billion recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded balances for completeness.


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1930.


FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	6,753	$	5,780	$	5,422
Operating Expenses
Fuel used in electric generation and purchased power	2,492		1,778		1,743
Operation, maintenance and other	1,475		1,467		1,332
Depreciation and amortization	1,187		1,097		1,116
Property and other taxes	190		159		167
Impairment of assets and other charges	7		63		499
Total operating expenses	5,351		4,564		4,857
Gains on Sales of Other Assets and Other, net	4		13		8
Operating Income	1,406		1,229		573
Other Income and Expenses, net	114		143		75
Interest Expense	354		306		269
Income Before Income Taxes	1,166		1,066		379
Income Tax Expense (Benefit)	158		75		(36)
Net Income and Comprehensive Income	$	1,008	$	991	$	415

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	49	$	35
Receivables (net of allowance for doubtful accounts of $4 at 2022 and 2021)	167		127
Receivables of VIEs (net of allowance for doubtful accounts of $40 at 2022 and $17 at 2021)	793		574
Receivables from affiliated companies	25		65

Inventory	1,006		921
Regulatory assets (includes $39 at 2022 and 2021 related to VIEs)	690		533
Other (includes $42 at 2022 related to VIEs)	174		83
Total current assets	2,904		2,338
Property, Plant and Equipment
Cost	38,875		37,018
Accumulated depreciation and amortization	(14,201)		(13,387)
Facilities to be retired, net	—		26
Net property, plant and equipment	24,674		23,657
Other Noncurrent Assets
Regulatory assets (includes $681 at 2022 and $720 at 2021 related to VIEs)	4,724		4,118
Nuclear decommissioning trust funds	3,430		4,089
Operating lease right-of-use assets, net	370		389
Other	650		792
Total other noncurrent assets	9,174		9,388
Total Assets	$	36,752	$	35,383
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	601	$	476
Accounts payable to affiliated companies	508		310
Notes payable to affiliated companies	238		172
Taxes accrued	77		163
Interest accrued	101		96
Current maturities of long-term debt (includes $34 at 2022 and $15 at 2021 related to VIEs)	369		556
Asset retirement obligations	288		274
Regulatory liabilities	332		381
Other	384		448
Total current liabilities	2,898		2,876
Long-Term Debt (includes $1,114 at 2022 and $1,097 at 2021 related to VIEs)	10,568		9,543
Long-Term Debt Payable to Affiliated Companies	150		150
Other Noncurrent Liabilities
Deferred income taxes	2,477		2,208
Asset retirement obligations	5,535		5,401
Regulatory liabilities	4,120		4,868
Operating lease liabilities	335		350
Accrued pension and other post-retirement benefit costs	160		221
Investment tax credits	124		128
Other	76		87
Total other noncurrent liabilities	12,827		13,263
Commitments and Contingencies
Equity
Member's Equity	10,309		9,551



Total Liabilities and Equity	$	36,752	$	35,383

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,008	$	991	$	415
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	1,371		1,286		1,299
Equity component of AFUDC	(52)		(34)		(29)

Impairment of assets and other charges	7		63		499
Deferred income taxes	121		(46)		(234)
Contributions to qualified pension plans	(8)		—		—
Payments for asset retirement obligations	(193)		(187)		(304)
Provisions for rate refunds	(58)		(36)		2
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—		48		1
Receivables	(228)		(52)		(4)
Receivables from affiliated companies	58		(33)		2
Inventory	(85)		(11)		23
Other current assets(a)	(207)		(147)		98
Increase (decrease) in
Accounts payable	20		12		(127)
Accounts payable to affiliated companies	198		95		12
Taxes accrued	(86)		83		68
Other current liabilities	13		(23)		157
Other assets(a)	(416)		(37)		(215)
Other liabilities	38		(16)		3
Net cash provided by operating activities	1,501		1,956		1,666
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,070)		(1,746)		(1,581)

Purchases of debt and equity securities	(1,148)		(1,931)		(1,555)
Proceeds from sales and maturities of debt and equity securities	1,138		1,914		1,516


Other	(29)		(20)		(57)
Net cash used in investing activities	(2,109)		(1,783)		(1,677)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,477		1,959		1,296
Payments for the redemption of long-term debt	(645)		(1,308)		(1,085)
Notes payable to affiliated companies	67		(123)		229
Distributions to parent	(250)		(700)		(400)
Other	(1)		(1)		(12)
Net cash provided by (used in) financing activities	648		(173)		28
Net increase in cash, cash equivalents and restricted cash	40		—		17
Cash, cash equivalents and restricted cash at beginning of period	39		39		22
Cash, cash equivalents and restricted cash at end of period	$	79	$	39	$	39
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	386	$	335	$	301
Cash paid for income taxes	157		83		123
Significant non-cash transactions:
Accrued capital expenditures	269		163		149

(a) Includes approximately $402 million for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


	Member's
(in millions)	Equity
Balance at December 31, 2019	$	9,246
Net income	415
Distribution to parent	(400)

Other	(1)
Balance at December 31, 2020	$	9,260
Net income	991
Distribution to parent	(700)


Balance at December 31, 2021	$	9,551
Net income	1,008
Distribution to parent	(250)


Balance at December 31, 2022	$	10,309

See Notes to Consolidated Financial Statements


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Florida, LLC

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1 and 4 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Florida Public Service Commission (the “Commission”), which has jurisdiction with respect to the electric rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As discussed in Note 4, regulatory proceedings in recent years have focused on the recoverability of storm and fuel costs. As a result, assessing the potential outcomes of future regulatory orders in Florida requires significant management judgment. As of December 31, 2022, the Company has approximately $3.6 billion recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 2001.


FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	6,353	$	5,259	$	5,188
Operating Expenses
Fuel used in electric generation and purchased power	2,586		1,806		1,737
Operation, maintenance and other	967		1,048		1,131
Depreciation and amortization	955		831		702
Property and other taxes	421		383		381
Impairment of assets and other charges	4		19		(4)
Total operating expenses	4,933		4,087		3,947
Gains on Sales of Other Assets and Other, net	2		1		1
Operating Income	1,422		1,173		1,242
Other Income and Expenses, net	74		71		53
Interest Expense	362		319		326
Income Before Income Taxes	1,134		925		969
Income Tax Expense	225		187		198
Net Income	$	909	$	738	$	771




Other Comprehensive Loss, net of tax
Unrealized losses on available-for-sale securities	(5)		(1)		(1)


Other Comprehensive Loss, net of tax	(5)		(1)		(1)
Comprehensive Income	$	904	$	737	$	770

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	45	$	23
Receivables (net of allowance for doubtful accounts of $8 at 2022 and 2021)	148		117
Receivables of VIEs (net of allowance for doubtful accounts of $28 at 2022 and $8 at 2021)	496		432
Receivables from affiliated companies	2		16

Inventory	573		477
Regulatory assets (includes $55 at 2022 and $54 at 2021 related to VIEs)	1,143		497
Other (includes $46 at 2022 and $39 at 2021 related to VIEs)	108		80
Total current assets	2,515		1,642
Property, Plant and Equipment
Cost	25,940		23,865
Accumulated depreciation and amortization	(6,377)		(5,819)
Net property, plant and equipment	19,563		18,046
Other Noncurrent Assets

Regulatory assets (includes $826 at 2022 and $883 at 2021 related to VIEs)	2,422		1,791
Nuclear decommissioning trust funds	424		553
Operating lease right-of-use assets, net	258		302
Other	372		399
Total other noncurrent assets	3,476		3,045
Total Assets	$	25,554	$	22,733
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	880	$	623
Accounts payable to affiliated companies	177		209
Notes payable to affiliated companies	605		199
Taxes accrued	53		51
Interest accrued	80		68
Current maturities of long-term debt (includes $306 at 2022 and $56 at 2021 related to VIEs)	328		76
Asset retirement obligations	1		1
Regulatory liabilities	244		98
Other	363		408
Total current liabilities	2,731		1,733
Long-Term Debt (includes $890 at 2022 and $1,196 at 2021 related to VIEs)	9,381		8,406
Other Noncurrent Liabilities
Deferred income taxes	2,789		2,434

Asset retirement obligations	357		436
Regulatory liabilities	633		698
Operating lease liabilities	211		256
Accrued pension and other post-retirement benefit costs	111		166

Investment tax credits	234		236
Other	84		73
Total other noncurrent liabilities	4,419		4,299
Commitments and Contingencies

Equity
Member's equity	9,031		8,298


Accumulated other comprehensive loss	(8)		(3)
Total equity	9,023		8,295
Total Liabilities and Equity	$	25,554	$	22,733

See Notes to Consolidated Financial Statements


FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	909	$	738	$	771
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	1,032		1,011		1,019
Equity component of AFUDC	(16)		(16)		(12)

Impairment of assets and other charges	4		19		(4)
Deferred income taxes	285		279		27
Contributions to qualified pension plans	(5)		—		—
Payments for asset retirement obligations	(98)		(101)		(80)

(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	—		—		(14)
Receivables	(93)		(45)		(64)
Receivables from affiliated companies	14		(13)		(3)
Inventory	(98)		(15)		26
Other current assets(a)	(640)		(451)		40
Increase (decrease) in
Accounts payable	202		47		66
Accounts payable to affiliated companies	(32)		124		(46)
Taxes accrued	2		(30)		39
Other current liabilities	62		(7)		(7)
Other assets(a)	(704)		(69)		84
Other liabilities	18		(69)		(181)
Net cash provided by operating activities	842		1,402		1,661
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,247)		(1,923)		(1,907)

Purchases of debt and equity securities	(193)		(302)		(4,443)
Proceeds from sales and maturities of debt and equity securities	279		408		4,495

Notes receivable from affiliated companies	—		—		173
Other	(108)		(136)		(103)
Net cash used in investing activities	(2,269)		(1,953)		(1,785)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,298		1,135		495
Payments for the redemption of long-term debt	(77)		(575)		(572)
Notes payable to affiliated companies	406		3		196
Distributions to parent	(175)		—		—
Other	(1)		—		(1)
Net cash provided by financing activities	1,451		563		118
Net increase (decrease) in cash, cash equivalents and restricted cash	24		12		(6)
Cash, cash equivalents and restricted cash at beginning of period	62		50		56
Cash, cash equivalents and restricted cash at end of period	$	86	$	62	$	50
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	339	$	308	$	321
Cash (received from) paid for income taxes	(83)		(15)		138
Significant non-cash transactions:
Accrued capital expenditures	394		337		214

(a) Includes approximately $942 million for impacts of under-collected deferred fuel regulatory assets for the year ended December 31, 2022.

See Notes to Consolidated Financial Statements

100


FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


			Accumulated
			Other
			Comprehensive
			Income (Loss)
			Net Unrealized
			Gains (Losses) on
	Member's		Available-for-		Total
(in millions)	Equity		Sale Securities		Equity
Balance at December 31, 2019	$	6,789	$	(1)	$	6,788
Net income	771		—		771
Other comprehensive loss	—		(1)		(1)







Balance at December 31, 2020	$	7,560	$	(2)	$	7,558
Net income	738		—		738
Other comprehensive loss	—		(1)		(1)



Balance at December 31, 2021	$	8,298	$	(3)	$	8,295
Net income	909		—		909
Other comprehensive loss	—		(5)		(5)

Distribution to parent	(175)		—		(175)
Other	(1)		—		(1)

Balance at December 31, 2022	$	9,031	$	(8)	$	9,023

See Notes to Consolidated Financial Statements

101


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Ohio, Inc.

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1 and 4 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the Public Utilities Commission of Ohio and by the Kentucky Public Service Commission (collectively the “Commissions”), which have jurisdiction with respect to the electric and natural gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2022, the Company has approximately $684 million recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commissions, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded balances for completeness.

102


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 2002.

103


FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues
Regulated electric	$	1,798	$	1,493	$	1,405
Regulated natural gas	716		544		453

Total operating revenues	2,514		2,037		1,858
Operating Expenses
Fuel used in electric generation and purchased power	657		409		339

Cost of natural gas	261		136		73
Operation, maintenance and other	523		479		463
Depreciation and amortization	324		307		278
Property and other taxes	369		355		324
Impairment of assets and other charges	(10)		25		—
Total operating expenses	2,124		1,711		1,477
Gains on Sales of Other Assets and Other, net	1		1		—
Operating Income	391		327		381
Other Income and Expenses, net	19		18		16
Interest Expense	129		111		102
Income Before Income Taxes	281		234		295
Income Tax (Benefit) Expense	(21)		30		43


Net Income and Comprehensive Income	$	302	$	204	$	252

See Notes to Consolidated Financial Statements

104


FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	16	$	13
Receivables (net of allowance for doubtful accounts of $6 at 2022 and $4 at 2021)	73		96
Receivables from affiliated companies	247		122
Notes receivable from affiliated companies	—		15
Inventory	144		116

Regulatory assets	103		72
Other	86		57
Total current assets	669		491
Property, Plant and Equipment
Cost	12,497		11,725
Accumulated depreciation and amortization	(3,250)		(3,106)
Facilities to be retired, net	—		6
Net property, plant and equipment	9,247		8,625
Other Noncurrent Assets
Goodwill	920		920
Regulatory assets	581		635
Operating lease right-of-use assets, net	18		19



Other	71		84
Total other noncurrent assets	1,590		1,658
Total Assets	$	11,506	$	10,774
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	380	$	348
Accounts payable to affiliated companies	72		64
Notes payable to affiliated companies	497		103
Taxes accrued	317		275
Interest accrued	29		30
Current maturities of long-term debt	475		—

Asset retirement obligations	17		13
Regulatory liabilities	99		62
Other	74		82
Total current liabilities	1,960		977
Long-Term Debt	2,745		3,168
Long-Term Debt Payable to Affiliated Companies	25		25
Other Noncurrent Liabilities
Deferred income taxes	1,136		1,050
Asset retirement obligations	137		123
Regulatory liabilities	534		739
Operating lease liabilities	17		18
Accrued pension and other post-retirement benefit costs	90		109


Other	96		101
Total other noncurrent liabilities	2,010		2,140
Commitments and Contingencies
Equity
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2022 and 2021	762		762
Additional paid-in capital	3,100		3,100
Retained earnings	904		602

Total equity	4,766		4,464
Total Liabilities and Equity	$	11,506	$	10,774

See Notes to Consolidated Financial Statements

105


FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	302	$	204	$	252
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	328		311		283
Equity component of AFUDC	(7)		(7)		(7)

Impairment of assets and other charges	(10)		25		—
Deferred income taxes	(22)		42		31
Contributions to qualified pension plans	(3)		—		—
Payments for asset retirement obligations	(12)		(2)		(2)
Provision for rate refunds	5		16		14
(Increase) decrease in

Receivables	23		6		(13)
Receivables from affiliated companies	(5)		(25)		9
Inventory	(28)		(6)		25
Other current assets	(55)		(60)		(18)
Increase (decrease) in
Accounts payable	44		38		2
Accounts payable to affiliated companies	8		(4)		—
Taxes accrued	42		26		30
Other current liabilities	(63)		11		3
Other assets	(29)		(43)		(32)
Other liabilities	64		27		(2)
Net cash provided by operating activities	582		559		575
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(850)		(848)		(834)




Notes receivable from affiliated companies	(105)		(10)		(19)
Other	(67)		(60)		(48)
Net cash used in investing activities	(1,022)		(918)		(901)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	50		150		467
Payments for the redemption of long-term debt	—		(50)		—
Notes payable to affiliated companies	395		(67)		(144)
Capital contribution from parent	—		325		—

Other	(2)		—		—
Net cash provided by financing activities	443		358		323
Net increase (decrease) in cash and cash equivalents	3		(1)		(3)
Cash and cash equivalents at beginning of period	13		14		17
Cash and cash equivalents at end of period	$	16	$	13	$	14
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	126	$	107	$	97
Cash (received from) paid for income taxes	(35)		9		—
Significant non-cash transactions:
Accrued capital expenditures	123		135		104

See Notes to Consolidated Financial Statements

106


FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY






			Additional
	Common		Paid-in		Retained		Total
(in millions)	Stock		Capital		Earnings		Equity
Balance at December 31, 2019	$	762	$	2,776	$	145	$	3,683
Net income	—		—		252		252



Balance at December 31, 2020	$	762	$	2,776	$	397	$	3,935
Net income	—		—		204		204
Contribution from parent	—		325		—		325

Other	—		(1)		1		—
Balance at December 31, 2021	$	762	$	3,100	$	602	$	4,464
Net income	—		—		302		302



Balance at December 31, 2022	$	762	$	3,100	$	904	$	4,766

See Notes to Consolidated Financial Statements

107


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Duke Energy Indiana, LLC

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1, 4 and 10 to the financial statements.

Critical Audit Matter Description

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commission, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

108


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 2002.

109


FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues	$	3,922	$	3,174	$	2,795
Operating Expenses
Fuel used in electric generation and purchased power	1,819		985		767
Operation, maintenance and other	729		750		762
Depreciation and amortization	645		615		569
Property and other taxes	75		73		81
Impairment of assets and other charges	388		9		—
Total operating expenses	3,656		2,432		2,179

Operating Income	266		742		616
Other Income and Expenses, net	36		42		37
Interest Expense	189		196		161
Income Before Income Taxes	113		588		492
Income Tax (Benefit) Expense	(24)		107		84
Net Income and Comprehensive Income	$	137	$	481	$	408

See Notes to Consolidated Financial Statements

110


FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets
Cash and cash equivalents	$	31	$	6
Receivables (net of allowance for doubtful accounts of $4 at 2022 and $3 at 2021)	112		100
Receivables from affiliated companies	298		98
Notes receivable from affiliated companies	—		134
Inventory	489		418
Regulatory assets	249		277
Other	197		68
Total current assets	1,376		1,101
Property, Plant and Equipment
Cost	18,121		17,343
Accumulated depreciation and amortization	(6,021)		(5,583)

Net property, plant and equipment	12,100		11,760
Other Noncurrent Assets
Regulatory assets	875		1,278
Operating lease right-of-use assets, net	49		53

Other	254		296
Total other noncurrent assets	1,178		1,627
Total Assets	$	14,654	$	14,488
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	391	$	282
Accounts payable to affiliated companies	206		221
Notes payable to affiliated companies	435		—
Taxes accrued	92		73
Interest accrued	48		49
Current maturities of long-term debt	303		84
Asset retirement obligations	207		110
Regulatory liabilities	187		127
Other	161		105
Total current liabilities	2,030		1,051
Long-Term Debt	3,854		4,089
Long-Term Debt Payable to Affiliated Companies	150		150
Other Noncurrent Liabilities
Deferred income taxes	1,299		1,303
Asset retirement obligations	744		877
Regulatory liabilities	1,454		1,565
Operating lease liabilities	47		50
Accrued pension and other post-retirement benefit costs	122		167
Investment tax credits	186		177
Other	65		44
Total other noncurrent liabilities	3,917		4,183
Commitments and Contingencies
Equity
Member's equity	4,702		5,015
Accumulated other comprehensive income	1		—
Total equity	4,703		5,015
Total Liabilities and Equity	$	14,654	$	14,488

See Notes to Consolidated Financial Statements

111


FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	137	$	481	$	408
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	648		619		572
Equity component of AFUDC	(13)		(27)		(23)

Impairment of assets and other charges	388		9		—
Deferred income taxes	(64)		34		29
Contributions to qualified pension plans	(5)		—		—
Payments for asset retirement obligations	(82)		(67)		(63)

(Increase) decrease in

Receivables	(3)		(33)		8
Receivables from affiliated companies	20		—		—
Inventory	(70)		55		44
Other current assets	(3)		(181)		(3)
Increase (decrease) in
Accounts payable	105		76		(12)
Accounts payable to affiliated companies	(3)		8		1
Taxes accrued	34		12		13
Other current liabilities	9		13		6
Other assets	(10)		20		(68)
Other liabilities	13		(15)		26
Net cash provided by operating activities	1,101		1,004		938
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(877)		(818)		(888)

Purchases of debt and equity securities	(61)		(142)		(37)
Proceeds from sales and maturities of debt and equity securities	48		65		22

Notes receivable from affiliated companies	(86)		(120)		(33)
Other	(55)		36		48
Net cash used in investing activities	(1,031)		(979)		(888)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	67		300		544
Payments for the redemption of long-term debt	(84)		(70)		(513)
Notes payable to affiliated companies	435		(131)		101
Distributions to parent	(462)		(125)		(200)
Other	(1)		—		—
Net cash used in financing activities	(45)		(26)		(68)
Net increase (decrease) in cash and cash equivalents	25		(1)		(18)
Cash and cash equivalents at beginning of period	6		7		25
Cash and cash equivalents at end of period	$	31	$	6	$	7
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	186	$	194	$	164
Cash paid for income taxes	35		56		36
Significant non-cash transactions:
Accrued capital expenditures	122		118		101

See Notes to Consolidated Financial Statements

112


FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


			Accumulated
			Other
			Comprehensive
			Income
			Pension
	Member's		and OPEB		Total
(in millions)	Equity		Adjustments		Equity
Balance at December 31, 2019	$	4,575	$	—	$	4,575
Net income	408		—		408

Distributions to parent	(200)		—		(200)

Balance at December 31, 2020	$	4,783	$	—	$	4,783
Net income	481		—		481

Distributions to parent	(250)		—		(250)
Other	1		—		1
Balance at December 31, 2021	$	5,015	$	—	$	5,015
Net income	137		—		137
Distributions to parent	(450)		—		(450)
Other	—		1		1
Balance at December 31, 2022	$	4,702	$	1	$	4,703

See Notes to Consolidated Financial Statements

113


REPORTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholder and the Board of Directors of Piedmont Natural Gas Company, Inc.

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Critical Audit Matter

Regulatory Matters – Impact of Rate Regulation on the Financial Statements – Refer to Notes 1 and 4 to the financial statements.

Critical Audit Matter Description

The Company is subject to rate regulation by the North Carolina Utilities Commission, the Public Service Commission of South Carolina, and the Tennessee Public Utility Commission (collectively the “Commissions”), which have jurisdiction with respect to the gas rates of the Company. Management has determined it meets the criteria for the application of regulated operations accounting in preparing its financial statements under accounting principles generally accepted in the United States of America. Significant judgment can be required to determine if otherwise recognizable incurred costs qualify to be presented as a regulatory asset and deferred because such costs are probable of future recovery in customer rates. As of December 31, 2022, the Company has approximately $511 million recorded as regulatory assets.

We identified the impact of rate regulation related to regulatory assets as a critical audit matter due to the significant judgments made by management, including assumptions regarding the outcome of future decisions by the Commissions, to support its assertions on the likelihood of future recovery for deferred costs. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commissions, auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities as it relates to regulatory assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the recovery of regulatory assets included the following, among others:

•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.

•We read relevant regulatory orders issued by the Commission, regulatory statutes, interpretations, procedural memorandums, filings made by interveners, and other publicly available information to assess the likelihood of recovery in future rates based on precedents of the Commissions’ treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded balances for completeness.

114


REPORTS

•We evaluated the reasonableness of management’s judgments regarding the recoverability of regulatory asset balances by performing the following:

–We inquired of management regarding changes in regulatory orders and regulatory asset balances during the year.

–We evaluated the reasonableness of such changes based on our knowledge of commission-approved amortization, expected incurred costs, and recently approved regulatory orders, as applicable.

–We utilized trend analyses to evaluate the historical consistency of regulatory asset balances.

–We compared the recorded regulatory asset balance to an independently developed expectation of the corresponding balance.

•We obtained representation from management asserting that regulatory assets recorded in the financial statements are probable of recovery.

/s/ Deloitte & Touche LLP

Charlotte, North Carolina

February 27, 2023

We have served as the Company's auditor since 1951.

115


FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating Revenues
Regulated natural gas	$	2,100	$	1,555	$	1,286
Nonregulated natural gas and other	24		14		11

Total operating revenues	2,124		1,569		1,297
Operating Expenses
Cost of natural gas	1,015		569		386
Operation, maintenance and other	368		327		322
Depreciation and amortization	222		213		180
Property and other taxes	57		55		53
Impairment of assets and other charges	18		10		7
Total operating expenses	1,680		1,174		948
Gains on Sales of Other Assets and Other, net	4		—		—
Operating Income	448		395		349
Equity in earnings of unconsolidated affiliates	8		9		9

Other income and expense, net	46		55		51
Total other income and expenses	54		64		60
Interest Expense	140		119		118
Income Before Income Taxes	362		340		291
Income Tax Expense	39		30		18
Net Income and Comprehensive Income	$	323	$	310	$	273

See Notes to Consolidated Financial Statements

116


FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

CONSOLIDATED BALANCE SHEETS


	December 31,
(in millions)	2022		2021
ASSETS
Current Assets

Receivables (net of allowance for doubtful accounts of $14 at 2022 and $15 at 2021)	$	436	$	318
Receivables from affiliated companies	11		11
Inventory	172		109
Regulatory assets	119		141

Other	4		9
Total current assets	742		588
Property, Plant and Equipment
Cost	10,869		9,918
Accumulated depreciation and amortization	(2,081)		(1,899)
Facilities to be retired, net	9		11
Net property, plant and equipment	8,797		8,030
Other Noncurrent Assets
Goodwill	49		49
Regulatory assets	392		316
Operating lease right-of-use assets, net	4		16
Investments in equity method unconsolidated affiliates	79		95
Other	272		288
Total other noncurrent assets	796		764
Total Assets	$	10,335	$	9,382
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	345	$	196
Accounts payable to affiliated companies	51		40

Notes payable to affiliated companies	514		518
Taxes accrued	74		63
Interest accrued	40		37
Current maturities of long-term debt	45		—
Regulatory liabilities	74		56
Other	81		81
Total current liabilities	1,224		991
Long-Term Debt	3,318		2,968

Other Noncurrent Liabilities
Deferred income taxes	870		815
Asset retirement obligations	26		22
Regulatory liabilities	1,024		1,058
Operating lease liabilities	13		14
Accrued pension and other post-retirement benefit costs	7		7
Other	180		158
Total other noncurrent liabilities	2,120		2,074
Commitments and Contingencies
Equity
Common stock, no par value: 100 shares authorized and outstanding at 2022 and 2021	1,635		1,635

Retained earnings	2,037		1,714

Total Piedmont Natural Gas Company, Inc. stockholder's equity	3,672		3,349
Noncontrolling interests	1		—
Total equity	3,673		3,349
Total Liabilities and Equity	$	10,335	$	9,382

See Notes to Consolidated Financial Statements

117


FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
(in millions)	2022		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	323	$	310	$	273
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	225		216		182
Equity component of AFUDC	(11)		(20)		(19)
Gains on sales of other assets	(4)		—		—
Impairment of assets and other charges	18		10		7
Deferred income taxes	5		4		53
Contributions to qualified pension plans	(2)		—		—
Equity in earnings from unconsolidated affiliates	(8)		(9)		(9)

Provision for rate refunds	(3)		(4)		(33)
(Increase) decrease in

Receivables	(111)		(77)		10
Receivables from affiliated companies	—		(1)		—
Inventory	(63)		(40)		3
Other current assets	32		33		(66)
Increase (decrease) in
Accounts payable	40		(25)		16
Accounts payable to affiliated companies	11		(39)		76
Taxes accrued	11		37		3
Other current liabilities	36		(26)		(11)
Other assets	9		26		(11)
Other liabilities	(1)		(4)		7
Net cash provided by operating activities	507		391		481
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(862)		(850)		(901)
Contributions to equity method investments	(8)		(9)		—







Other	(26)		(31)		(28)
Net cash used in investing activities	(896)		(890)		(929)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	394		347		394
Payments for the redemption of long-term debt	—		(160)		—
Notes payable to affiliated companies	(4)		(13)		54


Capital contribution from parent	—		325		—

Other	(1)		—		—
Net cash provided by financing activities	389		499		448
Net increase (decrease) in cash and cash equivalents	—		—		—
Cash and cash equivalents at beginning of period	—		—		—
Cash and cash equivalents at end of period	$	—	$	—	$	—
Supplemental Disclosures:
Cash paid for interest, net of amount capitalized	$	135	$	114	$	115
Cash paid for (received from) income taxes	23		(13)		(36)
Significant non-cash transactions:
Accrued capital expenditures	207		97		106

See Notes to Consolidated Financial Statements

118


FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY








					Total
					Piedmont
					Natural Gas
	Common		Retained		Company, Inc.		Noncontrolling		Total
(in millions)	Stock		Earnings		Equity		Interests		Equity
Balance at December 31, 2019	$	1,310	$	1,133	$	2,443	$	—	$	2,443
Net income	—		273		273		—		273





Other	—		(1)		(1)		—		(1)
Balance at December 31, 2020	$	1,310	$	1,405	$	2,715	$	—	$	2,715
Net income	—		310		310		—		310

Contribution from parent	325		—		325		—		325

Other	—		(1)		(1)		—		(1)
Balance at December 31, 2021	$	1,635	$	1,714	$	3,349	$	—	$	3,349
Net income	—		323		323		—		323



Other	—		—		—		1		1
Balance at December 31, 2022	$	1,635	$	2,037	$	3,672	$	1	$	3,673

See Notes to Consolidated Financial Statements

119


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Index to Combined Notes To Consolidated Financial Statements

The notes to the consolidated financial statements are a combined presentation. The following table indicates the registrants to which the notes apply.

Applicable Notes

Registrant

Duke Energy

•

Duke Energy Carolinas

•

Progress Energy

•

Duke Energy Progress

•

Duke Energy Florida

•

Duke Energy Ohio

•

Duke Energy Indiana

•

Piedmont

•

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Basis of Consolidation

These Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the Duke Energy Registrants and subsidiaries or VIEs where the respective Duke Energy Registrants have control. See Note 18 for additional information on VIEs. These Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities. See Note 9 for additional information on joint ownership. Substantially all of the Subsidiary Registrants' operations qualify for regulatory accounting.

Certain prior year amounts have been reclassified to conform to the current year presentation.

120


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Other Current Assets and Liabilities


		December 31,
(in millions)	Location	2022		2021
Duke Energy
Accrued compensation	Current Liabilities	$	778	$	915

Duke Energy Carolinas
Accrued compensation	Current Liabilities	$	247	$	277

Duke Energy Progress
Customer deposits	Current Liabilities	$	106	$	144
Other accrued liabilities	Current Liabilities	124		163
Duke Energy Florida
Customer deposits	Current Liabilities	$	200	$	200
Other accrued liabilities	Current Liabilities	61		89
Duke Energy Ohio
Gas Storage	Current Assets	$	57	$	25
Collateral liabilities	Current Liabilities	53		57
Duke Energy Indiana
Mark-to-market transactions	Current Assets	$	110	$	23

Discontinued Operations

Duke Energy has elected to present cash flows of discontinued operations combined with cash flows of continuing operations. Unless otherwise noted, the notes to these consolidated financial statements exclude amounts related to discontinued operations for all periods presented. For the years ended December 31, 2022, 2021 and 2020, the Loss From Discontinued Operations, net of tax on Duke Energy's Consolidated Statements of Operations includes amounts related to noncontrolling interests. A portion of Noncontrolling interests on Duke Energy's Consolidated Balance Sheets relates to discontinued operations for the periods presented. See Note 2 for discussion of discontinued operations related to the Commercial Renewables Disposal Groups.

Noncontrolling Interest

Duke Energy maintains a controlling financial interest in certain less than wholly owned regulated and nonregulated subsidiaries. As a result, Duke Energy consolidates these subsidiaries and presents the third-party investors' portion of Duke Energy's net income (loss), net assets and comprehensive income (loss) as noncontrolling interest. Noncontrolling interest is included as a component of equity on the Consolidated Balance Sheet. Operating agreements of Duke Energy's subsidiaries with noncontrolling interest allocate profit and loss based on their pro rata shares of the ownership interest in the respective subsidiary. Therefore, Duke Energy allocates net income or loss and other comprehensive income or loss of these subsidiaries to the owners based on their pro rata shares.

Significant Accounting Policies

Use of Estimates

Regulatory Accounting

121


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash, Cash Equivalents and Restricted Cash

All highly liquid investments with maturities of three months or less at the date of acquisition are considered cash equivalents. Duke Energy, Progress Energy and Duke Energy Florida have restricted cash balances related primarily to collateral assets, escrow deposits and VIEs. Duke Energy Carolinas and Duke Energy Progress have restricted cash balances related to VIEs from storm recovery bonds issued. See Note 18 for additional information. Restricted cash amounts are included in Other within Current Assets and Other Noncurrent Assets on the Consolidated Balance Sheets. The following table presents the components of cash, cash equivalents and restricted cash included in the Consolidated Balance Sheets.


	December 31, 2022
			Duke				Duke		Duke
	Duke		Energy		Progress		Energy		Energy
	Energy		Carolinas		Energy		Progress		Florida
Current Assets
Cash and cash equivalents	$	409	$	44	$	108	$	49	$	45
Other	173		8		74		28		41
Other Noncurrent Assets
Other	11		1		2		2		—
Total cash, cash equivalents and restricted cash	$	593	$	53	$	184	$	79	$	86


	December 31, 2021
			Duke				Duke		Duke
	Duke		Energy		Progress		Energy		Energy
	Energy		Carolinas		Energy		Progress		Florida
Current Assets
Cash and cash equivalents	$	341	$	7	$	70	$	35	$	23
Other	170		—		39		—		39
Other Noncurrent Assets
Other	6		1		4		4		—
Total cash, cash equivalents and restricted cash	$	517	$	8	$	113	$	39	$	62

Inventory

Inventory related to regulated operations is valued at historical cost. Inventory related to nonregulated operations is valued at the lower of cost or market. Inventory is charged to expense or capitalized to property, plant and equipment when issued, primarily using the average cost method. Excess or obsolete inventory is written down to the lower of cost or net realizable value. Once inventory has been written down, it creates a new cost basis for the inventory that is not subsequently written up. Provisions for inventory write-offs were not material at December 31, 2022, and 2021, respectively. The components of inventory are presented in the tables below.


	December 31, 2022
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,604	$	876	$	1,232	$	819	$	413	$	105	$	342	$	12
Coal	620		253		190		99		91		34		144		—
Natural gas, oil and other	360		35		157		88		69		5		3		160
Total inventory	$	3,584	$	1,164	$	1,579	$	1,006	$	573	$	144	$	489	$	172

122


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


	December 31, 2021
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,309	$	793	$	1,067	$	729	$	338	$	80	$	311	$	14
Coal	486		195		167		94		73		19		105		—
Natural gas, oil and other	316		38		164		98		66		17		2		95
Total inventory	$	3,111	$	1,026	$	1,398	$	921	$	477	$	116	$	418	$	109

Investments in Debt and Equity Securities

Goodwill

Intangible Assets

RECs are used to measure compliance with renewable energy standards and are held primarily for consumption. See Note 12 for further information.

Long-Lived Asset Impairments

123


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Property, Plant and Equipment


	Years Ended December 31,
	2022		2021		2020
Duke Energy	3.0	%	2.9	%	3.0	%
Duke Energy Carolinas	2.7	%	2.7	%	2.8	%
Progress Energy	3.2	%	3.1	%	3.2	%
Duke Energy Progress	3.0	%	3.0	%	3.1	%
Duke Energy Florida	3.5	%	3.3	%	3.3	%
Duke Energy Ohio	2.9	%	2.9	%	2.9	%
Duke Energy Indiana	3.6	%	3.6	%	3.5	%
Piedmont	2.1	%	2.1	%	2.3	%

In general, when the Duke Energy Registrants retire regulated property, plant and equipment, the original cost plus the cost of retirement, less salvage value and any depreciation already recognized, is charged to accumulated depreciation. However, when it becomes probable the asset will be retired substantially in advance of its original expected useful life or is abandoned, the cost of the asset and the corresponding accumulated depreciation is recognized as a separate asset. If the asset is still in operation, the net amount is classified as Facilities to be retired, net on the Consolidated Balance Sheets. If the asset is no longer operating, the net amount is classified in Regulatory assets on the Consolidated Balance Sheets if deemed recoverable (see discussion of long-lived asset impairments above). The carrying value of the asset is based on historical cost if the Duke Energy Registrants are allowed to recover the remaining net book value and a return equal to at least the incremental borrowing rate. If not, an impairment is recognized to the extent the net book value of the asset exceeds the present value of future revenues discounted at the incremental borrowing rate.

Other Noncurrent Assets

Duke Energy, through a nonregulated subsidiary, was the winner of the Carolina Long Bay offshore wind auction in May 2022 and recorded an

Leases

Nuclear Fuel

Nuclear fuel is classified as Property, Plant and Equipment on the Consolidated Balance Sheets.

124


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Allowance for Funds Used During Construction and Interest Capitalized

AFUDC equity, a permanent difference for income taxes, reduces the ETR when capitalized and increases the ETR when depreciated or amortized. See Note 24 for additional information.

Asset Retirement Obligations

Accounts Payable


	December 31, 2022
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Outstanding Accounts Payable Balance Sold	$	87	$	6	$	19	$	8	$	11	$	5	$	—	$	57
Suppliers Invoices Settled Through The Program	301		29		85		26		59		38		2		147


	December 30, 2021
					Duke		Duke
	Duke		Progress		Energy		Energy
(in millions)	Energy		Energy		Florida		Ohio		Piedmont
Outstanding Accounts Payable Balance Sold	$	19	$	9	$	9	$	6	$	4
Suppliers Invoices Settled Through The Program	122		10		10		12		100

Revenue Recognition

125


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Derivatives and Hedging

See Note 15 for further information.

Captive Insurance Reserves

Preferred Stock

Preferred stock is reviewed to determine the appropriate balance sheet classification and embedded features, such as call options, are evaluated to determine if they should be bifurcated and accounted for separately. Costs directly related to the issuance of preferred stock are recorded as a reduction of the proceeds received. The liability for the dividend is recognized when declared. The accumulated dividends on the cumulative preferred stock is recognized to net income available to Duke Energy Corporation in the EPS calculation. See Note 20 for further information.

Loss Contingencies and Environmental Liabilities

Contingent losses are recorded when it is probable a loss has occurred and the loss can be reasonably estimated. When a range of the probable loss exists and no amount within the range is a better estimate than any other amount, the minimum amount in the range is recorded. Unless otherwise required by GAAP, legal fees are expensed as incurred.

Environmental liabilities are recorded on an undiscounted basis when environmental remediation or other liabilities become probable and can be reasonably estimated. Environmental expenditures related to past operations that do not generate current or future revenues are expensed. Environmental expenditures related to operations that generate current or future revenues are expensed or capitalized, as appropriate. Certain environmental expenditures receive regulatory accounting treatment and are recorded as regulatory assets.

See Notes 4 and 5 for further information.

Severance and Special Termination Benefits

Duke Energy maintains severance plans for the general employee population under which, in general, the longer a terminated employee worked prior to termination the greater the amount of severance benefits provided. A liability for involuntary severance is recorded once an involuntary severance plan is committed to by management if involuntary severances are probable and can be reasonably estimated. For involuntary severance benefits incremental to its ongoing severance plan benefits, the fair value of the obligation is expensed at the communication date if there are no future service requirements or over the required future service period. Duke Energy also offers special termination benefits under voluntary severance programs. Special termination benefits are recorded immediately upon employee acceptance absent a significant retention period. Otherwise, the cost is recorded over the remaining service period. Employee acceptance of voluntary severance benefits is determined by management based on the facts and circumstances of the benefits being offered. See Note 21 for further information.

Guarantees

Income Taxes

Duke Energy and its subsidiaries file a consolidated federal income tax return and other state and foreign jurisdictional returns. The Subsidiary Registrants are parties to a tax-sharing agreement with Duke Energy. Income taxes recorded represent amounts the Subsidiary Registrants would incur as separate C-Corporations. Deferred income taxes have been provided for temporary differences between GAAP and tax bases of assets and liabilities because the differences create taxable or tax-deductible amounts for future periods. ITCs associated with regulated operations are deferred and amortized as a reduction of income tax expense over the estimated useful lives of the related properties.

126


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accumulated deferred income taxes are valued using the enacted tax rate expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be settled or realized. In the event of a change in tax rates, deferred tax assets and liabilities are remeasured as of the enactment date of the new rate. To the extent that the change in the value of the deferred tax represents an obligation to customers, the impact of the remeasurement is deferred to a regulatory liability. Remaining impacts are recorded in income from continuing operations. Duke Energy's results of operations could be impacted if the estimate of the tax effect of reversing temporary differences is not reflective of actual outcomes, is modified to reflect new developments or interpretations of the tax law, revised to incorporate new accounting principles, or changes in the expected timing or manner of a reversal.

Tax-related interest and penalties are recorded in Interest Expense and Other Income and Expenses, net in the Consolidated Statements of Operations.

See Note 24 for further information.

Excise Taxes

Certain excise taxes levied by state or local governments are required to be paid even if not collected from the customer. These taxes are recognized on a gross basis. Taxes for which Duke Energy operates merely as a collection agent for the state and local government are accounted for on a net basis. Excise taxes accounted for on a gross basis within both Operating Revenues and Property and other taxes in the Consolidated Statements of Operations were as follows.


	Years Ended December 31,
(in millions)	2022		2021		2020
Duke Energy	$	449	$	420	$	415
Duke Energy Carolinas	47		44		43
Progress Energy	290		250		249
Duke Energy Progress	25		22		26
Duke Energy Florida	265		228		223
Duke Energy Ohio	104		102		96
Duke Energy Indiana	7		23		25
Piedmont	1		1		2

Dividend Restrictions and Unappropriated Retained Earnings

Duke Energy does not have any current legal, regulatory or other restrictions on paying common stock dividends to shareholders. However, if Duke Energy were to defer dividend payments on the preferred stock, the declaration of common stock dividends would be prohibited. See Note 20 for more information. Additionally, as further described in Note 4, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio, Duke Energy Indiana and Piedmont have restrictions on paying dividends or otherwise advancing funds to Duke Energy due to conditions established by regulators in conjunction with merger transaction approvals. At December 31, 2022, and 2021, an insignificant amount of Duke Energy’s consolidated Retained earnings balance represents undistributed earnings of equity method investments.

New Accounting Standards

The following ~~new~~ accounting standard was adopted by the Duke Energy Registrants in 2021.

Leases with Variable Lease Payments. In July 2021, the FASB issued new accounting guidance requiring lessors to classify a lease with variable lease payments that do not depend on a reference index or rate as an operating lease if both of the following are met: (1) the lease would have to be classified as a sales-type or direct financing lease under prior guidance, and (2) the lessor would have recognized a day-one loss. Duke Energy elected to adopt the guidance immediately upon issuance of the new standard and will be applying the new standard prospectively to new lease arrangements meeting the criteria. Duke Energy did not have any lease arrangements that this new accounting guidance materially impacted.

The following accounting standard was adopted by the Duke Energy Registrants in 2020.

Current Expected Credit Losses. In June 2016, the FASB issued new accounting guidance for credit losses. Duke Energy adopted the new accounting guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year results. Duke Energy did not adopt any practical expedients.

~~134~~


~~FINANCIAL STATEMENTS~~			~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

Duke Energy recognizes allowances for credit losses based on management's estimate of losses expected to be incurred over the lives of certain assets or guarantees. Management monitors credit quality, changes in expected credit losses and the appropriateness of the allowance for credit losses on a forward-looking basis. Management reviews the risk of loss periodically as part of the existing assessment of collectability of receivables.

Duke Energy reviews the credit quality of its counterparties as part of its regular risk management process and requires credit enhancements, such as deposits or letters of credit, as appropriate and as allowed by regulators.

Duke Energy recorded cumulative effects of changes in accounting principles related to the adoption of the new credit loss standard for allowances and credit losses of trade and other receivables, insurance receivables and financial guarantees. These amounts are included in the ~~Condensed~~ Consolidated Balance Sheets in Receivables, Receivables of VIEs, Other Noncurrent Assets and Other Noncurrent Liabilities. See Notes 78 and 1819 for more information.

127


FINANCIAL STATEMENTS			SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Duke Energy recorded an adjustment for the cumulative effect of a change in accounting principle due to the adoption of this standard on January 1, 2020, as shown in the table below:


		December 31, 2020										January 1, 2020
				Duke				Duke		Duke								Duke				Duke		Duke
		Duke		Energy		Progress		Energy		Energy						Duke		Energy		Progress		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida			Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Piedmont
Total pretax impact to Retained Earnings	Total pretax impact to Retained Earnings	$	120	$	16	$	2	$	1	$	1		$	1	Total pretax impact to Retained Earnings	$	120	$	16	$	2	$	1	$	1	$	1

2. DISPOSITIONS

The following ~~new accounting standard has been issued but~~table summarizes the Loss from Discontinued Operations, net of tax recorded on Duke Energy's Consolidated Statements of Operations:


	Years Ended December 31,
(in millions)	2022		2021		2020
Commercial Renewables Disposal Groups	$	(1,349)	$	(151)	$	(14)
Other(a)	26		7		7
Loss from Discontinued Operations, net of tax	$	(1,323)	$	(144)	$	(7)

(a) Amount represents an income tax benefit resulting from tax adjustments for previously sold businesses not ~~yet adopted by~~related to the Commercial Renewables Disposal Groups.

Sale of Commercial Renewables Segment

In August 2022, Duke Energy ~~Registrants~~announced a strategic review of its commercial renewables business. Since 2007, Duke Energy has built a portfolio of commercial wind, solar and battery projects across the U.S., and established a development pipeline. Duke Energy has developed a strategy to focus on renewables, grid and other investment opportunities within its regulated operations. In November 2022, Duke Energy committed to a plan to sell the Commercial Renewables business segment, excluding the offshore wind contract for Carolina Long Bay, which was moved to the Electric Utilities and Infrastructure (EU&I) segment. Duke Energy is actively marketing the business as two separate disposal groups, the utility-scale solar and wind group and the distributed generation group (collectively, Commercial Renewables Disposal Groups). The sales processes for both Disposal Groups are ongoing and Duke Energy expects to dispose of these groups in the second half of 2023.

Assets Held For Sale and Discontinued Operations

The Commercial Renewables Disposal Groups were classified as held for sale and as discontinued operations in the fourth quarter of 2022. No adjustments were made to the historical activity within the Consolidated Statements of Comprehensive Income, Consolidated Statements of Cash Flows or the Consolidated Statements of Changes in Equity. Unless otherwise noted, the notes to these consolidated financial statements exclude amounts related to discontinued operations for all periods presented.

128


FINANCIAL STATEMENTS			DISPOSITIONS

The following table presents the carrying values of the major classes of Assets held for sale and Liabilities associated with assets held for sale included in Duke Energy's Consolidated Balance Sheets.


	December 31,
(in millions)	2022		2021
Current Assets Held for Sale
Cash and cash equivalents	$	10	$	3
Receivables, net	107		87
Inventory	88		86
Other	57		56
Total current assets held for sale	262		232
Noncurrent Assets Held for Sale
Property, Plant and Equipment
Cost	6,444		7,323
Accumulated depreciation and amortization	(1,651)		(1,452)
Net property, plant and equipment	4,793		5,871
Operating lease right-of-use assets, net	140		130
Investments in equity method unconsolidated affiliates	522		513
Other	179		181
Total other noncurrent assets held for sale	841		824
Total Assets Held for Sale	$	5,896	$	6,927
Current Liabilities Associated with Assets Held for Sale
Accounts payable	$	122	$	98
Taxes accrued	17		18

Other	120		51
Total current liabilities associated with assets held for sale	259		167
Noncurrent Liabilities Associated with Assets Held for Sale


Operating lease liabilities	150		134
Asset retirement obligations	190		175
Other	399		303
Total other noncurrent liabilities associated with assets held for sale	739		612
Total Liabilities Associated with Assets Held for Sale	$	998	$	779

As of December 31, 2022, the noncontrolling interest balance is $1.6 billion.

The following table presents the results of the Commercial Renewables Disposal Groups, which are included in Loss from Discontinued Operations, net of tax in Duke Energy's Consolidated Statements of Operations.


	Years Ended December 31,
(in millions)	2022		2021		2020
Operating revenues	$	465	$	476	$	502


Operation, maintenance and other	337		343		292
Depreciation and amortization(a)	201		227		200
Property and other taxes	36		34		26


Other income and expenses, net	2		(27)		1
Interest expense	10		72		66
Loss on disposal	1,748		—		—
Loss before income taxes	(1,865)		(227)		(81)
Income tax benefit	(516)		(76)		(67)
Loss from discontinued operations	$	(1,349)	$	(151)	$	(14)
Add: Net loss attributable to noncontrolling interest included in discontinued operations	108		344		296
Net income from discontinued operations attributable to Duke Energy Corporation	$	(1,241)	$	193	$	282

(a) Upon meeting the criteria for assets held for sale, beginning in November 2022 depreciation and amortization expense were ceased.

129


FINANCIAL STATEMENTS			DISPOSITIONS

The Commercial Renewables Disposal Groups' held for sale assets included pretax impairments of approximately $1.7 billion for the year ended December 31, 2022. The impairment was recorded to write-down the carrying amount of the property, plant and equipment assets to the estimated fair value of the business, based on the expected selling price less estimated cost to sell. These losses were included in Loss from Discontinued Operations, net of tax in Duke Energy's Consolidated Statements of Operations and Comprehensive Income. The fair value was primarily determined from the income approach using discounted cash flows but also considered market information obtained through the bidding process. The discounted cash flow model utilized Level 2 and Level 3 inputs. The fair value hierarchy levels are further discussed in Note 17. The impairment will be updated, if necessary, based on the final sales price, after any adjustments at closing for working capital and capital expenditures.

Duke Energy has elected not to separately disclose discontinued operations on Duke Energy's Consolidated Statements of Cash Flows. The following table summarizes Duke Energy's cash flows from discontinued operations related to the Commercial Renewables Disposal Groups.


	Years Ended December 31,
(in millions)	2022		2021		2020
Cash flows provided by (used in):
Operating activities	$	213	$	62	$	466
Investing activities	(802)		(542)		(1,102)

Other Sale Related Matters

Several Duke Energy renewables project companies, located in the Electric Reliability Council of Texas (ERCOT) market, were named in several lawsuits arising out of Texas Storm Uri, which occurred in February 2021. The legal actions related to these lawsuits will remain with Duke Energy and any future activity related to the matters will be presented in discontinued operations. See Note 5 for more information.

The Commercial Renewables Disposal Groups' debt and related interest rate swaps have not been classified as held for sale as they are not currently expected transfer to the buyer, but would be required to be extinguished as a result of the disposition. As of December 31, 2022, the balance of long-term debt including current maturities is $1.5 billion. If the debt and related interest rate swaps do not transfer to the buyer and are terminated early, the expected total loss on extinguishment is approximately $100 million, of which approximately $55 million is expected to be attributable to Duke Energy. The loss would be recorded in discontinued operations when the debt and swaps are terminated. Hedge accounting was discontinued on the related interest rate swaps when the Commercial Renewables Disposal Groups were classified as held for sale as the forecasted transactions being hedged are no longer probable. As a result, a gain of $72 million was recorded in Loss from Discontinued Operations, net of tax in Duke Energy's Consolidated Statements of Operations as of December 31, ~~2020.~~2022, of which $54 million is attributable to Duke Energy.

~~Reference Rate Reform.~~ ~~In March 2020,~~Interest expense and debt issuance costs directly associated with the ~~FASB issued new accounting guidance for reference rate reform. This guidance is elective~~Commercial Renewables Disposal Groups was allocated to discontinued operations. No interest from corporate level debt was allocated to discontinued operations.

The Commercial Renewables Disposal Groups have entered into negotiations to modify or terminate certain PPAs under which the Commercial Renewables Disposal Groups sell power and ~~provides expedients~~RECs from renewable projects to facilitate financial reporting for the anticipated transition away from the London Inter-bank Offered Rate (LIBOR) and other interbank reference rates by the end of 2021. The optional expedients are effective for modification of existing contracts or new arrangements executed between March 12, 2020, through December 31, 2022.

offtakers. Duke Energy ~~has variable-rate debt and manages interest rate risk by entering into financial contracts including interest rate swaps that are generally indexed~~expects to ~~LIBOR. Impacted financial arrangements extending beyond 2021 may require contractual amendment or termination~~pay offtakers approximately $95 million to ~~fully adapt~~modify the agreements. Charges related to ~~a post-LIBOR environment.~~the modifications will be reflected within Loss From Discontinued Operations in Duke Energy's Consolidated Statements of Operations.

Sale of Minority Interest in Duke Energy ~~is assessing these financial arrangements and is evaluating~~Indiana Holdco, LLC

On January 28, 2021, Duke Energy executed an agreement providing for an investment by an affiliate of GIC in Duke Energy Indiana in exchange for a 19.9% minority interest issued by Duke Energy Indiana Holdco, LLC, the ~~use~~holding company for Duke Energy Indiana. The transaction was completed following two closings for an aggregate purchase price of ~~optional expedients outlined~~approximately $2.05 billion. The first closing, which occurred on September 8, 2021, resulted in ~~the new accounting guidance. Alternative index provisions are also being assessed and incorporated into new financial arrangements that extend beyond 2021. The full outcome~~Duke Energy Indiana Holdco, LLC issuing 11.05% of its membership interests in exchange for approximately $1.03 billion or 50% of the ~~transition away from LIBOR cannot be determined at this time, but~~purchase price. The difference between the cash consideration received, net of transaction costs of approximately $27 million, and the carrying value of the noncontrolling interest is ~~not expected~~$545 million and was recorded as an increase to ~~have a material impact~~equity. The second closing was completed in December 2022 and resulted in Duke Energy Indiana Holdco, LLC issuing an additional 8.85% of its membership interests in exchange for approximately $1.03 billion. The difference between the cash consideration received, net of transaction costs of approximately $6 million, and the carrying value of the noncontrolling interest is $492 million and was recorded as an increase to equity. Duke Energy retained indirect control of these assets, and, therefore, no gain or loss was recognized on the ~~financial statements.~~Consolidated Statements of Operations for either transaction.

2.3. BUSINESS SEGMENTS

Reportable segments are determined based on information used by the chief operating decision-maker in deciding how to allocate resources and evaluate the performance of the business. Duke Energy evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests and preferred stock dividends. Segment income, as discussed below, includes intercompany revenues and expenses that are eliminated on the Consolidated Financial Statements. Certain governance costs are allocated to each segment. In addition, direct interest expense and income taxes are included in segment income.

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

Duke Energy

Due to Duke Energy's commitment in the fourth quarter of 2022 to sell the Commercial Renewables business segment, Duke Energy's segment structure now includes the following two segments: ~~Electric Utilities~~EU&I and ~~Infrastructure, Gas Utilities and Infrastructure and~~GU&I. Prior period information has been recast to conform to the current segment structure. See Note 2 for further information on the Commercial ~~Renewables.~~Renewables Disposal Groups.

130


FINANCIAL STATEMENTS			BUSINESS SEGMENTS

The ~~Electric Utilities and Infrastructure~~EU&I segment includes Duke Energy's regulated electric utilities in the Carolinas, Florida and the Midwest. The regulated electric utilities conduct operations through the Subsidiary Registrants that are substantially all regulated and, accordingly, qualify for regulatory accounting treatment. ~~Electric Utilities and Infrastructure~~EU&I also includes Duke Energy's electric transmission infrastructure ~~investments.~~investments and the offshore wind contract for Carolina Long Bay. Refer to Note 2 for further information.

The ~~Gas Utilities and Infrastructure~~GU&I segment includes Piedmont, Duke Energy's natural gas local distribution companies in Ohio and Kentucky, and Duke Energy's natural gas storage, ~~and~~ midstream pipeline, and renewable natural gas investments. ~~Gas Utilities and Infrastructure's~~GU&I's operations are substantially all regulated and, accordingly, qualify for regulatory accounting treatment.

~~The Commercial Renewables segment is primarily comprised of nonregulated utility-scale wind and solar generation assets located throughout the U.S.~~

The remainder of Duke Energy’s operations is presented as Other, which is primarily comprised of interest expense on holding company debt, unallocated corporate costs and Duke Energy’s wholly owned captive insurance company, Bison. Other also includes Duke Energy's interest in NMC. See Note 1213 for additional information on the investment in NMC.

Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.


	Year Ended December 31, 2022
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other		Eliminations		Total
Unaffiliated Revenues	$	25,990	$	2,748	$	28,738	$	30	$	—	$	28,768
Intersegment Revenues	34		92		126		92		(218)		—
Total Revenues	$	26,024	$	2,840	$	28,864	$	122	$	(218)	$	28,768
Interest Expense	$	1,565	$	182	$	1,747	$	778	$	(86)	$	2,439
Depreciation and amortization	4,550		327		4,877		236		(27)		5,086
Equity in earnings of unconsolidated affiliates	7		20		27		86		—		113
Income tax expense (benefit)	536		8		544		(244)		—		300
Segment income (loss)(a)(b)	3,929		468		4,397		(737)		(1)		3,659
Less noncontrolling interest											95
Add back preferred stock dividend											106
Discontinued operations											(1,215)
Net income											$	2,455
Capital investments expenditures and acquisitions(c)	$	8,985	$	1,295	$	10,280	$	1,139	$	—	$	11,419
Segment assets(d)	152,104		16,411		168,515		9,571		—		178,086

(a)EU&I includes $386 million recorded within Impairment of assets and other charges, $46 million within Regulated electric revenues and $34 million within Noncontrolling Interests related to the Duke Energy Indiana court rulings on coal ash on the Consolidated Statements of Operations. See Note 4 for additional information.

(b) Other includes $72 million recorded within Impairment of assets and other charges, $71 million within Operations, maintenance and other and a $7 million gain within Gains on sales of other assets related to costs attributable to business transformation, including long-term real estate strategy changes and workforce realignment on the Consolidated Statements of Operations; it also includes $25 million recorded within Operations, maintenance and other related to litigation on the Consolidated Statements of Operations.

(c) Other includes capital investments expenditures and acquisitions related to the Commercial Renewables Disposal Groups.

(d) Other includes Assets Held for Sale balances related to the Commercial Renewables Disposal Groups. Refer to Note 2 for further information.

~~135~~

131


FINANCIAL STATEMENTS			BUSINESS SEGMENTS

~~Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.~~


		Year Ended December 31, 2020															Year Ended December 31, 2021
		Electric		Gas				Total									Electric		Gas		Total
		Utilities and		Utilities and		Commercial		Reportable									Utilities and		Utilities and		Reportable
(in millions)	(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other		Eliminations		Total		(in millions)	Infrastructure		Infrastructure		Segments		Other		Eliminations		Total
Unaffiliated Revenues	Unaffiliated Revenues	$	21,687	$	1,653	$	502	$	23,842	$	26	$	—	$	23,868	Unaffiliated Revenues	$	22,570	$	2,022	$	24,592	$	29	$	—	$	24,621
Intersegment Revenues	Intersegment Revenues	33		95		—		128		71		(199)		—		Intersegment Revenues	33		90		123		84		(207)		—
Total Revenues	Total Revenues	$	21,720	$	1,748	$	502	$	23,970	$	97	$	(199)	$	23,868	Total Revenues	$	22,603	$	2,112	$	24,715	$	113	$	(207)	$	24,621
Interest Expense	Interest Expense	$	1,320	$	135	$	66	$	1,521	$	657	$	(16)	$	2,162	Interest Expense	$	1,432	$	142	$	1,574	$	643	$	(10)	$	2,207
Depreciation and amortization	Depreciation and amortization	4,068		258		199		4,525		209		(29)		4,705		Depreciation and amortization	4,251		303		4,554		236		(28)		4,762
Equity in earnings (losses) of unconsolidated affiliates		(1)		(2,017)		—		(2,018)		13		—		(2,005)
Equity in earnings of unconsolidated affiliates																Equity in earnings of unconsolidated affiliates	7		8		15		47		—		62
Income tax expense (benefit)	Income tax expense (benefit)	340		(349)		(65)		(74)		(162)		—		(236)		Income tax expense (benefit)	494		55		549		(281)		—		268
Segment income (loss)(a)(b)(c)	Segment income (loss)(a)(b)(c)	2,669		(1,266)		286		1,689		(426)		—		1,263		Segment income (loss)(a)(b)(c)	3,850		396		4,246		(641)		(3)		3,602
Less noncontrolling interest	Less noncontrolling interest													295		Less noncontrolling interest											329
Add back preferred stock dividend	Add back preferred stock dividend													107		Add back preferred stock dividend											106
Income from discontinued operations, net of tax														7
Discontinued operations																Discontinued operations											200
Net income	Net income													$	1,082	Net income											$	3,579
Capital investments expenditures and acquisitions(d)	Capital investments expenditures and acquisitions(d)	$	7,629	$	1,309	$	1,219	$	10,157	$	264	$	—	$	10,421	Capital investments expenditures and acquisitions(d)	$	7,653	$	1,271	$	8,924	$	828	$	—	$	9,752
Segment assets(e)	Segment assets(e)	138,225		13,849		6,716		158,790		3,598		—		162,388		Segment assets(e)	143,841		15,179		159,020		10,567		—		169,587

(a) EU&I includes $160 million of expense recorded within Impairment of assets and other charges, $77 million ~~Electric Utilities~~of income within Other Income and ~~Infrastructure~~expenses, $5 million of expense within Operations, maintenance and other, $13 million of income within regulated operating revenues, $3 million of expense within interest expense and $6 million of expense within Depreciation and amortization on the Duke Energy Carolinas' Consolidated Statement of Operations related to the South Carolina Supreme Court decision on coal ash and insurance proceeds; it also includes $42 million of expense recorded within Impairment of assets and other charges, $34 million of income within Other Income and expenses, $7 million of expense within Operations, maintenance, and other, $15 million of income within Regulated electric operating revenues, $5 million of expense within interest expense and $1 million of expense within Depreciation and amortization on the Duke Energy Progress' Consolidated Statement of Operations. See Notes 4 and 5 for more information.

(b) GU&I includes $20 million, recorded within Equity in earnings (losses) of unconsolidated affiliates on the Consolidated Statements of Operations, related to natural gas pipeline investments. See Note 4 for additional information.

(c) Other includes $133 million recorded within Impairment of assets and other charges, $42 million within Operations, maintenance and other, and $17 million within Depreciation and amortization on the Consolidated Statements of Operations, related to the workplace and workforce realignment. See Note 11 for additional information.

(d) Other includes capital investments expenditures and acquisitions related to the Commercial Renewables Disposal Groups.

(e) Other includes Assets Held for Sale balances related to the Commercial Renewables Disposal Groups. Refer to Note 2 for further information.


	Year Ended December 31, 2020
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other		Eliminations		Total
Unaffiliated Revenues	$	21,687	$	1,653	$	23,340	$	26	$	—	$	23,366
Intersegment Revenues	33		95		128		73		(201)		—
Total Revenues	$	21,720	$	1,748	$	23,468	$	99	$	(201)	$	23,366
Interest Expense	$	1,320	$	135	$	1,455	$	657	$	(15)	$	2,097
Depreciation and amortization	4,068		258		4,326		207		(29)		4,504
Equity in (losses) earnings of unconsolidated affiliates	(1)		(2,017)		(2,018)		13		—		(2,005)
Income tax expense (benefit)	340		(349)		(9)		(160)		—		(169)
Segment income (loss)(a)(b)(c)	2,669		(1,266)		1,403		(418)		(4)		981
Less noncontrolling interest											295
Add back preferred stock dividend											107
Discontinued operations											289
Net income											$	1,082
Capital investments expenditures and acquisitions(d)	$	7,629	$	1,309	$	8,938	$	1,483	$	—	$	10,421
Segment assets(e)	138,225		13,849		152,074		10,314		—		162,388

132


FINANCIAL STATEMENTS			BUSINESS SEGMENTS

(a) EU&I includes $948 million of Impairment of assets and other charges and a reversal of $152 million included in Regulated electric operating revenue related to the CCR Settlement Agreement filed with the NCUC. Additionally, ~~Electric Utilities and Infrastructure~~EU&I includes $19 million of Impairment of assets and other charges related to the Clemson University Combined Heat and Power Plant, $5 million of Impairment charges related to the natural gas pipeline assets and $16 million of shareholder contributions within Operations, maintenance and other related to Duke Energy Carolinas' and Duke Energy Progress' 2019 North Carolina rate cases. See Note 34 for additional information.

(b) ~~Gas Utilities and Infrastructure~~GU&I includes $2.1 billion recorded within Equity in (losses) earnings of unconsolidated affiliates and $7 million of Impairment of assets and other charges related to natural gas pipeline investments. See Notes 34 and 1213 for additional information.

(c) Other includes a $98 million reversal of 2018 severance costs due to a partial settlement in the Duke Energy Carolinas' 2019 North Carolina rate case. See Note ~~3 and~~ 2021 for additional information.

Year Ended December 31, 2019
Electric Gas Total
Utilities and Utilities and Commercial Reportable
(in millions) Infrastructure Infrastructure Renewables Segments Other Eliminations Total
Unaffiliated Revenues $ 22,798 $ 1,770 $ 487 $ 25,055 $ 24 $ — $ 25,079
Intersegment Revenues 33 96 — 129 71 (200) —
Total Revenues $ 22,831 $ 1,866 $ 487 $ 25,184 $ 95 $ (200) $ 25,079
Interest Expense $ 1,345 $ 117 $ 95 $ 1,557 $ 705 $ (58) $ 2,204
Depreciation and amortization 3,951 256 168 4,375 178 (5) 4,548
Equity in earnings (losses) of unconsolidated affiliates 9 114 (4) 119 43 — 162
Income tax expense (benefit) 785 22 (115) 692 (173) — 519
Segment income (loss)(a)(b)
3,536 432 198 4,166 (452) — 3,714
Less noncontrolling interest 177
Add back preferred stock dividend 41
Loss from discontinued operations, net of tax (7)
Net income $ 3,571
Capital investments expenditures and acquisitions $ 8,263 $ 1,539 $ 1,423 $ 11,225 $ 221 $ — $ 11,446
Segment assets 135,561 13,921 6,020 155,502 3,148 188 158,838

~~(a) Electric Utilities~~(d) Other includes capital investments expenditures and ~~Infrastructure includes a $27 million reduction of a prior year impairment at Citrus County CC~~acquisitions related to the ~~plant's cost cap. See Note 3 for additional information.~~

~~(b) Gas Utilities and Infrastructure includes an after-tax impairment charge of $19 million for the remaining investment in Constitution. See Note 12 for additional information.~~

~~136~~


~~FINANCIAL STATEMENTS~~			~~BUSINESS SEGMENTS~~

Year Ended December 31, 2018
Electric Gas Total
Utilities and Utilities and Commercial Reportable
(in millions) Infrastructure Infrastructure Renewables Segments Other Eliminations Total
Unaffiliated Revenues $ 22,242 $ 1,783 $ 477 $ 24,502 $ 19 $ — $ 24,521
Intersegment Revenues 31 98 — 129 70 (199) —
Total Revenues $ 22,273 $ 1,881 $ 477 $ 24,631 $ 89 $ (199) $ 24,521
Interest Expense $ 1,288 $ 106 $ 88 $ 1,482 $ 657 $ (45) $ 2,094
Depreciation and amortization 3,523 245 155 3,923 152 (1) 4,074
Equity in earnings (losses) of unconsolidated affiliates 5 27 (1) 31 52 — 83
Income tax expense (benefit)(a)
799 78 (147) 730 (282) — 448
Segment income (loss)(b)(c)(d)(e)
3,058 274 9 3,341 (694) — 2,647
Less noncontrolling interest 22
Income from discontinued operations, net of tax 19
Net income $ 2,644
Capital investments expenditures and acquisitions $ 8,086 $ 1,133 $ 193 $ 9,412 $ 256 $ — $ 9,668
Segment assets 125,364 12,361 4,204 141,929 3,275 188 145,392

(a) All segments include adjustments to the December 31, 2017, estimate of the income tax effects of the Tax Act. Electric Utilities and Infrastructure includes a $24 million expense, Gas Utilities and Infrastructure includes a $1 million expense, Commercial Renewables ~~includes a $3 million benefit and~~Disposal Groups.

(e) Other includes ~~a $2 million benefit. See Note 23~~Assets Held for ~~additional information.~~

(b) Electric Utilities and Infrastructure includes after-tax regulatory and legislative impairment charges of $202 million related to rate case orders, settlements or other actions of regulators or legislative bodies and an after-tax impairment charge of $46 millionSale balances related to the ~~Citrus County CC at Duke Energy Florida. See Note 3 for additional information.~~

~~(c) Gas Utilities and Infrastructure includes an after-tax impairment charge of $42 million for the investment in Constitution. See Note 12 for additional information.~~

~~(d)~~ Commercial Renewables ~~includes an impairment charge of $91 million, net of $2 million Noncontrolling interests, related~~Disposal Groups. Refer to ~~goodwill. See~~ Note 112 for ~~additional~~further information.

(e) Other includes $65 million of after-tax costs to achieve the Piedmont merger, $144 million of after-tax severance charges related to a companywide initiative and an $82 million after-tax loss on the sale of Beckjord described below. For additional information, see Note 1 for the Piedmont merger and Note 20 for severance charges.

In February 2018, Duke Energy sold Beckjord, a nonregulated facility retired during 2014, and recorded a pretax loss of $106 million within Gains (Losses) on Sales of Other Assets and Other, net and $1 million within Operation, maintenance and other on Duke Energy's Consolidated Statements of Operations for the year ended December 31, 2018. The sale included the transfer of coal ash basins and other real property and indemnification from any and all potential future claims related to the property, whether arising under environmental laws or otherwise.

Geographical Information

Substantially all assets and revenues from continuing operations are within the U.S.

Major Customers

For the year ended December 31, ~~2020,~~2022, revenues from one customer of Duke Energy Progress are ~~$553~~$684 million. Duke Energy Progress has 1one reportable segment, Electric Utilities and Infrastructure. No other Subsidiary Registrant has an individual customer representing more than 10% of its ~~revenues.~~

~~137~~


~~FINANCIAL STATEMENTS~~			~~BUSINESS SEGMENTS~~

revenues for the year ended December 31, 2022.

Products and Services

The following table summarizes revenues of the reportable segments by type.


		Retail		Wholesale		Retail				Total			Retail		Wholesale		Retail				Total
(in millions)	(in millions)	Electric		Electric		Natural Gas		Other		Revenues		(in millions)	Electric		Electric		Natural Gas		Other		Revenues
2022												2022
Electric Utilities and Infrastructure												Electric Utilities and Infrastructure	$	22,036	$	2,882	$	—	$	1,106	$	26,024
Gas Utilities and Infrastructure												Gas Utilities and Infrastructure	—		—		2,535		305		2,840

Total Reportable Segments												Total Reportable Segments	$	22,036	$	2,882	$	2,535	$	1,411	$	28,864
2021												2021
Electric Utilities and Infrastructure												Electric Utilities and Infrastructure	$	19,410	$	2,216	$	—	$	977	$	22,603
Gas Utilities and Infrastructure												Gas Utilities and Infrastructure	—		—		2,025		87		2,112

Total Reportable Segments												Total Reportable Segments	$	19,410	$	2,216	$	2,025	$	1,064	$	24,715
2020	2020											2020
Electric Utilities and Infrastructure	Electric Utilities and Infrastructure	$	18,898	$	1,878	$	—	$	944	$	21,720	Electric Utilities and Infrastructure	$	18,898	$	1,878	$	—	$	944	$	21,720
Gas Utilities and Infrastructure	Gas Utilities and Infrastructure	—		—		1,691		57		1,748		Gas Utilities and Infrastructure	—		—		1,691		57		1,748
Commercial Renewables		—		434		—		68		502

Total Reportable Segments	Total Reportable Segments	$	18,898	$	2,312	$	1,691	$	1,069	$	23,970	Total Reportable Segments	$	18,898	$	1,878	$	1,691	$	1,001	$	23,468
2019
Electric Utilities and Infrastructure		$	19,745	$	2,231	$	—	$	855	$	22,831
Gas Utilities and Infrastructure		—		—		1,782		84		1,866
Commercial Renewables		—		389		—		98		487
Total Reportable Segments		$	19,745	$	2,620	$	1,782	$	1,037	$	25,184
2018
Electric Utilities and Infrastructure		$	19,013	$	2,345	$	—	$	915	$	22,273
Gas Utilities and Infrastructure		—		—		1,817		64		1,881
Commercial Renewables		—		375		—		102		477
Total Reportable Segments		$	19,013	$	2,720	$	1,817	$	1,081	$	24,631

Duke Energy Ohio

Duke Energy Ohio has 2two reportable segments, ~~Electric Utilities~~EU&I and ~~Infrastructure and Gas Utilities and Infrastructure.~~GU&I.

~~Electric Utilities and Infrastructure~~EU&I transmits and distributes electricity in portions of Ohio and generates, distributes and sells electricity in portions of Northern Kentucky. ~~Gas Utilities and Infrastructure~~GU&I transports and sells natural gas in portions of Ohio and Northern Kentucky. Both reportable segments conduct operations primarily through Duke Energy Ohio and its wholly owned subsidiary, Duke Energy Kentucky. The remainder of Duke Energy Ohio's operations is presented as Other.

All Duke Energy Ohio assets and revenues from continuing operations are within the U.S.


		Year Ended December 31, 2020													Year Ended December 31, 2022
		Electric		Gas		Total									Electric		Gas		Total
		Utilities and		Utilities and		Reportable									Utilities and		Utilities and		Reportable
(in millions)	(in millions)	Infrastructure		Infrastructure		Segments		Other		Eliminations		Total		(in millions)	Infrastructure		Infrastructure		Segments		Other		Eliminations		Total

Total revenues	Total revenues	$	1,405	$	453	$	1,858	$	—	$	—	$	1,858	Total revenues	$	1,798	$	716	$	2,514	$	—	$	—	$	2,514
Interest expense	Interest expense	$	85	$	17	$	102	$	—	$	—	$	102	Interest expense	$	86	$	43	$	129	$	—	$	—	$	129
Depreciation and amortization	Depreciation and amortization	200		78		278		—		—		278		Depreciation and amortization	221		103		324		—		—		324
Income tax expense (benefit)	Income tax expense (benefit)	19		26		45		(2)		—		43		Income tax expense (benefit)	24		(43)		(19)		(2)		—		(21)
Segment income (loss)/Net income	Segment income (loss)/Net income	162		96		258		(6)		—		252		Segment income (loss)/Net income	189		121		310		(8)		—		302

Capital expenditures	Capital expenditures	$	548	$	286	$	834	$	—	$	—	$	834	Capital expenditures	$	488	$	362	$	850	$	—	$	—	$	850
Segment assets	Segment assets	6,615		3,380		9,995		32		(2)		10,025		Segment assets	7,504		4,164		11,668		14		(176)		11,506

~~138~~133


FINANCIAL STATEMENTS			BUSINESS SEGMENTS


	Year Ended December 31, 2021
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other		Eliminations		Total


Total revenues	$	1,493	$	544	$	2,037	$	—	$	—	$	2,037
Interest expense	$	87	$	24	$	111	$	—	$	—	$	111
Depreciation and amortization	217		90		307		—		—		307
Income tax expense (benefit)	15		19		34		(4)		—		30
Segment income (loss)/Net Income	141		78		219		(15)		—		204


Capital expenditures	$	486	$	362	$	848	$	—	$	—	$	848
Segment assets	6,882		3,892		10,774		29		(29)		10,774

Year Ended December 31, 2019
Electric Gas Total
Utilities and Utilities and Reportable
(in millions) Infrastructure Infrastructure Segments Other Eliminations Total
Total revenues $ 1,456 $ 484 $ 1,940 $ — $ — $ 1,940
Interest expense $ 80 $ 29 $ 109 $ — $ — $ 109
Depreciation and amortization 182 83 265 — — 265
Income tax expense (benefit) 20 21 41 (1) — 40
Segment income (loss) 159 85 244 (5) — 239
Loss from discontinued operations, net of tax (1)
Net income $ 238
Capital expenditures $ 680 $ 272 $ 952 $ — $ — $ 952
Segment assets 6,188 3,116 9,304 34 — 9,338

Year Ended December 31, 2018
Electric Gas Total
Utilities and Utilities and Reportable
(in millions) Infrastructure Infrastructure Segments Other Eliminations Total
Total revenues $ 1,450 $ 506 $ 1,956 $ 1 $ — $ 1,957
Interest expense $ 67 $ 24 $ 91 $ 1 $ — $ 92
Depreciation and amortization 183 85 268 — — 268
Income tax expense (benefit) 47 24 71 (28) — 43
Segment income (loss)/Net Income(a)
186 93 279 (103) — 176
Capital expenditures $ 655 $ 172 $ 827 $ — $ — $ 827
Segment assets 5,643 2,874 8,517 38 — 8,555

~~(a) Other includes the loss on the sale of Beckjord, see discussion above.~~


	Year Ended December 31, 2020
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other		Eliminations		Total


Total revenues	$	1,405	$	453	$	1,858	$	—	$	—	$	1,858
Interest expense	$	85	$	17	$	102	$	—	$	—	$	102
Depreciation and amortization	200		78		278		—		—		278
Income tax expense (benefit)	19		26		45		(2)		—		43
Segment income (loss)	162		96		258		(6)		—		252


Capital expenditures	$	548	$	286	$	834	$	—	$	—	$	834
Segment assets	6,615		3,380		9,995		32		(2)		10,025

3.4. REGULATORY MATTERS

REGULATORY ASSETS AND LIABILITIES

The Duke Energy Registrants record regulatory assets and liabilities that result from the ratemaking process. See Note 1 for further information.

~~139~~134


FINANCIAL STATEMENTS			REGULATORY MATTERS

The following tables present the regulatory assets and liabilities recorded on the Consolidated Balance Sheets of Duke Energy and Progress Energy. See separate tables below for balances by individual registrant.


		Duke Energy				Progress Energy							Duke Energy						Progress Energy
		December 31,				December 31,							December 31,						December 31,
(in millions)	(in millions)	2020		2019		2020		2019			(in millions)		2022			2021			2022			2021
Regulatory Assets	Regulatory Assets										Regulatory Assets
AROs – coal ash	AROs – coal ash	$	3,408	$	4,084	$	1,357	$	1,843		AROs – coal ash		$	3,205		$	3,408		$	1,429		$	1,399
AROs – nuclear and other	AROs – nuclear and other	754		739		685		668			AROs – nuclear and other		945			684			884			620
Deferred fuel and purchased power										Deferred fuel and purchased power		3,866			1,253			2,060			718
Accrued pension and OPEB	Accrued pension and OPEB	2,317		2,391		875		897			Accrued pension and OPEB		2,336			2,017			759			725
Storm cost deferrals		1,102		1,399		893		1,214
Storm cost securitized balance, net										Storm cost securitized balance, net		940			991			720			759
Nuclear asset securitized balance, net	Nuclear asset securitized balance, net	991		1,042		991		1,042			Nuclear asset securitized balance, net		881			937			881			937
Debt fair value adjustment	Debt fair value adjustment	950		1,019		—		—			Debt fair value adjustment		829			884			—			—
Storm cost deferrals										Storm cost deferrals		666			213			559			189
Hedge costs deferrals										Hedge costs deferrals		378			348			128			137
Post-in-service carrying costs (PISCC) and deferred operating expenses										Post-in-service carrying costs (PISCC) and deferred operating expenses		342			356			42			47
Retired generation facilities	Retired generation facilities	417		331		363		266			Retired generation facilities		316			357			243			265
Post-in-service carrying costs (PISCC) and deferred operating expenses		402		329		51		33
Deferred asset – Lee and Harris COLA	Deferred asset – Lee and Harris COLA	356		388		32		38			Deferred asset – Lee and Harris COLA		288			317			21			21
Hedge costs deferrals		351		356		148		129
Advanced metering infrastructure (AMI)	Advanced metering infrastructure (AMI)	311		338		102		114			Advanced metering infrastructure (AMI)		283			311			111			130
Demand side management (DSM)/Energy Efficiency (EE)		288		343		241		241
Customer connect project										Customer connect project		271			242			136			124
Costs of removal regulatory asset										Costs of removal regulatory asset		221			107			221			107
Vacation accrual	Vacation accrual	221		214		42		41			Vacation accrual		222			221			43			42
Deferred fuel and purchased power		213		528		162		305
COR settlement		128		133		33		35
Incremental COVID-19 expenses										Incremental COVID-19 expenses		210			87			78			28
CEP deferral										CEP deferral		190			161			—			—
Demand side management (DSM)/Energy efficiency (EE)										Demand side management (DSM)/Energy efficiency (EE)		189			235			188			230
Derivatives – natural gas supply contracts										Derivatives – natural gas supply contracts		168			139			—			—
NCEMPA deferrals	NCEMPA deferrals	124		72		124		72			NCEMPA deferrals		157			165			157			165
Nuclear deferral	Nuclear deferral	123		107		35		40			Nuclear deferral		154			120			64			42
Derivatives – natural gas supply contracts		122		117		—		—
CEP deferral		117		76		—		—
Deferred pipeline integrity costs										Deferred pipeline integrity costs		121			108			—			—
COR settlement										COR settlement		120			123			32			32
Deferred coal ash handling system costs										Deferred coal ash handling system costs		92			90			25			23
Qualifying facility contract buyouts										Qualifying facility contract buyouts		81			94			81			94
Amounts due from customers	Amounts due from customers	110		36		—		—			Amounts due from customers		57			85			—			—
Qualifying facility contract buyouts		107		121		107		121
Customer connect project		105		65		55		37
Propane caverns										Propane caverns		26			—			—			—
Deferred severance charges										Deferred severance charges		21			54			7			18
Manufactured gas plant (MGP)	Manufactured gas plant (MGP)	104		102		—		—			Manufactured gas plant (MGP)		—			104			—			—
ABSAT, coal ash basin closure		98		65		27		15
Deferred pipeline integrity costs		92		79		—		—
Deferred severance charges		86		—		29		—
Incremental COVID-19 expenses		76		—		23		—

Other	Other	589		544		158		141			Other		555			426			110			87
Total regulatory assets	Total regulatory assets	14,062		15,018		6,533		7,292			Total regulatory assets		18,130			14,637			8,979			6,939
Less: current portion	Less: current portion	1,641		1,796		758		946			Less: current portion		3,485			2,150			1,833			1,030
Total noncurrent regulatory assets	Total noncurrent regulatory assets	$	12,421	$	13,222	$	5,775	$	6,346		Total noncurrent regulatory assets		$	14,645		$	12,487		$	7,146		$	5,909
Regulatory Liabilities	Regulatory Liabilities										Regulatory Liabilities
Net regulatory liability related to income taxes	Net regulatory liability related to income taxes	$	7,368	$	7,872	$	2,411	$	2,595		Net regulatory liability related to income taxes		$	6,462		$	7,199		$	2,192		$	2,394
Costs of removal	Costs of removal	5,883		5,756		2,666		2,561			Costs of removal		5,151			6,150			2,269			2,955
AROs – nuclear and other	AROs – nuclear and other	1,512		1,100		—		—			AROs – nuclear and other		1,038			2,053			—			—
Hedge cost deferrals										Hedge cost deferrals		683			364			252			155
Accrued pension and OPEB										Accrued pension and OPEB		211			213			—			—
DOE Settlement										DOE Settlement		154			—			154			—
Provision for rate refunds	Provision for rate refunds	344		370		123		123			Provision for rate refunds		78			274			28			87
Accrued pension and OPEB		177		176		—		—

Amounts to be refunded to customers	Amounts to be refunded to customers	51		34		—		—			Amounts to be refunded to customers		45			—			—			—
Deferred fuel and purchased power		18		1		—		1
Other	Other	1,053		739		491		275			Other		1,226			1,110			434			453
Total regulatory liabilities	Total regulatory liabilities	16,406		16,048		5,691		5,555			Total regulatory liabilities		15,048			17,363			5,329			6,044
Less: current portion	Less: current portion	1,377		784		640		330			Less: current portion		1,466			1,211			576			478
Total noncurrent regulatory liabilities	Total noncurrent regulatory liabilities	$	15,029	$	15,264	$	5,051	$	5,225		Total noncurrent regulatory liabilities		$	13,582		$	16,152		$	4,753		$	5,566

Descriptions of regulatory assets and liabilities summarized in the tables above and below follow. See tables below for recovery and amortization periods at the separate registrants.

~~140~~


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

AROs – coal ash. Represents deferred depreciation and accretion related to the legal obligation to close ash basins. The costs are deferred until recovery treatment has been determined. See Notes 1 and 910 for additional information.

135


FINANCIAL STATEMENTS			REGULATORY MATTERS

AROs – nuclear and other. Represents regulatory assets or liabilities, including deferred depreciation and accretion, related to legal obligations associated with the future retirement of property, plant and equipment, excluding amounts related to coal ash. The AROs relate primarily to decommissioning nuclear power facilities. The amounts also include certain deferred gains and losses on NDTF investments. See Notes 1 and 910 for additional information.

Deferred fuel and purchased power. Represents certain energy-related costs that are recoverable or refundable as approved by the applicable regulatory body.

Accrued pension and OPEB. Accrued pension and OPEB represent regulatory assets and liabilities related to each of the Duke Energy Registrants’ respective shares of unrecognized actuarial gains and losses and unrecognized prior service cost and credit attributable to Duke Energy’s pension plans and OPEB plans. The regulatory asset or liability is amortized with the recognition of actuarial gains and losses and prior service cost and credit to net periodic benefit costs for pension and OPEB plans. The accrued pension and OPEB regulatory assets are expected to be recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 2223 for additional detail.

Storm cost ~~deferrals.~~securitized balance, net. Represents ~~deferred incremental costs incurred~~the North Carolina portion of storm restoration expenditures related to ~~major weather-related events.~~Hurricane Florence, Hurricane Michael, Hurricane Dorian and Winter Storm Diego (2018 and 2019 events).

Nuclear asset securitized balance, net. Represents the balance associated with Crystal River Unit 3 retirement approved for recovery by the FPSC on September 15, 2015, and the upfront financing costs securitized in 2016 with issuance of the associated bonds. The regulatory asset balance is net of the AFUDC equity portion.

Debt fair value adjustment. Purchase accounting adjustments recorded to state the carrying value of Progress Energy and Piedmont at fair value in connection with the 2012 and 2016 mergers, respectively. Amount is amortized over the life of the related debt.

~~Retired generation facilities.~~Storm cost deferrals. Represents ~~amounts~~deferred incremental costs incurred related to ~~be recovered for facilities that have been retired~~major weather-related events.

Hedge costs deferrals. Amounts relate to unrealized gains and losses on derivatives recorded as a regulatory asset or liability, respectively, until the contracts are ~~probable of recovery.~~settled.

Post-in-service carrying costs (PISCC) and deferred operating expenses. Represents deferred depreciation and operating expenses as well as carrying costs on the portion of capital expenditures placed in service but not yet reflected in retail rates as plant in service.

Retired generation facilities. Represents amounts to be recovered for facilities that have been retired and are probable of recovery.

Deferred asset – Lee and Harris COLA. Represents deferred costs incurred for the canceled Lee and Harris nuclear projects.

~~Hedge costs deferrals.~~ ~~Amounts relate to unrealized gains and losses on derivatives recorded as a regulatory asset or liability, respectively, until the contracts are settled.~~

AMI. Represents deferred costs related to the installation of AMI meters and remaining net book value of non-AMI meters to be replaced at Duke Energy Carolinas, net book value of existing meters at Duke Energy Florida, Duke Energy Progress and Duke Energy Ohio and future recovery of net book value of electromechanical meters that have been replaced with AMI meters at Duke Energy Indiana.

~~DSM/EE.~~Customer connect project. ~~Deferred~~Represents incremental operating expenses and carrying costs on deferred amounts related to ~~various DSM and EE programs recoverable through various mechanisms.~~the deployment of the new customer information system.

Vacation accrual. Represents vacation entitlement, which is generally recovered in the following year.

~~Deferred fuel and purchased power.~~Incremental COVID-19 expenses. Represents incremental costs related to ensuring continuity and quality of service in a safe manner during the COVID-19 pandemic.

CEP deferral. Represents deferred depreciation, PISCC and deferred property tax for Duke Energy Ohio Gas capital assets for the Capital Expenditure Program (CEP).

DSM/EE. Deferred costs related to various DSM and EE programs recoverable through various mechanisms.

Derivatives – natural gas supply contracts. Represents costs for certain ~~energy-related costs that~~long-dated, fixed quantity forward natural gas supply contracts, which are recoverable ~~or refundable as approved by the applicable regulatory body.~~

~~COR settlement.~~ ~~Represents approved COR settlements that are being amortized over the average remaining lives, at the time of approval, of the associated assets.~~through PGA clauses.

NCEMPA deferrals. Represents retail allocated cost deferrals and returns associated with the additional ownership interest in assets acquired from NCEMPA in 2015.

Nuclear deferral. Includes amounts related to levelizing nuclear plant outage costs, which allows for the recognition of nuclear outage expenses over the refueling cycle rather than when the outage occurs, resulting in the deferral of operations and maintenance costs associated with refueling.

~~Derivatives – natural gas supply contracts~~Deferred pipeline integrity costs. . Represents pipeline integrity management costs ~~for certain long-dated, fixed quantity forward gas supply contracts, which are recoverable through PGA clauses.~~in compliance with federal regulations.

~~CEP deferral~~COR settlement. Represents approved COR settlements that are being amortized over the average remaining lives, at the time of approval, of the associated assets.

Deferred coal ash handling system costs. Represents deferred depreciation ~~PISCC~~ and ~~deferred property tax for Duke Energy Ohio Gas~~returns associated with capital assets ~~for~~related to converting the ~~Capital Expenditure Program (CEP).~~

~~Amounts due~~ash handling system from ~~customers.~~ ~~Relates primarily~~wet to ~~margin decoupling and IMR recovery mechanisms.~~dry.

Qualifying facility contract buyouts. Represents termination payments for regulatory recovery through the capacity clause.

~~Customer connect project.~~Amounts due from customers. Relates primarily to margin decoupling and IMR recovery mechanisms.

136


FINANCIAL STATEMENTS			REGULATORY MATTERS

Costs of removal regulatory asset. Represents the excess of spend over funds received from customers to cover the future removal of property, plant and equipment from retired or abandoned sites as property is retired, net of certain deferred gains on NDTF investments.

Propane Caverns. Represents ~~incremental operating expenses and carrying~~amounts for costs ~~on deferred amounts~~ related to propane inventory, the ~~deployment~~net book value of ~~the new customer information system known as the Customer Connect Project.~~remaining assets and decommissioning costs at Duke Energy Ohio.

MGP. Represents remediation costs incurred at former MGP sites and the deferral of costs to be incurred at Duke Energy Ohio's East End and West End sites.

~~ABSAT, coal ash basin closure. Represents deferred depreciation and returns associated with Ash Basin Strategic Action Team (ABSAT) capital assets related to converting the ash handling system from wet to dry.~~

~~141~~


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

~~Deferred pipeline integrity costs.~~ ~~Represents pipeline integrity management costs in compliance with federal regulations recovered through a rider mechanism.~~

~~Deferred severance charges.~~ ~~Represents costs incurred for employees separation from Duke Energy.~~

~~Incremental COVID-19 expenses.~~ ~~Representsincremental costs related to ensuring continuity and quality of service in a safe manner during the COVID-19 pandemic.~~

Net regulatory liability related to income taxes. Amounts for all registrants include regulatory liabilities related primarily to impacts from the Tax Act. See Note 2324 for additional information. Amounts have no immediate impact on rate base as regulatory assets are offset by deferred tax liabilities.

Costs of removal. Represents funds received from customers to cover the future removal of property, plant and equipment from retired or abandoned sites as property is retired. Also includes certain deferred gains on NDTF investments.

~~Provisions~~DOE Settlement. Represents litigation settlement funds received resulting from the DOE’s failure to accept spent nuclear fuel and other radioactive waste from the Crystal River Unit 3 during 2014-2018 as required under the Nuclear Waste Policy Act.

Provision for rate refunds. Represents estimated amounts due to customers based on recording interim rates subject to refund.

~~Amounts to be refunded to customers.~~ ~~Represents required rate reductions to retail customers by the applicable regulatory body.~~

RESTRICTIONS ON THE ABILITY OF CERTAIN SUBSIDIARIES TO MAKE DIVIDENDS, ADVANCES AND LOANS TO DUKE ENERGY

As a condition to the approval of merger transactions, the NCUC, PSCSC, PUCO, KPSC and IURC imposed conditions on the ability of Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio, Duke Energy Kentucky, Duke Energy Indiana and Piedmont to transfer funds to Duke Energy through loans or advances, as well as restricted amounts available to pay dividends to Duke Energy. Certain subsidiaries may transfer funds to the Parent by obtaining approval of the respective state regulatory commissions. These conditions imposed restrictions on the ability of the public utility subsidiaries to pay cash dividends as discussed below.

Duke Energy Progress and Duke Energy Florida also have restrictions imposed by their first mortgage bond indentures, which in certain circumstances, limit their ability to make cash dividends or distributions on common stock. Amounts restricted as a result of these provisions were not material at December 31, ~~2020.~~

Duke Energy Indiana has certain dividend restrictions as a result of the agreement entered in January 2021 to sell a minority interest to GIC. Duke Energy Indiana will not declare a dividend prior to the first closing, which is expected to be completed in the second quarter of 2021, and will declare dividends between the first closing and the second closing, which is required to be completed no later than January 2023, in accordance with the sale agreement. See additional information in Note 1.2022.

Additionally, certain other subsidiaries of Duke Energy have restrictions on their ability to dividend, loan or advance funds to Duke Energy due to specific legal or regulatory restrictions, including, but not limited to, minimum working capital and tangible net worth requirements.

The restrictions discussed below were not a material amount of Duke Energy's and Progress Energy's net assets at December 31, ~~2020.~~2022.

Duke Energy Carolinas

Duke Energy Carolinas must limit cumulative distributions subsequent to mergers to (i) the amount of retained earnings on the day prior to the closing of the mergers, plus (ii) any future earnings recorded.

Duke Energy Progress

Duke Energy Progress must limit cumulative distributions subsequent to the mergers between Duke Energy and Progress Energy and Duke Energy and Piedmont to (i) the amount of retained earnings on the day prior to the closing of the respective mergers, plus (ii) any future earnings recorded.

Duke Energy Ohio

Duke Energy Ohio will not declare and pay dividends out of capital or unearned surplus without the prior authorization of the PUCO. Duke Energy Ohio received FERC and PUCO approval to pay dividends from its equity accounts that are reflective of the amount that it would have in its retained earnings account had push-down accounting for the Cinergy merger not been applied to Duke Energy Ohio’s balance sheet. The conditions include a commitment from Duke Energy Ohio that equity, adjusted to remove the impacts of push-down accounting, will not fall below 30% of total capital.

Duke Energy Kentucky is required to pay dividends solely out of retained earnings and to maintain a minimum of 35% equity in its capital structure.

Duke Energy Indiana

Duke Energy Indiana must limit cumulative distributions subsequent to the merger between Duke Energy and Cinergy to (i) the amount of retained earnings on the day prior to the closing of the merger, plus (ii) any future earnings recorded. In addition, Duke Energy Indiana will not declare and pay dividends out of capital or unearned surplus without prior authorization of the IURC.

Piedmont

Piedmont must limit cumulative distributions subsequent to the acquisition of Piedmont by Duke Energy to (i) the amount of retained earnings on the day prior to the closing of the merger, plus (ii) any future earnings recorded.

~~142~~


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

RATE-RELATED INFORMATION

The NCUC, PSCSC, FPSC, IURC, PUCO, TPUC and KPSC approve rates for retail electric and natural gas services within their states. The FERC approves rates for electric sales to wholesale customers served under cost-based rates (excluding Ohio and Indiana), as well as sales of transmission service. The FERC also regulates certification and siting of new interstate natural gas pipeline projects.

~~Duke Energy Carolinas and Duke Energy Progress~~

~~2021 Coal Ash Settlement~~

~~On January 22~~, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the Coal Combustion Residuals Settlement Agreement (the “CCR Settlement Agreement”) with the North Carolina Public Staff (Public Staff), the North Carolina Attorney General’s Office and the Sierra Club (collectively, the "Settling Parties"), which was filed with the NCUC on January 25, 2021. The CCR Settlement Agreement resolves all coal ash prudence and cost recovery issues in connection with 2019 rate cases filed by Duke Energy Carolinas and Duke Energy Progress with the NCUC, as well as the equitable sharing issue on remand from the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases as a result of the December 11, 2020, North Carolina Supreme Court opinion. The settlement also provides clarity on coal ash cost recovery in North Carolina for Duke Energy Carolinas and Duke Energy Progress through January 2030 and February 2030 (the "Term"), respectively.

Duke Energy Carolinas and Duke Energy Progress agreed not to seek recovery of approximately $1 billion of systemwide deferred coal ash expenditures, but will retain the ability to earn a debt and equity return during the amortization period, which shall be five years in the pending 2019 North Carolina rate cases and will be set by the NCUC in future rate case proceedings. The equity return and the amortization period on deferred coal ash costs under the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases will remain unaffected. The equity return on deferred coal ash costs under the 2019 North Carolina rate cases and future rate cases in North Carolina will be set at 150 basis points lower than the authorized return on equity then in effect, with a capital structure composed of 48% debt and 52% equity. Duke Energy Carolinas and Duke Energy Progress retain the ability to earn a full WACC return during the deferral period, which is the period from when costs are incurred until they are recovered in rates.

The Settling Parties agreed that execution by Duke Energy Carolinas and Duke Energy Progress of a settlement agreement between themselves and the NCDEQ dated December 31, 2019, (the “DEQ Settlement”) and the coal ash management plans included therein or subsequently approved by DEQ are reasonable and prudent. The Settling Parties retain the right to challenge the reasonableness and prudence of actions taken by Duke Energy Carolinas and Duke Energy Progress and costs incurred to implement the scope of work agreed upon in the DEQ Settlement, after February 1, 2020, and March 1, 2020, for Duke Energy Carolinas and Duke Energy Progress, respectively. The Settling Parties further agreed to waive rights through the Term to challenge the reasonableness or prudence of Duke Energy Carolinas’ and Duke Energy Progress’ historical coal ash management practices, and to waive the right to assert any arguments that future coal ash costs, including financing costs, shall be shared between either company and customers through equitable sharing or any other rate base or return adjustment that shares the revenue requirement burden of coal ash costs not otherwise disallowed due to imprudence.

~~The Settling Parties agreed to a sharing arrangement for future coal ash insurance litigation proceeds between Duke Energy Carolinas and Duke Energy Progress and North Carolina customers, if achieved.~~

The settlement is subject to the review and approval of the NCUC. The Settling Parties requested an expedited review by the NCUC and anticipate an order on the pending 2019 North Carolina rate cases for Duke Energy Carolinas and Duke Energy Progress by the second quarter of 2021. On January 29, 2021, Duke Energy Carolinas and Duke Energy Progress filed joint motions with the Settling Parties seeking approval of the CCR Settlement Agreement, along with supporting testimony and exhibits from Duke Energy Carolinas and Duke Energy Progress. On February 5, 2021, the Public Staff filed testimony and exhibits supporting the CCR Settlement Agreement.

As a result of the CCR Settlement Agreement, Duke Energy Carolinas and Duke Energy Progress recorded a pretax charge of approximately $454 million and $494 million, respectively, in the fourth quarter of 2020 to Impairment charges and a reversal of approximately $50 million and $102 million, respectively, to Regulated electric operating revenues on the respective Consolidated Statements of Operations.

~~COVID-19 Filings~~

~~North Carolina~~

On March 10, 2020, Governor Roy Cooper declared a state of emergency due to the COVID-19 pandemic. On March 19, 2020, the NCUC issued an order directing that utilities under its jurisdiction suspend disconnections for nonpayment of utility bills during the state of emergency and allow for customers to enter into payment arrangements to pay off arrearages accumulated during the state of emergency after the end of the state of emergency. Additionally, to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 19, 2020, Duke Energy Carolinas and Duke Energy Progress filed a request with the NCUC seeking authorization to waive: (1) any late payment charges incurred by a residential or nonresidential customer, effective March 21, 2020; (2) the application of fees for checks returned for insufficient funds for residential and nonresidential customers; (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit; and (4) the fees and charges associated with the use of credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted the companies’ request on March 20, 2020.

~~143~~137


FINANCIAL STATEMENTS			REGULATORY MATTERS

On July 29, 2020, the NCUC issued its Order Lifting Disconnection Moratorium and Allowing Collection of Arrearages Pursuant to Special Repayment Plans. The order contained the following: (1) public utilities may resume customer disconnections due to nonpayment for bills first rendered on or after September 1, 2020, after appropriate notice; (2) the late fee moratorium will continue through the end of the state of emergency or until further order of the Commission; (3) Duke Energy ~~utilities may reinstate fees for checks returned for insufficient funds as well as transaction fees for use of credit cards or debit cards for bills first rendered on or after~~Carolinas and Duke Energy Progress

Hurricane Ian

In late September ~~1, 2020;~~ and ~~(4) no sooner than September 1, 2020,~~early October 2022, Hurricane Ian inflicted severe damage to the ~~collection of past-due or delinquent accounts accrued up to and including August 31, 2020, may proceed subject to conditions.~~ Duke Energy Carolinas and Duke Energy Progress ~~resumed normal billing practices~~territories in North Carolina and South Carolina. Approximately 950,000 customers were impacted. Total estimated operation and maintenance expenses incurred for restoration efforts for the year ended December 31, 2022, were approximately $100 million, with an additional $9 million in capital investments. Approximately $83 million of the operation and maintenance expenses are deferred in Regulatory assets within Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2022 ($40 million and $43 million for Duke Energy Carolinas and Duke Energy Progress, respectively). Duke Energy Carolinas and Duke Energy Progress have regulatory tools to recover storm costs including deferral and securitization. These estimates could change as Duke Energy Carolinas and Duke Energy Progress receive additional information on actual costs.

Carbon Plan Proceeding

On October ~~1, 2020, with~~13, 2021, North Carolina enacted legislation (Energy Solutions for North Carolina or HB 951) that established a framework overseen by the ~~exception~~NCUC to advance North Carolina CO2 emission reductions from electric generating facilities in the state through the use of least cost planning while providing for continued reliability and affordable rates for customers. Among other things, HB 951 directed that the ~~billing of late payment charges. Customers were notified of~~NCUC approve an initial carbon plan (Carbon Plan) by December 31, 2022, taking all reasonable steps to achieve a 70% reduction in CO2 emissions from public utilities’ electric generating facilities in the ~~resumption of normal billing practices, the option of deferred payment arrangements~~state by 2030 (from 2005 levels) and ~~where to find assistance, if necessary. Service disconnections~~achieve carbon neutrality from electric generating facilities by 2050 while maintaining affordability and reliability for ~~nonpayment for residential customers resumed on November 2, 2020.~~

customers. On May 16, 2022, Duke Energy Carolinas and Duke Energy Progress filed ~~a joint petition on August 7, 2020,~~their proposed Carolinas Carbon Plan (Proposed Plan) with the NCUC.

The NCUC issued an order on December 30, 2022, adopting the first Carbon Plan. The order recognizes the value of an “all-of-the-above” approach to achieving CO2 emission reductions and established a set of near-term procurement and development activities needed to continue progress towards the targeted CO2 reductions, along with the schedule for ~~deferral treatment~~the future biennial updates to the Carbon Plan. The approved near-term action plan includes procurement and development of ~~incremental~~solar, storage and hydrogen-capable natural gas generation at levels consistent with the Proposed Plan, along with upgrading key transmission facilities to strengthen the grid, improve resilience for customers and interconnect new solar generation and stakeholder engagement activities for onshore wind generation (in all cases, subject to any further applicable regulatory processes). The order also approved early development activities for long lead-time resources, including new nuclear, pumped-hydro storage and offshore wind transmission development. The NCUC affirmed the utility ownership structure required in HB 951; all new generation facilities or other resources selected by the NCUC to achieve the CO2 emission reductions shall be owned and recovered on a cost-of-service basis by the utilities, with a carveout for 45% of solar and solar plus storage generation to be procured through long-term purchase power agreements with third parties. The order approves continued utilization of the remaining coal-fired generation assets, ensuring that appropriate replacement generating units and associated transmission infrastructure are in service before existing generating units are retired and providing an orderly transition out of coal generation by 2035.

Storm Cost Securitization Legislation

On June 15, 2022, the South Carolina General Assembly unanimously adopted S. 1077 (Act 227) in both the House and Senate and the bill was signed into law on June 17, 2022. The legislation enables the PSCSC to permit the issuance of bonds for the payment of storm costs and ~~waived customer fees due~~the creation of a storm charge for repayment.

On August 5, 2022, Duke Energy Progress filed a petition with the PSCSC for review and approval of deferred storm costs to be securitized of approximately $223 million. The evidentiary hearing is scheduled to begin on or after March 1, 2023. On February 7, 2023, a stipulation was reached with all parties in the ~~COVID-19 pandemic. Comments~~proceeding regarding certain items identified through the Office of Regulatory Staff (ORS) audit of storm costs. The final amount for securitization will depend on the ~~joint petition were filed on November 5, 2020, and reply comments were filed on November 30, 2020. Duke Energy Carolinas and~~ outcome of the hearing.Duke Energy Progress cannot predict the outcome of this matter.

~~South Carolina~~

On March 13, 2020, Governor Henry McMaster declared a state of emergency due to the COVID-19 pandemic. The governor also issued a letter on March 14, 2020, to the ORS Executive Director regarding the suspension of disconnection of essential utility services for nonpayment. On March 18, 2020, the PSCSC issued an order approving such waivers, and also approved waivers for regulations related to late fees and reconnect fees. The PSCSC's order also required utilities to track the financial impacts of actions taken pursuant to such waivers for possible reporting to the PSCSC.

On May 13, 2020, the ORS filed a letter with the PSCSC that included a request from Governor McMaster that utilities proceed with developing and implementing plans for phasing in normal business operations. On May 14, 2020, the PSCSC conditionally vacated the regulation waivers regarding termination of service and suspension of disconnect fees. Prior to termination, utilities are to refer past-due customers to local organizations for assistance and/or deferred payment arrangements. Duke Energy Carolinas and Duke Energy Progress filed a report on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. On August 14, 2020, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the PSCSC for approval of an accounting order to defer incremental COVID-19 related costs incurred through June 30, 2020, and for the ongoing months during the duration of the COVID-19 pandemic. The deferral request did not include lost revenues. Updates on cost impacts were filed on September 30, 2020, and included financial impacts through the end of August 2020. On October 16, 2020, the ORS requested the PSCSC delay taking formal action on the deferral request until the ORS and any intervenors complete discovery. The PSCSC issued an order on October 21, 2020, to grant additional time to complete discovery until January 20, 2021, and to establish a procedural schedule. Updates on cost impacts were filed on December 30, 2020, and included financial impacts through November 30, 2020. On January 15, 2021, ORS requested the PSCSC suspend the dates for the ORS report and public hearing. The ORS conferred with the companies regarding the status of the docket, and the parties mutually agreed that recently enacted federal laws addressing COVID-19 aid and recovery should be studied before further action is taken in this docket. On January 27, 2021, the PSCSC voted to grant the ORS request to suspend the virtual public hearing. ORS is to file its report on or before March 29, 2021.

On August 17, 2020, Duke Energy Carolinas and Duke Energy Progress filed an update on their planned return to normal operations during the COVID-19 pandemic. Normal billing practices resumed in South Carolina as of October 1, 2020, and service disconnections for nonpayment resumed on October 12, 2020. Customers were notified of the resumption of normal billing practices, the option of payment arrangements and where to find assistance, if necessary. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

~~2020 North Carolina Storm Securitization Filings~~

On October 26, 2020, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the NCUC, as agreed to in partial settlements reached in the 2019 North Carolina Rate Cases for Duke Energy Carolinas and Duke Energy Progress, seeking authorization for the financing of the costs of each utility's storm recovery activities required as a result of Hurricane Florence, Hurricane Michael, Hurricane Dorian and Winter Storm Diego. Specifically, Duke Energy Carolinas and Duke Energy Progress requested that the NCUC find that their storm recovery costs and related financing costs are appropriately financed by debt secured by storm recovery property, and that the Commission issue financing orders by which each utility may accomplish such financing using a securitization structure. On January 27, 2021, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain accounting issues, including agreement to support an 18- to 20-year bond period. The total revenue requirement over a proposed 20-year bond period for the storm recovery charges is approximately $287 million for Duke Energy Carolinas and $920 million for Duke Energy Progress. A remote evidentiary hearing ended on January 29, 2021, and on February 1, 2021, the NCUC granted a motion by Duke Energy Carolinas and Duke Energy Progress for a temporary 30-day waiver of the 135-day time frame for the NCUC to issue orders on the joint petition, extending the deadline for the NCUC to issue an order to no later than April 9, 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

~~144~~138


FINANCIAL STATEMENTS			REGULATORY MATTERS

Duke Energy Carolinas

Regulatory Assets and Liabilities

The following tables present the regulatory assets and liabilities recorded on Duke Energy Carolinas' Consolidated Balance Sheets.


		December 31,				Earns/Pays	Recovery/Refund		December 31,				Earns/Pays	Recovery/Refund
(in millions)	(in millions)	2020		2019		a Return	Period Ends	(in millions)	2022		2021		a Return	Period Ends
Regulatory Assets(a)	Regulatory Assets(a)							Regulatory Assets(a)
AROs – coal ash	AROs – coal ash	$	1,414	$	1,696	(h)	(b)	AROs – coal ash	$	1,391	$	1,227	(g)	(b)

Deferred fuel and purchased power(i)								Deferred fuel and purchased power(i)	1,614		339		(e)	2024
Accrued pension and OPEB(c)	Accrued pension and OPEB(c)	427		477		Yes	(i)	Accrued pension and OPEB(c)	614		365		Yes	(h)
Storm cost deferrals		205		178		Yes	(b)
Storm cost securitized balance, net								Storm cost securitized balance, net	220		232			2041

Storm cost deferrals								Storm cost deferrals	93		22		Yes	(b)
Hedge costs deferrals(c)								Hedge costs deferrals(c)	228		171		Yes	(b)
PISCC and deferred operating expenses(c)								PISCC and deferred operating expenses(c)	30		31		Yes	(b)
Retired generation facilities(c)	Retired generation facilities(c)	11		16		Yes	2023	Retired generation facilities(c)	39		54		Yes	(b)
PISCC(c)		32		33		Yes	(b)
Deferred asset – Lee COLA	Deferred asset – Lee COLA	324		350			(b)	Deferred asset – Lee COLA	267		296			(b)
Hedge costs deferrals(c)		174		198		Yes	2041
AMI	AMI	154		166		Yes	(b)	AMI	139		140		Yes	(b)
DSM/EE		46		100		(g)
Customer connect project								Customer connect project	62		66		Yes	(b)

Vacation accrual	Vacation accrual	84		80			2021	Vacation accrual	84		83			2023
Deferred fuel and purchased power		42		222		(e)	2022
COR settlement		95		98		Yes	(b)

Nuclear deferral		88		67			2022
Incremental COVID-19 expenses								Incremental COVID-19 expenses	127		51		Yes	(b)

Customer connect project		50		28		Yes	(b)
Nuclear deferral								Nuclear deferral	90		78			2024

ABSAT, coal ash basin closure		71		50		Yes	(b)
COR settlement								COR settlement	88		91		Yes	(b)
Deferred coal ash handling system costs								Deferred coal ash handling system costs	67		67		Yes	(b)

Deferred severance charges		57		—			2022
Incremental COVID-19 expenses		31		—		Yes	(b)

Other	Other	164		151			(b)	Other	235		166			(b)
Total regulatory assets	Total regulatory assets	3,469		3,910				Total regulatory assets	5,388		3,479
Less: current portion	Less: current portion	473		550				Less: current portion	1,095		544
Total noncurrent regulatory assets	Total noncurrent regulatory assets	$	2,996	$	3,360			Total noncurrent regulatory assets	$	4,293	$	2,935
Regulatory Liabilities(a)	Regulatory Liabilities(a)							Regulatory Liabilities(a)
Net regulatory liability related to income taxes(d)	Net regulatory liability related to income taxes(d)	$	2,874	$	3,060		(b)	Net regulatory liability related to income taxes(d)	$	2,475	$	2,785		(b)
Costs of removal(c)	Costs of removal(c)	1,975		1,936		Yes	(f)	Costs of removal(c)	1,769		2,009		Yes	(f)
AROs – nuclear and other	AROs – nuclear and other	1,512		1,100			(b)	AROs – nuclear and other	1,038		2,053			(b)
Provision for rate refunds(c)		170		175		Yes
Hedge cost deferrals								Hedge cost deferrals	350		209			(b)
Accrued pension and OPEB(c)	Accrued pension and OPEB(c)	32		39		Yes	(i)	Accrued pension and OPEB(c)	44		44		Yes	(h)

Deferred fuel and purchased power		18		—		(e)	2020
Provision for rate refunds								Provision for rate refunds	50		124		Yes	(b)

Other	Other	427		368			(b)	Other	587		461			(b)
Total regulatory liabilities	Total regulatory liabilities	7,008		6,678				Total regulatory liabilities	6,313		7,685
Less: current portion	Less: current portion	473		255				Less: current portion	530		487
Total noncurrent regulatory liabilities	Total noncurrent regulatory liabilities	$	6,535	$	6,423			Total noncurrent regulatory liabilities	$	5,783	$	7,198

(a) Regulatory assets and liabilities are excluded from rate base unless otherwise noted.

(b) The expected recovery or refund period varies or has not been determined.

(d) Includes regulatory liabilities related to the change in the federal tax rate as a result of the Tax Act and the change in the North Carolina tax rate, both discussed in Note ~~23.~~24. Portions are included in rate base.

(e) Pays interest on over-recovered costs in North Carolina. Includes certain purchased power costs in North Carolina and South Carolina and costs of distributed energy in South Carolina.

(f) Recovered over the life of the associated assets.

(g) ~~Includes incentives on DSM/EE investments and is recovered through an annual rider mechanism.~~

~~(h)~~ Earns a debt and equity return on coal ash expenditures for North Carolina and South Carolina retail customers as permitted by various regulatory orders.

~~(i)~~(h) Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 2223 for additional detail.

(i) Duke Energy Carolinas submitted a fuel filing to the NCUC in May 2022 for recovery of $327 million, which included deferrals through January 2022. This amount is expected to be recovered through August 2023. The next filing will be made in the first quarter of 2023. Duke Energy Carolinas submitted a fuel filing to the PSCSC in July 2022 for recovery of $79 million, which included deferrals through May 2022. The amount is expected to be recovered through September 2023. The next filing will be made in the third quarter of 2023.

2023 North Carolina Rate Case

On January 19, 2023, Duke Energy Carolinas filed a PBR application with the NCUC to request an increase in base rate retail revenues. The PBR Application includes an MYRP to recover projected capital investments during the three year MYRP period. In addition to the MYRP, the PBR Application includes an Earnings Sharing Mechanism, Residential Decoupling Mechanism and Performance Incentive Mechanisms as required by HB 951. If approved, the overall retail revenue increase would be $501 million in Year 1, $172 million in Year 2 and $150 million in Year 3, for a combined total of $823 million or 15.7% by early 2026. The rate increase is driven primarily by major transmission and distribution investments since the last rate case and projected in the MYRP, as well as investments in energy storage and solar assets included in the MYRP consistent with the Carbon Plan. Duke Energy Carolinas plans to implement temporary rates, subject to refund, on September 1, 2023, and has requested permanent rates be effective by January 1, 2024. Duke Energy Carolinas cannot predict the outcome of this matter.

~~145~~

139


FINANCIAL STATEMENTS			REGULATORY MATTERS

Oconee Nuclear Station Subsequent License Renewal

~~2017 North Carolina Rate Case~~

On ~~August 25, 2017,~~June 7, 2021, Duke Energy Carolinas filed ana subsequent license renewal (SLR) application for the Oconee Nuclear Station (ONS) with the ~~NCUC~~U.S. Nuclear Regulatory Commission (NRC) to renew ONS’s operating license for an additional 20 years. The SLR would extend operations of the facility from 60 to 80 years. The current licenses for units 1 and 2 expire in 2033 and the license for unit 3 expires in 2034. By a Federal Register Notice dated July 28, 2021, the NRC provided a 60-day comment period for persons whose interest may be affected by the issuance of a subsequent renewed license for ONS to file a request for a ~~rate increase~~hearing and a petition for ~~retail customers~~leave to intervene. On September 27, 2021, Beyond Nuclear and Sierra Club (Petitioners) filed a Hearing Request and Petition to Intervene (Hearing Request) and a Petition for Waiver. The Hearing Request proposed three contentions and claimed that Duke Energy Carolinas did not satisfy the National Environmental Policy Act (NEPA) of ~~approximately $647 million.~~ 1969, as amended, or the NRC’s NEPA-implementing regulations. Following Duke Energy Carolinas' answer and the Petitioners' reply, on February 11, 2022, the Atomic Safety and Licensing Board (ASLB) issued its decision on the Hearing Request and found that the Petitioners failed to establish that the proposed contentions are litigable. The ASLB also denied the Petitioners' Petition for Waiver and terminated the proceeding.

On February ~~28, 2018,~~24, 2022, the NRC issued a decision in the SLR appeal related to Florida Power and Light's Turkey Point nuclear generating station in Florida. The NRC ruled that the NRC’s license renewal Generic Environmental Impact Statement (GEIS) does not apply to SLR because the GEIS does not address SLR. The decision overturned a 2020 NRC decision that found the GEIS applies to SLR. Although Turkey Point is not owned or operated by a Duke Energy Registrant, the NRC’s order applies to all SLR applicants, including ONS. The NRC order also indicated no subsequent renewed licenses will be issued until the NRC staff has completed an adequate NEPA review for each application. On April 5, 2022, the NRC approved a 24-month rulemaking plan that will enable the NRC staff to complete an adequate NEPA review. Although an SLR applicant may wait until the rulemaking is completed, the NRC also noted that an applicant may submit a supplement to its environmental report providing information on environmental impacts during the SLR period prior to the rulemaking being completed. On November 7, 2022, Duke Energy Carolinas submitted a supplement to its environmental report addressing environmental impacts during the SLR period. On December 19, 2022, the NRC published a notice in the Federal Register that the NRC will conduct a limited scoping process to gather additional information necessary to prepare an environmental impact statement (EIS) to evaluate the environmental impacts at ONS during the SLR period. The NRC received comments from the EPA and the Petitioners and these comments identify eighteen potential impacts that should be considered by the NRC in the EIS, which include, but are not limited to, climate change and flooding, environmental justice, severe accidents, and external events. Currently, the NRC expects to publish a draft EIS in October 2023.

On December 19, 2022, the NRC issued the Safety Evaluation Report (SER) for the safety portion of the SLR application. The NRC determined Duke Energy Carolinas met the requirements of the applicable regulations and identified actions that have been taken or will be taken to manage the effects of aging and address time-limited analyses. Duke Energy Carolinas and the ~~Public Staff filed an Agreement~~NRC met with the Advisory Committee on Reactor Safeguards (ACRS) on February 2, 2023, to discuss issues regarding the SER and ~~Stipulation~~SLR application, after which the ACRS will issue a report discussing the result of ~~Partial Settlement resolving certain portions~~its review.

Although the NRC’s GEIS applicability decision will delay completion of the proceeding. Terms of the settlement included a return on equity of 9.9% and a capital structure of 52% equity and 48% debt. On June 22, 2018, the NCUC issued an order approving the Stipulation of Partial Settlement and requiring a revenue reduction. As a result of the June 22, 2018, order,SLR proceeding, Duke Energy Carolinas ~~recorded a pretax charge~~does not believe it changes the probability that the ONS subsequent renewed licenses will ultimately be issued, although Duke Energy Carolinas cannot guarantee the outcome of ~~approximately $150 million to Impairment charges and Operation, maintenance and other on~~ the Consolidated Statements of Operations. The charge was primarily related to the denial of a return on the Lee Nuclear Project and the assessment of a $70 million cost of service penalty by reducing the annual recovery of deferred coal ash costs by $14 million per year over a five-year recovery period.license application process.

~~The North Carolina Attorney General and other parties separately filed Notices of Appeal to the North Carolina Supreme Court. The North Carolina Supreme Court consolidated the~~ Duke Energy Carolinas and Duke Energy Progress ~~appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion on the consolidated appeals~~intend to seek renewal of operating licenses and 20-year license extensions for all of their nuclear stations. New depreciation rates were implemented for all of the ~~2018~~nuclear facilities during the second quarter of 2021. Duke Energy Carolinas and Duke Energy Progress rate case orders which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. In response to a NCUC order seeking comments on the proposed procedure on remand, on January 11, 2021, Duke Energy Carolinas, Duke Energy Progress, the Public Staff, the North Carolina Attorney General, Sierra Club and Carolina Industrial Group for Fair Utility Rates II and III filed joint comments proposing that the NCUC not hold additional evidentiary hearings, but instead rely upon existing records in the 2017 North Carolina rate cases, or in the alternative the records in the 2019 North Carolina rate cases, in deciding the issue on remand. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021. For information on a proposed settlement pending before the NCUC, see "2021 Coal Ash Settlement." Duke Energy Carolinas cannot predict the outcome of ~~this matter.~~

~~2019 North Carolina Rate Case~~

On September 30, 2019, Duke Energy Carolinas filed an application with the NCUC for a net rate increase for retail customers of approximately $291 million, which represented an approximate 6% increase in annual base revenues. The gross rate case revenue increase request was $445 million, which was offset by an EDIT rider of $154 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Carolinas requested rates be effective no later than August 1, 2020. The NCUC established a procedural schedule with an evidentiary hearing to begin on March 23, 2020. On March 16, 2020, in consideration of public health and safety as a result of the COVID-19 pandemic, Duke Energy Carolinas filed a motion with the NCUC seeking a suspension of the procedural schedule in the rate case, including issuing discovery requests, and postponement of the evidentiary hearing for 60 days. Also on March 16, 2020, the NCUC issued an Order Postponing Hearing and Addressing Procedural Matters, which postponed the evidentiary hearing until further order by the Commission.

On March 25, 2020, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. Major components of the settlement included:

•~~Removal of deferred storm costs from the rate case;~~

•~~Filing a petition seeking to securitize the deferred storm costs within 120 days of a commission order in this rate case regarding the reasonableness and prudency of the storm costs;~~

•~~Agreement of certain assumptions to demonstrate the quantifiable benefits to customers of a securitization financing; and~~

•~~Agreement on certain accounting matters, including recovery of employee incentives, severance, aviation costs and executive compensation.~~

On May 6, 2020, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. On June 17, 2020, the NCUC issued an order adopting procedures for the expert witness hearings to take place in three phases: (1) a hearing on issues common to both rate cases conducted remotely; (2) a hearing on Duke Energy Carolinas specific rate case issues, followed immediately by; (3) a hearing on Duke Energy Progress specific rate case issues. On July 24, 2020, Duke Energy Carolinas filed its request for approval of its notice to customers required to implement temporary rates. On July 27, 2020, Duke Energy Carolinas filed a joint motion with Duke Energy Progress and the Public Staff notifying the Commission that the parties reached a joint partial settlement with the Public Staff. Also, on July 27, 2020, Duke Energy Carolinas filed a letter stating that it intended to update its temporary rates calculation to reflect the terms of the partial settlement.

On July 31, 2020, Duke Energy Carolinas and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), which is subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. Major components of the Second Partial Settlement included:

•~~A return on equity of 9.6% and a capital structure of 52% equity and 48% debt;~~

•~~Agreement on amortization over a five-year period for unprotected federal EDIT flowbacks to customers;~~

•Agreement on the inclusion of plant in service and other revenue requirement updates through May 31, 2020, subject to Public Staff review. Annual revenue requirement associated with the May 31 update is estimated at $45 million; and

•~~Settlement to allow the deferral of costs for certain grid projects placed in service between June 1, 2020, and December 31, 2022, totaling $0.8 billion.~~these additional relicensing proceedings.

~~146~~140


FINANCIAL STATEMENTS			REGULATORY MATTERS

The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting, implementation of new depreciation rates and the amortization period of the loss on the hydro station sale.

On August 4, 2020, Duke Energy Carolinas filed an amended motion for approval of its amended notice to customers, seeking to exercise its statutory right to implement temporary rates subject to refund on or after August 24, 2020. The revenue requirement to be recovered, subject to refund, through the temporary rates is based on and consistent with the base rate component of the Second Partial Settlement with the Public Staff and excludes the items to be litigated noted above. Duke Energy Carolinas will not begin the amortization or implementation of these items until a final order is issued in the rate case and new base rates are implemented. These items will also be excluded when determining whether a refund of amounts collected through these temporary rates is needed. In addition, Duke Energy Carolinas also seeks authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Carolinas on a permanent basis. The NCUC approved the August 4, 2020 amended temporary rates motion on August 6, 2020, and temporary rates went into effect on August 24, 2020.

The Duke Energy Carolinas evidentiary hearing concluded on September 18, 2020, and post-hearing filings were made with the NCUC from all parties by November 4, 2020. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021. Duke Energy Carolinas expects the NCUC to issue an order on its net rate increase by the second quarter of 2021. For information on a proposed settlement pending before the NCUC, see "2021 Coal Ash Settlement." Duke Energy Carolinas cannot predict the outcome of this matter.

~~2018 South Carolina Rate Case~~

~~On November 8, 2018, Duke Energy Carolinas filed an application with the PSCSC for a rate increase for retail customers of approximately $168 million.~~

After hearings in March 2019, the PSCSC issued an order on May 21, 2019, which included a return on equity of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:

•~~Approval of cancellation of the Lee Nuclear Project, with Duke Energy Carolinas maintaining the Combined Operating License;~~

•Approval of recovery of $125 million (South Carolina retail portion) of Lee Nuclear Project development costs (including AFUDC through December 2017) over a 12-year period, but denial of a return on the deferred balance of costs;

•~~Approval of recovery of $96 million of coal ash costs over a five-year period with a return at Duke Energy Carolinas' WACC;~~

•~~Denial of recovery of $115 million of certain coal ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;~~

•~~Approval of a $66 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;~~

•Approval of a $45 million decrease through the EDIT Rider to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with the Average Rate Assumption Method (ARAM) for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a five-year period for the deferred revenues; and

•~~Approval of a $17 million decrease through the EDIT Rider related to reductions in the North Carolina state income tax rate from 6.9% to 2.5% to be returned over a five-year period.~~

As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Carolinas filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Carolinas were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Carolinas' request to rehear or reconsider the Commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, return on equity and the recovery of a return on deferred operation and maintenance expenses. An order detailing the Commission's decision in the Directive was issued on October 18, 2019. Duke Energy Carolinas filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal and the ORS filed a Notice of Cross Appeal with the Supreme Court of South Carolina. On February 12, 2020, Duke Energy Carolinas and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to the Lee Nuclear Station. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments have not yet been scheduled by the Supreme Court of South Carolina. Based on legal analysis and the filing of the appeal, Duke Energy Carolinas has not recorded an adjustment for its deferred coal ash costs in this matter. Duke Energy Carolinas cannot predict the outcome of this matter.

~~147~~


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

Duke Energy Progress

Regulatory Assets and Liabilities

The following tables present the regulatory assets and liabilities recorded on Duke Energy Progress' Consolidated Balance Sheets.


		December 31,				Earns/Pays	Recovery/Refund		December 31,				Earns/Pays	Recovery/Refund
(in millions)	(in millions)	2020		2019		a Return	Period Ends	(in millions)	2022		2021		a Return	Period Ends
Regulatory Assets(a)	Regulatory Assets(a)							Regulatory Assets(a)
AROs – coal ash	AROs – coal ash	$	1,347	$	1,834	(h)	(b)	AROs – coal ash	$	1,418	$	1,389	(g)	(b)
AROs – nuclear and other	AROs – nuclear and other	683		509			(c)	AROs – nuclear and other	869		613			(c)
Accrued pension and OPEB		393		423			(k)
Storm cost deferrals(d)		785		801		Yes	(b)
Deferred fuel and purchased power(l)								Deferred fuel and purchased power(l)	705		303		(e)	2024
Accrued pension and OPEB(d)								Accrued pension and OPEB(d)	417		351		Yes	(j)
Storm cost securitized balance, net								Storm cost securitized balance, net	720		759			2041

Storm cost deferrals								Storm cost deferrals	234		170		Yes	(b)
Hedge costs deferrals								Hedge costs deferrals	55		60			(b)
PISCC and deferred operating expenses								PISCC and deferred operating expenses	42		47		Yes	2054
Retired generation facilities	Retired generation facilities	189		83		Yes	(b)	Retired generation facilities	149		171		Yes	(b)
PISCC and deferred operating expenses		51		33		Yes	2054
Deferred asset – Harris COLA		32		38			(b)
Hedge costs deferrals		89		85			(b)
Deferred asset - Harris COLA								Deferred asset - Harris COLA	21		21			(b)
AMI	AMI	57		61		Yes	(b)	AMI	81		92		Yes	(b)
DSM/EE(e)		224		216		(i)
Customer connect project								Customer connect project	54		57		Yes	(b)

Vacation accrual	Vacation accrual	42		41			2021	Vacation accrual	43		42			2023
Deferred fuel and purchased power		158		266		(f)	2022
COR settlement		33		35		Yes	(e)
Incremental COVID-19 expenses								Incremental COVID-19 expenses	78		28		Yes	(b)

DSM/EE(d)								DSM/EE(d)	180		218		(h)

NCEMPA deferrals	NCEMPA deferrals	124		72		(g)	2042	NCEMPA deferrals	157		165		(f)	2042
Nuclear deferral	Nuclear deferral	35		40			2022	Nuclear deferral	64		42			2024

COR settlement								COR settlement	32		32		Yes	(b)
Deferred coal ash handling system costs								Deferred coal ash handling system costs	25		23		Yes	(b)

Customer connect project		25		17		Yes	(b)

ABSAT, coal ash basin closure		27		15		Yes	(b)

Deferred severance charges		29		—			2022
Incremental COVID-19 expenses		23		—		Yes	(b)

Other	Other	122		109			(b)	Other	70		68			(b)
Total regulatory assets	Total regulatory assets	4,468		4,678				Total regulatory assets	5,414		4,651
Less: current portion	Less: current portion	492		526				Less: current portion	690		533
Total noncurrent regulatory assets	Total noncurrent regulatory assets	$	3,976	$	4,152			Total noncurrent regulatory assets	$	4,724	$	4,118
Regulatory Liabilities(a)	Regulatory Liabilities(a)							Regulatory Liabilities(a)
Net regulatory liability related to income taxes(l)		$	1,662	$	1,802		(b)
Costs of removal		2,666		2,294		Yes	(j)
Net regulatory liability related to income taxes(k)								Net regulatory liability related to income taxes(k)	$	1,559	$	1,695		(b)
Costs of removal(d)								Costs of removal(d)	2,269		2,955		Yes	(i)

Hedge cost deferrals								Hedge cost deferrals	252		155			(b)

Provision for rate refunds	Provision for rate refunds	123		123		Yes		Provision for rate refunds	28		87		Yes	(b)

Other	Other	473		249			(b)	Other	344		357			(b)
Total regulatory liabilities	Total regulatory liabilities	4,924		4,468				Total regulatory liabilities	4,452		5,249
Less: current portion	Less: current portion	530		236				Less: current portion	332		381
Total noncurrent regulatory liabilities	Total noncurrent regulatory liabilities	$	4,394	$	4,232			Total noncurrent regulatory liabilities	$	4,120	$	4,868

(a) Regulatory assets and liabilities are excluded from rate base unless otherwise noted.

(b) The expected recovery or refund period varies or has not been determined.

(d) ~~South Carolina storm costs are included~~Included in rate base.

(e) ~~Included in rate base.~~

~~(f)~~ Pays interest on over-recovered costs in North Carolina. Includes certain purchased power costs in North Carolina and South Carolina and costs of distributed energy in South Carolina.

~~(g)~~(f) South Carolina retail allocated costs are earning a return.

~~(h)~~(g) Earns a debt and equity return on coal ash expenditures for North Carolina and South Carolina retail customers as permitted by various regulatory orders.

~~(i)~~(h) Includes incentives on DSM/EE investments and is recovered through an annual rider mechanism.

~~(j)~~(i) Recovered over the life of the associated assets.

~~(k)~~(j) Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 2223 for additional detail.

~~(l)~~(k) Includes regulatory liabilities related to the change in the federal tax rate as a result of the Tax Act and the change in the North Carolina tax rate, both discussed in Note ~~23.~~24. Portions are included in rate base.

(l) Duke Energy Progress submitted a fuel filing to the NCUC in August 2022 for recovery of $251 million, which included deferrals through June 2022. This amount is expected to be recovered through November 2023. The next filing will be made in the second quarter of 2023. Duke Energy Progress submitted a fuel filing to the PSCSC in April 2022 for recovery of $44 million, which included deferrals through February 2022. This amount is expected to be recovered through June 2023. The next filing will be made in the second quarter of 2023.

~~148~~

141


FINANCIAL STATEMENTS			REGULATORY MATTERS

~~2017~~2022 North Carolina Rate Case

On ~~June 1, 2017,~~October 6, 2022, Duke Energy Progress filed ana PBR application with the NCUC to request an increase in base rate retail revenues. The rate request before the NCUC includes an MYRP to recover projected capital investments during the three year MYRP period. In addition to the MYRP, the PBR Application includes an Earnings Sharing Mechanism, Residential Decoupling Mechanism and Performance Incentive Mechanisms as required by HB 951. If approved, the overall retail revenue increase would be $326 million in Year 1, $151 million in Year 2 and $138 million in Year 3, for a combined total of $615 million or 16% by late 2025. The rate increase ~~for retail customers of approximately $477 million, which was subsequently adjusted to $420 million. On November 22, 2017,~~ is driven primarily by major transmission and distribution investments since the last rate case and projected in the MYRP, as well as investments in energy storage and solar assets included in the MYRP consistent with the Carbon Plan. Duke Energy Progress plans to implement temporary rates, subject to refund, on June 1, 2023, and ~~the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included a return~~has requested permanent rates be effective by October 1, 2023. The evidentiary hearing has been scheduled to begin on equity of 9.9% and a capital structure of 52% equity and 48% debt. On February 23, 2018, the NCUC issued an order approving the stipulation. The order also impacted certain amounts that were similarly recorded on Duke Energy Carolinas' Consolidated Balance Sheets. As a result of the order, Duke Energy Progress and Duke Energy Carolinas recorded pretax charges of $68 million and $14 million, respectively, in the first quarter of 2018 to Impairment charges, Operation, maintenance and other and Interest Expense on the Consolidated Statements of Operations. The Public Staff, the North Carolina Attorney General and the Sierra Club filed notices of appeal to the North Carolina Supreme Court.

The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion on the consolidated appeals of the 2018 Duke Energy Carolinas and Duke Energy Progress rate case orders which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. In response to a NCUC order seeking comments on the proposed procedure on remand, on January 11, 2021, Duke Energy Carolinas, Duke Energy Progress, the Public Staff, the North Carolina Attorney General, Sierra Club and Carolina Industrial Group for Fair Utility Rates II and III filed joint comments proposing that the NCUC not hold additional evidentiary hearings, but instead rely upon existing records in the 2017 North Carolina rate cases or in the alternative the records in the 2019 North Carolina rate cases, in deciding the issue on remand. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021. For information on the proposed settlement pending before the NCUC, see "2021 Coal Ash Settlement."May 1, 2023. Duke Energy Progress cannot predict the outcome of this matter.

~~2019 North Carolina Rate Case~~

On October 30, 2019, Duke Energy Progress filed an application with the NCUC for a net rate increase for retail customers of approximately $464 million, which represented an approximate 12.3% increase in annual base revenues. The gross rate case revenue increase request was $586 million, which was offset by riders of $122 million, primarily an EDIT rider of $120 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Progress seeks to defer and recover incremental Hurricane Dorian storm costs in this proceeding and requests rates be effective no later than September 1, 2020. As a result of the COVID-19 pandemic, on March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on this matter indefinitely. On April 7, 2020, the NCUC issued an order partially resuming the procedural schedule requiring intervenors to file direct testimony on April 13, 2020. Public Staff filed supplemental direct testimony on April 23, 2020. Duke Energy Progress filed rebuttal testimony on May 4, 2020.

On June 2, 2020, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. Major components of the settlement included:

•~~Removal of deferred storm costs from the rate case;~~

•~~Filing a petition seeking to securitize the deferred storm costs within 120 days of a commission order in this rate case regarding the reasonableness and prudency of the storm costs;~~

•~~Agreement of certain assumptions to demonstrate the quantifiable benefits to customers of a securitization financing;~~

•~~Agreement that the Asheville CC project is complete and in service and agreement on the amount to be included in rate base; and~~

•~~Agreement on certain accounting matters, including recovery of employee incentives, severance, aviation costs and executive compensation.~~

On May 6, 2020, Duke Energy Progress, Duke Energy Carolinas and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. On June 17, 2020, the NCUC issued an order adopting procedures for the expert witness hearings to take place in three phases: (1) a hearing on issues common to both rate cases conducted remotely; (2) a hearing on Duke Energy Carolinas specific rate case issues, followed immediately by; (3) a hearing on Duke Energy Progress specific rate case issues. On July 27, 2020, Duke Energy Progress filed a joint motion with Duke Energy Carolinas and the Public Staff notifying the Commission that the parties reached a joint partial settlement with the Public Staff.

On July 31, 2020, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), which is subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. Major components of the Second Partial Settlement included:

•~~A return on equity of 9.6% and a capital structure of 52% equity and 48% debt;~~

•~~Agreement on amortization over a five-year period for unprotected federal EDIT flowbacks to customers;~~

•~~Settlement to allow the deferral of costs for certain grid projects placed in service between June 1, 2020, and December 31,~~ 2022 ~~of $0.5 billion.~~

~~149~~


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting and implementation of new depreciation rates.

~~On August 7, 2020, Duke Energy Progress filed a motion for approval of notice required to implement temporary rates~~, seeking to exercise its statutory right to implement temporary rates subject to refund on or after September 1, 2020. The revenue requirement to be recovered subject to refund through the temporary rates is based on and consistent with the terms of the base rate component of the settlement agreements with the Public Staff and excludes items to be litigated noted above. Duke Energy Progress will not begin the amortization or implementation of these items until a final determination is issued in the rate case and new base rates are implemented. These items will also be excluded when determining whether a refund of amounts collected through these temporary rates is needed. In addition, Duke Energy Progress also seeks authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Progress on a permanent basis. The NCUC approved the August 7, 2020 temporary rates motion on August 11, 2020, and temporary rates went into effect on September 1, 2020.

The Duke Energy Progress evidentiary hearing concluded on October 6, 2020, and post-hearing filings were filed with the NCUC from all parties by December 4, 2020. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021. Duke Energy Progress expects the NCUC to issue an order on its net rate increase by the second quarter of 2021. For information on a proposed settlement pending before the NCUC, see "2021 Coal Ash Settlement." Duke Energy Progress cannot predict the outcome of this matter.

~~Hurricane Dorian~~

Hurricane Dorian reached the Carolinas in September 2019 as a Category 2 hurricane making landfall within Duke Energy Progress’ service territory. Total estimated incremental operation and maintenance expenses incurred to repair and restore the system are approximately $168 million with an additional $4 million in capital investments made for restoration efforts. Approximately $145 million and $179 million of the operation and maintenance expenses are deferred in Regulatory assets within Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2020, and December 31, 2019, respectively. A request for an accounting order to defer incremental storm costs associated with Hurricane Dorian was included in Duke Energy Progress' October 30, 2019, general rate case filing with the NCUC. Terms of the June 2, 2020, Agreement and Stipulation of Partial Settlement removed incremental storm costs from the general rate case. A petition seeking to securitize these costs, along with costs from Hurricane Florence, Hurricane Michael and Winter Storm Diego, was filed on October 26, 2020, with the NCUC. For information on the securitization filing, see "2020 North Carolina Storm Securitization Filings." Duke Energy Progress cannot predict the outcome of this matter.

On February 7, 2020, a petition was filed with the PSCSC in the 2019 storm deferrals docket requesting deferral of approximately $22 million in operation and maintenance expenses to an existing storm deferral balance previously approved by the PSCSC. The PSCSC voted to approve the request on March 4, 2020, and issued a final order on April 7, 2020. On July 1, 2020, Duke Energy Progress filed a supplemental true up reducing the actual costs to $17 million.

~~2018~~ South Carolina Rate Case

On ~~November 8, 2018,~~September 1, 2022, Duke Energy Progress filed an application with the PSCSC ~~for a~~to request an increase in base rate ~~increase for~~ retail ~~customers of approximately $59 million.~~

After hearings in April 2019, the PSCSC issued an order on May 21, 2019, which included a return on equity of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:

•revenues. On J~~Approval of recovery of $4 million of coal ash costs over a five-year period with a return at Duke Energy Progress' WACC;~~

•~~Denial of recovery of $65 million of certain coal ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;~~

•~~Approval of a $17 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;~~

•Approval of a $12 million decrease through the EDIT Tax Savings Rider resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with ARAM for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a three-year period for the deferred revenues; and

•~~Approval of a $12 million increase due to the expiration of EDIT related to reductions in the North Carolina state income tax rate from 6.9% to 2.5%.~~

~~150~~


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Progress' request to rehear or reconsider the Commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, return on equity and the recovery of a return on deferred operation and maintenance expenses, but allowing additional litigation-related costs. As a result of the Directive allowing litigation-related costs, customer rates were revised effective July 1, 2019. An order detailing the Commission's decision in the Directive was issued on October 18, 2019. Duke Energy Progress filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. The ORS filed a Notice of Cross Appeal on November 20, 2019. On Februaryanuary 12, ~~2020,~~2023, Duke Energy Progress and the ORS, as well as other consumer, environmental, and industrial intervening parties, filed a ~~joint motion to extend briefing schedule deadlines, which was approved by~~comprehensive Agreement and Stipulation of Settlement resolving all issues in the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments have not yet been scheduled by the Supreme Court of South Carolina. Based on legal analysis and the filingbase rate proceeding. The major components of the ~~appeal,~~stipulation include:

•A $52 million annual customer rate increase prior to the reduction from the accelerated return to customers of federal unprotected Property, Plant and Equipment related EDIT. After extending the remaining EDIT giveback to customers to 33 months, the net annual retail rate increase is approximately $36 million.

•ROE of 9.6% based upon a capital structure of 52.43% equity and 47.57% debt.

•Continuation of deferral treatment of coal ash basin closure costs. Supports an amortization period for remaining coal ash closure costs in this rate case of seven years. Duke Energy Progress ~~has~~agreed not ~~recorded an adjustment for its~~to seek recovery of approximately $50 million of deferred coal ash ~~costs~~expenditures related to retired sites in this ~~matter. Duke Energy Progress cannot predict~~rate case (South Carolina retail allocation).

•Accepts the ~~outcome~~2021 Depreciation Study as proposed in this case, as adjusted for certain recommendations from ORS and includes accelerated retirement dates for certain coal units as originally proposed.

•Establishment of ~~this matter.~~a storm reserve to help offset the costs of major storms.

~~Western Carolinas Modernization Plan~~

~~Duke Energy Progress retired the 376-MW Asheville coal-fired plant~~The PSCSC held a hearing on January ~~29, 2020, at which time~~17, 2023, to consider evidence supporting the ~~net book value, including associated ash basin closure costs, of $214 million was transferred from Generation facilities~~stipulation and unanimously voted to ~~be retired, net~~approve the comprehensive agreement on February 9, 2023. The PSCSC voted to ~~Regulatory assets within Current Assets and Other Noncurrent Assets on the Consolidated Balance Sheets.~~

On December 27, 2019, Asheville Combined Cycle Unit 5 Combustion Turbine and Unit 6 Steam Turbine Generator and the common systems that serve combined cycle units went into commercial operation. Duke Energy Progress placed the Unit 7 Combustion Turbine into commercial operation in simple-cycle mode on January 15, 2020. The Unit 8 Steam Turbine Generator went into commercial operation on April 5, 2020. On June 2, 2020, Duke Energy Progress filed a request with the PSCSC for an accounting order for the deferral of post-in-service costs incurred in connection with the addition of the Asheville combined-cycle generating plant. The petition requested the PSCSC issue an accounting order authorizingallow Duke Energy Progress to defer post-in-service costs including the Asheville combined-cycle’s depreciation expense, property taxes, incremental operations and maintenance expenses and carrying costs at WACC of approximately $8 million annually. On June 17, 2020,implement new customer rates by April 1, 2023. A final written order is due from the PSCSC ~~voted to approve the petition and issued its final order on July 6, 2020.~~

~~On October 8, 2018, Duke Energy Progress filed an application with the NCUC for a CPCN to construct~~ ~~the Hot Springs Microgrid Solar and Battery Storage Facility, which was approved with certain conditions on May 10, 2019.~~ ~~A hearing to update the NCUC on the status of the project was held on~~by March ~~5, 2020. Construction began in May 2020 with commercial operation expected to begin in October 2021.~~

On July 27, 2020, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Woodfin Solar Facility, a 5-MW solar generating facility to be constructed on a closed landfill in Buncombe County. The expert hearing was held on November 18, 2020. Duke Energy Progress cannot predict the outcome of this matter.1, 2023.

FERC Return on Equity ~~Complaints~~Complaint

On October ~~11, 2019, NCEMPA~~16, 2020, North Carolina Electric Membership Corporation (NCEMC) filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the Federal Power Act (FPA), alleging that the 11% stated return on equity (ROE) component contained in the demand formula rate in the Full Requirements Power Purchase Agreement (FRPPA) between NCEMPA and Duke Energy Progress is unjust and unreasonable. On July 16, 2020, the FERC set this matter for hearing and settlement judge procedures and established a refund effective date of October 11, 2019. In its order setting the matter for settlement, the FERC allowed for the consideration of variations to the base transmission-related ROE methodology developed in its Order No. 569-A, through the introduction of “specific facts and circumstances” involving issues specific to the case. It is Duke Energy Progress’ view that, in consideration of the specific facts and circumstances of risks under the provisions of the FRPPA, the stated 11% ROE is just and reasonable. The parties are currently in FERC settlement procedures. Duke Energy Progress cannot predict the outcome of this matter.

~~On October 16, 2020, NCEMC filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the FPA,~~ alleging that the 11% stated ROE component in the demand formula rate in the Power Supply and Coordination Agreement between NCEMC and Duke Energy Progress is unjust and unreasonable. ~~Under FPA Section 206, the earliest refund effective date that the FERC can establish is the date of the filing of the complaint.~~On June 16, 2022, Duke Energy Progress ~~responded~~submitted to the ~~complaint on~~FERC an Offer of Settlement and Settlement Agreement (Settlement Agreement) between NCEMC and Duke Energy Progress. The Settlement Agreement provides for an ROE of 10%, effective January 1, 2022, among other contract modifications. On November ~~20, 2020, demonstrating that the 11% ROE is just and reasonable for the service provided. The parties have filed additional pleadings. The FERC has not issued an order, and there is no deadline for~~7, 2022, the FERC ~~to act. Duke Energy Progress cannot predict~~approved the ~~outcome of this matter.~~Settlement Agreement.

~~151~~142


FINANCIAL STATEMENTS			REGULATORY MATTERS

Duke Energy Florida

Regulatory Assets and Liabilities

The following tables present the regulatory assets and liabilities recorded on Duke Energy Florida's Consolidated Balance Sheets.


		December 31,				Earns/Pays	Recovery/Refund		December 31,				Earns/Pays	Recovery/Refund
(in millions)	(in millions)	2020		2019		a Return	Period Ends	(in millions)	2022		2021		a Return	Period Ends
Regulatory Assets(a)	Regulatory Assets(a)							Regulatory Assets(a)
AROs – coal ash~~(c)~~	AROs – coal ash~~(c)~~	$	10	$	9		(b)	AROs – coal ash~~(c)~~	$	11	$	10		(b)
AROs – nuclear and other~~(c)~~	AROs – nuclear and other~~(c)~~	2		159		Yes	(b)	AROs – nuclear and other~~(c)~~	15		7			(b)
Deferred fuel and purchased power(h)								Deferred fuel and purchased power(h)	1,355		415		(f)	2024
Accrued pension and OPEB(c)	Accrued pension and OPEB(c)	482		474		Yes	(g)	Accrued pension and OPEB(c)	342		374		Yes	(g)

Nuclear asset securitized balance, net								Nuclear asset securitized balance, net	881		937			2036

Storm cost deferrals(c)	Storm cost deferrals(c)	108		413		(e)	(b)	Storm cost deferrals(c)	325		19		(f)	(b)
Nuclear asset securitized balance, net		991		1,042			2036
Hedge costs deferrals(c)								Hedge costs deferrals(c)	73		77		Yes	2038

Retired generation facilities(c)	Retired generation facilities(c)	174		183		Yes	(b)	Retired generation facilities(c)	94		94		Yes	2044

Hedge costs deferrals		59		44		Yes	2038
AMI(c)	AMI(c)	45		53		Yes	2032	AMI(c)	30		38		Yes	2032
DSM/EE(c)		17		25		Yes	2025

Deferred fuel and purchased power		4		39		(f)	2022
Customer connect project(c)								Customer connect project(c)	82		67		Yes	2037
Costs of removal regulatory asset(c)								Costs of removal regulatory asset(c)	221		107		(d)	(b)

Qualifying facility contract buyouts		107		121		Yes	2034
Customer connect project		30		20			2037

Qualifying facility contract buyouts(c)								Qualifying facility contract buyouts(c)	81		94		Yes	2034

Other	Other	35		31		(d)	(b)	Other	55		49		(d)	(b)
Total regulatory assets	Total regulatory assets	2,064		2,613				Total regulatory assets	3,565		2,288
Less: current portion	Less: current portion	265		419				Less: current portion	1,143		497
Total noncurrent regulatory assets	Total noncurrent regulatory assets	$	1,799	$	2,194			Total noncurrent regulatory assets	$	2,422	$	1,791
Regulatory Liabilities(a)

Net regulatory liability related to income taxes(c)	Net regulatory liability related to income taxes(c)	$	749	$	793		(b)	Net regulatory liability related to income taxes(c)	$	633	$	699		(b)
Costs of removal(c)		—		267		(d)	(b)

Deferred fuel and purchased power(c)		—		1		(f)
DOE Settlement								DOE Settlement	154		—

Other	Other	19		26		(d)	(b)	Other	90		97		(d)	(b)
Total regulatory liabilities	Total regulatory liabilities	768		1,087				Total regulatory liabilities	877		796
Less: current portion	Less: current portion	110		94				Less: current portion	244		98
Total noncurrent regulatory liabilities	Total noncurrent regulatory liabilities	$	658	$	993			Total noncurrent regulatory liabilities	$	633	$	698

(a) Regulatory assets and liabilities are excluded from rate base unless otherwise noted.

(b) The expected recovery or refund period varies or has not been determined.

(d) Certain costs earn/pay a return.

(e) Earns a debt return/interest once collections begin.

(f) Earns commercial paper rate.

(g) Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 2223 for additional detail.

~~COVID-19 Filings~~

In March 2020, Governor Ron DeSantis directed the State Health Officer of Florida to declare a public health emergency in Florida related to the COVID-19 pandemic. The governor also issued an Executive Order on March 9, 2020, in which he declared a state of emergency in Florida and directed the Director of the Division of Emergency Management to implement the state’s Comprehensive Emergency Management Plan. On March 19, 2020,(h) Duke Energy Florida ~~filed~~submitted a ~~request~~fuel filing to ~~modify its tariff to allow it to waive late fees for customers, and on April 6, 2020,~~ the FPSC ~~issued an order approving~~in January 2023 for recovery of $795 million, which included the ~~request. Duke Energy Florida had already voluntarily waived reconnect fees and credit card fees and ceased disconnecting customers for nonpayment. On~~2022 actual under-recovery of $1.2 billion, offset by projected declining fuel costs in 2023 due to lower natural gas prices. The expected recovery period is April 2, 2020, Duke Energy Florida filed a petition with the FPSC to accelerate a $78 million fuel cost refund to customers in the month of May 2020. Typically, the refund would be made over the course of 2021. The FPSC approved the petition on April 28, 2020. Duke Energy Florida resumed normal billing practices as of August 24, 2020, with the exception of the billing of late payment charges. Customers were notified of the resumption of normal billing practices, the option of deferred payment arrangements and where to find assistance, if necessary. Service disconnections for nonpayment for residential customers resumed on October 5, 2020.2023 through March 2024.

2021 Settlement Agreement

On January 14, 2021, Duke Energy Florida filed a Settlement Agreement (the ~~“Settlement”~~“2021 Settlement”) with the FPSC. The parties to the 2021 Settlement include Duke Energy Florida, the Office of Public Counsel (OPC), the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PCS Phosphate and NUCOR Steel Florida, Inc. (collectively, the “Parties”).

~~152~~


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

Pursuant to the 2021 Settlement, the Parties agreed to a base rate stay-out provision that expires year-end 2024; however, Duke Energy Florida is allowed an increase to its base rates of an incremental $67 million in 2022, $49 million in 2023 and $79 million in 2024, subject to adjustment in the event of tax reform during the years 2021, 2022 and 2023. The Parties also agreed to ~~a return on equity (“ROE”)~~an ROE band of 8.85% to 10.85% with a midpoint of 9.85% based on a capital structure of 53% equity and 47% debt. The ROE band can be increased by 25 basis points if the average 30-year U.S. Treasury rate increases 50 basis points or more over a six-month period in which case the midpoint ROE would rise from 9.85% to 10.10%. On July 25, 2022, this provision was triggered. Duke Energy Florida filed a petition with the FPSC on August 12, 2022, to increase the ROE effective August 2022 with a base rate increase effective January 1, 2023. The FPSC approved this request on October 4, 2022. The 2021 Settlement Agreement also provided that Duke Energy Florida will ~~also~~ be able to retain the $173 million retail portion of the expected DOE award ~~of $173 million for~~from its lawsuit to recover spent nuclear fuel ~~which is expected to be received in 2022, in order~~ to mitigate customer rates over the term of the 2021 Settlement. In return, Duke Energy Florida ~~will be able~~is permitted to recognize the $173 million into earnings ~~from~~through the approved settlement period. The full amount of the $173 million is expected to be recognized between the years of 2023 and 2024, while also remaining within the approved ROE band. Duke Energy Florida settled the DOE lawsuit and received payment of approximately $180 million on June 15, 2022, of which the retail portion was approximately $154 million. The 2021 Settlement authorizes Duke Energy Florida to collect the difference between $173 million and the $154 million retail portion of the amount received through ~~2024.~~the capacity cost recovery clause.

143


FINANCIAL STATEMENTS			REGULATORY MATTERS

The 2021 Settlement also contained a provision to recover or flow-back the effects of tax law changes. As a result of the IRA enacted on August 16, 2022, Duke Energy Florida is eligible for PTCs associated with solar facilities placed in service beginning in January 2022. Duke Energy Florida filed a petition with the FPSC on October 17, 2022, to reduce base rates effective January 1, 2023, by $56 million to flow back the expected 2023 PTCs and to flow back the expected 2022 PTCs via an adjustment to the capacity cost recovery clause. On December 14, 2022, the FPSC issued an order approving Duke Energy Florida’s petition. See Note 24 for additional information on the IRA.

In addition to these terms, the 2021 Settlement ~~contains~~contained provisions related to the accelerated depreciation of Crystal River Units 4-5, the approval of approximately $1 billion in future investments in new ~~cost effective~~cost-effective solar power, the implementation of a new Electric Vehicle Charging Station Program and the deferral and recovery of costs in connection with the implementation of Duke Energy Florida’s Vision Florida program, which explores various emerging non-carbon emitting generation technology, distributed technologies and resiliency projects, among other things. The 2021 Settlement also ~~resolves~~resolved remaining unrecovered storm costs for ~~hurricanes Dorian~~Hurricane Michael and ~~Michael.~~Hurricane Dorian.

The FPSC approved the 2021 Settlement ~~is subject to the review and approval of the FPSC, which may occur in the second quarter of~~on May 4, 2021, issuing an order on June 4, 2021. ~~If the FPSC approves the Settlement, the new~~Revised customer rates ~~will be~~became effective January 1, 2022, with subsequent base rate increases effective January 1, 2023, and January 1, 2024. ~~Duke Energy Florida cannot predict the outcome of this matter.~~

~~Storm Restoration Cost Recovery~~

Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover $223 million of estimated retail incremental storm restoration costs for Hurricane Michael, consistent with the provisions in the 2017 Settlement, and the FPSC approved the petition on June 11, 2019. The FPSC also approved allowing Duke Energy Florida to use the tax savings resulting from the Tax Act to recover these storm costs in lieu of implementing a storm surcharge. Approved storm costs are currently expected to be fully recovered by approximately year-end 2021. On November 22, 2019, Duke Energy Florida filed a petition for approval of actual retail recoverable storm restoration costs related to Hurricane Michael in the amount of $191 million plus interest. On May 19, 2020, Duke Energy Florida filed a supplemental true up reducing the actual retail recoverable storm restoration costs related to Hurricane Michael by approximately $3 million, resulting in a total request to recover $188 million actual retail recoverable storm restoration costs, plus interest. On November 12, 2020, Duke Energy Florida and OPC requested a 90 day abatement to engage in discussions to narrow the issues being litigated. The Prehearing Officer approved this request on November 16, 2020, and ordered Duke Energy Florida and OPC to update the commission on their discussions by February 12, 2021. Approximately $80 million and $204 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2020, and December 31, 2019, respectively.

Duke Energy Florida filed a petition with the FPSC on December 19, 2019, to recover $169 million of estimated retail incremental storm restoration costs for Hurricane Dorian, consistent with the provisions in the 2017 Settlement and the FPSC approved the petition on February 24, 2020. Approximately $167 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2019, representing recoverable costs under the FPSC’s storm rule and Duke Energy Florida's OATT formula rates. The amount at December 31, 2020 was immaterial. The final actual amount of $145 million was filed on September 30, 2020. Pursuant to the 2021 Settlement Agreement filed for FPSC approval on January 14, 2021, all matters regarding storm cost recovery relating to hurricanes Michael and Dorian have been resolved.

Clean Energy Connection

On July 1, 2020, Duke Energy Florida petitioned the FPSC for approval of a voluntary solar program. The program consists of 10 new solar generating facilities with combined capacity of approximately 750 MW. The program allows participants to support cost-effective solar development in Florida by paying a subscription fee based on per ~~kilowatt-subscriptions~~kilowatt subscriptions and receiving a credit on their bill based on the actual generation associated with their portion of the solar portfolio. The estimated cost of the 10 new solar generation facilities is approximately $1 billion ~~over~~and the ~~next four years, and this~~projects are expected to be completed by the end of 2024. This investment will be included in base rates offset by the revenue from the subscription ~~fees. The~~fees and the credits will be included for recovery in the fuel cost recovery clause. ~~A remote hearing was held~~The FPSC approved the program in January 2021.

On February 24, 2021, the League of United Latin American Citizens (LULAC) filed a notice of appeal of the FPSC’s order approving the Clean Energy Connection to the Supreme Court of Florida. The Supreme Court of Florida heard the oral argument on ~~November 17, 2020,~~February 9, 2022. On May 27, 2022, the Supreme Court of Florida issued an order remanding the case back to the FPSC so that the FPSC can amend its order to better address some of the arguments raised by LULAC. On September 23, 2022, the FPSC issued a revised order and ~~post-hearing~~submitted it on September 26, 2022, to the Supreme Court of Florida. The Supreme Court of Florida requested that the parties file supplemental briefs regarding the revised order, which were filed February 6, 2023. The FPSC approval order remains in effect pending the outcome of the appeal. Duke Energy Florida cannot predict the outcome of this matter.

Storm Protection Plan

On April 11, 2022, Duke Energy Florida filed a Storm Protection Plan for approval with the ~~FPSC from all parties by December 9, 2020.~~FPSC. The plan, which covers investments for the 2023-2032 time frame, reflects approximately $7 billion of capital investment in transmission and distribution meant to strengthen its infrastructure, reduce outage times associated with extreme weather events, reduce restoration costs and improve overall service reliability. The evidentiary hearing began on August 2, 2022. On October 4, 2022, the FPSC voted to approve Duke Energy Florida's plan with one modification to remove the transmission loop radially fed program, ~~on January 5, 2021, and issued its written~~representing a reduction of approximately $80 million over the 10-year period starting in 2025. On December 9, 2022, the Office of Public Counsel filed a notice of appeal of this order ~~on January 26, 2021.~~

~~Crystal River Unit 3 Accelerated Decommissioning Filing~~

~~On May 29, 2019,~~to the Florida Supreme Court. Duke Energy Florida ~~entered into a Decommissioning Services Agreement for~~cannot predict the ~~accelerated decommissioning~~outcome of ~~Crystal River Unit 3 located~~this matter.

Hurricane Ian

On September 28, 2022, much of Duke Energy Florida’s service territory was impacted by Hurricane Ian, which caused significant damage resulting in ~~Citrus County, Florida,~~more than 1.1 million outages. Duke Energy Florida's December 31, 2022 Consolidated Balance Sheets include an estimate of approximately $353 million related to deferred Hurricane Ian storm costs, consistent with ~~ADP CR3, LLC and ADP SF1, LLC, each of~~the FPSC's storm rule, in Regulatory assets within Other Noncurrent Assets. After depleting any existing storm reserves, which is a wholly owned subsidiary of Accelerated Decommissioning Partners, LLC (ADP), a joint venture between NorthStar Group Services, Inc. and Orano USA LLC. The agreement will allow for completion of the decommissioning of Crystal River Unit 3 by 2027, rather than 2074 as originally planned.were approximately $107 million before Hurricane Ian, Duke Energy Florida ~~will also sell~~is permitted to petition the FPSC for recovery of additional incremental operation and ~~assign~~maintenance costs resulting from the ~~spent nuclear fuel, storage canisters, high-level waste~~storm and ~~existing dry spent fuel storage installation and certain related assets, together with certain associated liabilities and obligations~~ to ~~ADP SF1, LLC.~~replenish the retail customer storm reserve to approximately $132 million. Duke Energy Florida ~~expects that the assets~~filed its petition for cost recovery of various storms, including Hurricane Ian, and replenishment of the ~~Nuclear Decommissioning Trust Fund as~~storm reserve on January 23, 2023, seeking recovery of ~~December 31, 2020, will be sufficient to cover~~$442 million, for recovery over 12 months beginning with the ~~contract price. The U.S. Nuclear Regulatory Commission approved~~first billing cycle in April 2023. Duke Energy Florida cannot predict the ~~transaction on April 1, 2020, and the FPSC issued an order approving the transaction on August 27, 2020. The transaction closed on October 1, 2020.~~outcome of this matter.

~~153~~144


FINANCIAL STATEMENTS			REGULATORY MATTERS

~~Citrus County CC~~

Construction of the 1,640-MW combined-cycle natural gas plant in Citrus County, Florida, began in October 2015 with an estimated cost of $1.5 billion, including AFUDC. Both units came online in the fourth quarter of 2018. The ultimate cost of the facility was estimated to be $1.6 billion, and Duke Energy Florida recorded Impairment charges on Duke Energy’s Consolidated Statements of Operations of $60 million in the fourth quarter of 2018 for the overrun. In the year ended December 31, 2019, Duke Energy Florida recorded a $36 million reduction to the prior year impairment due to a decrease in the cost estimate of the Citrus County CC, primarily related to the settlement agreement with Fluor, the EPC contractor. This adjustment reduced the estimated cost of the facility to $1.5 billion.

Duke Energy Ohio

Regulatory Assets and Liabilities

The following tables present the regulatory assets and liabilities recorded on Duke Energy Ohio's Consolidated Balance Sheets.


		December 31,				Earns/Pays	Recovery/Refund		December 31,				Earns/Pays	Recovery/Refund
(in millions)	(in millions)	2020		2019		a Return	Period Ends	(in millions)	2022		2021		a Return	Period Ends
Regulatory Assets(a)	Regulatory Assets(a)							Regulatory Assets(a)
AROs – coal ash	AROs – coal ash	$	22	$	16	Yes	(b)	AROs – coal ash	$	—	$	33	Yes	(b)

Deferred fuel and purchased power								Deferred fuel and purchased power	54		38			2023
Accrued pension and OPEB	Accrued pension and OPEB	149		155			(g)	Accrued pension and OPEB	129		133			(e)
Storm cost deferrals		4		7			2023

Storm cost deferrals								Storm cost deferrals	14		2			2023
Hedge costs deferrals								Hedge costs deferrals	2		5			(b)
PISCC and deferred operating expenses(c)	PISCC and deferred operating expenses(c)	16		17		Yes	2083	PISCC and deferred operating expenses(c)	15		16		Yes	2083

Hedge costs deferrals		7		6			(b)

AMI	AMI	36		40			(b)	AMI	18		24			(b)
DSM/EE		1		2		(f)	(e)
Vacation accrual		6		5			2021
Deferred fuel and purchased power		—		1			2021

Customer connect project								Customer connect project	54		41			(b)

CEP deferral	CEP deferral	117		76		Yes	(b)	CEP deferral	190		161		Yes	(b)

MGP		104		102			(b)

Deferred pipeline integrity costs	Deferred pipeline integrity costs	21		17		Yes	(b)	Deferred pipeline integrity costs	28		24		Yes	(b)

Propane caverns								Propane caverns	26		—			(b)

Manufactured gas plant (MGP)								Manufactured gas plant (MGP)	—		104			(b)

Other	Other	166		154			(b)	Other	154		126			(b)
Total regulatory assets	Total regulatory assets	649		598				Total regulatory assets	684		707
Less: current portion	Less: current portion	39		49				Less: current portion	103		72
Total noncurrent regulatory assets	Total noncurrent regulatory assets	$	610	$	549			Total noncurrent regulatory assets	$	581	$	635
Regulatory Liabilities(a)	Regulatory Liabilities(a)							Regulatory Liabilities(a)
Net regulatory liability related to income taxes	Net regulatory liability related to income taxes	$	628	$	654		(b)	Net regulatory liability related to income taxes	$	496	$	602		(b)
Costs of removal	Costs of removal	68		86			(d)	Costs of removal	9		39			(d)

Accrued pension and OPEB								Accrued pension and OPEB	21		21			(e)

Provision for rate refunds	Provision for rate refunds	45		31			(b)	Provision for rate refunds	—		61
Accrued pension and OPEB		17		16			(g)

Other	Other	55		40			(b)	Other	107		78			(b)
Total regulatory liabilities	Total regulatory liabilities	813		827				Total regulatory liabilities	633		801
Less: current portion	Less: current portion	65		64				Less: current portion	99		62
Total noncurrent regulatory liabilities	Total noncurrent regulatory liabilities	$	748	$	763			Total noncurrent regulatory liabilities	$	534	$	739

(a) Regulatory assets and liabilities are excluded from rate base unless otherwise noted.

(b) The expected recovery or refund period varies or has not been determined.

(d) Recovery over the life of the associated assets.

(e) Recovered ~~via a rider mechanism.~~

~~(f) Includes incentives on DSM/EE investments.~~

~~(g) Recovered~~ primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 2223 for additional detail.

Duke Energy Ohio Electric Base Rate Case

Duke Energy Ohio filed with the PUCO an electric distribution base rate case application on October 1, 2021, with supporting testimony filed on October 15, 2021, requesting an increase in electric distribution base rates of approximately $55 million and an ROE of 10.3%. This is an approximate 3.3% average increase in the customer's total bill across all customer classes. The drivers for this case are capital invested since Duke Energy Ohio's last electric distribution base rate case in 2017. Duke Energy Ohio is also seeking to adjust the caps on its Distribution Capital Investment Rider (DCI Rider). The Staff of the PUCO (Staff) report was issued on May 19, 2022, recommending an increase in electric distribution base rates of $2 million to $15 million with an ROE range of 8.84% to 9.85%. On September 19, 2022, Duke Energy Ohio filed a Stipulation and Recommendation with the PUCO, which includes an increase in overall electric distribution base rates of approximately $23 million and an ROE of 9.5%. The stipulation is among all but one party to the proceeding. The PUCO issued an order on December 14, 2022, approving the Stipulation without material modification. Rates went into effect on January 3, 2023. The Ohio Consumers' Counsel (OCC) filed an application for rehearing on January 13, 2023. On February 8, 2023, the Commission granted the OCC's application for rehearing for further consideration.Duke Energy Ohio cannot predict the outcome of this matter.

~~154~~

145


FINANCIAL STATEMENTS			REGULATORY MATTERS

~~Duke Energy Ohio COVID-19 Filings~~

In response to the COVID-19 pandemic, on March 9, 2020, Governor Mike DeWine declared a state of emergency in the state of Ohio. The PUCO issued an order directing utilities to cease disconnections for nonpayment and waive late payment and reconnection fees and to minimize direct customer contact. The PUCO also directed utilities to maintain flexible payment plans and tariff interpretations to assist customers during this crisis and to seek any regulatory waivers, if necessary. In response, Duke Energy Ohio ceased all disconnections except for safety-related concerns and waived late payment and reconnection fees. On March 19, 2020, Duke Energy Ohio filed its compliance plan with the PUCO and sought waiver of several regulations to minimize direct customer contact. On May 4, 2020, Duke Energy Ohio filed a motion to suspend payment rules to enable proactive outreach to residential customers offering additional options for managing their utility bills. PUCO found the proposal to address the state of emergency and the accompanying waivers reasonable and directed Duke Energy Ohio to work with the PUCO Staff on a comprehensive plan for resumption of activities and operations, to be filed 45 days before resumption of activities. The transition plan to resume normal operations to pre-COVID-19 levels was filed on June 26, 2020, and approved by the PUCO on July 29, 2020. Pursuant to the transition plan, suspended work and activities resumed beginning August 10, 2020, and disconnections resumed on September 8, 2020, for nonresidential customers and October 5, 2020, for residential customers.

On April 16, 2020, Duke Energy Ohio filed an application for a Reasonable Arrangement to temporarily lower the minimum bill for demand-metered commercial and industrial customers. On June 17, 2020, the PUCO denied Duke Energy Ohio's application for a reasonable arrangement and ordered Duke Energy Ohio to work with the PUCO Staff on payment arrangements for impacted nonresidential customers.

On May 11, 2020, Duke Energy Ohio filed with the PUCO a request seeking deferral of incremental costs incurred, as well as specific miscellaneous lost revenues using existing uncollectible riders already in place for both electric and natural gas operations. Duke Energy Ohio would subsequently file for rider recovery at a later date. On June 17, 2020, the PUCO approved Duke Energy Ohio’s deferral application. The Commission denied the accrual of carrying costs and ordered Duke Energy Ohio to also track potential savings experienced as a result of COVID-19.

~~Duke Energy Kentucky COVID-19~~

In response to the COVID-19 pandemic, on March 6, 2020, Governor Andy Beshear declared a state of emergency in the commonwealth of Kentucky. The KPSC issued an order directing utilities to cease disconnections for nonpayment and waive late payment fees. The KPSC also directed utilities to maintain flexible payment plans and tariff interpretations to assist customers during this crisis and to seek any regulatory waivers, if necessary. In response, Duke Energy Kentucky ceased all disconnections except for safety-related concerns and waived late payment and reconnection fees. On September 21, 2020, the KPSC issued an order ending the disconnection moratorium for residential and nonresidential customers effective no earlier than October 20, 2020. Utilities are required to offer residential customers a default payment plan for any arrearages accumulated through the October 2020 billing cycle. Assessment of late payment charges for nonresidential customers resumed beginning October 20, 2020, ~~and resumed for residential customers after December 31, 2020. Duke Energy Kentucky is following the order, as clarified on September 30, 2020, by the KPSC.~~

~~2017 Electric Security Plan Filing~~

On June 1, 2017, Duke Energy Ohio filed with the PUCO a request for a standard service offer in the form of an ESP. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation and Recommendation (Stipulation) with the PUCO resolving that the term of the ESP would be from June 1, 2018, to May 31, 2025, and included continuation of market-based customer rates through competitive procurement processes for generation, continuation and expansion of existing rider mechanisms and approved new rider mechanisms relating to costs incurred to enhance the customer experience and transform the grid and a service reliability rider for vegetation management. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the Ohio Consumers' Counsel (OCC), respectively, filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the Stipulation. The case has been resolved.

~~Electric Base Rate Case~~

Duke Energy Ohio filed with the PUCO an electric distribution base rate case application and supporting testimony in March 2017. Duke Energy Ohio requested an estimated annual increase of approximately $15 million and a return on equity of 10.4%. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed the Stipulation with the PUCO including a $19 million decrease in annual base distribution revenue with a return on equity unchanged from the current rate of 9.84% based upon a capital structure of 50.75% equity and 49.25% debt. Upon approval of new rates, Duke Energy Ohio's rider for recovering its initial SmartGrid implementation ended as these costs would be recovered through base rates. The Stipulation also renewed 14 existing riders, some of which were included in Duke Energy Ohio's ESP, and added two new riders including the Enhanced Service Reliability Rider to recover vegetation management costs not included in base rates, up to $10 million per year (operation and maintenance only) and the Power Future Initiatives Rider (formerly PowerForward Rider) to recover costs incurred to enhance the customer experience and further transform the grid (operation and maintenance and capital). In addition to the changes in revenue attributable to the Stipulation, Duke Energy Ohio’s capital-related riders, including the Distribution Capital Investments Rider, began to reflect the lower federal income tax rate associated with the Tax Act with updates to customers’ bills beginning April 1, 2018. This change reduced electric revenue by approximately $20 million on an annualized basis. On December 19, 2018, the PUCO approved the Stipulation without material modification. New base rates were implemented effective January 2, 2019. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC, respectively, filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed the OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the Stipulation. The case has been resolved.

~~155~~


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

~~Ohio Valley Electric Corporation~~

On March 31, 2017, Duke Energy Ohio filed for approval to adjust its existing Rider PSR to pass through net costs related to its contractual entitlement to capacity and energy from the generating assets owned by OVEC. Duke Energy Ohio sought deferral authority for net costs incurred from April 1, 2017, until the new rates under Rider PSR were put into effect. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation with the PUCO resolving numerous issues including those related to Rider PSR. The Stipulation activated Rider PSR for recovery of net costs incurred from January 1, 2018, through May 2025. On December 19, 2018, the PUCO approved the Stipulation without material modification. The PSR rider became effective April 1, 2019. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the Stipulation. The case has been resolved.

On July 23, 2019, House Bill 6 (HB 6) was signed into law that became effective January 1, 2020. Among other things, the bill allows for funding through a rider mechanism referred to as the Clean Air Fund (Rider CAF), of two nuclear generating facilities located in Northern Ohio owned by Energy Harbor (f/k/a FirstEnergy Solutions), repeal of energy efficiency mandates and recovery of prudently incurred costs, net of any revenues, for Ohio investor-owned utilities that are participants under the OVEC power agreement. The recovery is through a non-bypassable rider that replaced any existing recovery mechanism approved by the PUCO and will remain in place through 2030. As such, Duke Energy Ohio created the Legacy Generation Rider (Rider LGR) that replaced Rider PSR effective January 1, 2020. The amounts recoverable from customers are subject to an annual cap, with incremental costs that exceed such cap eligible for deferral and recovery subject to review. See Note 17 for additional discussion of Duke Energy Ohio's ownership interest in OVEC. In July 2020, legislation to repeal HB 6 was proposed in both the Ohio House and Senate, with subsequent hearings to receive witness testimony. On December 21, 2020, the Franklin County Circuit Court issued an injunction against the PUCO’s Order that approved the nuclear plant funding through Rider CAF set to become effective on January 1, 2021. On December 28, 2020, in a separate proceeding, the Ohio Supreme Court, ordered a temporary stay on the implementation of Rider CAF. Duke Energy Ohio is not impacted by any changes in Rider CAF. The General Assembly’s session ended without addressing HB 6. Duke Energy Ohio cannot predict the outcome of this matter.

~~Tax Act – Ohio~~

On December 21, 2018, Duke Energy Ohio filed an application to change its base rate tariffs and establish a new rider to implement the benefits of the Tax Act for natural gas customers. Duke Energy Ohio requested commission approval to implement the changes and rider effective April 1, 2019. The new rider will flow through to customers the benefit of the lower statutory federal tax rate from 35% to 21% since January 1, 2018, all future benefits of the lower tax rates and a full refund of deferred income taxes collected at the higher tax rates in prior years. Deferred income taxes subject to normalization rules will be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. The PUCO established a procedural schedule and testimony was filed on July 31, 2019. An evidentiary hearing occurred on August 7, 2019. Initial briefs were filed on September 11, 2019. Reply briefs were filed on September 25, 2019. Duke Energy Ohio cannot predict the outcome of this matter.

Energy Efficiency Cost Recovery

~~On February 26, 2020,~~In response to changes in Ohio law that eliminated Ohio's energy efficiency mandates, the PUCO issued an order on February 26, 2020, directing utilities to wind down their demand-side management programs by September 30, 2020, and to terminate the programs by December 31, ~~2020, in response to changes in~~2020. Duke Energy Ohio ~~law that eliminated Ohio's energy efficiency mandates.~~ took the following actions:

•On March 27, 2020, Duke Energy Ohio filed an ~~Application~~application for ~~Rehearing~~rehearing seeking clarification on the final true up and reconciliation process after 2020. On ~~April 22,~~November 18, 2020, the PUCO ~~granted rehearing for further consideration. The PUCO~~ issued ~~two orders on November 18, 2020, on the application for rehearing. The first~~an order ~~was a Third Entry on Rehearing on the Duke Energy Ohio portfolio holding~~replacing the cost cap previously imposed ~~was unlawful,~~upon Duke Energy Ohio with a cap on shared savings recovery. On December 18, 2020, Duke Energy Ohio filed an additional application for rehearing challenging, among other things, the imposition of the cap on shared savings. On January 13, 2021, the application for rehearing was granted for further consideration.

•On October 9, 2020, Duke Energy Ohio filed an application to implement a voluntary energy efficiency program portfolio to commence on January 1, 2021. The application proposed a mechanism for recovery of ~~$8 million pretax should be imposed~~program costs and ~~lost~~a benefit associated with avoided transmission and distribution ~~revenues could not be recovered after December 31, 2020. The second~~costs. This application remains under review.

•On November 18, 2020, the PUCO issued an order ~~directs~~directing all utilities to set ~~the rider~~their energy efficiency riders to zero effective January 1, 2021, and to file a separate application for final reconciliation of all energy efficiency costs prior to December 31, 2020. Effective January 1, 2021, Duke Energy Ohio suspended its energy efficiency programs.

•On June 14, 2021, the PUCO requested each utility to file by July 15, 2021, a proposal to reestablish low-income programs through December ~~18, 2020,~~31, 2021. Duke Energy Ohio filed its application on July 14, 2021.

•On February 23, 2022, the PUCO issued its Fifth Entry on Rehearing that 1) affirmed its reduction in Duke Energy Ohio's shared savings cap; 2) denied rehearing/clarification regarding lost distribution revenues and shared savings recovery for periods after December 31, 2020; and 3) directed Duke Energy Ohio to submit an updated application ~~for rehearing.~~ with exhibits.

•On ~~January 13, 2021,~~March 25, 2022, Duke Energy Ohio filed its Amended Application consistent with the ~~application for rehearing was granted for further consideration.~~ PUCO's order.

Duke Energy Ohio cannot predict the outcome of this matter.

~~On October 9, 2020,~~ Duke Energy Ohio Natural Gas Base Rate Case

Duke Energy Ohio filed with the PUCO a natural gas base rate case application on June 30, 2022, with supporting testimony filed on July 14, 2022, requesting an ~~application~~increase in natural gas base rates of approximately $49 million and an ROE of 10.3%. This is an approximate 5.6% average increase in the customer's total bill across all customer classes. The drivers for this case are capital invested since Duke Energy Ohio's last natural gas base rate case in 2012. Duke Energy Ohio is also seeking to ~~implement a voluntary efficiency program portfolio~~adjust the caps on its Capital Expenditure Program Rider (CEP Rider). The Staff of the PUCO (Staff) report was issued on December 21, 2022, recommending an increase in natural gas base rates of $24 million to $36 million, with an equity ratio of 52% and an ROE range of 9.03% to 10.04%. A procedural schedule was issued on December 22, 2022, scheduling the evidentiary hearing to commence on January 1, 2021. The application proposes a mechanism for recovery of program costs and a benefit associated with avoided transmission and distribution costs. The application remains under review. As of January 1, 2021, Duke Energy Ohio suspended its energy efficiency programs due to changes in Ohio law.March 28, 2023. Duke Energy Ohio cannot predict the outcome of this matter.

~~156~~


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

Natural Gas Pipeline Extension

Duke Energy Ohio ~~is proposing to install~~installed a new natural gas pipeline (the Central Corridor Project) in its Ohio service territory to increase system reliability and enable the retirement of older infrastructure. ~~Duke Energy Ohio currently estimates~~Construction of the pipeline ~~development costs~~extension was completed and ~~construction activities will range from $163~~placed in service on March 14, 2022, with a total cost of approximately $170 million ~~to $245 million in direct costs~~ (excluding overheads and AFUDC) and that construction of the pipeline extension is expected to be completed before the 2021/2022 winter season. An evidentiary hearing for a Certificate of Environmental Compatibility and Public Need concluded on April 11, 2019. On November 21, 2019, the Ohio Power Siting Board (OPSB) approved Duke Energy Ohio's application subject to 41 conditions on construction. Applications for rehearing were filed by several stakeholders on December 23, 2019, arguing that the OPSB approval was incorrect. On February 20, 2020, the OPSB denied the rehearing requests. On April 15, 2020, Joint Appellants filed a notice of appeal at the Supreme Court of Ohio of the OPSB’s decision approving Duke Energy Ohio’s Central Corridor application. On June 4, 2020, the OPSB filed a motion to dismiss claims raised by one of the Joint Appellants and on August 5, 2020, the Supreme Court of Ohio dismissed one of the Joint Appellants from the appeal. Joint Appellants filed their merit briefs on August 26, 2020. Appellee briefs were filed October 15, 2020. Appellants' briefs were filed on November 24, 2020. On September 22, 2020, Duke Energy Ohio filed an application with the OPSB for approval to amend the certificated pipeline route due to changes in the route negotiated with property owners and municipalities. The staff report was filed on December 21, 2020, recommending approval subject to three conditions that reaffirm previous conditions, and provide guidance regarding local permitting and construction supervision.. On December 23, 2020, Duke Energy Ohio filed a letter indicating its acceptance of these conditions if required by the OPSB. On January 21, 2021, the OPSB approved the amended filing with the recommended conditions. On January 27, 2021, the Ohio Supreme Court set oral argument for March 31, 2021. Duke Energy Ohio cannot predict the outcome of this matter..

MGP Cost Recovery

~~As part of its 2012 natural gas base rate case,~~In an order issued in 2013, the PUCO approved Duke Energy ~~Ohio has approval to defer~~Ohio's deferral and ~~recover~~recovery of costs related to environmental remediation at two sites (East End and West End) that housed former MGP operations. Duke Energy Ohio ~~has collected approximately $55 million in environmental remediation costs incurred between 2009 through 2012 through Rider MGP, which is currently suspended. Duke Energy Ohio has~~ made annual applications with the PUCO to recover its incremental remediation costs consistent with the PUCO’s directive in Duke Energy Ohio’s 2012 natural gas base rate case. ~~To date,~~

A Stipulation and Recommendation was filed jointly by Duke Energy Ohio, the Staff, the Office of the Ohio Consumers' Counsel and the Ohio Energy Group on August 31, 2021, which was approved without modification by the PUCO ~~has not ruled~~ on Duke Energy Ohio’s annual applications for the calendar years 2013 through 2019. On September 28, 2018, the staff of the PUCO issued a report recommending a disallowance of approximately $12 million of the $26 million inApril 20, 2022. The Stipulation and Recommendation resolved all open issues regarding MGP remediation costs incurred between 2013 ~~through 2017 that staff believes are not eligible~~and 2019, Duke Energy Ohio’s request for ~~recovery. Staff interprets~~additional deferral authority beyond 2019 and the ~~PUCO’s 2012 Order granting~~pending issues related to the Tax Act described below as it related to Duke Energy Ohio’s natural gas operations. As a result of the approval of the Stipulation and Recommendation, Duke Energy Ohio ~~recovery~~recognized pretax charges of ~~MGP remediation as limiting~~approximately $15 million to Operating revenues, regulated natural gas and $58 million to Operation, maintenance and other and a tax benefit of $72 million to Income Tax (Benefit) Expense in the ~~recovery to work directly on~~Consolidated Statements of Operations for the ~~East End~~year ended December 31, 2022. The Stipulation and ~~West End sites. On October 30, 2018,~~Recommendation further acknowledged Duke Energy Ohio’s ability to file a request for additional deferral authority in the future related to environmental remediation of any MGP impacts in the Ohio ~~filed reply comments objecting~~River, if necessary, subject to specific conditions. On June 15, 2022, the ~~staff’s recommendations~~PUCO granted the rehearing requests of Interstate Gas Supply, Inc. (IGS) and ~~explaining, among other things, the obligation Duke~~The Retail Energy Ohio has under Ohio law to remediate all areas impacted by the former MGPs and not just physical property that housed the former plants and equipment. On March 29, 2019, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2018 seeking recovery of approximately $20 million in remediation costs. On July 12, 2019, the staff recommended a disallowance of approximately $11 million for work that staff believes occurred in areas not authorized for recovery. Additionally, staff recommended that any discussion pertaining to Duke Energy Ohio's recovery of ongoing MGP costs should be directly tied to or netted against insurance proceeds collected by Duke Energy Ohio. An evidentiary hearing concluded on November 21, 2019. Initial briefsSupply Association (RESA), which were filed on ~~January 17, 2020, and reply briefs were filed on February 14, 2020.~~May 20, 2022, for further consideration. Duke Energy Ohio cannot predict the outcome of this matter.

On March 31, 2020, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2019 seeking recovery of approximately $39 million in remediation costs incurred during 2019. On July 23, 2020, the staff recommended a disallowance of approximately $4 million for work the staff believes occurred in areas not authorized for recovery. Additionally, the staff recommended insurance proceeds, net of litigation costs and attorney fees, should be reimbursed to customers and not be held by Duke Energy Ohio until all investigation and remediation is complete. Duke Energy Ohio filed comments in response to the staff report on August 21, 2020, and intervenor comments were filed on November 9, 2020. Duke Energy Ohio cannot predict the outcome of this matter.

The 2012 PUCO order also contained conditional deadlines for completing the MGP environmental remediation and the deferral of remediation costs at the MGP sites. Subsequent to the order, the deadline was extended to December 31, 2019. On May 10, 2019, Duke Energy Ohio filed an application requesting a continuation of its existing deferral authority for MGP remediation that must occur after December 31, 2019. On July 12, 2019, staff recommended the Commission deny the deferral authority request. On September 13, 2019, intervenor comments were filed opposing Duke Energy Ohio's request for continuation of existing deferral authority and on October 2, 2019, Duke Energy Ohio filed reply comments. Duke Energy Ohio cannot predict the outcome of this matter.

~~Duke Energy Kentucky Electric Base Rate Case~~

On September 3, 2019, Duke Energy Kentucky filed a rate case with the KPSC requesting an increase in electric base rates of approximately $46 million. On January 31, 2020, Duke Energy Kentucky filed rebuttal testimony updating its rate increase request to approximately $44 million. Hearings concluded on February 20, 2020, and briefing was completed March 20, 2020. On April 27, 2020, the KPSC issued its decision approving a $24 million increase for Duke Energy Kentucky with a 9.25% return on equity. The KPSC denied Duke Energy Kentucky’s major storm deferral mechanism and EV and battery storage pilots. The KPSC approved Duke Energy Kentucky’s Green Source Advantage tariff. New customer rates were effective on May 1, 2020. On May 18, 2020, Duke Energy Kentucky filed its motion for rehearing and on June 4, 2020, the motion was granted in part and denied in part by the KPSC. On October 16, 2020, the KPSC issued an Order on Rehearing authorizing an additional $4 million increase in revenue requirement bringing the total authorized revenue requirement increase to $28 million. Revised customer rates took effect in November 2020. The case has been resolved.

~~Regional Transmission Organization Realignment~~

Duke Energy Ohio, including Duke Energy Kentucky, transferred control of its transmission assets from MISO to PJM, effective December 31, 2011. The PUCO approved a settlement related to Duke Energy Ohio’s recovery of certain costs of the RTO realignment via a non-bypassable rider. Duke Energy Ohio is allowed to recover all MISO Transmission Expansion Planning (MTEP) costs directly or indirectly charged to Ohio customers. The KPSC also approved a request to effect the RTO realignment, subject to a commitment not to seek double recovery in a future rate case of the transmission expansion fees that may be charged by MISO and PJM in the same period or overlapping periods.

~~157~~146


FINANCIAL STATEMENTS			REGULATORY MATTERS

Tax Act – Ohio

~~The following table provides~~On December 21, 2018, Duke Energy Ohio filed an application to change its base rate tariffs and establish a ~~reconciliation~~new rider to implement the benefits of the ~~beginning~~Tax Act for natural gas customers. The new rider would flow through to customers the benefit of the reduction in the statutory federal tax rate from 35% to 21% since January 1, 2018, all future benefits of the lower tax rates and ~~ending balance~~a full refund of deferred income taxes collected at the higher tax rates in prior years. Deferred income taxes subject to normalization rules would be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. An evidentiary hearing occurred on August 7, 2019. The Stipulation and Recommendation filed on August 31, 2021, and approved on April 20, 2022, disclosed in the MGP Cost Recovery matter above, resolves the outstanding issues in this proceeding by providing customers a one-time bill credit for the reduction in the statutory federal tax rate from 35% to 21% since January 1, 2018, through June 1, 2022, and reducing base rates going forward. Deferred income taxes subject to normalization rules will be refunded consistent with federal law through a new rider. Deferred income taxes not subject to normalization rules were written off. The commission granted the rehearing requests of IGS and RESA for further consideration. Duke Energy ~~Ohio’s~~Ohio cannot predict the outcome of this matter.

Midwest Propane Caverns

Duke Energy Ohio used propane stored in caverns to meet peak demand during winter for several decades. Once the Central Corridor Project was complete and placed in service, the propane peaking facilities were no longer necessary and were retired. On October 7, 2021, Duke Energy Ohio requested deferral treatment of the property, plant and equipment as well as costs related to propane inventory and decommissioning costs. On January 6, 2022, the Staff issued a report recommending deferral authority for costs related to propane inventory and decommissioning costs, but not for the net book value of the remaining plant assets. As a result of the Staff's report, Duke Energy Ohio recorded ~~liability for its exit obligation~~a $19 million charge to Impairment of assets and ~~share of MTEP costs recorded in Other within Current Liabilities and Other Noncurrent Liabilities~~other charges on the Consolidated ~~Balance Sheets. The retail portions~~Statements of ~~MTEP costs billed by MISO are recovered~~Operations and Comprehensive Income for the year ended December 31, 2021. A Stipulation and Recommendation was filed jointly by Duke Energy Ohio and the Staff on April 27, 2022, recommending, among other things, approval of deferral treatment of a portion of the net book value of the property, plant and equipment prior to the 2021 impairment at the time of the next natural gas base rate case, excluding operations and maintenance savings, decommissioning costs not to exceed $7 million and costs related to propane inventory. The Stipulation and Recommendation states that Duke Energy Ohio will seek recovery of the deferral through its next natural gas base rate case proceeding with a ~~non-bypassable rider.~~proposed amortization period of at least 10 years and include an independent engineering study analyzing the necessity and prudency of the incremental investments made at the facilities since March 31, 2012. Duke Energy Ohio will not seek a return on the deferred amounts. An evidentiary hearing was held on September 8, 2022. On October 5, 2022, the PUCO issued an order approving the Stipulation and Recommendation as filed. As a result of the order, Duke Energy Ohio recorded a reversal of $12 million to Impairment of assets and other charges on the Consolidated Statements of Operations and Comprehensive Income for the year ended December 31, ~~2020, and 2019, $37~~2022.

Duke Energy Kentucky Electric Base Rate Case

On December 1, 2022, Duke Energy Kentucky filed a rate case with the KPSC requesting an annualized increase in electric base rates of approximately $75 million and ~~$40 million, respectively, are recorded~~an ROE of 10.35%. This is an overall increase in ~~Regulatory assets on~~rates of approximately 17.8%. The request for rate increase is driven by capital investments to strengthen the electricity generation and delivery systems along with adjusted depreciation rates for the East Bend and Woodsdale generation stations to support the energy transition. Duke Energy ~~Ohio's Consolidated Balance Sheets.~~Kentucky is also requesting new programs and tariff updates, including a voluntary community-based renewable subscription program and two EV charging programs. A procedural schedule was issued on December 19, 2022, scheduling the evidentiary hearing for May 9, 2023. New rates are anticipated to go into effect around July 15, 2023. Duke Energy Kentucky cannot predict the outcome of this matter.

Provisions/ Cash
(in millions) December 31, 2019 Adjustments Reductions December 31, 2020
Duke Energy Ohio $ 54 $ (1) $ (3) $ 50

147


FINANCIAL STATEMENTS			REGULATORY MATTERS

Duke Energy Indiana

Regulatory Assets and Liabilities

The following tables present the regulatory assets and liabilities recorded on Duke Energy Indiana's Consolidated Balance Sheets.


		December 31,				Earns/Pays	Recovery/Refund		December 31,				Earns/Pays	Recovery/Refund
(in millions)	(in millions)	2020		2019		a Return	Period Ends	(in millions)	2022		2021		a Return	Period Ends
Regulatory Assets(a)	Regulatory Assets(a)							Regulatory Assets(a)
AROs – coal ash	AROs – coal ash	$	615	$	529	Yes	(b)	AROs – coal ash	$	385	$	749	Yes	(b)

Deferred fuel and purchased power								Deferred fuel and purchased power	138		158			2023
Accrued pension and OPEB	Accrued pension and OPEB	245		243			(e)	Accrued pension and OPEB	214		222			(e)

Retired generation facilities(c)		43		49		Yes	2030
PISCC and deferred operating expenses(c)		303		246		Yes	(b)

Hedge costs deferrals	Hedge costs deferrals	22		23			(b)	Hedge costs deferrals	20		35			(b)
PISCC and deferred operating expenses(c)								PISCC and deferred operating expenses(c)	255		262		Yes	(b)
Retired generation facilities(c)								Retired generation facilities(c)	34		38		Yes	2030

AMI	AMI	19		18			2031	AMI	15		17			2031
Customer connect project								Customer connect project	19		11			(b)

Vacation accrual		12		12			2021
Deferred fuel and purchased power		9		—			2021

Other	Other	60		52			(b)	Other	44		63			(b)
Total regulatory assets	Total regulatory assets	1,328		1,172				Total regulatory assets	1,124		1,555
Less: current portion	Less: current portion	125		90				Less: current portion	249		277
Total noncurrent regulatory assets	Total noncurrent regulatory assets	$	1,203	$	1,082			Total noncurrent regulatory assets	$	875	$	1,278
Regulatory Liabilities(a)	Regulatory Liabilities(a)							Regulatory Liabilities(a)
Net regulatory liability related to income taxes	Net regulatory liability related to income taxes	$	956	$	1,008		(b)	Net regulatory liability related to income taxes	$	840	$	908		(b)
Costs of removal	Costs of removal	599		599			(d)	Costs of removal	531		575			(d)

Hedge cost deferrals								Hedge cost deferrals	81		—			(b)
Accrued pension and OPEB								Accrued pension and OPEB	104		113			(e)

Accrued pension and OPEB		100		90			(e)
Amounts to be refunded to customers		17		—			(b)

Other	Other	66		43			(b)	Other	85		96			(b)
Total regulatory liabilities	Total regulatory liabilities	1,738		1,740				Total regulatory liabilities	1,641		1,692
Less: current portion	Less: current portion	111		55				Less: current portion	187		127
Total noncurrent regulatory liabilities	Total noncurrent regulatory liabilities	$	1,627	$	1,685			Total noncurrent regulatory liabilities	$	1,454	$	1,565

(a) Regulatory assets and liabilities are excluded from rate base unless otherwise noted.

(b) The expected recovery or refund period varies or has not been determined.

(d) Refunded over the life of the associated assets.

(e) Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 2223 for additional detail.

~~COVID-19 Filing~~

In response to the COVID-19 pandemic, on March 6, 2020, Governor Eric Holcomb declared a public health disaster emergency in the state of Indiana, which is currently still in effect. At that time, Duke Energy Indiana had already voluntarily suspended all disconnections and waived late payment fees and check return fees. The utility also waived credit card fees for residential customers. The Executive Order requiring utilities in the state to suspend disconnection of utility service expired July 1, 2020.

~~158~~


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

On May 8, 2020, Duke Energy Indiana, along with other Indiana utilities, filed a request with the IURC for approval of deferral treatment for costs and revenue reductions associated with the COVID-19 pandemic. The utilities requested initial deferral approval in July 2020, with individual subdockets for each utility to be established for consideration of utility-specific cost and revenue impacts, cost recovery timing and customer payment plans. On June 29, 2020, the IURC issued an order in Phase 1 wherein it extended the disconnection moratorium for jurisdictional utilities until August 14, 2020, along with requiring six-month payment arrangements, waiver of late fees, reconnection fees, convenience fees and deposits. The IURC permitted jurisdictional utilities to use regulatory accounting for any impacts associated with the prohibition on utility disconnections, waiver or exclusion of certain utility fees (i.e., late fees, convenience fees, deposits, and reconnection fees), the use of expanded payment arrangements to aid customers, and for COVID-19 related uncollectible and incremental bad debt expense. The IURC did not permit recovery of lost revenues due to load reduction or carrying costs. In Phase 2 filings, individual utilities may choose to request regulatory accounting for other COVID-19 related operation and maintenance costs wherein evidence of the impact of any costs or offsetting savings can be presented and considered in an evidentiary hearing. On August 12, 2020, the IURC issued a supplemental order extending the requirement for six-month payment arrangements and waiver of certain customer fees for another 60 days but did not extend the disconnect moratorium. As such, Duke Energy Indiana resumed service disconnections for nonpayment in mid-September 2020. Normal billing practices resumed in mid-October 2020, except that Duke Energy Indiana has committed to provide extended payment arrangements into 2021 and to waive credit card and pay station fees for residential customers through the end of 2020. Customers were notified of the resumption of normal billing practices, the option of deferred payment arrangements and where to find assistance, if necessary. Duke Energy Indiana cannot predict the outcome of this matter.

2019 Indiana Rate Case

On July 2, 2019, Duke Energy Indiana filed a general rate case with the IURC for a rate increase for retail customers of approximately $395 million. The rebuttal case, filed on December 4, 2019, updated the requested revenue requirement to result in a 15.6% or $396 million average retail rate increase, including the impacts of the ~~Utility Receipts Tax. Hearings concluded on February 7, 2020.~~utility receipts tax. On June 29, 2020, the IURC issued ~~the~~an order in the rate case approving a revenue increase of $146 million before certain adjustments and ratemaking refinements. The order ~~provided for an overall cost of capital of 5.7% based on a 9.7% return on equity and a 53% equity component of the capital structure, and~~ approved Duke Energy Indiana's requested forecasted rate base of $10.2 billion as of December 31, 2020, including the Edwardsport Integrated Gasification Combined Cycle (IGCC) Plant. The IURC reduced Duke Energy Indiana's request by slightly more than $200 million, when accounting for the utility receipts tax and other adjustments. Approximately 50% of the reduction iswas due to a prospective change in depreciation and use of regulatory asset for the end-of-life inventory at retired generating plants, approximately 20% iswas due to the approved ROE of 9.7% ~~return on equity~~ versus the requested ROE of 10.4% and approximately 20% iswas related to miscellaneous earnings neutral adjustments. Step one rates ~~are~~were estimated to be approximately 75% of the total and became effective on July 30, 2020. Step two rates ~~are~~ estimated to be the remaining 25% of the total rate increase were approved on July 28, 2021, and ~~will be~~ implemented in ~~mid-2021.~~ August 2021.

Several groups ~~filed notices of appeal of~~appealed the IURC order to the Indiana Court of Appeals. The Indiana Court of Appeals affirmed the IURC decision on ~~July 29, 2020. Appellate briefs were filed~~May 13, 2021. However, upon appeal by the Indiana Office of Utility Consumer Counselor (OUCC) and the Duke Industrial Group on ~~October 14, 2020, focusing on three issues: wholesale sales allocations,~~March 10, 2022, the Indiana Supreme Court found that the IURC erred in allowing Duke Energy Indiana to recover coal ash ~~basin cost recovery~~costs incurred before the IURC’s rate case order in June 2020. The Indiana Supreme Court found that allowing Duke Energy Indiana to recover coal ash costs incurred between rate cases that exceeded the amount built into base rates violated the prohibition against retroactive ratemaking. The IURC’s order has been remanded to the IURC for additional proceedings consistent with the Indiana Supreme Court’s opinion. As a result of the court's opinion, Duke Energy Indiana recognized pretax charges of approximately $211 million to Impairment of assets and ~~the Edwardsport IGCC operating~~other charges and ~~maintenance expense level approved. The appeal was fully briefed in~~ ~~January 2021, and a decision is expected~~$46 million to Operating revenues in the ~~first or second quarter~~Consolidated Statements of ~~2021.~~Operations for the year ended December 31, 2022. Duke Energy Indiana filed a request for rehearing with the Supreme Court on April 11, 2022, which the court denied on May 26, 2022. Duke Energy Indiana filed its testimony in the remand proceeding on August 18, 2022. An evidentiary hearing is scheduled to begin March 3, 2023. Duke Energy Indiana cannot predict the outcome of this matter.

148


FINANCIAL STATEMENTS			REGULATORY MATTERS

2020 Indiana Coal Ash Recovery Case

In Duke Energy Indiana’s 2019 rate case, the IURC ~~approved coal ash basin closure costs expended through 2018 including financing costs as a regulatory asset and included in rate base. The IURC~~also opened a subdocket ~~to deal with the~~for post-2018 coal ash related expenditures. Duke Energy Indiana filed testimony on April 15, 2020, in the coal ash subdocket requesting recovery for the post-2018 coal ash basin closure costs for plans that have been approved by the Indiana Department of Environmental Management (IDEM) as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing was held on September 14, ~~2020,~~2020. Briefing was completed by mid-September 2021. On November 3, 2021, the IURC issued an order allowing recovery for post-2018 coal ash basin closure costs for the plans that have been approved by IDEM, as well as continuing deferral, with carrying costs, on the balance. The OUCC and the ~~parties have agreed~~Duke Industrial Group appealed. The Indiana Court of Appeals issued its opinion on February 21, 2023, reversing the IURC's order to the extent that it allowed Duke Energy Indiana to recover federally mandated costs incurred prior to the IURC's November 3, 2021 order. In addition, the court found that any costs incurred pre-petition to determine federally mandated compliance options were not specifically authorized by the statute and should also be disallowed. Duke Energy Indiana is assessing its appellate options and must file a ~~delayed briefing schedule that allows~~petition to transfer to the Indiana Supreme Court by April 7, 2023. As a result of the court's opinion, Duke Energy Indiana recognized a pretax charge of approximately $175 million to Impairment of assets and other charges for the ~~Indiana Rate Case appeal to proceed. Briefing will be completed by mid-May 2021.~~year ended December 31, 2022. Duke Energy Indiana cannot predict the outcome of this matter.

~~159~~

TDSIC 2.0

On November 23, 2021, Duke Energy Indiana filed for approval of the Transmission, Distribution, Storage Improvement Charge 2.0 investment plan for 2023-2028 (TDSIC 2.0). On June 15, 2022, the IURC approved, without modification, TDSIC 2.0, which includes approximately $2 billion in transmission and distribution investments selected to improve customer reliability, harden and improve resiliency of the grid, enable expansion of renewable and distributed energy projects and encourage economic development. In addition, the IURC set up a subdocket to consider the targeted economic development project, which the IURC approved on March 2, 2022. On July 15, 2022, the OUCC filed a notice of appeal to the Indiana Court of Appeals in Duke Energy Indiana’s TDSIC 2.0 proceeding. An appellant brief was filed on October 28, 2022, and Duke Energy Indiana filed its responsive brief on December 28, 2022. Duke Energy Indiana cannot predict the outcome of this matter.


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

Piedmont

Regulatory Assets and Liabilities

The following tables present the regulatory assets and liabilities recorded on Piedmont's Consolidated Balance Sheets.


		December 31,				Earns/Pays	Recovery/Refund		December 31,				Earns/Pays	Recovery/Refund
(in millions)	(in millions)	2020		2019		a Return	Period Ends	(in millions)	2022		2021		a Return	Period Ends
Regulatory Assets(a)	Regulatory Assets(a)							Regulatory Assets(a)

AROs – nuclear and other	AROs – nuclear and other	$	20	$	16		(d)	AROs – nuclear and other	$	27	$	22		(d)

Accrued pension and OPEB(c)	Accrued pension and OPEB(c)	88		90			(f)	Accrued pension and OPEB(c)	119		82			(g)

Vacation accrual	Vacation accrual	12		12			2021	Vacation accrual	12		12			2023

Derivatives – natural gas supply contracts(f)								Derivatives – natural gas supply contracts(f)	168		139

Derivatives – natural gas supply contracts(e)		122		117

Deferred pipeline integrity costs(c)								Deferred pipeline integrity costs(c)	93		84			2025

Amounts due from customers	Amounts due from customers	110		36		Yes	(b)	Amounts due from customers	57		85		(e)	(b)

Deferred pipeline integrity costs(c)		71		62			2023

Other	Other	32		30			(b)	Other	35		33			(b)
Total regulatory assets	Total regulatory assets	455		363				Total regulatory assets	511		457
Less: current portion	Less: current portion	153		73				Less: current portion	119		141
Total noncurrent regulatory assets	Total noncurrent regulatory assets	$	302	$	290			Total noncurrent regulatory assets	$	392	$	316
Regulatory Liabilities(a)	Regulatory Liabilities(a)							Regulatory Liabilities(a)
Net regulatory liability related to income taxes	Net regulatory liability related to income taxes	$	499	$	555		(b)	Net regulatory liability related to income taxes	$	459	$	510		(b)
Costs of removal		575		574			(d)
Costs of removal(c)								Costs of removal(c)	573		572			(d)

Provision for rate refunds		6		41		Yes
Accrued pension and OPEB(c)		3		3			(f)
Amounts to be refunded to customers		34		34		Yes	(b)

Other	Other	15		5			(b)	Other	66		32		(e)	(b)
Total regulatory liabilities	Total regulatory liabilities	1,132		1,212				Total regulatory liabilities	1,098		1,114
Less: current portion	Less: current portion	88		81				Less: current portion	74		56
Total noncurrent regulatory liabilities	Total noncurrent regulatory liabilities	$	1,044	$	1,131			Total noncurrent regulatory liabilities	$	1,024	$	1,058

(a) Regulatory assets and liabilities are excluded from rate base unless otherwise noted.

(b) The expected recovery or refund period varies or has not been determined.

(d) Recovery over the life of the associated assets.

(e) Certain costs earn/pay a return.

(f) Balance will fluctuate with changes in the market. Current contracts extend into 2031.

~~(f)~~(g) Recovered primarily over the average remaining service periods or life expectancies of employees covered by the benefit plans. See Note 2223 for additional detail.

~~COVID-19 Filings~~

~~North~~2022 South Carolina Rate Case

On March 10, 2020, Governor Roy Cooper declared a state of emergency due to the COVID-19 pandemic. On March 19, 2020, the NCUC issued on order directing that utilities under its jurisdiction suspend disconnections for nonpayment of utility bills during the state of emergency and allow for customers to enter into payment arrangements to pay off arrearages accumulated during the state of emergency after the end of the state of emergency. Additionally, to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 19, 2020,April 1, 2022, Piedmont filed ~~a request~~an application with the ~~NCUC seeking authorization to waive: (1) any late payment charges incurred by~~PSCSC for a ~~residential or nonresidential customer, effective March 21, 2020; (2)~~rate increase for retail customers of approximately $7 million, which represents an approximate 3.4% increase in retail revenues. An evidentiary hearing was held on August 15, 2022. On September 15, 2022, the ~~application~~PSCSC delivered its decision, which included an ROE of ~~fees for checks returned for insufficient funds for residential~~9.3% and ~~nonresidential customers; (3) the reconnection charge when~~ a ~~residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment~~capital structure of 52.2% equity and ~~to work with customers regarding the other requirements to restore service, including re-establishment of credit;~~47.8% debt and (4) the fees and charges associated with the use of credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted Piedmont’s request on March 20, 2020.

~~On July 29, 2020, the NCUC~~ issued its ~~Order Lifting Disconnection Moratorium~~final order on October 6, 2022. Revised customer rates became effective in October 2022 and ~~Allowing Collection~~resulted in a rate decrease for retail customers of Arrearages Pursuant to Special Repayment Plans. The order contained the following: (1) public utilities may resume customer disconnections due to nonpayment for bills first rendered on or after September 1, 2020, after appropriate notice; (2) the late fee moratorium will continue through the end of the state of emergency or until further order of the commission; (3) Duke Energy utilities may reinstate fees for checks returned for insufficient funds as well as transaction fees for use of credit cards or debit cards for bills first rendered on or after September 1, 2020; and (4) no sooner than September 1, 2020, the collection of past-due or delinquent accounts accrued up to and including August 31, 2020, may proceed subject to conditions.

Normal billing practices resumed as of October 1, 2020, with the exception of billing of late payment charges. Service disconnections for nonpayment resumed on November 4, 2020. Customers were notified of the resumption of normal billing practices, the option of payment arrangements and where to find assistance, if necessary. The NCUC's moratorium for the billing of late payment charges is still in effect until further order from the NCUC. Piedmont cannot predict the outcome of this matter.approximately $1 million.

~~160~~149


FINANCIAL STATEMENTS			REGULATORY MATTERS

~~South Carolina~~

On September 30, 2020, Piedmont filed an update on its planned return to normal operations during the COVID-19 pandemic. Normal billing practices resumed as of October 1, 2020, and service disconnections for nonpayment resumed on November 4, 2020. Customers were notified of the resumption of normal billing practices, the option of payment arrangements and where to find assistance, if necessary.

Tennessee

On March 12, 2020, Governor Bill Lee declared a state of emergency due to the COVID-19 pandemic. In an effort to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 20, 2020, Piedmont filed a request with the TPUC seeking authorization to waive, effective March 21, 2020: (1) any late payment charges incurred by a residential or nonresidential customer; (2) the application of fees for checks returned for insufficient funds for residential and nonresidential customers; and (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit. The TPUC granted Piedmont’s request by Order issued March 31,2020. The Order also stated that customers were not relieved of their obligation to pay for utility services received.

The TPUC held its regularly scheduled Commission Conference electronically on August 10, 2020, and on September 16, 2020, issued an Order Lifting Suspension of Disconnections of Service for Lack of Payment with Conditions, effective August 29, 2020. The conditions relate to required customer communications, payment plan options for past-due amounts and ongoing reporting to the TPUC. Potential recovery of costs related to the COVID-19 pandemic may be considered in future, individual docketed proceedings. Annual Review Mechanism

On October ~~15, 2020,~~10, 2022, the TPUC approved Piedmont’s petition to adopt an Annual Review Mechanism (ARM) as allowed by Tennessee law. Under the ARM, Piedmont will adjust rates annually to achieve its allowed 9.80% ROE over the upcoming year and to true up any variance between its allowed ROE and actual ROE from the prior calendar year. The initial year subject to the true up is 2022, and the initial rate adjustments request will be filed ~~a report on its planned return to normal operations during the COVID-19 pandemic. Normal billing practices resumed as of~~in May 2023 for rates effective October 1, 2020, and service disconnections for nonpayment resumed on November 4, 2020. Customers were notified of the resumption of normal billing practices, the option of payment arrangements and where to find assistance, if necessary.

~~2020 Tennessee Rate Case~~

On July 2, 2020, Piedmont filed an application with the TPUC, its first general rate case in Tennessee in nine years, for a rate increase for retail customers of approximately $30 million, which represents an approximate 15% increase in annual revenues. The rate increase is driven by significant infrastructure upgrade investments since its previous rate case. Approximately half of the plant additions being added to rate base are categories of capital investment not covered under the IMR mechanism, which was approved in 2013. Piedmont amended its requested increase to approximately $26 million in December 2020. As authorized under Tennessee law, Piedmont implemented interim rates on January 2, 2021, at the level requested in its adjusted request. A settlement reached with the Tennessee Consumer Advocate in mid-January was filed with the TPUC on February 2, 2021. The settlement results in an increase of revenues of approximately $16 million and a ROE of 9.8%. At a hearing on February 16, 2021, the TPUC voted to accept the settlement, with new rates effective January 2, 2021. Piedmont must refund customers the difference between bills previously rendered under interim rates and such bills if rendered under approved rates, plus interest.

~~2021 North Carolina Rate Case~~

On February 19, 2021, Piedmont filed notice with the NCUC of its intent to file a general rate case on or about March 22, 2021. Piedmont’s last general rate case in North Carolina was filed in April 2019, with rates effective November 2019.

~~2019 North Carolina Rate Case~~

On April 1, 2019, Piedmont filed an application with the NCUC, its first general rate case in North Carolina in six years. On August 13, 2019, Piedmont, the Public Staff, and two groups representing industrial customers filed an Agreement and Stipulation Settlement resolving issues in the base rate proceeding, which included a return on equity of 9.7% and a capital structure of 52% equity and 48% debt. Other major components of the Stipulation included:

•~~An annual increase in revenues of $109 million before consideration of riders associated with federal and state tax reform;~~

•A decrease through a rider mechanism of $23 million per year to return unprotected federal EDIT over a five-year period and deferred revenues related to the federal rate reduction of $37 million to be returned over one year;

•~~A decrease through a rider mechanism of $21 million per year related to reductions in the North Carolina state income tax rate to be returned over a three-year period;~~

•~~An overall cap on net revenue increase of $83 million. This will impact Piedmont beginning November 1, 2022, only if the company does not file another general rate case in the interim;~~

~~161~~


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

•~~Continuation of the IMR mechanism; and~~

•~~Establishment of a new deferral mechanism for certain Distribution Integrity Management Program (DIMP) operations and maintenance expenses incurred effective November 1, 2019, and thereafter.~~

~~On October 31, 2019, the NCUC approved the Stipulation and the revised customer rates were effective November 1, 2019.~~2023.

OTHER REGULATORY MATTERS

Atlantic Coast Pipeline, LLC

Atlantic Coast Pipeline (ACP pipeline) was planned to be an approximately 600-mile interstate natural gas pipeline running from West Virginia to North Carolina. Duke Energy indirectly owns a 47% interest, which is accounted for as an equity method investment through its Gas Utilities and Infrastructure segment.

On April 15, 2020, the United States District Court for the District of Montana granted partial summary judgment in favor of the plaintiffs in Northern Plains Resource Council v. U.S. Army Corps of Engineers (USACE) (Northern Plains), vacating USACE’s Nationwide Permit 12 (NWP 12) and remanding it to USACE for consultation under the Endangered Species Act (ESA) of 1973. In Northern Plains, the court ruled that NWP 12 was unlawful because USACE did not consult under the ESA with the U.S. Fish and Wildlife Service and/or National Marine Fisheries Service prior to NWP 12’s reissuance in 2017. Because NWP 12 has been vacated and its application enjoined, USACE currently has suspended verification of any new or pending applications under NWP 12 until further court action clarifies the situation.

On May 28, 2020, the U.S. Court of Appeals for the Ninth Circuit issued a ruling that limited the NWP 12 vacatur to energy infrastructure projects. In July 2020, the Supreme Court of the United States issued an order allowing other new oil and gas pipeline projects to use the NWP 12 process pending appeal to the U.S. Court of Appeals for the Ninth Circuit; however, that did not decrease the uncertainty associated with an eventual ruling. Together, these rulings indicated that the timeline to reinstate the necessary water crossing permits for ACP would likely cause further delays and cost increases.

~~On July 5, 2020, Dominion Energy, Inc. announced a sale of substantially all of its gas transmission and storage segment assets, operations core to the ACP pipeline project.~~

As a result of the uncertainty created by ~~the NWP 12~~various legal rulings, the potential impact on the cost and schedule for the project, the ongoing legal challenges and the risk of additional legal challenges and delays through the construction period and Dominion’s decision to sell substantially all of its gas transmission and storage segment assets, Duke Energy's Board of Directors and management decided that it was not prudent to continue to invest in the project. On July 5, 2020, Duke Energy and Dominion announced the cancellation of the ACP pipeline project.

As a result, Duke Energy recorded pretax charges to earnings of approximately $2.1 billion for the year ended December 31, 2020, within Equity in (losses) earnings of unconsolidated affiliates on the Duke Energy Consolidated Statements of Operations. The tax benefit associated with this cancellation was $393 million and is reco~~rded in Income Tax Expense (Benefit) Expense on the Duke Energy Consolidated Statements of Operations. Additional charges of less than $20 million are expected to be recorded within the next three years as ACP incurs obligations to exit operations.~~

As part of the pretax charges to earnings of approximately $2.1 billion recorded for the year ended December 31, 2020, within Equity in earnings (losses) of unconsolidated affiliates on the Duke Energy ~~has~~Consolidated Statements of Operations, Duke Energy established liabilities related to the cancellation ofof the ACP pipeline ~~proje~~ctproject. In February 2021, Duke Energy paid approximately $855 million to fund ACP's outstanding debt, relieving Duke Energy of ~~$928~~its guarantee. At December 31, 2022, there is $59 million and $8$47 million within Other Current Liabilities and Other Noncurrent Liabilities, respectively, in the Gas Utilities and Infrastructure segment. The ~~liability represents~~liabilities represent Duke Energy's obligation of approximately ~~$860~~$106 million to ~~fund ACP's outstanding debt and $76 million to~~ satisfy remaining ARO requirements to restore construction sites.

See Notes 78 and 1213 for ~~additional~~additional information regarding this transaction.

Potential Coal Plant Retirements

The Subsidiary Registrants periodically file ~~integrated resource plans (IRPs)~~IRPs with their state regulatory commissions. The IRPs provide a view of forecasted energy needs over a long term (10 to 20 years) and options being considered to meet those needs. IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in North Carolina and Indiana earlier than their current estimated useful ~~lives.~~ lives. The NCUC concluded in its Carbon Plan order that the projected retirements dates presented by Duke Energy Carolinas and Duke Energy Progress in their Carbon Plan for coal-fired generating facilities were reasonable for planning purposes and further directed that appropriate steps be taken to optimally retire the coal fleet according to such schedule. Duke Energy continues to evaluate the potential need to retire these coal-fired generating facilities earlier than the current estimated useful lives and plans to seek regulatory recovery for amounts that would not be otherwise recovered when any of these assets are retired.

~~162~~


~~FINANCIAL STATEMENTS~~			~~REGULATORY MATTERS~~

The table below contains the net carrying value of generating facilities planned for retirement or included in recent IRPs or Carbon Plan as evaluated for potential retirement. Dollar amounts in the table below are included in Net property, plant and equipment on the Consolidated Balance Sheets as of December 31, ~~2020,~~2022, and exclude capitalized asset retirement costs.


			Remaining Net				Remaining Net
		Capacity	Book Value			Capacity	Book Value
		(in MW)	(in millions)			(in MW)	(in millions)
Duke Energy Carolinas	Duke Energy Carolinas				Duke Energy Carolinas
Allen Steam Station Units 1-3(a)		604	$	113
Allen Steam Station Units 4-5(b)		526	338
Allen Steam Station Unit 1(a)					Allen Steam Station Unit 1(a)	167	$	10
Allen Steam Station Unit 5(b)					Allen Steam Station Unit 5(b)	259	233
Cliffside Unit 5(b)	Cliffside Unit 5(b)	546	350		Cliffside Unit 5(b)	546	344
Marshall Units 1-2(b)					Marshall Units 1-2(b)	760	428
Duke Energy Progress	Duke Energy Progress				Duke Energy Progress
Mayo Unit 1(b)	Mayo Unit 1(b)	746	676		Mayo Unit 1(b)	713	639
Roxboro Units 3-4(b)	Roxboro Units 3-4(b)	1,409	484		Roxboro Units 3-4(b)	1,409	425
Duke Energy Florida	Duke Energy Florida				Duke Energy Florida
Crystal River Units 4-5(c)	Crystal River Units 4-5(c)	1,430	1,696		Crystal River Units 4-5(c)	1,442	1,549
Duke Energy Indiana	Duke Energy Indiana				Duke Energy Indiana
Gallagher Units 2 and 4(d)		280	102
Gibson Units 1-5~~(e)~~(d)	Gibson Units 1-5~~(e)~~(d)	2,845	1,866		Gibson Units 1-5~~(e)~~(d)	2,845	2,043
Cayuga Units 1-2~~(e)~~(d)	Cayuga Units 1-2~~(e)~~(d)	1,005	777		Cayuga Units 1-2~~(e)~~(d)	1,005	622
Total Duke Energy	Total Duke Energy	9,391	$	6,402	Total Duke Energy	9,146	$	6,293

(a) As part of the 2015 resolution of a lawsuit involving alleged New Source Review violations, Duke Energy Carolinas must retire Allen Steam Station ~~Units~~Unit 1 ~~through 3~~ by December 31, 2024.

(b) These units were included in the IRP filed by Duke Energy Carolinas and Duke Energy Progress in South Carolina on September 1, 2020, and in the Carbon Plan adopted by the NCUC in December 2022. The long-term energy options considered ~~in the IRP~~ could result in retirement of these units earlier than their current estimated useful lives. ~~Unit 3 with a capacity of 270 MW and a net book value of $26 million at December 31, 2020, is expected to be retired in March 2021.~~

(b) These units are included in the IRP filed by Duke Energy Carolinas and Duke Energy Progress in North Carolina and South Carolina on September 1, 2020. The long-term energy options considered in the IRP could result in retirement of these units earlier than their current estimated useful lives. In 2019, Duke Energy Carolinas and Duke Energy Progress filed North Carolina rate cases that included depreciation studies that accelerate end-of-life dates for these plants. A decision by NCUC is expected by the end of the first quarter 2021.

150


FINANCIAL STATEMENTS			REGULATORY MATTERS

(c) On January 14, 2021, Duke ~~Energy~~Energy Florida filed ~~a settlement~~the 2021 Settlement agreement with the FPSC, which proposed depreciation rates reflecting retirement dates for Duke Energy Florida's last 2two coal-fired generating facilities, Crystal River Units 4-5, eight years ahead of schedule in 2034 rather than in ~~2042, in support of Duke Energy's carbon reduction goals. A request for~~2042. The FPSC approved the ~~FPSC to hold a hearing has been made and a decision by the FPSC is expected~~2021 Settlement on May 4, 2021. The remaining net book value reflected in the ~~second quarter 2021.~~

~~(d)~~table above excludes $200 million of accelerated deprecation collected from retail customers pursuant to Duke Energy Indiana committed to either retire or stop burning coal at Gallagher Units 2 and 4 by December 31, 2022, as part of the 2016 settlement of Edwardsport IGCC matters. In February 2021, upon approval by MISO of a new retirement date, Duke Energy Indiana determined it would modify the retirement date to June 1, 2021.Florida's 2017 Settlement.

(e) On July 1, 2019, Duke Energy Indiana filed its 2018 IRP with the IURC. The 2018 IRP included scenarios evaluating the potential retirement of coal-fired generating units at Gibson and Cayuga.(d) The rate case filed July 2, 2019, included proposed depreciation rates reflecting retirement dates from 2026 to 2038. The depreciation rates reflecting these updated retirement dates were approved by the IURC as part of the rate case order issued on June 29, 2020.

4.5. COMMITMENTS AND CONTINGENCIES

INSURANCE

General Insurance

The Duke Energy Registrants have insurance and reinsurance coverage either directly or through indemnification from Duke Energy’s captive insurance company, Bison, and its affiliates, consistent with companies engaged in similar commercial operations with similar type properties. The Duke Energy Registrants’ coverage includes (i) commercial general liability coverage for liabilities arising to third parties for bodily injury and property damage; (ii) workers’ compensation; (iii) automobile liability coverage; and (iv) property coverage for all real and personal property damage. Real and personal property damage coverage excludes electric transmission and distribution lines, but includes damages arising from boiler and machinery breakdowns, earthquakes, flood damage and extra expense, but not outage or replacement power coverage. All coverage is subject to certain deductibles or retentions, sublimits, exclusions, terms and conditions common for companies with similar types of operations. The Duke Energy Registrants self-insure their electric transmission and distribution lines against loss due to storm damage and other natural disasters. As discussed further in Note 3,4, Duke Energy Florida maintains a storm damage reserve and has a regulatory mechanism to recover the cost of named storms on an expedited basis.

The cost of the Duke Energy Registrants’ coverage can fluctuate from year to year reflecting claims history and conditions of the insurance and reinsurance markets.

~~163~~


~~FINANCIAL STATEMENTS~~			~~COMMITMENTS AND CONTINGENCIES~~

In the event of a loss, terms and amounts of insurance and reinsurance available might not be adequate to cover claims and other expenses incurred. Uninsured losses and other expenses, to the extent not recovered by other sources, could have a material effect on the Duke Energy Registrants’ results of operations, cash flows or financial position. Each company is responsible to the extent losses may be excluded or exceed limits of the coverage available.

Nuclear Insurance

Duke Energy Carolinas owns and operates McGuire and Oconee and operates and has a partial ownership interest in Catawba. McGuire and Catawba each have 2two reactors. Oconee has 3three reactors. The other joint owners of Catawba reimburse Duke Energy Carolinas for certain expenses associated with nuclear insurance per the Catawba joint owner agreements.

Duke Energy Progress owns and operates Robinson, Brunswick and Harris. Robinson and Harris each have 1one reactor. Brunswick has 2two reactors.

Duke Energy Florida owns Crystal River Unit 3, which permanently ceased operation in 2013 and ~~reached~~achieved a SAFSTOR condition in ~~January 2018 after the successful transfer of all used nuclear fuel assemblies~~July 2019. On October 1, 2020, Crystal River Unit 3 changed decommissioning strategies from SAFSTOR to ~~an on-site dry cask storage facility.~~DECON.

In the event of a loss, terms and amounts of insurance available might not be adequate to cover property damage and other expenses incurred. Uninsured losses and other expenses, to the extent not recovered by other sources, could have a material effect on Duke Energy Carolinas’, Duke Energy Progress’ and Duke Energy Florida’s results of operations, cash flows or financial position. Each company is responsible to the extent losses may be excluded or exceed limits of the coverage available.

Nuclear Liability Coverage

The Price-Anderson Act requires owners of nuclear reactors to provide for public nuclear liability protection per nuclear incident up to a maximum total financial protection liability. The maximum total financial protection liability, which is approximately ~~$13.8~~$13.7 billion, is subject to change every five years for inflation and for the number of licensed reactors. Total nuclear liability coverage consists of a combination of private primary nuclear liability insurance coverage and a mandatory industry risk-sharing program to provide for excess nuclear liability coverage above the maximum reasonably available private primary coverage. The U.S. Congress could impose revenue-raising measures on the nuclear industry to pay claims.

Primary Liability Insurance

Duke Energy Carolinas and Duke Energy Progress have purchased the maximum reasonably available private primary nuclear liability insurance as required by law, which is $450 million per station. Duke Energy Florida has purchased $100 million primary nuclear liability insurance for Crystal River in compliance with the law.

Excess Liability Program

This program provides ~~$13.3~~$13.2 billion of coverage per incident through the Price-Anderson Act’s mandatory ~~industry-wide~~industrywide excess secondary financial protection program of risk pooling. This amount is the product of potential cumulative retrospective premium assessments of $138 million times the current 9796 licensed commercial nuclear reactors in the U.S. Under this program, operating unit licensees could be assessed retrospective premiums to compensate for public nuclear liability damages in the event of a nuclear incident at any licensed facility in the U.S. Retrospective premiums may be assessed at a rate not to exceed $20.5 million per year per licensed reactor for each incident. The assessment may be subject to state premium taxes.

151


FINANCIAL STATEMENTS			COMMITMENTS AND CONTINGENCIES

Nuclear Property and Accidental Outage Coverage

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are members of Nuclear Electric Insurance Limited (NEIL), an industry mutual insurance company, which provides property damage, nuclear accident decontamination and premature decommissioning insurance for each station for losses resulting from damage to its nuclear plants, either due to accidents or acts of terrorism. Additionally, NEIL provides accidental outage coverage for losses in the event of a major accidental outage at an insured nuclear station.

Pursuant to regulations of the NRC, each company’s property damage insurance policies provide that all proceeds from such insurance be applied, first, to place the plant in a safe and stable condition after a qualifying accident and second, to decontaminate the plant before any proceeds can be used for decommissioning, plant repair or restoration.

Losses resulting from acts of terrorism are covered as common occurrences, such that if terrorist acts occur against one or more commercial nuclear power plants insured by NEIL within a 12-month period, they would be treated as one event and the owners of the plants where the act occurred would share one full limit of liability. The full limit of liability is currently $3.2 billion. NEIL sublimits the total aggregate for all of their policies for non-nuclear terrorist events to approximately $1.8 billion.

Each nuclear facility has accident property damage, nuclear accident decontamination and premature decommissioning liability insurance from NEIL with limits of $1.5 billion, except for Crystal River Unit 3. Crystal River Unit 3’s limit is $50 million and is on an actual cash value basis. All nuclear facilities except for Catawba and Crystal River Unit 3 also share an additional $1.25 billion nuclear accident insurance limit above their dedicated underlying limit. This shared additional excess limit is not subject to reinstatement in the event of a loss. Catawba has a dedicated $1.25 billion of additional nuclear accident insurance limit above its dedicated underlying limit. Catawba and Oconee also have an additional $750 million of non-nuclear accident property damage limit. All coverages are subject to sublimits and significant deductibles.

~~164~~


~~FINANCIAL STATEMENTS~~			~~COMMITMENTS AND CONTINGENCIES~~

NEIL’s Accidental Outage policy provides some coverage, similar to business interruption, for losses in the event of a major accident property damage outage of a nuclear unit. Coverage is provided on a weekly limit basis after a significant waiting period deductible and at 100% of the applicable weekly limits for 52 weeks and 80% of the applicable weekly limits for up to the next 110 weeks. Coverage is provided until these applicable weekly periods are met, where the accidental outage policy limit will not exceed $490 million for Catawba, McGuire, ~~and Catawba, $434 million for~~ Harris, ~~$420 million for~~ Brunswick, ~~$392 million for~~ Oconee and ~~$336 million for~~ Robinson. NEIL sublimits the accidental outage recovery up to the first 104 weeks of coverage not to exceed $328 million from non-nuclear accidental property damage. Coverage amounts decrease in the event more than one unit at a station is out of service due to a common accident. All coverages are subject to sublimits and significant deductibles.

Potential Retroactive Premium Assessments

In the event of NEIL losses, NEIL’s board of directors may assess member companies' retroactive premiums of amounts up to 10 times their annual premiums for up to six years after a loss. NEIL has never exercised this assessment. The maximum aggregate annual retrospective premium obligations for Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are ~~$156~~$151 million, $93 million and $1 million, respectively. Duke Energy Carolinas' maximum assessment amount includes 100% of potential obligations to NEIL for jointly owned reactors. Duke Energy Carolinas would seek reimbursement from the joint owners for their portion of these assessment amounts.

ENVIRONMENTAL

The Duke Energy Registrants are subject to federal, state and local ~~laws~~regulations regarding air and water quality, hazardous and solid waste disposal, coal ash and other environmental matters. These ~~laws~~regulations can be changed from time to time, imposing new obligations on the Duke Energy Registrants. The following environmental matters impact all of the Duke Energy Registrants.

Remediation Activities

In addition to ~~the ARO~~AROs recorded as a result of various environmental regulations, discussed in Note 9,10, the Duke Energy Registrants are responsible for environmental remediation at various sites. These include certain properties that are part of ongoing operations and sites formerly owned or used by Duke Energy entities. These sites are in various stages of investigation, remediation and monitoring. Managed in conjunction with relevant federal, state and local agencies, remediation activities vary based upon site conditions and location, remediation requirements, complexity and sharing of responsibility. If remediation activities involve joint and several liability provisions, strict liability, or cost recovery or contribution actions, the Duke Energy Registrants could potentially be held responsible for environmental impacts caused by other potentially responsible parties and may also benefit from insurance policies or contractual indemnities that cover some or all cleanup costs. Liabilities are recorded when losses become probable and are reasonably estimable. The total costs that may be incurred cannot be estimated because the extent of environmental impact, allocation among potentially responsible parties, remediation alternatives and/or regulatory decisions have not yet been determined at all sites. Additional costs associated with remediation activities are likely to be incurred in the future and could be significant. Costs are typically expensed as Operation, maintenance and other in the Consolidated Statements of Operations unless regulatory recovery of the costs is deemed probable.

152


FINANCIAL STATEMENTS			COMMITMENTS AND CONTINGENCIES

The following ~~tables contain~~table contains information regarding reserves for probable and estimable costs related to the various environmental sites. These reserves are recorded in Other within Other Noncurrent Liabilities on the Consolidated Balance Sheets.


(in millions)	(in millions)	December 31, 2020		December 31, 2019		(in millions)	December 31, 2022		December 31, 2021
Reserves for Environmental Remediation	Reserves for Environmental Remediation					Reserves for Environmental Remediation
Duke Energy	Duke Energy	$	75	$	58	Duke Energy	$	84	$	88
Duke Energy Carolinas	Duke Energy Carolinas	19		11		Duke Energy Carolinas	22		19
Progress Energy	Progress Energy	19		16		Progress Energy	19		23
Duke Energy Progress	Duke Energy Progress	6		4		Duke Energy Progress	8		11
Duke Energy Florida	Duke Energy Florida	12		9		Duke Energy Florida	11		11
Duke Energy Ohio	Duke Energy Ohio	22		19		Duke Energy Ohio	33		34
Duke Energy Indiana	Duke Energy Indiana	6		4		Duke Energy Indiana	3		4
Piedmont	Piedmont	10		8		Piedmont	7		9

Additional losses in excess of recorded reserves that could be incurred for the stages of investigation, remediation and monitoring for environmental sites that have been evaluated at this time are not ~~material except as presented~~material.

LITIGATION

Duke Energy

Michael Johnson et al. v. Duke Energy Corporation et al.

On September 23, 2020, plaintiff Michael Johnson, a former Duke Energy employee and participant in the ~~table below.~~Duke Energy Retirement Savings Plan (Plan) brought suit on his own behalf and on behalf of other participants and beneficiaries similarly situated against Duke Energy Corporation, the Duke Energy Benefits Committee, and other unnamed individual defendants. The complaint, which was subsequently amended to add a current participant as a plaintiff on November 23, 2020, alleges that the defendants breached their fiduciary duties with respect to certain fees associated with the Plan in violation of the Employee Retirement Income Security Act of 1974 and seeks certification of a class of all individuals who were participants or beneficiaries of the Plan at any time on or after September 23, 2014. The defendants filed a motion to dismiss the plaintiffs’ amended complaint on December 18, 2020. On January 31, 2022, the court denied the defendants' motion to dismiss. On February 28, 2022, Duke Energy responded to the amended complaint. Discovery commenced and the parties exchanged preliminary disclosures. After review of these disclosures, the plaintiffs agreed to voluntarily dismiss the suit and the parties subsequently filed a joint stipulation of voluntary dismissal with prejudice on April 29, 2022, ending this litigation.


~~(in millions)~~Texas Storm Uri Tort Litigation Duke Energy Corporation and several Duke Energy renewables project companies in the ERCOT market were named in more than thirty lawsuits arising out of Texas Storm Uri, which occurred in February 2021. Duke Energy Corporation was dismissed from the suits, leaving two suits in which individual wind and solar projects are named. These lawsuits seek recovery for property damages, personal injury and wrongful death allegedly caused by the power outages that plaintiffs claim were the collective failure of generators, transmission and distribution utilities ("TDUs"), retail energy providers, natural gas providers, co-ops and municipalities that generate power and ERCOT, all of which were originally sued by all plaintiffs. The cases were consolidated into a Texas state court multidistrict litigation (MDL) proceeding for discovery and pre-trial motions. Five cases were designated for motions to dismiss and all other cases were stayed. On January 28, 2023, the Court denied the generators' and TDUs' motions to dismiss the negligence claims but dismissed the tortious interference and conspiracy claims. The motions to dismiss ERCOT and the natural gas defendants were also granted. The generator and TDU defendants filed a petition for mandamus in each of the five cases seeking to overturn the denials on February 10, 2023. If the Texas Court of Appeals accepts the appeals, it will set a briefing schedule. The remaining cases that are part of the MDL are currently stayed, except that plaintiffs have been given leave to amend their pleadings. Plaintiffs began amending existing lawsuits and filing new lawsuits on behalf of hundreds of plaintiffs against hundreds of defendants, including in some cases, by again naming Duke Energy Corporation and naming, for the first time, Duke Energy Renewables, LLC. Plaintiffs have also re-named ERCOT as a defendant. As new cases are served, they are being brought into the MDL and are subject to the stay in the MDL proceeding. Duke Energy cannot predict the outcomes of these matters. See Note 2 for more information related to the sale of the Commercial Renewables Disposal Groups. Duke Energy Carolinas Ruben Villano, et al. v. Duke Energy Carolinas, LLC On June 16, 2021, a group of nine individuals went over a low head dam adjacent to the Dan River Steam Station in Eden, North Carolina, while water tubing. Emergency personnel rescued four people and five others were confirmed deceased. On August 11, 2021, Duke Energy Carolinas was served with the complaint filed in Durham County Superior Court on behalf of four survivors, which was later amended to include all the decedents along with the survivors. The lawsuit alleges that Duke Energy Carolinas knew that the river was used for recreational purposes and that Duke Energy did not adequately warn about the dam and that Duke Energy Carolinas created a dangerous and hidden hazard on the Dan River in building and maintaining the low head dam. Discovery has commenced and is scheduled to be completed on or before August 23, 2023. The parties are preparing for mediation, which is scheduled for March 22, 2023. Dispositive motions are due to be filed by September 6, 2023, and the case is scheduled to be trial-ready by October 2, 2023. Duke Energy Carolinas cannot predict the outcome of this matter.
~~Duke Energy~~	$	25
~~Duke Energy Carolinas~~	12



~~Duke Energy Ohio~~	4

~~Piedmont~~	2

~~165~~153


FINANCIAL STATEMENTS			COMMITMENTS AND CONTINGENCIES

~~LITIGATION~~

~~Duke Energy Carolinas and Duke Energy Progress~~

~~Coal Ash Insurance Coverage Litigation~~

In March 2017, Duke Energy Carolinas and Duke Energy Progress filed a civil action in the North Carolina Business Court against various insurance providers. The lawsuit seeks payment for coal ash related liabilities covered by third-party liability insurance policies. The insurance policies were issued between 1971 and 1986 and provide third-party liability insurance for property damage. The civil action seeks damages for breach of contract and indemnification for costs arising from the Coal Ash Act and the EPA CCR rule at 15 coal-fired plants in North Carolina and Sout~~h Carolina. Fact discovery has been completed. The parties filed dispositive pretrial motions relating to key legal issues on December 4, 2020.~~ Hearings on these motions are scheduled to begin on February 24, 2021, and trial is scheduled for January 24, 2022. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

~~Duke Energy Carolinas~~

NTE Carolinas II, LLC Litigation

In November 2017, Duke Energy Carolinas entered into a standard FERC large generator interconnection agreement (LGIA) with NTE Carolinas II, LLC (NTE), a company that proposed to build a combined-cycle natural gas plant in Rockingham County, North Carolina. On September 6, 2019, Duke Energy Carolinas filed a lawsuit in Mecklenburg County Superior Court against NTE for breach of contract, ~~and~~ alleging that NTE's failure to pay benchmark payments for Duke Energy Carolinas' transmission system upgrades required under the interconnection agreement constituted a termination of the interconnection agreement. Duke Energy Carolinas ~~is seeking~~sought a monetary judgment against NTE because NTE failed to make multiple milestone payments. The lawsuit was moved to federal court in North Carolina. NTE filed a motion to dismiss Duke Energy Carolinas’ complaint and brought counterclaims alleging anti-competitive conduct and violations of state and federal statutes. Duke Energy Carolinas filed a motion to dismiss NTE's counterclaims. Both NTE's and Duke Energy Carolinas' motions to dismiss were subsequently denied by the court.

On May 21, 2020, in response to aan NTE petition challenging Duke Energy ~~Carolina's~~Carolinas' termination of the LGIA, FERC issued a ruling ~~(i)~~ that 1) it has exclusive jurisdiction to determine whether a transmission provider may terminate a ~~LGIA, (ii)~~LGIA; 2) FERC approval is required to terminate a conforming LGIA if objected to by the interconnection ~~customer,~~customer; and ~~(iii)~~3) Duke Energy may not announce the termination of a conforming LGIA unless FERC has approved the termination. FERC's Office of Enforcement also initiated an investigation of Duke Energy Carolinas into matters pertaining to the LGIA. Duke Energy Carolinas is cooperating with the Office of Enforcement but cannot predict the outcome of this investigation.

Following completion of discovery, Duke Energy Carolinas filed a motion for summary judgment seeking a ruling in its favor as to some of its affirmative claims against NTE and to all of NTE’s counterclaims. On ~~August 17, 2020,~~June 24, 2022, the court ~~denied both NTE’s and~~issued an order partially granting Duke Energy ~~Carolinas’ Motion~~Carolinas' motion by dismissing NTE's counterclaims that Duke Energy Carolinas engaged in anti-competitive behavior in violation of state and federal statutes. On October 12, 2022, the parties executed a settlement agreement with respect to ~~Dismiss. The parties are~~the remaining breach of contract claims in ~~active discovery~~the litigation and ~~trial is scheduled~~a Stipulation of Dismissal was filed with the court on October 13, 2022. On November 11, 2022, NTE filed its Notice of Appeal to the U.S. Court of Appeals for ~~June 20, 2022.~~the Fourth Circuit as to the District Court's summary judgment ruling in Duke Energy Carolinas' favor on NTE's antitrust and unfair competition claims. Briefing on NTE's appeal will be completed on May 3, 2023. Duke Energy Carolinas cannot predict the outcome of this matter.

Asbestos-related Injuries and Damages Claims

Duke Energy Carolinas has experienced numerous claims for indemnification and medical cost reimbursement related to asbestos exposure. These claims relate to damages for bodily injuries alleged to have arisen from exposure to or use of asbestos in connection with construction and maintenance activities conducted on its electric generation plants prior to 1985. As of December 31, 2020, there were 145 asserted claims for non-malignant cases with the cumulative relief sought of up to $39 million and 56 asserted claims for malignant cases with the cumulative relief sought of up to $20 million. Based on Duke Energy Carolinas’ experience, it is expected that the ultimate resolution of most of these claims likely will be less than the amount claimed.

Duke Energy Carolinas has recognized asbestos-related reserves of ~~$572~~$457 million and ~~$604~~$501 million at December 31, ~~2020,~~2022, and ~~2019,~~2021, respectively. These reserves are classified in Other within Other Noncurrent Liabilities and Other within Current Liabilities on the Consolidated Balance Sheets. The change in the reserves is a result of a third-party study completed in 2021 as well as settlements made throughout the year. These reserves are based upon Duke Energy Carolinas' best estimate for current and future asbestos claims through ~~2040~~2042 and are recorded on an undiscounted basis. In light of the uncertainties inherent in a longer-term forecast, management does not believe they can reasonably estimate the indemnity and medical costs that might be incurred after ~~2040~~2042 related to such potential claims. It is possible Duke Energy Carolinas may incur asbestos liabilities in excess of the recorded reserves.

Duke Energy Carolinas has third-party insurance to cover certain losses related to asbestos-related injuries and damages above an aggregate self-insured retention. Duke Energy Carolinas’ cumulative payments began to exceed the self-insurance retention in 2008. Future payments up to the policy limit will be reimbursed by the third-party insurance carrier. The insurance policy limit for potential future insurance recoveries indemnification and medical cost claim payments is $714 million in excess of the self-insured retention. Receivables for insurance recoveries were ~~$704~~$595 million and ~~$742~~$644 million at December 31, ~~2020,~~2022, and ~~2019,~~2021, respectively. These amounts are classified in Other within Other Noncurrent Assets and Receivables within Current Assets on the Consolidated Balance Sheets. Any future payments up to the policy limit will be reimbursed by the third-party insurance carrier. Duke Energy Carolinas is not aware of any uncertainties regarding the legal sufficiency of insurance claims. Duke Energy Carolinas believes the insurance recovery asset is probable of recovery as the insurance carrier continues to have a strong financial strength rating.

As described in Note 1, Duke Energy adopted the new guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. The reserve for credit losses for insurance receivables for the asbestos-related injuries and damages ~~based on adoption of the new standard~~ is ~~$15~~$12 million for Duke Energy and Duke Energy Carolinas as of December 31, ~~2020.~~2022, and December 31, 2021. The insurance receivable is evaluated based on the risk of default and the historical losses, current conditions and expected conditions around collectability. Management evaluates the risk of default annually based on payment history, credit rating and changes in the risk of default from credit agencies.

~~166~~


~~FINANCIAL STATEMENTS~~			~~COMMITMENTS AND CONTINGENCIES~~

Duke Energy Progress and Duke Energy Florida

Spent Nuclear Fuel Matters

On June 18, 2018, Duke Energy Progress and Duke Energy Florida sued the U.S. in the U.S. Court of Federal Claims for damages incurred for the period 2014 through 2018. The lawsuit claimed the ~~Department of Energy~~DOE breached a contract in failing to accept spent nuclear fuel under the Nuclear Waste Policy Act of 1982 and asserted damages for the cost of on-site storage in the amount of $100 million and $200 million for Duke Energy Progress and Duke Energy Florida, respectively. ~~Discovery is ongoing~~

On March 30, 2022, the DOE and ~~a trial is expected to occur in 2021.~~

Duke Energy ~~Florida~~

~~Power Purchase Dispute Arbitration~~

Progress executed a settlement agreement, pursuant to which Duke Energy ~~Florida,~~Progress would receive damages for costs incurred between 2014 and 2018 and would be able to submit future costs on ~~behalf of its customers, entered into~~ a ~~PPA for the purchase of firm capacity and energy from a qualifying facility under the Public Utilities Regulatory Policies Act of 1978.~~defined schedule. In April 2022, Duke Energy ~~Florida determined~~Progress received $87 million in proceeds that related to damages incurred in 2014 through 2018.

On May 2, 2022, the ~~qualifying facility did not perform in accordance with the PPA,~~DOE and Duke Energy Florida ~~terminated the PPA. The qualifying facility counterparty filed~~executed a ~~confidential American Arbitration Association (AAA) arbitration demand, challenging the termination of the PPA and seeking damages.~~settlement agreement, pursuant to which Duke Energy Florida ~~denies liability~~would receive damages for costs incurred between 2014 and ~~is vigorously defending the arbitration claim.~~

~~The final arbitration hearing occurred during the week of December 7, 2020. An arbitral award has not yet been issued.~~2018 and would be able to submit costs incurred in 2019 and 2020 pursuant to an audit process. In June 2022, Duke Energy Florida ~~cannot predict the outcome of this matter.~~received $180 million in proceeds that related to damages incurred in 2014 through 2018.

154


FINANCIAL STATEMENTS			COMMITMENTS AND CONTINGENCIES

Duke Energy Indiana

Coal Ash Basin Closure Plan Appeal

On January 27, 2020, Hoosier Environmental Council (HEC) filed a Petition for Administrative Review with the Indiana Office of Environmental Adjudication ~~(the court)~~ challenging the Indiana Department of Environmental Management’s (IDEM's) December 10, 2019 partial approval of Duke Energy Indiana’s ash pond closure ~~plan.~~plan at Duke Energy's Gallagher power station. After hearing oral arguments in early April 2021 on Duke Energy Indiana's and HEC's competing Motions for Summary Judgment, on May 4, 2021, the administrative court rejected all of HEC’s claims and issued a ruling in favor of Duke Energy Indiana. On ~~March~~June 3, 2021, HEC filed an appeal in Superior Court to seek judicial review of the order. Briefing on the appeal was completed on December 13, 2021.

On January 11, ~~2020,~~2022, Duke Energy Indiana received a compliance obligation letter from the EPA notifying the company that the two basins at issue in the litigation are subject to requirements of the CCR Rule. The letter does not provide a deadline for compliance. Duke Energy Indiana is proceeding with surface impoundment closure at its Indiana sites consistent with EPA’s guidance, the federal CCR rule, and Indiana law, as applicable.

On April 21, 2022, HEC filed a motion requesting that the court hold a hearing within 45 days and also take judicial notice of the EPA's January 11, 2022 letter. On April 22, 2022, Duke Energy Indiana sent IDEM a letter withdrawing the closure plans for the Gallagher North Ash Pond and Primary Pond Ash Fill. After acknowledgment by IDEM of withdrawal of these closure plans, Duke Energy Indiana filed a Motion to ~~Dismiss. On May 5, 2020,~~Dismiss the litigation as moot on April 28, 2022, which IDEM supported, and the court ~~denied~~granted the ~~motion.~~Motion to Dismiss on July 8, 2022.

Coal Ash Insurance Coverage Litigation

In June 2022, Duke Energy Indiana filed a civil action in Indiana Superior Court against various insurance companies seeking declaratory relief with respect to insurance coverage for coal combustion residuals-related expenses and liabilities covered by third-party liability insurance policies. The ~~parties have completed discovery~~insurance policies cover the 1969-1972 and ~~will now prepare to file dispositive motions. Summary judgment briefing will be completed by March 30, 2021. If these~~1984-1985 periods and provide third-party liability insurance for claims ~~survive dispositive motions,~~and suits alleging property damage, bodily injury and personal injury (or a ~~hearing is scheduled for April 26, 2021.~~combination thereof). A trial date has not yet been set. Duke Energy Indiana cannot predict the outcome of this matter. ~~See Note 9 for additional information.~~

Other Litigation and Legal Proceedings

The Duke Energy Registrants are involved in other legal, tax and regulatory proceedings arising in the ordinary course of business, some of which involve significant amounts. The Duke Energy Registrants believe the final disposition of these proceedings will not have a material effect on their results of operations, cash flows or financial ~~position.~~

~~The table below presents recorded reserves based on management’s best estimate of probable loss~~position for ~~legal matters, excluding asbestos-related reserves.~~the years presented. Reserves are classified on the Consolidated Balance Sheets in Other within Other Noncurrent Liabilities and Other within Current Liabilities. ~~The reasonably possible range of loss in excess of recorded reserves is not material, other than as described above.~~

December 31,
(in millions) 2020 2019
Reserves for Legal Matters
Duke Energy $ 68 $ 62
Duke Energy Carolinas 2 2
Progress Energy 61 55
Duke Energy Progress 13 12
Duke Energy Florida 28 22
Piedmont 1 1

OTHER COMMITMENTS AND CONTINGENCIES

General

As part of their normal business, the Duke Energy Registrants are party to various financial guarantees, performance guarantees and other contractual commitments to extend guarantees of credit and other assistance to various subsidiaries, investees and other third parties. These guarantees involve elements of performance and credit risk, which are not fully recognized on the Consolidated Balance Sheets and have uncapped maximum potential payments. However, the Duke Energy Registrants do not believe these guarantees will have a material effect on their results of operations, cash flows or financial position. See Note 78 for more information.

Purchase Obligations

Purchased Power

Duke Energy Progress, Duke Energy Florida and Duke Energy Ohio have ongoing purchased power contracts, including renewable energy contracts, with other utilities, wholesale marketers, co-generators and qualified facilities. These purchased power contracts generally provide for capacity and energy payments. In addition, Duke Energy Progress and Duke Energy Florida have various contracts to secure transmission rights.

~~167~~


~~FINANCIAL STATEMENTS~~			~~COMMITMENTS AND CONTINGENCIES~~

The following table presents executory purchased power contracts with terms exceeding one year, excluding contracts classified as leases.


			Minimum Purchase Amount at December 31, 2020																Minimum Purchase Amount at December 31, 2022
		Contract																Contract
(in millions)	(in millions)	Expiration	2021		2022		2023		2024		2025		Thereafter		Total		(in millions)	Expiration	2023		2024		2025		2026		2027		Thereafter		Total
Duke Energy Progress(a)	Duke Energy Progress(a)	2025-2032	$	66	$	73	$	66	$	67	$	69	$	69	$	410	Duke Energy Progress(a)	2028-2032	$	22	$	21	$	22	$	18	$	19	$	27	$	129
Duke Energy Florida(b)	Duke Energy Florida(b)	2023-2025	335		354		374		262		91		—		1,416		Duke Energy Florida(b)	2024-2025	300		267		91		—		—		—		658
Duke Energy Ohio~~(d)~~(c)	Duke Energy Ohio~~(d)~~(c)	2022	130		55		—		—		—		—		185		Duke Energy Ohio~~(d)~~(c)	2024	55		36		—		—		—		—		91

(a) Contracts represent ~~either~~between 18% and 100% of net plant ~~output or vary.~~output.

(b) Contracts represent 100% of net plant output.

~~(d)~~output varies. Excludes PPA with OVEC. ~~See Note 17 for additional information.~~

155


FINANCIAL STATEMENTS			COMMITMENTS AND CONTINGENCIES

Gas Supply and Capacity Contracts

Duke Energy Ohio and Piedmont routinely enter into long-term natural gas supply commodity and capacity commitments and other agreements that commit future cash flows to acquire services needed in their businesses. These commitments include pipeline and storage capacity contracts and natural gas supply contracts to provide service to customers. Costs arising from the natural gas supply commodity and capacity commitments, while significant, are pass-through costs to customers and are generally fully recoverable through the fuel adjustment or PGA ~~procedures~~procedures and prudence reviews in North Carolina and South Carolina and under the Tennessee Incentive Plan in Tennessee. In the Midwest, these costs are recovered via the Gas Cost Recovery Rate in Ohio or the Gas Cost Adjustment Clause in Kentucky. The time periods for fixed payments under pipeline and storage capacity contracts are upup to 1520 years. The time periods for fixed payments under natural gas supply contracts are up to ~~six~~four years. The time period for the natural gas supply purchase commitments is up to 11nine years.

~~Certain~~Certain storage and pipeline capacity contracts require the payment of demand charges that are based on rates approved by the FERC in order to maintain rights to access the natural gas storage or pipeline capacity on a firm basis during the contract term. The demand charges that are incurred in each period are recognized in the Consolidated Statements of Operations and Comprehensive Income as part of natural gas purchases and are included in Cost of natural gas.

The following table presents future unconditional purchase obligations under natural gas supply and capacity contracts as of December 31, ~~2020.~~2022.

(in millions) Duke Energy Duke Energy Ohio Piedmont
2021 $ 311 $ 41 $ 270
2022 270 28 242
2023 197 20 177
2024 139 17 122
2025 125 14 111
Thereafter 662 60 602
Total $ 1,704 $ 180 $ 1,524


(in millions)	2023		2024		2025		2026		2027		Thereafter		Total
Duke Energy Ohio	$	85	$	101	$	85	$	56	$	52	$	616	$	995
Piedmont	319		313		267		213		203		587		1,902

5.6. LEASES

As part of its operations, Duke Energy leases certain aircraft, space on communication towers, industrial equipment, fleet vehicles, fuel transportation (barges and railcars), land and office space under various terms and expiration dates. Additionally, Duke Energy Carolinas, Duke Energy Progress and Duke Energy Indiana have finance leases related to firm natural gas pipeline transportation capacity. Duke Energy Progress and Duke Energy Florida have entered into certain PPAs, which are classified as finance and operating leases.

Duke Energy has certain lease agreements, which include variable lease payments that are based on the usage of an asset. These variable lease payments are not included in the measurement of the ROU assets or operating lease liabilities on the Consolidated Financial Statements.

Certain Duke Energy lease agreements include options for renewal and early termination. The intent to renew a lease varies depending on the lease type and asset. Renewal options that are reasonably certain to be exercised are included in the lease measurements. The decision to terminate a lease early is dependent on various economic factors. No termination options have been included in any of the lease measurements.

Duke Energy Carolinas entered into a sale-leaseback arrangement in December 2019, to construct and occupy an office tower. The lease agreement was evaluated as a sale-leaseback of real estate and it was determined that the transaction did not qualify for sale-leaseback accounting. As a result, the transaction is being accounted for as a financing. For this transaction, Duke Energy Carolinas will continue to record the real estate on the Consolidated Balance Sheets within Property, Plant and Equipment as if it were the legal owner and will continue to recognize depreciation expense over the estimated useful life. In addition, ~~a liability will be recorded for~~ the failed sale-leaseback obligation is reported within Long-Term Debt on the Consolidated Balance Sheets, with the monthly lease payments commencing after the construction phase being split between interest expense and principal pay down of the debt.

~~168~~


~~FINANCIAL STATEMENTS~~			~~LEASES~~

Duke Energy operates various renewable energy projects and sells the generated output to utilities, electric cooperatives, municipalities and commercial and industrial customers through long-term PPAs. In certain situations, these PPAs and the associated renewable energy projects qualify as operating leases. Rental income from these leases is accounted for as Nonregulated electric and other revenues in the Consolidated Statements of Operations. There are no minimum lease payments as all payments are contingent based on actual electricity generated by the renewable energy projects. Contingent lease payments were $275 million, $264 million and $268 million for the years ended December 31, 2020, 2019, and 2018, respectively. Renewable energy projects owned by Duke Energy and accounted for as operating leases had a cost basis of $3,335 million and $3,349 million and accumulated depreciation of $848 million and $721 million at December 31, 2020, and 2019, respectively. These assets are principally classified as nonregulated electric generation and transmission assets.

Piedmont has certain agreements with Duke Energy Carolinas for the construction and transportation of natural gas pipelines to supply its natural gas plant needs. Piedmont accounts for these pipeline lateral contracts as sales-type leases since the present value of the sum of the lease payments equals the fair value of the assets. These pipeline lateral assets owned by Piedmont had a current net investment basis of $2 million ~~and $4 million~~ as of December 31, ~~2020,~~2022, and ~~2019, respectively,~~2021, and a long-term net investment basis of ~~$205~~$201 million and ~~$70~~$203 million as of December 31, ~~2020,~~2022, and ~~2019,~~2021, respectively. These assets are classified in Other, within Current Assets and Other Noncurrent Assets, respectively, on Piedmont's Consolidated Balance Sheets. Duke Energy Carolinas accounts for the contracts as finance leases. The activity for these contracts is eliminated in consolidation at Duke Energy.

156


FINANCIAL STATEMENTS			LEASES

The following tables present the components of lease expense.


		Year Ended December 31, 2020																	Year Ended December 31, 2022
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Operating lease expense(a)	Operating lease expense(a)	$	283	$	53	$	162	$	72	$	90	$	11	$	19	$	7	Operating lease expense(a)	$	229	$	39	$	153	$	83	$	70	$	10	$	19	$	6
Short-term lease expense(a)	Short-term lease expense(a)	4		—		2		1		1		0		1		0		Short-term lease expense(a)	4		—		1		—		1		—		2		—
Variable lease expense(a)	Variable lease expense(a)	30		13		13		5		8		0		1		1		Variable lease expense(a)	61		(1)		60		37		23		—		—		1
Finance lease expense	Finance lease expense																	Finance lease expense
Amortization of leased assets(b)	Amortization of leased assets(b)	119		8		24		6		18		0		1		0		Amortization of leased assets(b)	151		6		61		41		20		—		—		—
Interest on lease liabilities(c)	Interest on lease liabilities(c)	61		30		44		37		7		0		0		0		Interest on lease liabilities(c)	50		32		49		45		4		—		1		—
Total finance lease expense	Total finance lease expense	180		38		68		43		25		0		1		—		Total finance lease expense	201		38		110		86		24		—		1		—
Total lease expense	Total lease expense	$	497	$	104	$	245	$	121	$	124	$	11	$	22	$	8	Total lease expense	$	495	$	76	$	324	$	206	$	118	$	10	$	22	$	7


	Year Ended December 31, 2021
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Operating lease expense(a)	$	245	$	43	$	155	$	83	$	72	$	11	$	18	$	7
Short-term lease expense(a)	5		—		2		1		1		—		2		—
Variable lease expense(a)	41		17		22		10		12		—		—		1
Finance lease expense
Amortization of leased assets(b)	219		5		37		18		19		—		1		—
Interest on lease liabilities(c)	55		33		48		42		6		—		—		—
Total finance lease expense	274		38		85		60		25		—		1		—
Total lease expense	$	565	$	98	$	264	$	154	$	110	$	11	$	21	$	8

(a) Included in Operations, maintenance and other or, for barges and railcars, Fuel used in electric generation and purchased power on the Consolidated Statements of Operations.

(b) Included in Depreciation and amortization on the Consolidated Statements of Operations.

Year Ended December 31, 2019
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Operating lease expense(a)
$ 292 $ 47 $ 161 $ 69 $ 92 $ 11 $ 20 $ 5
Short-term lease expense(a)
16 5 9 4 5 1 2 —
Variable lease expense(a)
47 22 22 16 6 — 1 1
Finance lease expense
Amortization of leased assets(b)
111 6 21 5 16 1 0 —
Interest on lease liabilities(c)
61 15 42 33 9 0 1 0
Total finance lease expense 172 21 63 38 25 1 1 0
Total lease expense $ 527 $ 95 $ 255 $ 127 $ 128 $ 13 $ 24 $ 6

~~(a) Included in Operations, maintenance and other or, for barges and railcars, Fuel used in electric generation and purchased power on the Consolidated Statements of Operations.~~

~~(b) Included in Depreciation and amortization on the Consolidated Statements of Operations.~~

~~(c) Included in Interest Expense on the Consolidated Statements of Operations.~~

~~169~~


~~FINANCIAL STATEMENTS~~			~~LEASES~~

The following table presents rental expense for operating leases, as reported under the former lease standard. These amounts are included in Operation, maintenance and other and Fuel used in electric generation and purchased power on the Consolidated Statements of Operations.


	~~Year Ended~~
~~(in millions)~~	~~December 31, 2018~~
~~Duke Energy~~	$	~~268~~
~~Duke Energy Carolinas~~	49
~~Progress Energy~~	~~143~~
~~Duke Energy Progress~~	75
~~Duke Energy Florida~~	68
~~Duke Energy Ohio~~	13
~~Duke Energy Indiana~~	21
~~Piedmont~~	11

The following table presents operating lease maturities and a reconciliation of the undiscounted cash flows to operating lease liabilities.


		December 31, 2020																	December 31, 2022
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
2021		$	229	$	24	$	99	$	44	$	55	$	2	$	5	$	5
2022		212		22		95		40		55		2		4		5
2023	2023	202		20		95		41		54		2		4		5		2023	$	225	$	23	$	118	$	64	$	54	$	2	$	6	$	4
2024	2024	186		14		95		41		54		2		4		5		2024	207		21		110		56		54		2		5		4
2025	2025	162		10		85		31		54		2		4		5		2025	175		14		96		42		54		2		5		4
2026																		2026	161		13		99		45		54		2		4		—
2027																		2027	134		9		73		46		27		2		4		—
Thereafter	Thereafter	870		51		376		252		124		20		59		—		Thereafter	322		37		253		209		44		15		45		1
Total operating lease payments	Total operating lease payments	1,861		141		845		449		396		30		80		25		Total operating lease payments	1,224		117		749		462		287		25		69		13
Less: present value discount	Less: present value discount	(344)		(24)		(149)		(95)		(54)		(9)		(24)		(2)		Less: present value discount	(169)		(20)		(107)		(76)		(31)		(7)		(18)		—
Total operating lease liabilities(a)	Total operating lease liabilities(a)	$	1,517	$	117	$	696	$	354	$	342	$	21	$	56	$	23	Total operating lease liabilities(a)	$	1,055	$	97	$	642	$	386	$	256	$	18	$	51	$	13

(a) Certain operating lease payments include renewal options that are reasonably certain to be exercised.

157


FINANCIAL STATEMENTS			LEASES

The following table presents finance lease maturities and a reconciliation of the undiscounted cash flows to finance lease liabilities.


		December 31, 2020										December 31, 2022
				Duke				Duke		Duke			Duke					Duke				Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy			Energy			Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida			Indiana		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Indiana
2021		$	186	$	38	$	68	$	43	$	25		$	1
2022		173		38		68		43		25			1
2023	2023	174		38		68		43		25			1		2023	$	198	$	38	$	103	$	78	$	25	$	1
2024	2024	119		38		52		43		9			1		2024	143		38		88		79		9		1
2025	2025	51		38		48		43		5			1		2025	76		38		85		80		5		1
2026															2026	77		38		86		81		5		1
2027															2027	74		38		82		81		1		1
Thereafter	Thereafter	762		502		481		475		6			26		Thereafter	584		427		555		555		—		23
Total finance lease payments	Total finance lease payments	1,465		692		785		690		95			31		Total finance lease payments	1,152		617		999		954		45		28
Less: amounts representing interest	Less: amounts representing interest	(620)		(398)		(408)		(394)		(14)			(21)		Less: amounts representing interest	(388)		(333)		(371)		(367)		(4)		(19)
Total finance lease liabilities	Total finance lease liabilities	$	845	$	294	$	377	$	296	$	81		$	10	Total finance lease liabilities	$	764	$	284	$	628	$	587	$	41	$	9

The following tables contain additional information related to leases.


		December 31, 2022
				Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Classification	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Assets
Operating	Operating lease ROU assets, net	$	1,042	$	78	$	628	$	370	$	258	$	18	$	49	$	4
Finance	Net property, plant and equipment	810		284		674		590		84		—		6		—
Total lease assets		$	1,852	$	362	$	1,302	$	960	$	342	$	18	$	55	$	4
Liabilities
Current
Operating	Other current liabilities	$	179	$	14	$	96	$	51	$	45	$	1	$	4	$	—
Finance	Current maturities of long-term debt	153		7		57		35		22		—		—		—
Noncurrent
Operating	Operating lease liabilities	876		83		546		335		211		17		47		13
Finance	Long-Term Debt	611		277		571		552		19		—		9		—
Total lease liabilities		$	1,819	$	381	$	1,270	$	973	$	297	$	18	$	60	$	13


		December 31, 2021
				Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Classification	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Assets
Operating	Operating lease ROU assets, net	$	1,136	$	92	$	691	$	389	$	302	$	19	$	53	$	16
Finance	Net property, plant and equipment	950		302		729		627		102		—		7		—
Total lease assets		$	2,086	$	394	$	1,420	$	1,016	$	404	$	19	$	60	$	16
Liabilities
Current
Operating	Other current liabilities	$	184	$	22	$	94	$	50	$	44	$	1	$	4	$	5
Finance	Current maturities of long-term debt	151		6		61		41		20		—		—		—
Noncurrent
Operating	Operating lease liabilities	940		78		606		350		256		18		50		14
Finance	Long-Term Debt	764		283		629		588		41		—		10		—
Total lease liabilities		$	2,039	$	389	$	1,390	$	1,029	$	361	$	19	$	64	$	19

~~170~~158


FINANCIAL STATEMENTS			LEASES


	Year Ended December 31, 2022
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Cash paid for amounts included in the measurement of lease liabilities(a)
Operating cash flows from operating leases	$	230	$	24	$	118	$	63	$	55	$	2	$	6	$	4
Operating cash flows from finance leases	50		32		49		45		4		—		1		—
Financing cash flows from finance leases	151		6		61		41		20		—		—		—


Lease assets obtained in exchange for new lease liabilities (non-cash)
Operating(b)	$	111	$	10	$	—	$	—	$	—	$	—	$	—	$	—

~~The following tables contain additional information related to leases.~~

December 31, 2020
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Classification Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Assets
Operating Operating lease ROU assets, net $ 1,524 $ 110 $ 690 $ 346 $ 344 $ 20 $ 55 $ 20
Finance Net property, plant and equipment 797 312 416 297 119 — 7 —
Total lease assets $ 2,321 $ 422 $ 1,106 $ 643 $ 463 $ 20 $ 62 $ 20
Liabilities
Current
Operating Other current liabilities $ 177 $ 20 $ 73 $ 31 $ 42 $ 1 $ 3 $ 4
Finance Current maturities of long-term debt 129 5 26 7 19 — — —
Noncurrent
Operating Operating lease liabilities 1,340 97 623 323 300 20 53 19
Finance Long-Term Debt 716 289 351 289 62 — 10 —
Total lease liabilities $ 2,362 $ 411 $ 1,073 $ 650 $ 423 $ 21 $ 66 $ 23

December 31, 2019
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Classification Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Assets
Operating Operating lease ROU assets, net $ 1,658 $ 123 $ 788 $ 387 $ 401 $ 21 $ 57 $ 24
Finance Net property, plant and equipment 926 198 443 308 135 — 7 —
Total lease assets $ 2,584 $ 321 $ 1,231 $ 695 $ 536 $ 21 $ 64 $ 24
Liabilities
Current
Operating Other current liabilities $ 208 $ 27 $ 95 $ 37 $ 58 $ 1 $ 3 $ 4
Finance Current maturities of long-term debt 119 7 24 6 18 — — —
Noncurrent
Operating Operating lease liabilities 1,432 102 697 354 343 21 55 23
Finance Long-Term Debt 850 172 381 301 80 — 10 —
Total lease liabilities $ 2,609 $ 308 $ 1,197 $ 698 $ 499 $ 22 $ 68 $ 27

~~171~~


~~FINANCIAL STATEMENTS~~			~~LEASES~~


		Year Ended December 31, 2020																	Year Ended December 31, 2021
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Cash paid for amounts included in the measurement of lease liabilities(a)	Cash paid for amounts included in the measurement of lease liabilities(a)																	Cash paid for amounts included in the measurement of lease liabilities(a)
Operating cash flows from operating leases	Operating cash flows from operating leases	$	271	$	31	$	124	$	52	$	72	$	2	$	6	$	5	Operating cash flows from operating leases	$	245	$	25	$	117	$	62	$	55	$	2	$	6	$	5
Operating cash flows from finance leases	Operating cash flows from finance leases	61		30		44		37		7		—		—		—		Operating cash flows from finance leases	55		33		48		42		6		—		—		—
Financing cash flows from finance leases	Financing cash flows from finance leases	119		8		24		6		18		—		1		—		Financing cash flows from finance leases	219		5		37		18		19		—		1		—

Lease assets obtained in exchange for new lease liabilities (non-cash)	Lease assets obtained in exchange for new lease liabilities (non-cash)																	Lease assets obtained in exchange for new lease liabilities (non-cash)
Operating(b)	Operating(b)	$	116	$	17	$	—	$	—	$	—	$	—	$	1	$	—	Operating(b)	$	182	$	4	$	99	$	99	$	—	$	—	$	—	$	—
Finance	Finance	125		125		—		—		—		—		—		—		Finance	322		—		322		322		—		—		—		—

(a) No amounts were classified as investing cash flows from operating ~~leases for the year ended December 31, 2020.~~leases.

(b) Does not include ROU assets recorded as a result of the adoption of the new lease standard.

Year Ended December 31, 2019
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Cash paid for amounts included in the measurement of lease liabilities(a)
Operating cash flows from operating leases $ 285 $ 34 $ 131 $ 53 $ 78 $ 2 $ 7 $ 7
Operating cash flows from finance leases 61 15 42 33 9 — 1 —
Financing cash flows from finance leases 111 6 21 5 16 1 — —
Lease assets obtained in exchange for new lease liabilities (non-cash)
Operating(b)
$ 194 $ 44 $ 30 $ 30 $ — $ — $ — $ 1
Finance 251 76 175 175 — — — —


	December 31, 2022
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Weighted average remaining lease term (years)
Operating leases	8		10		8		9		6		15		15		1
Finance leases	10		17		12		12		12		—		23		—
Weighted average discount rate(a)
Operating leases	3.4	%	3.8	%	3.6	%	3.5	%	3.8	%	4.2	%	4.0	%	3.3	%
Finance leases	7.7	%	11.5	%	9.1	%	9.1	%	8.0	%	—	%	11.9	%	—	%

~~(a) No amounts were classified as investing cash flows from operating leases for the year ended December 31, 2019.~~

~~(b) Does not include ROU assets recorded as a result of the adoption of the new lease standard.~~


		December 31, 2020																	December 31, 2021
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont			Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Weighted average remaining lease term (years)	Weighted average remaining lease term (years)																	Weighted average remaining lease term (years)
Operating leases	Operating leases	10		9		10		12		8		17		18		5		Operating leases	8		9		8		10		7		16		16		4
Finance leases	Finance leases	13		19		15		17		11		—		25		—		Finance leases	10		18		13		13		11		—		24		—
Weighted average discount rate(a)	Weighted average discount rate(a)																	Weighted average discount rate(a)
Operating leases	Operating leases	3.8	%	3.4	%	3.8	%	3.9	%	3.8	%	4.2	%	4.2	%	3.6	%	Operating leases	3.5	%	3.5	%	3.6	%	3.4	%	3.8	%	4.2	%	4.1	%	3.6	%
Finance leases	Finance leases	8.4	%	11.6	%	11.9	%	12.4	%	8.2	%	0	%	11.9	%	0	%	Finance leases	7.3	%	11.6	%	9.0	%	9.0	%	8.2	%	—	%	11.9	%	—	%

(a) The discount rate is calculated using the rate implicit in a lease if it is readily determinable. Generally, the rate used by the lessor is not provided to Duke Energy and in these cases the incremental borrowing rate is used. Duke Energy will typically use its fully collateralized incremental borrowing rate as of the commencement date to calculate and record the lease. The incremental borrowing rate is influenced by the lessee’s credit rating and lease term and as such may differ for individual leases, embedded leases or portfolios of leased assets.

~~172~~159


FINANCIAL STATEMENTS			~~LEASES~~DEBT AND CREDIT FACILITIES

December 31, 2019
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Weighted average remaining lease term (years)
Operating leases 11 9 10 12 8 17 18 6
Finance leases 13 19 16 18 11 — 26 —
Weighted average discount rate(a)
Operating leases 3.9 % 3.5 % 3.8 % 3.9 % 3.8 % 4.2 % 4.1 % 3.6 %
Finance leases 8.1 % 11.8 % 11.9 % 12.4 % 8.3 % 0 % 11.9 % 0 %

6.7. DEBT AND CREDIT FACILITIES

Summary of Debt and Related Terms

The following tables summarize outstanding ~~debt.~~debt and includes debt attributable to the Commercial Renewables Disposal Groups. See Note 2 for further details.

December 31, 2020
Weighted
Average Duke Duke Duke Duke Duke
Interest Duke Energy Progress Energy Energy Energy Energy
(in millions) Rate Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Unsecured debt, maturing 2021-2078 3.71 % $ 23,669 $ 1,150 $ 3,150 $ 700 $ 350 $ 1,180 $ 403 $ 2,800
Secured debt, maturing 2021-2052 2.67 % 4,270 543 1,584 252 1,332 — — —
First mortgage bonds, maturing 2021-2050(a)
4.00 % 29,177 10,008 14,100 7,875 6,225 1,850 3,219 —
Finance leases, maturing 2022-2051(b)
6.96 % 845 294 377 296 81 — 10 —
Tax-exempt bonds, maturing 2027-2041(c)
0.75 % 477 — 48 48 — 77 352 —
Notes payable and commercial paper(d)
0.51 % 3,407 — — — — — — —
Money pool/intercompany borrowings 0 806 3,119 445 196 194 281 530
Fair value hedge carrying value adjustment 4 4 — — — — — —
Unamortized debt discount and premium, net(e)
1,217 (20) (31) (19) (11) (29) (18) (5)
Unamortized debt issuance costs(f)
(330) (62) (113) (44) (62) (14) (25) (15)
Total debt 3.62 % $ 62,736 $ 12,723 $ 22,234 $ 9,553 $ 8,111 $ 3,258 $ 4,222 $ 3,310
Short-term notes payable and commercial paper (2,873) — — — — — — —
Short-term money pool/intercompany borrowings — (506) (2,969) (295) (196) (169) (131) (530)
Current maturities of long-term debt(g)
(4,238) (506) (1,426) (603) (823) (50) (70) (160)
Total long-term debt(g)
$ 55,625 $ 11,711 $ 17,839 $ 8,655 $ 7,092 $ 3,039 $ 4,021 $ 2,620

~~173~~


~~FINANCIAL STATEMENTS~~			~~DEBT AND CREDIT FACILITIES~~


	December 31, 2022
	Weighted
	Average				Duke				Duke		Duke		Duke		Duke
	Interest		Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Rate		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Unsecured debt, maturing 2023-2082	4.20	%	$	29,585	$	1,150	$	2,600	$	—	$	950	$	1,330	$	697	$	3,390
Secured debt, maturing 2023-2052	4.11	%	5,632		1,317		2,383		1,155		1,228		—		—		—
First mortgage bonds, maturing 2023-2052(a)	3.89	%	32,645		11,306		16,350		8,776		7,576		1,850		3,138		—
Finance leases, maturing 2023-2051(b)	7.90	%	764		284		628		587		41		—		9		—

Tax-exempt bonds, maturing 2027-2046(c)	3.84	%	1,331		—		500		500		—		77		352		—
Notes payable and commercial paper(d)	4.50	%	4,582		—		—		—		—		—		—		—
Money pool/intercompany borrowings			—		1,533		993		389		605		522		585		514
Fair value hedge carrying value adjustment			(5)		—		—		—		—		—		—		—
Unamortized debt discount and premium, net(e)			1,016		(21)		(40)		(23)		(16)		(25)		(17)		(9)
Unamortized debt issuance costs(f)			(383)		(70)		(132)		(59)		(70)		(12)		(22)		(18)
Total debt	4.09	%	$	75,167	$	15,499	$	23,282	$	11,325	$	10,314	$	3,742	$	4,742	$	3,877
Short-term notes payable and commercial paper			(3,952)		—		—		—		—		—		—		—
Short-term money pool/intercompany borrowings			—		(1,233)		(843)		(238)		(605)		(497)		(435)		(514)
Current maturities of long-term debt(g)			(4,154)		(1,018)		(697)		(369)		(328)		(475)		(303)		(45)
Total long-term debt(g)			$	67,061	$	13,248	$	21,742	$	10,718	$	9,381	$	2,770	$	4,004	$	3,318

(a)Substantially all electric utility property is mortgaged under mortgage bond indentures.

(b)Duke Energy includes ~~$24 million and $341~~$164 million of finance lease purchase accounting adjustments related to Duke Energy ~~Progress and Duke Energy~~ Florida ~~respectively,~~ related to PPAs that are not accounted for as finance leases in their respective financial statements because of grandfathering provisions in GAAP.

(c)Substantially all tax-exempt bonds are secured by first mortgage bonds, letters of credit or the Master Credit Facility.

(d)Includes $625 million classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for Duke Energy's commercial paper program was 2315 days.

(e)Duke Energy includes ~~$1,196~~$1,057 million and ~~$117~~$85 million in purchase accounting adjustments related to Progress Energy and Piedmont, respectively.

(f)Duke Energy includes ~~$33~~$27 million in purchase accounting adjustments primarily related to the merger with Progress Energy.

(g)Refer to Note 1718 for additional information on amounts from consolidated VIEs.

December 31, 2019
Weighted
Average Duke Duke Duke Duke Duke
Interest Duke Energy Progress Energy Energy Energy Energy
(in millions) Rate Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Unsecured debt, maturing 2020-2078 4.02 % $ 22,477 $ 1,150 $ 3,650 $ 700 $ 350 $ 1,110 $ 405 $ 2,399
Secured debt, maturing 2020-2052 3.30 % 4,537 544 1,722 335 1,387 — — —
First mortgage bonds, maturing 2020-2049(a)
4.13 % 27,977 9,557 13,800 7,575 6,225 1,449 3,169 —
Finance leases, maturing 2022-2051(b)
6.60 % 969 179 405 307 98 — 10 —
Tax-exempt bonds, maturing 2022-2041(c)
2.90 % 730 243 48 48 — 77 362 —
Notes payable and commercial paper(d)
1.98 % 3,588 — — — — — — —
Money pool/intercompany borrowings — 329 1,970 216 — 337 180 476
Fair value hedge carrying value adjustment 5 5 — — — — — —
Unamortized debt discount and premium, net(e)
1,294 (23) (29) (17) (11) (30) (19) (2)
Unamortized debt issuance costs(f)
(316) (55) (111) (40) (62) (12) (20) (13)
Total debt 3.92 % $ 61,261 $ 11,929 $ 21,455 $ 9,124 $ 7,987 $ 2,931 $ 4,087 $ 2,860
Short-term notes payable and commercial paper (3,135) — — — — — — —
Short-term money pool/intercompany borrowings — (29) (1,821) (66) — (312) (30) (476)
Current maturities of long-term debt(g)
(3,141) (458) (1,577) (1,006) (571) — (503) —
Total long-term debt(g)
$ 54,985 $ 11,442 $ 18,057 $ 8,052 $ 7,416 $ 2,619 $ 3,554 $ 2,384

160


FINANCIAL STATEMENTS			DEBT AND CREDIT FACILITIES


	December 31, 2021
	Weighted
	Average				Duke				Duke		Duke		Duke		Duke
	Interest		Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Rate		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Unsecured debt, maturing 2022-2082	3.71	%	$	24,564	$	1,150	$	2,250	$	—	$	150	$	1,330	$	700	$	2,990
Secured debt, maturing 2022-2052	2.50	%	5,584		1,094		2,397		1,120		1,278		—		—		—
First mortgage bonds, maturing 2022-2051(a)	3.87	%	31,026		10,507		15,450		8,375		7,075		1,850		3,219		—
Finance leases, maturing 2022-2051(b)	5.81	%	915		289		690		629		61		—		10		—

Tax-exempt bonds, maturing 2027-2041(c)	0.65	%	360		—		48		48		—		27		285		—
Notes payable and commercial paper(d)	0.35	%	3,929		—		—		—		—		—		—		—
Money pool/intercompany borrowings			—		526		2,959		322		199		128		150		518
Fair value hedge carrying value adjustment			4		4		—		—		—		—		—		—
Unamortized debt discount and premium, net(e)			1,119		(21)		(34)		(19)		(14)		(27)		(18)		(6)
Unamortized debt issuance costs(f)			(362)		(67)		(128)		(54)		(68)		(13)		(23)		(16)
Total debt	3.50	%	$	67,139	$	13,482	$	23,632	$	10,421	$	8,681	$	3,295	$	4,323	$	3,486
Short-term notes payable and commercial paper			(3,304)		—		—		—		—		—		—		—
Short-term money pool/intercompany borrowings			—		(226)		(2,809)		(172)		(199)		(103)		—		(518)
Current maturities of long-term debt(g)			(3,387)		(362)		(1,082)		(556)		(76)		—		(84)		—
Total long-term debt(g)			$	60,448	$	12,894	$	19,741	$	9,693	$	8,406	$	3,192	$	4,239	$	2,968

(a) Substantially all electric utility property is mortgaged under mortgage bond indentures.

(b) Duke Energy includes ~~$44 million and $419~~$256 million of finance lease purchase accounting adjustments related to Duke Energy ~~Progress and Duke Energy~~ Florida ~~respectively,~~ related to PPAs that are not accounted for as finance leases in their respective financial statements because of grandfathering provisions in GAAP.

(c) Substantially all tax-exempt bonds are secured by first mortgage bonds, letters of credit or the Master Credit Facility.

(d) Includes $625 million that was classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for Duke Energy's commercial paper programs was 1415 days.

(e) Duke Energy includes ~~$1,275~~$1,121 million and ~~$137~~$100 million in purchase accounting adjustments related to Progress Energy and Piedmont, respectively.

(f) Duke Energy includes ~~$37~~$29 million in purchase accounting adjustments primarily related to the merger with Progress Energy.

(g) Refer to Note 1718 for additional information on amounts from consolidated VIEs.

~~174~~


~~FINANCIAL STATEMENTS~~			~~DEBT AND CREDIT FACILITIES~~

Current Maturities of Long-Term Debt

The following table shows the significant components of Current maturities of Long-Term Debt on the Consolidated Balance Sheets. The Duke Energy Registrants currently anticipate satisfying these obligations with cash on hand and proceeds from additional borrowings.


(in millions)	(in millions)	Maturity Date	Interest Rate			December 31, 2020		(in millions)	Maturity Date	Interest Rate		December 31, 2022
Unsecured Debt~~(a)~~	Unsecured Debt~~(a)~~							Unsecured Debt~~(a)~~
Duke Energy (Parent)								Duke Energy (Parent)	April 2023	2.875	%	$	350
Duke Energy (Parent)(a)								Duke Energy (Parent)(a)	June 2023	3.469	%	500
Duke Energy (Parent)								Duke Energy (Parent)	October 2023	3.950	%	400
Duke Energy Ohio(a)								Duke Energy Ohio(a)	October 2023	4.272	%	150
Duke Energy Indiana(a)								Duke Energy Indiana(a)	October 2023	4.118	%	300

Duke Energy (Parent)		May 2021	0.721	%	(b)	$	500
Piedmont		June 2021	4.240	%		160
Duke Energy (Parent)		September 2021	3.550	%		500
Duke Energy (Parent)		September 2021	1.800	%		750
Duke Energy Florida		November 2021	0.482	%	(b)	200
Secured Debt
Duke Energy Florida		April 2021	0.972	%	(b)	250

First Mortgage Bonds	First Mortgage Bonds							First Mortgage Bonds
Duke Energy Carolinas	Duke Energy Carolinas	June 2021	3.900	%		500		Duke Energy Carolinas	March 2023	2.500	%	500
Duke Energy Florida		August 2021	3.100	%		300
Duke Energy Carolinas								Duke Energy Carolinas	March 2023	3.050	%	500
Duke Energy Progress	Duke Energy Progress	September 2021	3.000	%		500		Duke Energy Progress	September 2023	3.375	%	300
Duke Energy Progress		September 2021	8.625	%		100
Other(c)						478
Duke Energy Ohio								Duke Energy Ohio	September 2023	3.800	%	300

Other(b)								Other(b)				854
Current maturities of long-term debt	Current maturities of long-term debt					$	4,238	Current maturities of long-term debt				$	4,154

(a) ~~During October 2020, Progress Energy early retired $500 million of unsecured debt with an original maturity of January 15, 2021.~~

~~(b)~~ Debt has a floating interest rate.

~~(c)~~(b) Includes finance lease obligations, amortizing debt, tax-exempt bonds with mandatory put options and small bullet maturities.

161


FINANCIAL STATEMENTS			DEBT AND CREDIT FACILITIES

Maturities and Call Options

The following table shows the annual maturities of long-term debt for the next five years and thereafter. Amounts presented exclude short-term notes payable, commercial paper and money pool borrowings and debt issuance costs for the Subsidiary Registrants.


		December 31, 2020																	December 31, 2022
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy(a)		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy(a)		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
2021		$	4,238	$	506	$	1,426	$	603	$	823	$	50	$	70	$	160
2022		4,905		721		1,736		1,208		78		—		84		—
2023	2023	3,356		1,008		638		561		77		325		3		45		2023	$	4,154	$	1,018	$	697	$	369	$	328	$	475	$	303	$	45
2024	2024	1,344		9		76		10		66		—		4		40		2024	3,216		19		939		72		867		—		4		40
2025	2025	3,153		310		725		661		64		270		154		205		2025	4,322		491		1,040		975		65		245		4		205
2026																		2026	2,682		621		345		279		66		45		4		40
2027																		2027	3,203		323		947		233		714		102		177		300
Thereafter	Thereafter	41,983		9,745		14,802		6,274		6,878		2,486		3,818		2,350		Thereafter	52,999		11,884		18,642		9,238		7,753		2,415		3,853		2,760
Total long-term debt, including current maturities	Total long-term debt, including current maturities	$	58,979	$	12,299	$	19,403	$	9,317	$	7,986	$	3,131	$	4,133	$	2,800	Total long-term debt, including current maturities	$	70,576	$	14,356	$	22,610	$	11,166	$	9,793	$	3,282	$	4,345	$	3,390

(a) Excludes ~~$1,346~~$1,169 million in purchase accounting adjustments related to the Progress Energy merger and the Piedmont acquisition.

The Duke Energy Registrants have the ability under certain debt facilities to call and repay the obligation prior to its scheduled maturity. Therefore, the actual timing of future cash repayments could be materially different than as presented above.

~~175~~


~~FINANCIAL STATEMENTS~~			~~DEBT AND CREDIT FACILITIES~~

Short-Term Obligations Classified as Long-Term Debt

Tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder and certain commercial paper issuances and money pool borrowings are classified as Long-Term Debt on the Consolidated Balance Sheets. These tax-exempt bonds, commercial paper issuances and money pool borrowings, which are short-term obligations by nature, are classified as long-term due to Duke Energy’s intent and ability to utilize such borrowings as long-term financing. As Duke Energy’s Master Credit Facility and other bilateral letter of credit agreements have non-cancelable terms in excess of one year as of the balance sheet date, Duke Energy has the ability to refinance these short-term obligations on a long-term basis. The following tables show short-term obligations classified as long-term debt.


		December 31, 2020											December 31, 2022 and 2021
				Duke		Duke		Duke		Duke					Duke		Duke		Duke		Duke
		Duke		Energy		Energy		Energy		Energy			Duke		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Progress		Ohio		Indiana		(in millions)	Energy		Carolinas		Progress		Ohio		Indiana
Tax-exempt bonds	Tax-exempt bonds	$	312	$	—	$	—	$	27	$	285	Tax-exempt bonds	$	312	$	—	$	—	$	27	$	285
Commercial paper(a)	Commercial paper(a)	625		300		150		25		150		Commercial paper(a)	625		300		150		25		150

Total	Total	$	937	$	300	$	150	$	52	$	435	Total	$	937	$	300	$	150	$	52	$	435

December 31, 2019
Duke Duke Duke Duke
Duke Energy Energy Energy Energy
(in millions) Energy Carolinas Progress Ohio Indiana
Tax-exempt bonds $ 312 $ — $ — $ 27 $ 285
Commercial paper(a)
625 300 150 25 150
Total $ 937 $ 300 $ 150 $ 52 $ 435

(a) Progress Energy amounts are equal to Duke Energy Progress amounts.

Summary of Significant Debt Issuances

~~The following tables summarize significant debt issuances (in millions).~~

Year Ended December 31, 2020
Duke Duke Duke Duke Duke Duke
Maturity Interest Duke Energy Energy Energy Energy Energy Energy
Issuance Date Date Rate Energy (Parent) Carolinas Progress Florida Ohio Indiana Piedmont
Unsecured Debt
May 2020(a)
Jun 2030 2.450 % $ 500 $ 500 $ — $ — $ — $ — $ — $ —
May 2020(b)
Jun 2050 3.350 % 400 — — — — — — 400
August 2020(c)
Feb 2022 0.400 % (d) 700 — — 700 — — — —
September 2020(e)
Sep 2025 0.900 % 650 650 — — — — — —
September 2020(e)
Jun 2030 2.450 % 350 350 — — — — — —
First Mortgage Bonds
January 2020(f)
Feb 2030 2.450 % 500 — 500 — — — — —
January 2020(f)
Aug 2049 3.200 % 400 — 400 — — — — —
March 2020(g)
Apr 2050 2.750 % 550 — — — — — 550 —
May 2020(b)
Jun 2030 2.125 %

400 — — — — 400 — —
June 2020(b)
Jun 2030 1.750 % 500 — — — 500 — — —
August 2020(h)
Aug 2050 2.500 % 600 — — 600 — — — —
Total issuances $ 5,550 $ 1,500 $ 900 $ 1,300 $ 500 $ 400 $ 550 $ 400

~~(a)Debt issued to repay $500 million borrowing made under~~In January 2023, Duke Energy ~~(Parent) revolving credit facility~~Carolinas issued $1.8 billion of first mortgage bonds. The issuance was split between a $900 million,10-year tranche at 4.95% and a $900 million, 30-year tranche at 5.35%. The net proceeds will be used to refinance $1 billion of Duke Energy Carolinas bonds maturing in March ~~2020, and for general corporate purposes.~~

~~(b)Debt issued~~2023, to ~~repay~~pay down short-term debt and for general ~~corporate~~company purposes.

~~(c)Debt issued to repay $700 million term loan due December 2020.~~

~~(d)Debt issuance has a floating interest rate.~~

~~(e)Debt issued to repay a portion of outstanding commercial paper, to repay a portion of Duke Energy (Parent)'s outstanding $1.7 billion term loan due March 2021 and for general corporate purposes.~~

~~(f)Debt issued to repay at maturity $450 million first mortgage bonds due June 2020 and for general corporate purposes.~~

~~(g)Debt issued to repay at maturity $500 million first mortgage bonds due July 2020 and to pay down short-term debt.~~

~~(h)Debt issued to repay at maturity $300 million first mortgage bonds due September 2020 and for general corporate purposes.~~

~~176~~162


FINANCIAL STATEMENTS			DEBT AND CREDIT FACILITIES

The following tables summarize significant debt issuances (in millions).

Year Ended December 31, 2019
Duke Duke Duke Duke Duke Duke
Maturity Interest Duke Energy Energy Energy Energy Energy Energy
Issuance Date Date Rate Energy (Parent) Carolinas Progress Florida Ohio Indiana Piedmont
Unsecured Debt
March 2019(a)
Mar 2022 2.538 % (b) $ 300 $ 300 $ — $ — $ — $ — $ — $ —
March 2019(a)
Mar 2022 3.227 % 300 300 — — — — — —
May 2019(e)
Jun 2029 3.500 % 600 — — — — — — 600
June 2019(a)
Jun 2029 3.400 % 600 600 — — — — — —
June 2019(a)
Jun 2049 4.200 % 600 600 — — — — — —
July 2019(g)
Jul 2049 4.320 % 40 — — — — 40 — —
September 2019(g)
Oct 2025 3.230 % 95 — — — — 95 — —
September 2019(g)
Oct 2029 3.560 % 75 — — — — 75 — —
November 2019(h)
Nov 2021 2.167 % (b) 200 — — — 200 — — —
First Mortgage Bonds
January 2019(c)
Feb 2029 3.650 % 400 — — — — 400 — —
January 2019(c)
Feb 2049 4.300 % 400 — — — — 400 — —
March 2019(d)
Mar 2029 3.450 % 600 — — 600 — — — —
August 2019(a)
Aug 2029 2.450 % 450 — 450 — — — — —
August 2019(a)
Aug 2049 3.200 % 350 — 350 — — — — —
September 2019(f)
Oct 2049 3.250 % 500 — — — — — 500 —
November 2019(i)
Dec 2029 2.500 % 700 — — — 700 — — —
Total issuances $ 6,210 $ 1,800 $ 800 $ 600 $ 900 $ 1,010 $ 500 $ 600


				Year Ended December 31, 2022
						Duke		Duke		Duke		Duke
	Maturity	Interest		Duke		Energy		Energy		Energy		Energy
Issuance Date	Date	Rate		Energy		(Parent)		Carolinas		Progress		Florida		Piedmont
Unsecured Debt
May 2022(a)	May 2052	5.050	%	$	400	$	—	$	—	$	—	$	—	$	400
June 2022(b)	June 2028	4.750	%	645		645		—		—		—		—
June 2022(b)	June 2034	5.306	%	537		537		—		—		—		—
August 2022(c)	March 2028	4.300	%	900		900		—		—		—		—
August 2022(c)	August 2032	4.500	%	1,150		1,150		—		—		—		—
August 2022(c)	August 2052	5.000	%	1,150		1,150		—		—				—
December 2022(d)	December 2025	5.000	%	500		500		—		—		—		—
December 2022(d)	December 2027	5.000	%	500		500		—		—		—		—


First Mortgage Bonds
March 2022(e)	March 2032	2.850	%	500		—		500		—		—		—
March 2022(e)	March 2052	3.550	%	650		—		650		—		—		—
March 2022(e)	April 2032	3.400	%	500		—		—		500		—		—
March 2022(e)	April 2052	4.000	%	400		—		—		400		—		—
November 2022(f)	November 2052	5.950	%	500		—		—		—		500		—
Tax-exempt Bonds
June 2022(g)	September 2030	4.000	%	168		168		—		—		—		—
June 2022(g)	November 2039	4.250	%	234		234		—		—		—		—
September 2022(h)	October 2046	3.300	%	200		—		—		200				—
September 2022(i)	October 2046	3.700	%	210		—		—		210				—
September 2022(i)	October 2046	4.000	%	42		—		—		42				—

Total issuances				$	9,186	$	5,784	$	1,150	$	1,352	$	500	$	400

(a)Debt issued to repay a portion of outstanding intercompany short-term debt and for general corporate purposes.

(b)Duke Energy (Parent) issued 600 million euros aggregate principal amount of 3.10% senior notes due June 2028 and 500 million euros aggregate principal amount of 3.85% senior notes due June 2034. Debt issued to repay a $500 million debt maturity, pay down short-term debt and for general corporate purposes. Duke Energy's obligations under its euro-denominated fixed-rate notes were effectively converted to fixed-rate U.S. dollars at issuance through cross-currency swaps, mitigating foreign currency exchange risk associated with the interest and principal payments. See Note 15 for additional information.

(c)Debt issued to repay a portion of short-term debt and for general corporate purposes.

(d)Proceeds will be used to repay a portion of commercial paper and for general corporate purposes.

(e)Debt issued to finance or refinance, in whole or in part, existing or new eligible projects under the sustainable financing framework.

(f)Debt issued to repay a portion of outstanding intercompany short-term debt and for general company purposes.

(g)Debt issued to refund the Ohio Air Quality Development Revenue Refunding bonds, previously held in treasury, which were used to finance or refinance portions of certain solid waste disposal facilities. The mandatory purchase date of these bonds is June 1, 2027.

(h)Debt issued to provide funds to refund the prior bonds, which were used to finance or refinance portions of certain air and water pollution control equipment and solid waste disposal equipment. The mandatory purchase date of these bonds is October 1, 2026.

(i)Debt issued to provide funds to refund the prior bonds, which were used to finance or refinance portions of certain air and water pollution control equipment and solid waste disposal equipment. The mandatory purchase date of these bonds is October 1, 2030.

163


FINANCIAL STATEMENTS			DEBT AND CREDIT FACILITIES


				Year Ended December 31, 2021
						Duke		Duke		Duke		Duke
	Maturity	Interest		Duke		Energy		Energy		Energy		Energy
Issuance Date	Date	Rate		Energy		(Parent)		Carolinas		Progress		Florida		Piedmont
Unsecured Debt
March 2021a)	March 2031	2.500	%	$	350	$	—	$	—	$	—	$	—	$	350
June 2021(b)(c)	June 2023	0.299	%	500		500		—		—		—		—
June 2021(c)	June 2031	2.550	%	1,000		1,000		—		—		—		—
June 2021(c)	June 2041	3.300	%	750		750		—		—		—		—
June 2021(c)	June 2051	3.500	%	750		750		—		—		—		—
September 2021(d)	January 2082	3.250	%	500		500		—		—		—		—
Secured Debt
November 2021(e)	July 2031	1.679	%	100		—		100		—		—		—
November 2021(e)	July 2041	2.617	%	137		—		137		—		—		—
November 2021(e)	July 2028	1.295	%	221		—		—		221		—		—
November 2021(e)	July 2037	2.387	%	352		—		—		352		—		—
November 2021(e)	July 2041	2.799	%	197		—		—		197		—		—
First Mortgage Bonds
April 2021(f)	April 2031	2.550	%	550		—		550		—		—		—
April 2021(f)	April 2051	3.450	%	450		—		450		—		—		—
August 2021(g)	August 2031	2.000	%	650		—		—		650		—		—
August 2021(g)	August 2051	2.900	%	450		—		—		450		—		—
December 2021(h)	December 2031	2.400	%	650		—		—		—		650		—
December 2021(h)	December 2051	3.000	%	500		—		—		—		500		—
Total issuances				$	8,107	$	3,500	$	1,237	$	1,870	$	1,150	$	350

(a)Debt issued to repay at maturity $160 million senior unsecured notes due June 2021, pay down short-term debt and for general corporate purposes.

(b)Debt ~~issuance~~ has a floating interest rate.

(c)Debt issued to repay ~~at maturity $450 million first mortgage bonds due April 2019, pay down~~$1.75 billion of Duke Energy (Parent) debt maturities, to repay a portion of short-term debt and for general corporate purposes.

(d)Debt issued to ~~fund eligible green energy projects~~repay in ~~the Carolinas.~~October 2021 $500 million of Duke Energy (Parent) unsecured notes. The interest rate resets every five years.

(e)Debt issued to finance the North Carolina portion of storm restoration expenditures related to Hurricane Florence, Hurricane Michael, Hurricane Dorian and Winter Storm Diego.

(f)Debt issued to repay ~~in full the outstanding $350~~at maturity $500 million ~~Piedmont unsecured term loan~~first mortgage bonds due ~~September 2019,~~June 2021, pay down short-term debt and for general ~~corporate purposes.~~

~~(f)Debt issued to retire $150 million of pollution control bonds, pay down short-term debt and for general corporate~~company purposes.

(g)Debt issued to repay at maturity ~~$100~~a total of $600 million ~~debentures~~first mortgage bonds due ~~October 2019,~~September 2021, pay down short-term debt and for general ~~corporate~~company purposes.

(h)~~Debt issued~~Proceeds were used to ~~fund storm restoration costs and for general corporate purposes.~~finance or refinance, in whole or in part, existing or new eligible projects under the sustainable financing framework.

~~(i)Debt issued to reimburse the payment of existing and new Eligible Green Expenditures in Florida.~~

AVAILABLE CREDIT FACILITIES

Master Credit Facility

In March ~~2020,~~2022, Duke Energy amended its existing ~~$8 billion~~ Master Credit Facility to increase the amount of the facility from $8 billion to $9 billion and to extend the termination date to March ~~2025.~~2027. The Duke Energy Registrants, excluding Progress Energy, have borrowing capacity under the Master Credit Facility up to a specified sublimit for each borrower. Duke Energy has the unilateral ability at any time to increase or decrease the borrowing sublimits of each borrower, subject to a maximum sublimit for each borrower. The amount available under the Master Credit Facility has been reduced to backstop issuances of commercial paper, certain letters of credit and variable-rate demand tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder.

~~177~~164


FINANCIAL STATEMENTS			DEBT AND CREDIT FACILITIES

The table below includes the current borrowing sublimits and available capacity under these credit facilities.


		December 31, 2020																	December 31, 2022
				Duke		Duke		Duke		Duke		Duke		Duke							Duke		Duke		Duke		Duke		Duke		Duke
		Duke		Energy		Energy		Energy		Energy		Energy		Energy					Duke		Energy		Energy		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		(Parent)		Carolinas		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		(Parent)		Carolinas		Progress		Florida		Ohio		Indiana		Piedmont
Facility size(a)	Facility size(a)	$	8,000	$	2,650	$	1,475	$	1,250	$	800	$	625	$	600	$	600	Facility size(a)	$	9,000	$	2,375	$	1,925	$	800	$	1,150	$	900	$	1,050	$	800
Reduction to backstop issuances	Reduction to backstop issuances																	Reduction to backstop issuances
Commercial paper(b)	Commercial paper(b)	(2,239)		—		(736)		(407)		(179)		(176)		(257)		(484)		Commercial paper(b)	(3,685)		463		(1,533)		(389)		(605)		(522)		(585)		(514)
Outstanding letters of credit	Outstanding letters of credit	(40)		(34)		(4)		(2)		—		—		—		—		Outstanding letters of credit	(40)		(27)		(4)		(2)		(7)		—		—		—
Tax-exempt bonds	Tax-exempt bonds	(81)		—		—		—		—		—		(81)		—		Tax-exempt bonds	(81)		—		—		—		—		—		(81)		—

Available capacity	Available capacity	$	5,640	$	2,616	$	735	$	841	$	621	$	449	$	262	$	116	Available capacity	$	5,194	$	2,811	$	388	$	409	$	538	$	378	$	384	$	286

(a) Represents the sublimit of each borrower.

(b) Duke Energy issued $625 million of commercial paper and loaned the proceeds through the money pool to Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio and Duke Energy Indiana. The balances are classified as Long-Term Debt Payable to Affiliated Companies in the Consolidated Balance Sheets.

Duke Energy (Parent) Term Loan Facility

~~In response to market volatility and ongoing liquidity impacts from COVID-19, in~~On March ~~2020,~~9, 2022, Duke Energy (Parent) entered into a ~~$1.5 billion, 364-day~~ Term Loan Credit Agreement ~~borrowing the full $1.5~~(Credit Agreement) with commitments totaling $1.4 billion ~~available~~maturing on March ~~19, 2020.~~9, 2024. The term loan contained a provision for increasing the amount available for borrowing by up to $500 million. Duke Energy (Parent) exercised this provision on March 27, 2020, borrowing an additional $188 million. Proceeds were used to reduce outstanding commercial paper and for general corporate purposes. The loan was repaid by Duke Energy (Parent) as of December 31, 2020. Refer to Note 1 for additional information on the COVID-19 pandemic.

~~Three-Year Revolving Credit Facility~~

~~Duke Energy (Parent) has a $1 billion revolving credit facility. The facility had an initial termination date of June 2020, but in May 2019, Duke Energy extended the termination~~maturity date of the ~~facility~~Credit Agreement may be extended for up to ~~May 2022. Borrowings under this facility will be used for general corporate purposes. As~~two years by request of December 31, 2020, $500 million has been drawn under this facility. This balance is classified as Long-term debt on Duke Energy's Consolidated Balance Sheets. Any undrawn commitments can be drawn, and borrowings can be prepaid, at any time throughout the term of the facility. During the first quarter of 2020, an additional $500 million was drawn under this facility to manage liquidity impacts from COVID-19. The additional $500 million was paid down during the second quarter of 2020. The terms and conditions of the facility are generally consistent with those governing Duke Energy's Master Credit Facility.

Duke Energy ~~Progress Term Loan Facility~~

~~In December 2018, Duke Energy Progress entered into a two-year term loan facility with commitments totaling $700 million.~~(Parent), upon satisfaction of certain conditions contained in the Credit Agreement. Borrowings under the facility were used to ~~pay storm-related costs, pay down commercial paper and to partially finance an upcoming bond maturity. As of December 31, 2019, the entire $700 million had been~~repay amounts drawn under the Three-Year Revolving Credit Facility and for general corporate purposes, including repayment of a portion of Duke Energy's outstanding commercial paper. In December 2022, Duke Energy (Parent) repaid $400 million of the term loan. The balance is classified as Long-Term Debt on Duke Energy's Consolidated Balance Sheets. The Three-Year Revolving Credit Facility was terminated in March 2022.

Duke Energy Florida Term Loan Facility

In October 2022, Duke Energy Florida entered into a term loan facility with commitments totaling $800 million expiring in April 2024. The term loan was fully drawn at the time of closing In October and ~~was~~borrowings were used for storm costs, under-collected fuel and general company purposes. The balance is classified as ~~Current maturities of long-term debt~~Long-Term Debt on Duke Energy ~~Progress'~~Florida's Consolidated Balance ~~Sheets. In August 2020, Duke Energy Progress repaid its $700 million two-year term loan facility.~~Sheet.

Other Debt Matters

In September ~~2019,~~2022, Duke Energy filed a Form S-3 with the SEC. Under this Form S-3, which is uncapped, the Duke Energy Registrants, excluding Progress Energy, may issue debt and other securities, including preferred stock, in the future at amounts, prices and with terms to be determined at the time of future offerings. The registration statement was filed to replace a similar prior filing upon expiration of its three-year term and also allows for the issuance of common and preferred stock by Duke Energy.

Also in September 2022, to replace another similar prior filing, Duke Energy ~~has~~filed an effective Form S-3 with the SEC to sell up to $3$4 billion of variable denomination floating-rate demand notes, called PremierNotes. The Form S-3 states that no more than ~~$1.5~~$2 billion of the notes will be outstanding at any particular time. The notes are offered on a continuous basis and bear interest at a floating rate per annum determined by the Duke Energy PremierNotes Committee, or its designee, on a weekly basis. The interest rate payable on notes held by an investor may vary based on the principal amount of the investment. The notes have no stated maturity date, are non-transferable and may be redeemed in whole or in part by Duke Energy or at the investor’s option at any time. The balance as of December 31, ~~2020,~~2022, and ~~2019,~~2021, was ~~$1,168~~$897 million and ~~$1,049~~$1,066 million, respectively. The notes are short-term debt obligations of Duke Energy and are reflected as Notes payable and commercial paper on Duke Energy’s Consolidated Balance Sheets.

Money Pool and Intercompany Credit Agreements

The Subsidiary Registrants, excluding Progress Energy, are eligible to receive support for their short-term borrowing needs through participation with Duke Energy and certain of its subsidiaries in a money pool arrangement. Under this arrangement, those companies with short-term funds may provide short-term loans to affiliates participating in this arrangement. The money pool is structured such that the Subsidiary Registrants, excluding Progress Energy, separately manage their cash needs and working capital requirements. Accordingly, there is no net settlement of receivables and payables between money pool participants. Duke Energy (Parent), may loan funds to its participating subsidiaries, but may not borrow funds through the money pool. Accordingly, as the money pool activity is between Duke Energy and its ~~wholly owned~~ subsidiaries, all money pool balances are eliminated within Duke Energy’s Consolidated Balance Sheets.

~~178~~


~~FINANCIAL STATEMENTS~~			~~DEBT AND CREDIT FACILITIES~~

Money pool receivable balances are reflected within Notes receivable from affiliated companies on the Subsidiary Registrants’ Consolidated Balance Sheets. Money pool payable balances are reflected within either Notes payable to affiliated companies or Long-Term Debt Payable to Affiliated Companies on the Subsidiary Registrants’ Consolidated Balance Sheets.

In March 2022, Progress Energy closed a revolving credit agreement with Duke Energy (Parent), which allowed up to $2.5 billion in intercompany borrowings.

165


FINANCIAL STATEMENTS			DEBT AND CREDIT FACILITIES

Restrictive Debt Covenants

The Duke Energy Registrants’ debt and credit agreements contain various financial and other covenants. Duke Energy's Master Credit Facility contains a covenant requiring the debt-to-total capitalization ratio not to exceed 65% for each borrower, excluding Piedmont, and 70% for Piedmont. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements. As of December 31, ~~2020, each~~2022, Duke Energy presented approximately $131 million of long-term debt as current on the Consolidated Balance Sheet as a result of a technical default due to the bankruptcy filing of a Duke Energy customer. The Duke Energy Registrants ~~was~~were in compliance with all other covenants related to their debt ~~agreements.~~agreements as of December 31, 2022. In addition, some credit agreements may allow for acceleration of payments or termination of the agreements due to nonpayment, or acceleration of other significant indebtedness of the borrower or some of its subsidiaries. None of the debt or credit agreements contain material adverse change clauses.

Other Loans

As of December 31, ~~2020,~~2022, and ~~2019,~~2021, Duke Energy had loans outstanding of ~~$817~~$852 million, including ~~$35~~$33 million at Duke Energy Progress and ~~$777~~$819 million, including ~~$36~~$34 million at Duke Energy Progress, respectively, against the cash surrender value of life insurance policies it owns on the lives of its executives. The amounts outstanding were carried as a reduction of the related cash surrender value that is included in Other within Other Noncurrent Assets on the Consolidated Balance Sheets.

7.8. GUARANTEES AND INDEMNIFICATIONS

Duke Energy has various financial and performance guarantees and indemnifications with non-consolidated entities, which are issued in the normal course of business. As discussed below, these contracts include performance guarantees, standby letters of credit, debt guarantees and ~~indemnifications.~~indemnifications and include guarantees and indemnifications related to Commercial Renewables Disposal Groups. Duke Energy enters into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party. At December 31, ~~2020,~~2022, Duke Energy does not believe conditions are likely for significant performance under these ~~guarantees, except for ACP as described below.~~guarantees. To the extent liabilities are incurred as a result of the activities covered by the guarantees, such liabilities are included on the accompanying Consolidated Balance Sheets.

On January 2, 2007, Duke Energy completed the spin-off of its previously wholly owned natural gas businesses to shareholders. Guarantees issued by Duke Energy or its affiliates, or assigned to Duke Energy prior to the spin-off, remained with Duke Energy subsequent to the spin-off. Guarantees issued by Spectra Energy Capital, LLC (Spectra Capital) or its affiliates prior to the spin-off remained with Spectra Capital subsequent to the spin-off, except for guarantees that were later assigned to Duke Energy. Duke Energy has indemnified Spectra Capital against any losses incurred under certain of the guarantee obligations that remain with Spectra Capital. At December 31, ~~2020,~~2022, the maximum potential amount of future payments associated with these guarantees were ~~$56~~$40 million, the majority of which ~~expires~~expire by 2028.

In October 2017, ACP executed a $3.4 billion revolving credit facility with a stated maturity date of October 2021. Duke Energy entered into a guarantee agreement to support its share of the ACP revolving credit facility. In July 2020, ACP reduced the size of the credit facility to $1.9 billion. Duke Energy's maximum exposure to loss under the terms of the guarantee iswas $860 million as of December 31, 2020. This amount ~~represents~~represented 47% of the outstanding borrowings under the credit ~~facility.~~

~~Duke Energy~~facility and was recognized ~~the $860 million~~ within Other Current Liabilities on the Consolidated Balance Sheets at December 31, 2020, of which $95 million was previously recognized due the adoption of new guidance for credit losses effective January 1, 2020. In February 2021, Duke Energy paid approximately $855 million to fund ACP's outstanding debt, relieving Duke Energy of its guarantee. See Notes 34 and 1213 for more information. The remaining reserve for credit losses for financial guarantees of $4 million at December 31, 2020, is included within Other Noncurrent Liabilities on the Duke Energy's Consolidated Balance Sheets. Management considers financial guarantees for evaluation under this standard based on the anticipated amount outstanding at the time of default. The reserve for credit losses is based on the evaluation of the contingent components of financial guarantees. Management evaluates the risk of default, exposure and length of time remaining in the period for each contract.

In addition to the Spectra Capital and ACP revolving credit facility guarantees above, Duke Energy has issued performance guarantees to customers and other third parties that guarantee the payment and performance of other parties, including certain non-wholly owned entities, as well as guarantees of debt of certain non-consolidated entities. If such entities were to default on payments or performance, Duke Energy would be required under the guarantees to make payments on the obligations of these entities. The maximum potential amount of future payments required under these guarantees as of December 31, ~~2020,~~2022, was ~~$56~~$33 million of which ~~$53 million~~all expire between ~~2021~~2024 and 2030, with the remaining performance guarantees having no contractual expiration. Additionally, certain guarantees have uncapped maximum potential payments; however, Duke Energy does not believe these guarantees will have a material effect on its results of operations, cash flows or financial position.

Duke Energy uses bank-issued standby letters of credit to secure the performance of wholly owned and non-wholly owned entities to a third party or customer. Under these arrangements, Duke Energy has payment obligations to the issuing bank that are triggered by a draw by the third party or customer due to the failure of the wholly owned or non-wholly owned entity to perform according to the terms of its underlying contract. At December 31, ~~2020,~~2022, Duke Energy had issued a total of ~~$566~~$667 million in letters of credit, which expire between ~~2021~~2023 and ~~2023.~~2028. The unused amount under these letters of credit was ~~$76~~$35 million.

Duke Energy recognized ~~$11~~$2 million and ~~$23~~$3 million as of December 31, ~~2020,~~2022, and ~~2019,~~2021, respectively, primarily in Other within Other Noncurrent Liabilities on the Consolidated Balance Sheets, for the guarantees discussed above. As current estimates change, additional losses related to guarantees and indemnifications to third parties, which could be material, may be recorded by the Duke Energy Registrants in the future.

~~179~~


~~FINANCIAL STATEMENTS~~			~~JOINT OWNERSHIP OF GENERATING AND TRANSMISSION FACILITIES~~

8.9. JOINT OWNERSHIP OF GENERATING AND TRANSMISSION FACILITIES

The Duke Energy Registrants maintain ownership interests in certain jointly owned generating and transmission facilities. The Duke Energy Registrants are entitled to a share of the generating capacity and output of each unit equal to their respective ownership interests. The Duke Energy Registrants pay their ownership share of additional construction costs, fuel inventory purchases and operating expenses. The Duke Energy Registrants share of revenues and operating costs of the jointly owned facilities is included within the corresponding line in the Consolidated Statements of Operations. Each participant in the jointly owned facilities must provide its own financing.

166


FINANCIAL STATEMENTS			JOINT OWNERSHIP OF GENERATING AND TRANSMISSION FACILITIES

The following table presents the Duke Energy Registrants' interest of jointly owned plant or facilities and amounts included on the Consolidated Balance Sheets. All facilities are operated by the Duke Energy Registrants and are included in the Electric Utilities and Infrastructure segment.


		December 31, 2020									December 31, 2022
								Construction									Construction
		Ownership		Property, Plant		Accumulated		Work in			Ownership		Property, Plant		Accumulated		Work in
(in millions except for ownership interest)	(in millions except for ownership interest)	Interest		and Equipment		Depreciation		Progress		(in millions except for ownership interest)	Interest		and Equipment		Depreciation		Progress
Duke Energy Carolinas	Duke Energy Carolinas									Duke Energy Carolinas
Catawba (units 1 and 2)(a)	Catawba (units 1 and 2)(a)	19.25	%	$	1,017	$	518	$	23	Catawba (units 1 and 2)(a)	19.25	%	$	1,047	$	546	$	32
W.S. Lee CC(b)	W.S. Lee CC(b)	87.27	%	632		49		1		W.S. Lee CC(b)	87.27	%	613		86		48
Duke Energy Indiana	Duke Energy Indiana									Duke Energy Indiana
Gibson (unit 5)(c)	Gibson (unit 5)(c)	50.05	%	447		199		4		Gibson (unit 5)(c)	50.05	%	450		241		2
Vermillion(d)	Vermillion(d)	62.50	%	174		101		1		Vermillion(d)	62.50	%	182		113		1
Transmission and local facilities(c)	Transmission and local facilities(c)	Various		5,817		1,508		150		Transmission and local facilities(c)	Various		6,718		1,510		157

(a) Jointly owned with North Carolina Municipal Power Agency Number 1, NCEMC and PMPA.

(b) Jointly owned with NCEMC.

(d) Jointly owned with WVPA.

9.10. ASSET RETIREMENT OBLIGATIONS

Duke Energy records an ARO when it has a legal obligation to incur retirement costs associated with the retirement of a long-lived asset and the obligation can be reasonably estimated. Certain assets of the Duke Energy Registrants have an indeterminate life, such as transmission and distribution facilities, and thus the fair value of the retirement obligation is not reasonably estimable. A liability for these AROs will be recorded when a fair value is determinable.

The Duke Energy Registrants’ regulated operations accrue costs of removal for property that does not have an associated legal retirement obligation based on regulatory orders from state commissions. These costs of removal are recorded as a regulatory liability in accordance with regulatory accounting treatment. The Duke Energy Registrants do not accrue the estimated cost of removal for any nonregulated assets. See Note 34 for the estimated cost of removal for assets without an associated legal retirement obligation, which are included in Regulatory liabilities on the Consolidated Balance Sheets.

The following table presents the AROs recorded on the Consolidated Balance Sheets.


		December 31, 2020																	December 31, 2022
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Decommissioning of nuclear power facilities(a)	Decommissioning of nuclear power facilities(a)	$	6,845	$	2,695	$	4,101	$	3,642	$	459	$	—	$	—	$	—	Decommissioning of nuclear power facilities(a)	$	7,261	$	3,009	$	4,217	$	3,948	$	270	$	—	$	—	$	—
Closure of ash impoundments	Closure of ash impoundments	5,778		2,597		1,973		1,950		23		67		1,140		—		Closure of ash impoundments	5,176		2,309		1,862		1,833		29		95		911		—
Other	Other	381		58		75		43		32		44		36		20		Other	291		64		102		42		59		59		40		26
Total asset retirement obligation	Total asset retirement obligation	$	13,004	$	5,350	$	6,149	$	5,635	$	514	$	111	$	1,176	$	20	Total asset retirement obligation	$	12,728	$	5,382	$	6,181	$	5,823	$	358	$	154	$	951	$	26
Less: Current portion	Less: Current portion	718		264		283		283		—		3		168		—		Less: Current portion	773		261		289		288		1		17		207		—
Total noncurrent asset retirement obligation	Total noncurrent asset retirement obligation	$	12,286	$	5,086	$	5,866	$	5,352	$	514	$	108	$	1,008	$	20	Total noncurrent asset retirement obligation	$	11,955	$	5,121	$	5,892	$	5,535	$	357	$	137	$	744	$	26

(a) Duke Energy amount includes purchase accounting adjustments related to the merger with Progress Energy.

Nuclear Decommissioning Liability

AROs related to nuclear decommissioning are based on site-specific cost studies. The NCUC, PSCSC and FPSC require updated cost estimates for decommissioning nuclear plants every five years.

~~180~~


~~FINANCIAL STATEMENTS~~			~~ASSET RETIREMENT OBLIGATIONS~~

The following table summarizes information about the most recent site-specific nuclear decommissioning cost studies. Decommissioning costs are stated in 2018 or 2019 dollars, depending on the year of the cost study, and include costs to decommission plant components not subject to radioactive contamination.


		Annual Funding		Decommissioning				Annual Funding		Decommissioning
(in millions)	(in millions)	Requirement(a)		Costs(a)		Year of Cost Study	(in millions)	Requirement(a)		Costs(a)		Year of Cost Study
Duke Energy	Duke Energy	$	27	$	9,105	2018 or 2019	Duke Energy	$	10	$	9,105	2018 or 2019
Duke Energy Carolinas(b)(c)	Duke Energy Carolinas(b)(c)	—		4,365		2018	Duke Energy Carolinas(b)(c)	—		4,365		2018
Duke Energy Progress(d)	Duke Energy Progress(d)	27		4,181		2019	Duke Energy Progress(d)	10		4,181		2019
Duke Energy Florida(e)	Duke Energy Florida(e)	—		559		N/A	Duke Energy Florida(e)	—		559		N/A

167


FINANCIAL STATEMENTS			ASSET RETIREMENT OBLIGATIONS

(a) Amount represents annual funding requirement for the current fiscal year. Amounts for Progress Energy equal the sum of Duke Energy Progress and Duke Energy Florida.

(b) Decommissioning ~~cost~~costs for Duke Energy Carolinas reflects its ownership interest in jointly owned reactors. Other joint owners are responsible for decommissioning costs related to their interest in the reactors.

(d) Duke Energy Progress' site-specific nuclear decommissioning cost study completed in 2019 was filed with the NCUC and PSCSC in March 2020. Duke Energy Progress also completed a funding study, which was filed with the NCUC and PSCSC in July 2020. In October 2021, Duke Energy Progress filed the 2019 nuclear decommissioning cost study with the FERC, as well as a revised rate schedule for decommissioning expense to be collected from wholesale customers. The FERC accepted the filing, as filed on December 9, 2021.

Nuclear Decommissioning Trust Funds

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida each maintain NDTFs that are intended to pay for the decommissioning costs of their respective nuclear power plants. The NDTF investments are managed and invested in accordance with applicable requirements of various regulatory bodies including the NRC, FERC, NCUC, PSCSC, FPSC and the IRS.

Use of the NDTF investments is restricted to nuclear decommissioning activities including license termination, spent fuel and site restoration. The license termination and spent fuel obligations relate to contaminated decommissioning and are recorded as AROs. The site restoration obligation relates to non-contaminated decommissioning and is recorded to cost of removal within Regulatory liabilities on the Consolidated Balance Sheets.

The following table presents the fair value of NDTF assets legally restricted for purposes of settling AROs associated with nuclear decommissioning. Duke Energy Florida entered into an agreement with a third party to decommission Crystal River Unit 3 and was granted an exemption from the NRC, which allows for use of the NDTF for all aspects of nuclear decommissioning. The entire balance of Duke Energy Florida's NDTF may be applied toward license termination, spent fuel and site restoration costs incurred to decommission Crystal River Unit 3 and is excluded from the table below. See Note 1617 for additional information related to the fair value of the Duke Energy Registrants' NDTFs.


		December 31,					December 31,
(in millions)	(in millions)	2020		2019		(in millions)	2022		2021
Duke Energy	Duke Energy	$	7,726	$	6,766	Duke Energy	$	7,466	$	8,933
Duke Energy Carolinas	Duke Energy Carolinas	4,381		3,837		Duke Energy Carolinas	4,208		5,068
Duke Energy Progress	Duke Energy Progress	3,345		2,929		Duke Energy Progress	3,258		3,865

Nuclear Operating Licenses

~~Operating~~As described in Note 4, Duke Energy Carolinas and Duke Energy Progress intend to seek renewal of operating licenses and 20-year license extensions for all of their nuclear ~~units are potentially subject to extension.~~stations. The following table includes the current expiration of nuclear operating licenses.


Unit			Year of Expiration
Duke Energy Carolinas
Catawba Units 1 and 2			2043

McGuire Unit 1			2041
McGuire Unit 2			2043
Oconee Units 1 and 2			2033

Oconee Unit 3			2034
Duke Energy Progress
Brunswick Unit 1			2036
Brunswick Unit 2			2034
Harris			2046
Robinson			2030

~~181~~


~~FINANCIAL STATEMENTS~~			~~ASSET RETIREMENT OBLIGATIONS~~

The NRC has acknowledged permanent cessation of operation and permanent removal of fuel from the reactor vessel at Crystal River Unit 3. Therefore, the license no longer authorizes operation of the reactor. During 2019, Duke Energy Florida entered into an agreement for the accelerated decommissioning of Crystal River Unit 3. Regulatory approval was received from the NRC and the FPSC in April 2020 and August 2020, respectively. See Note 34 for more information.

Closure of Ash Impoundments

The Duke Energy Registrants are subject to state and federal regulations covering the closure of coal ash impoundments, including the EPA CCR rule and the Coal Ash Act, and other agreements. AROs recorded on the Duke Energy Registrants' Consolidated Balance Sheets include the legal obligation for closure of coal ash basins and the disposal of related ash as a result of these regulations and agreements.

168


FINANCIAL STATEMENTS			ASSET RETIREMENT OBLIGATIONS

The ARO amount recorded on the Consolidated Balance Sheets is based upon estimated closure costs for impacted ash impoundments. The amount recorded represents the discounted cash flows for estimated closure costs based upon specific closure plans. Actual costs to be incurred will be dependent upon factors that vary from site to site. The most significant factors are the method and time frame of closure at the individual sites. Closure methods considered include removing the water from ash basins, consolidating material as necessary and capping the ash with a synthetic barrier, excavating and relocating the ash to a lined structural fill or lined landfill or recycling the ash for concrete or some other beneficial use. The ultimate method and timetable for closure will be in compliance with standards set by federal and state regulations and other agreements. The ARO amount will be adjusted as additional information is gained through the closure and post-closure process, including acceptance and approval of compliance approaches, which may change management assumptions, and may result in a material change to the balance. See ARO Liability Rollforward section below for information on revisions made to the coal ash liability during ~~2020~~2022 and ~~2019.~~2021.

Asset retirement costs associated with the AROs for operating plants and retired plants are included in Net property, plant and equipment and Regulatory assets, respectively, on the Consolidated Balance Sheets. See Note 34 for additional information on Regulatory assets related to ~~AROs.~~AROs and Note 5 for additional information on commitments and contingencies.

Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions, which permit recovery of necessary and prudently incurred costs associated with Duke Energy’s regulated operations. See Note 34 for additional information on recovery of coal ash costs.

ARO Liability Rollforward

The following tables present changes in the liability associated with AROs.


				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Balance at December 31, 2018		$	10,467	$	3,949	$	5,411	$	4,820	$	591	$	93	$	722	$	19
Balance at December 31, 2020																		Balance at December 31, 2020	$	12,854	$	5,350	$	6,149	$	5,635	$	514	$	111	$	1,176	$	20

Accretion expense(a)	Accretion expense(a)	508		235		252		227		25		3		28		1		Accretion expense(a)	504		242		229		212		17		4		35		1
Liabilities settled(b)	Liabilities settled(b)	(895)		(329)		(499)		(460)		(39)		(12)		(54)		—		Liabilities settled(b)	(613)		(210)		(324)		(214)		(110)		(3)		(77)		—
Liabilities incurred in the current year	Liabilities incurred in the current year	25		18		7		—		7		—		—		—		Liabilities incurred in the current year	14		8		6		—		6		—		—		—
Revisions in estimates of cash flows(c)	Revisions in estimates of cash flows(c)	3,213		1,861		1,300		1,306		(6)		(4)		136		(3)		Revisions in estimates of cash flows(c)	(159)		(89)		52		42		10		24		(147)		1
Balance at December 31, 2019		13,318		5,734		6,471		5,893		578		80		832		17
Balance at December 31, 2021																		Balance at December 31, 2021	12,600		5,301		6,112		5,675		437		136		987		22

Accretion expense(a)	Accretion expense(a)	542		258		246		225		21		4		33		1		Accretion expense(a)	501		242		229		215		14		6		30		1
Liabilities settled(b)	Liabilities settled(b)	(724)		(198)		(451)		(358)		(93)		(2)		(74)		—		Liabilities settled(b)	(680)		(234)		(334)		(228)		(106)		(13)		(98)		—
Liabilities incurred in the current year	Liabilities incurred in the current year	22		—		5		—		5		—		—		—		Liabilities incurred in the current year	22		—		18		—		18		—		5		—
Revisions in estimates of cash flows~~(d)~~(c)	Revisions in estimates of cash flows~~(d)~~(c)	(154)		(444)		(122)		(125)		3		29		385		2		Revisions in estimates of cash flows~~(d)~~(c)	285		73		156		161		(5)		25		27		3
Balance at December 31, 2020		$	13,004	$	5,350	$	6,149	$	5,635	$	514	$	111	$	1,176	$	20
Balance at December 31, 2022																		Balance at December 31, 2022	$	12,728	$	5,382	$	6,181	$	5,823	$	358	$	154	$	951	$	26

(a) Substantially all accretion expense for the years ended December 31, ~~2020,~~2022, and ~~2019,~~2021, relates to Duke Energy’s regulated operations and has been deferred in accordance with regulatory accounting treatment.

(b) Amounts primarily relate to ash impoundment closures and nuclear decommissioning.

(c) ~~Amounts~~The amounts recorded represent the discounted cash flows for estimated closure costs as evaluated on a site-by-site basis. The increases in 2022 primarily relate to ~~increases~~higher unit costs associated with basin closure and routine maintenance. The decreases in ~~closure estimates for certain ash impoundments as a result of the NCDEQ's April 1, 2019, Order and the related settlement agreement dated December 31, 2019.~~

~~(d) Primarily relates to decreases due~~2021 primarily relate to revised basin closure cost estimates, partially offset by increases related to new closure plan approvals, post closure maintenance and beneficiation costs. Duke Energy Indiana estimates also include the impacts of closure estimates for certain ash impoundments due to the impact of Hoosier Environmental Council’s petition filed with the court challenging the Indiana Department of Environmental Management’s partial approval of Duke Energy Indiana’s ash pond closure plan. See Note 4 for more information on Hoosier Environmental Council's petition. The incremental amount recorded represents the discounted cash flows for estimated closure costs based upon the probability weightings of the potential closure methods as evaluated on a site-by-site basis.

~~182~~169


FINANCIAL STATEMENTS			PROPERTY, PLANT AND EQUIPMENT

~~10.~~11. PROPERTY, PLANT AND EQUIPMENT

The following tables summarize the property, plant and equipment for Duke Energy and its subsidiary registrants.


		December 31, 2020																		December 31, 2022
		Average																		Average
		Remaining			Duke				Duke		Duke		Duke		Duke					Remaining			Duke				Duke		Duke		Duke		Duke
		Useful Life	Duke		Energy		Progress		Energy		Energy		Energy		Energy					Useful Life	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	(Years)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	(Years)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Land	Land		$	2,046	$	536	$	908	$	463	$	445	$	171	$	118	$	279	Land		$	2,232	$	565	$	993	$	496	$	497	$	230	$	124	$	295
Plant – Regulated	Plant – Regulated																		Plant – Regulated
Electric generation, distribution and transmission	Electric generation, distribution and transmission	39	117,107		44,059		50,785		31,375		19,410		6,255		16,008		—		Electric generation, distribution and transmission	39	126,016		46,640		55,872		33,336		22,536		6,900		16,604		—
Natural gas transmission and distribution	Natural gas transmission and distribution	54	10,799		—		—		—		—		3,136		—		7,663		Natural gas transmission and distribution	56	13,174		—		—		—		—		3,773		—		9,401
Other buildings and improvements	Other buildings and improvements	36	2,038		740		459		197		262		374		300		165		Other buildings and improvements	40	2,537		973		647		341		306		398		336		183
Plant – Nonregulated	Plant – Nonregulated																		Plant – Nonregulated
Electric generation, distribution and transmission		27	5,444		—		—		—		—		—		—		—

Other buildings and improvements	Other buildings and improvements	10	519		—		—		—		—		—		—		—		Other buildings and improvements	10	369		—		—		—		—		—		—		—
Nuclear fuel	Nuclear fuel		3,284		1,837		1,447		1,447		—		—		—		—		Nuclear fuel		3,081		1,723		1,358		1,358		—		—		—		—
Equipment	Equipment	15	2,608		620		759		498		261		385		238		122		Equipment	13	2,959		710		936		567		369		441		356		125
Construction in process	Construction in process		6,645		1,645		2,013		709		1,304		407		409		581		Construction in process		7,381		2,671		3,073		1,317		1,756		375		381		478
Other	Other	14	5,090		1,203		1,521		1,070		441		294		309		324		Other	15	6,090		1,368		1,943		1,460		476		380		320		387
Total property, plant and equipment~~(e)~~(a)	Total property, plant and equipment~~(e)~~(a)		155,580		50,640		57,892		35,759		22,123		11,022		17,382		9,134		Total property, plant and equipment~~(e)~~(a)		163,839		54,650		64,822		38,875		25,940		12,497		18,121		10,869
Total accumulated depreciation – regulated(b)(c)	Total accumulated depreciation – regulated(b)(c)		(46,216)		(17,453)		(18,368)		(12,801)		(5,560)		(3,013)		(5,661)		(1,749)		Total accumulated depreciation – regulated(b)(c)		(50,544)		(18,669)		(20,584)		(14,201)		(6,377)		(3,250)		(6,021)		(2,081)
Total accumulated depreciation – nonregulated~~(e)~~(d)	Total accumulated depreciation – nonregulated~~(e)~~(d)		(2,611)		—		—		—		—		—		—		—		Total accumulated depreciation – nonregulated~~(e)~~(d)		(1,556)		—		—		—		—		—		—		—
Generation facilities to be retired, net			29		—		29		29		—		—		—		—
Facilities to be retired, net																			Facilities to be retired, net		9		—		—		—		—		—		—		9
Total net property, plant and equipment	Total net property, plant and equipment		$	106,782	$	33,187	$	39,553	$	22,987	$	16,563	$	8,009	$	11,721	$	7,385	Total net property, plant and equipment		$	111,748	$	35,981	$	44,238	$	24,674	$	19,563	$	9,247	$	12,100	$	8,797

(a) Includes finance leases of ~~$832~~$816 million, $335 million, ~~$416~~$674 million, ~~$297~~$590 million, ~~$119~~$84 million and $10 million at Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana, respectively, primarily within Plant – Regulated. The Progress Energy, Duke Energy Progress and Duke Energy Florida amounts are net of ~~$141~~$233 million, ~~$24~~$81 million and ~~$117~~$152 million, respectively, of accumulated amortization of finance leases.

(b) Includes ~~$1,832~~$1,683 million, ~~$1,010~~$934 million, ~~$822~~$749 million and ~~$822~~$749 million of accumulated amortization of nuclear fuel at Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.

(c) Includes accumulated amortization of finance leases of ~~$12~~$7 million, ~~$23~~$51 million and $3$4 million at Duke Energy, Duke Energy Carolinas and Duke Energy Indiana, respectively.

(d) Includes accumulated amortization of finance leases of ~~$23 million~~($1 million) at Duke Energy.

~~(e) Includes gross property, plant and equipment cost of consolidated VIEs of $6,394 million and accumulated depreciation of consolidated VIEs of $1,242 million at Duke Energy.~~

In 2020, Duke Energy evaluated recoverability of its renewable merchant plants principally located in the Electric Reliability Council of Texas West market and in the PJM West market due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Duke Energy determined that the assets were not impaired because the carrying value of $210 million approximates the aggregate estimated future undiscounted cash flows. A continued decline in energy market pricing would likely result in a future impairment. Duke Energy retained 51% ownership interest in these facilities following the 2019 transaction to sell a minority interest in certain renewable assets. See Note 1 for further information.

~~183~~170


FINANCIAL STATEMENTS			PROPERTY, PLANT AND EQUIPMENT


		December 31, 2019																		December 31, 2021
		Average																		Average
		Remaining			Duke				Duke		Duke		Duke		Duke					Remaining			Duke				Duke		Duke		Duke		Duke
		Useful Life	Duke		Energy		Progress		Energy		Energy		Energy		Energy					Useful Life	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	(Years)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	(Years)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Land	Land		$	2,091	$	520	$	884	$	449	$	435	$	150	$	117	$	388	Land		$	2,145	$	543	$	957	$	482	$	475	$	219	$	122	$	279
Plant – Regulated	Plant – Regulated																		Plant – Regulated
Electric generation, distribution and transmission	Electric generation, distribution and transmission	39	111,739		42,723		48,142		30,018		18,124		5,838		15,032		—		Electric generation, distribution and transmission	40	120,855		44,910		53,447		32,417		21,030		6,573		15,925		—
Natural gas transmission and distribution	Natural gas transmission and distribution	54	9,839		—		—		—		—		2,892		—		6,947		Natural gas transmission and distribution	54	12,079		—		—		—		—		3,347		—		8,732
Other buildings and improvements	Other buildings and improvements	32	1,810		714		401		162		239		269		278		148		Other buildings and improvements	37	1,921		550		514		228		286		381		321		155
Plant – Nonregulated	Plant – Nonregulated																		Plant – Nonregulated
Electric generation, distribution and transmission		28	5,103		—		—		—		—		—		—		—

Other buildings and improvements	Other buildings and improvements	9	488		—		—		—		—		—		—		—		Other buildings and improvements	11	401		—		—		—		—		—		—		—
Nuclear fuel	Nuclear fuel		3,253		1,891		1,362		1,362		—		—		—		—		Nuclear fuel		3,181		1,856		1,325		1,325		—		—		—		—
Equipment	Equipment	13	2,313		546		665		452		213		319		205		128		Equipment	13	2,659		614		791		497		294		403		262		122
Construction in process	Construction in process		6,102		1,389		2,149		1,114		1,035		504		381		531		Construction in process		5,979		2,078		2,297		954		1,343		515		460		262
Other	Other	13	4,916		1,139		1,467		1,046		411		269		292		304		Other	14	5,276		1,323		1,563		1,115		437		287		253		368
Total property, plant and equipment~~(e)~~(a)	Total property, plant and equipment~~(e)~~(a)		147,654		48,922		55,070		34,603		20,457		10,241		16,305		8,446		Total property, plant and equipment~~(e)~~(a)		154,496		51,874		60,894		37,018		23,865		11,725		17,343		9,918
Total accumulated depreciation – regulated(b)(c)	Total accumulated depreciation – regulated(b)(c)		(43,419)		(16,525)		(17,159)		(11,915)		(5,236)		(2,843)		(5,233)		(1,681)		Total accumulated depreciation – regulated(b)(c)		(47,611)		(17,854)		(19,214)		(13,387)		(5,819)		(3,106)		(5,583)		(1,899)
Total accumulated depreciation – nonregulated~~(e)~~(d)	Total accumulated depreciation – nonregulated~~(e)~~(d)		(2,354)		—		—		—		—		—		—		—		Total accumulated depreciation – nonregulated~~(e)~~(d)		(1,493)		—		—		—		—		—		—		—
Generation facilities to be retired, net			246		—		246		246		—		—		—		—
Facilities to be retired, net																			Facilities to be retired, net		144		102		26		26		—		6		—		11
Total net property, plant and equipment	Total net property, plant and equipment		$	102,127	$	32,397	$	38,157	$	22,934	$	15,221	$	7,398	$	11,072	$	6,765	Total net property, plant and equipment		$	105,536	$	34,122	$	41,706	$	23,657	$	18,046	$	8,625	$	11,760	$	8,030

(a) Includes finance leases of ~~$952~~$958 million, ~~$211~~$335 million, ~~$443~~$729 million, ~~$308~~$627 million, ~~$135~~$102 million, and $10 million at Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana, respectively, primarily within Plant – Regulated. The Progress Energy, Duke Energy Progress and Duke Energy Florida amounts are net of ~~$143~~$178 million, ~~$17~~$45 million and ~~$126~~$133 million, respectively, of accumulated amortization of finance leases.

(b) Includes ~~$1,807~~$1,799 million, ~~$1,082~~$1,064 million, ~~$725~~$735 million and ~~$725~~$735 million of accumulated amortization of nuclear fuel at Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.

(c) Includes accumulated amortization of finance leases of $6$9 million, ~~$13~~$33 million, and $3 million at Duke Energy, Duke Energy Carolinas and Duke Energy Indiana, respectively.

(d) Includes accumulated amortization of finance leases of ~~$20 million~~($1 million) at Duke Energy.

~~(e) Includes gross property, plant~~Duke Energy continues to execute on its business transformation strategy, including the evaluation of in-office work policies considering the experience with the COVID-19 pandemic and ~~equipment cost~~also workforce realignment of ~~consolidated VIEs~~roles and responsibilities. In May 2021, Duke Energy management approved the sale of ~~$5,747~~certain properties and entered into an agreement to exit certain leased space on December 31, 2021. The sale of the properties is subject to abandonment accounting and resulted in an impairment charge. Additionally, the exit of the leased space resulted in the impairment of related furniture, fixtures and equipment. During the year ended December 31, 2021, Duke Energy recorded a pretax charge to earnings of $192 million on the Consolidated Statements of Operations, which includes $133 million within Impairment of assets and ~~accumulated depreciation of consolidated VIEs of $1,041~~other charges, $42 million ~~at Duke Energy.~~within Operations, maintenance and other and $17 million within Depreciation and amortization.

The following ~~tables present~~table presents capitalized interest, which includes the debt component of AFUDC.


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		2018		(in millions)	2022		2021		2020
Duke Energy	Duke Energy	$	112	$	159	$	161	Duke Energy	$	118	$	66	$	96
Duke Energy Carolinas	Duke Energy Carolinas	28		30		35		Duke Energy Carolinas	50		29		28
Progress Energy	Progress Energy	17		31		51		Progress Energy	26		20		17
Duke Energy Progress	Duke Energy Progress	12		28		26		Duke Energy Progress	19		14		12
Duke Energy Florida	Duke Energy Florida	5		3		25		Duke Energy Florida	7		6		5
Duke Energy Ohio	Duke Energy Ohio	26		22		17		Duke Energy Ohio	14		20		26
Duke Energy Indiana(a)	Duke Energy Indiana(a)	10		26		27		Duke Energy Indiana(a)	3		(17)		10
Piedmont	Piedmont	8		26		17		Piedmont	4		9		8

(a) In 2021, Duke Energy Indiana is primarily compromised of ($24 million) of PISCC amortization, which is partially offset by $7 million of the debt component of AFUDC.

~~184~~171


FINANCIAL STATEMENTS			GOODWILL AND INTANGIBLE ASSETS

~~11.~~12. GOODWILL AND INTANGIBLE ASSETS

GOODWILL

Duke Energy

~~The following table presents goodwill by reportable segment for~~ Duke ~~Energy included~~Energy's Goodwill balance of $19.3 billion is allocated $17.4 billion to EU&I and $1.9 billion to GU&I on Duke Energy's Consolidated Balance Sheets at December 31, ~~2020,~~2022, and ~~2019.~~

Electric Utilities Gas Utilities Commercial
(in millions) and Infrastructure and Infrastructure Renewables Total
Goodwill Balance at December 31, 2019 $ 17,379 $ 1,924 $ 122 $ 19,425
Accumulated impairment charges — — (122) (122)
Goodwill balance at December 31, 2019, adjusted for accumulated impairment charges $ 17,379 $ 1,924 $ — $ 19,303
Goodwill Balance at December 31, 2020 $ 17,379 $ 1,924 $ 122 $ 19,425
Accumulated impairment charges — — (122) (122)
Goodwill balance at December 31, 2020, adjusted for accumulated impairment charges $ 17,379 $ 1,924 $ — $ 19,303

~~(a) Duke Energy evaluated the recoverability of goodwill during 2018 and 2017 and recorded~~2021. There are no accumulated impairment charges of $93 million and $29 million, respectively, related to the Commercial Renewables reporting unit included in Impairment charges on Duke Energy's Consolidated Statements of Operations. The fair value of the reporting unit was determined based on the income approach and market approach in 2018 and 2017, respectively. See "Goodwill Impairment Testing" below for the results of the 2020 goodwill impairment test.charges.

Duke Energy Ohio

Duke Energy Ohio's Goodwill balance of $920 million, allocated $596 million to ~~Electric Utilities and Infrastructure~~EU&I and $324 million to ~~Gas Utilities and Infrastructure,~~GU&I, is presented net of accumulated impairment charges of $216 million on the Consolidated Balance Sheets at December 31, ~~2020,~~2022, and ~~2019.~~2021.

Progress Energy

Progress Energy's Goodwill is included in the ~~Electric Utilities and Infrastructure~~EU&I segment and there are 0no accumulated impairment charges.

Piedmont

Piedmont's Goodwill is included in the ~~Gas Utilities and Infrastructure~~GU&I segment and there are 0no accumulated impairment charges.

Goodwill Impairment Testing

Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont are required to perform an annual goodwill impairment test as of the same date each year and, accordingly, perform their annual impairment testing of goodwill as of August 31. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update their test between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value. As the fair value for Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont exceeded their respective carrying values at the date of the annual impairment analysis, 0no goodwill impairment charges were recorded in ~~2020.~~

~~185~~


~~FINANCIAL STATEMENTS~~			~~GOODWILL AND INTANGIBLE ASSETS~~

2022.

INTANGIBLE ASSETS

The following tables show the carrying amount and accumulated amortization of intangible assets included in Other within Other Noncurrent Assets on the Consolidated Balance Sheets of the Duke Energy Registrants at December 31, ~~2020,~~2022, and ~~2019.~~2021.


		December 31, 2020																	December 31, 2022
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Emission allowances	Emission allowances	$	8	$	—	$	5	$	2	$	3	$	—	$	2	$	—	Emission allowances	$	8	$	—	$	5	$	2	$	3	$	—	$	2	$	—
Renewable energy certificates	Renewable energy certificates	196		65		130		130		—		1		—		—		Renewable energy certificates	210		84		124		124		—		2		—		—
Natural gas, coal and power contracts		24		—		—		—		—		—		24		—
Renewable operating and development projects		107		—		—		—		—		—		—		—

Other	Other	20		—		—		—		—		—		—		—		Other	55		—		4		1		3		—		—		22
Total gross carrying amounts	Total gross carrying amounts	355		65		135		132		3		1		26		—		Total gross carrying amounts	273		84		133		127		6		2		2		22
Accumulated amortization – natural gas, coal and power contracts		(23)		—		—		—		—		—		(23)		—
Accumulated amortization – renewable operating and development projects		(34)		—		—		—		—		—		—		—

Accumulated amortization – other	Accumulated amortization – other	(3)		—		—		—		—		—		—		—		Accumulated amortization – other	(8)		—		(1)		—		(1)		—		—		(2)
Total accumulated amortization	Total accumulated amortization	(60)		—		—		—		—		—		(23)		—		Total accumulated amortization	(8)		—		(1)		—		(1)		—		—		(2)
Total intangible assets, net	Total intangible assets, net	$	295	$	65	$	135	$	132	$	3	$	1	$	3	$	—	Total intangible assets, net	$	265	$	84	$	132	$	127	$	5	$	2	$	2	$	20


		December 31, 2019																	December 31, 2021
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Emission allowances	Emission allowances	$	18	$	—	$	5	$	2	$	3	$	—	$	12	$	—	Emission allowances	$	8	$	—	$	5	$	2	$	3	$	—	$	2	$	—
Renewable energy certificates	Renewable energy certificates	172		53		118		118		—		1		—		—		Renewable energy certificates	204		73		131		131		—		—		—		—
Natural gas, coal and power contracts	Natural gas, coal and power contracts	24		—		—		—		—		—		24		—		Natural gas, coal and power contracts	24		—		—		—		—		—		24		—
Renewable operating and development projects		89		—		—		—		—		—		—		—

Other	Other	2		—		—		—		—		—		—		—		Other	28		—		—		—		—		—		—		—
Total gross carrying amounts	Total gross carrying amounts	305		53		123		120		3		1		36		—		Total gross carrying amounts	264		73		136		133		3		—		26		—
Accumulated amortization – natural gas, coal and power contracts	Accumulated amortization – natural gas, coal and power contracts	(21)		—		—		—		—		—		(21)		—		Accumulated amortization – natural gas, coal and power contracts	(24)		—		—		—		—		—		(24)		—
Accumulated amortization – renewable operating and development projects		(34)		—		—		—		—		—		—		—

Accumulated amortization – other	Accumulated amortization – other	(1)		—		—		—		—		—		—		—		Accumulated amortization – other	(4)		—		—		—		—		—		—		—
Total accumulated amortization	Total accumulated amortization	(56)		—		—		—		—		—		(21)		—		Total accumulated amortization	(28)		—		—		—		—		—		(24)		—
Total intangible assets, net	Total intangible assets, net	$	249	$	53	$	123	$	120	$	3	$	1	$	15	$	—	Total intangible assets, net	$	236	$	73	$	136	$	133	$	3	$	—	$	2	$	—

Amortization Expense

Amortization expense amounts for ~~natural gas, coal and power contracts, renewable operating projects and~~ other intangible assets are immaterial for the years ended December 31, ~~2020, 2019~~2022, 2021 and ~~2018,~~2020, and are expected to be immaterial for the next five years as of December 31, ~~2020.~~2022.

172

~~12.~~


FINANCIAL STATEMENTS			INVESTMENTS IN UNCONSOLIDATED AFFILIATES

13. INVESTMENTS IN UNCONSOLIDATED AFFILIATES

EQUITY METHOD INVESTMENTS

Investments in affiliates that are not controlled by Duke Energy, but over which it has significant influence, are accounted for using the equity method.

~~186~~


~~FINANCIAL STATEMENTS~~			~~INVESTMENTS IN UNCONSOLIDATED AFFILIATES~~

The following table presents Duke Energy’s investments in unconsolidated affiliates accounted for under the equity method, as well as the respective equity in earnings, by ~~segment.~~segment, for periods presented in this filing.


															Years Ended December 31,
		Years Ended December 31,													2022				2021				2020
		2020				2019				2018							Equity in				Equity in		Equity in
				Equity in				Equity in				Equity in					earnings				earnings		earnings
(in millions)	(in millions)	Investments		earnings		Investments		earnings		Investments		earnings		(in millions)	Investments		(losses)		Investments		(losses)		(losses)
Electric Utilities and Infrastructure	Electric Utilities and Infrastructure	$	105	$	(1)	$	122	$	9	$	97	$	6	Electric Utilities and Infrastructure	$	99	$	7	$	104	$	7	$	(1)
Gas Utilities and Infrastructure	Gas Utilities and Infrastructure	215		(2,017)		1,388		114		1,003		27		Gas Utilities and Infrastructure	240		21		231		8		(2,017)
Commercial Renewables		534		—		314		(4)		201		(1)

Other	Other	107		13		112		43		108		51		Other	116		85		122		47		13
Total	Total	$	961	$	(2,005)	$	1,936	$	162	$	1,409	$	83	Total	$	455	$	113	$	457	$	62	$	(2,005)

During the years ended December 31, ~~2020, 2019~~2022, 2021 and ~~2018,~~2020, Duke Energy received distributions from equity investments of ~~$37~~$111 million, ~~$55~~$56 million and ~~$108~~$34 million, respectively, which are included in Other assets within Cash Flows from Operating Activities on the Consolidated Statements of Cash Flows. During the years ended December 31, ~~2020, 2019~~2022, 2021 and ~~2018,~~2020, Duke Energy received distributions from equity investments of ~~$133~~$6 million, ~~$11~~$14 million and ~~$137~~$23 million, respectively, which are included in Return of investment capital within Cash Flows from Investing Activities on the Consolidated Statements of Cash Flows.

During the years ended December 31, ~~2020, 2019~~2022, 2021 and ~~2018,~~2020, Piedmont received distributions from equity investments of $2$31 million, $1$8 million and $1$2 million, respectively, which are included in Other assets within Cash Flows from Operating ~~Activities~~Activities. During the years ended December 31, 2021, and 2020, Piedmont received distributions from equity investments of $2 million ~~$4 million~~ and $3$2 million, respectively, which are included within Cash Flows from Investing Activities on the Consolidated Statements of Cash Flows. Amounts received during the year ended December 31, 2022, included in Cash Flows from Investing Activities on the Consolidated Statements of Cash Flows were immaterial.

Significant investments in affiliates accounted for under the equity method are discussed below.

Electric Utilities and Infrastructure

Duke Energy owns 50% interests in both DATC and Pioneer, which build, own and operate electric transmission facilities in North America.

Gas Utilities and Infrastructure

~~The table below outlines~~ Pipeline Investments

Piedmont owns a 21.49% investment in Cardinal, an intrastate pipeline located in North Carolina.

Duke ~~Energy's ownership interests~~Energy owns a 7.5% interest in Sabal Trail, a 517-mile interstate natural gas pipeline, ~~companies and~~which provides natural gas ~~storage facilities.~~

Investment Amount (in millions)
Ownership December 31,
Entity Name Interest 2020 2019
Pipeline Investments(a)
ACP(b)
47 % $ — $ 1,179
Sabal Trail 7.5 % 120 121
Cardinal(c)
21.49 % 9 9
Storage Facilities
Pine Needle(c)
45 % 27 28
Hardy Storage(c)
50 % 56 51
Other 29.68 % 3 —
Total Investments(d)
$ 215 $ 1,388

~~(a)~~to Duke Energy ~~recorded OTTIs of $25 million~~Florida and ~~$55 million within Equity in (losses) earnings of unconsolidated affiliates on~~ Florida Power and Light.

Duke ~~Energy's Consolidated Statements of Operations for the years ended December 31, 2019, and 2018, respectively, to completely impair its 24% ownership~~Energy owns a 47% interest in ~~Constitution.~~

~~(b)~~the ACP pipeline. In 2020, Duke Energy determined it would no longer continue its investment in the construction of the ACP pipeline. See Notes 34 and 78 for further information.

~~(c)~~ Storage Facilities

Piedmont owns ~~the Cardinal,~~a 45% interest in Pine Needle, ~~and Hardy Storage investments.~~

~~(d) Duke Energy includes purchase accounting adjustments related to Piedmont.~~

~~Commercial Renewables~~

~~DS Cornerstone, LLC, which owns wind farm projects~~an interstate LNG storage facility located in ~~the U.S. was part of a sale of minority interest in a certain portion of renewable assets in 2019. See Note 1 for more information on the sale. Prior to the sale, Duke Energy had~~North Carolina, and a 50% interest in ~~DS Cornerstone, LLC. After the sale,~~ Hardy Storage, an underground interstate natural gas storage facility located in West Virginia.

Renewable Natural Gas Investments

Duke Energy ~~has~~owns a ~~26%~~29.68% investment in SustainRNG, a developer of renewable natural gas projects, a 70% interest in ~~the investment.~~

~~As of December 31, 2020, Duke Energy completed its acquisition of 70 distributed fuel cell projects from Bloom Energy Corporation, which approximates 43 MW of capacity serving commercial~~Sustain T&W, SustainRNG's renewable natural gas project located in Georgia, and ~~industrial customers across the U.S. Duke Energy is not the primary beneficiary of the distributed fuel cell portfolio and does not consolidate these assets.~~

~~187~~

a 70% interest in Sustain Liberty, SustainRNG's renewable natural gas project located in North Carolina.

~~FINANCIAL STATEMENTS~~

~~INVESTMENTS IN UNCONSOLIDATED AFFILIATES~~

Other

Duke Energy has a 17.5% indirect economic ownership interest and a 25% board representation and voting rights interest in NMC, which owns and operates a methanol and MTBE business in Jubail, Saudi Arabia.

173


FINANCIAL STATEMENTS			INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Significant Subsidiaries

For the year ended December 31, 2020, Duke Energy's investment in ACP met the requirements of S-X Rule 4-08(g) to provide summarized financial information. The following table provides summary information for ACP as required under S-X Rule 1-02(bb) for the ~~comparative periods~~period of significance in Duke Energy's consolidated ~~balance sheets and consolidated~~ statements of operations.

December 31,
(in millions) 2020 2019
Current assets $ 43 $ 17
Noncurrent assets 93 4,091
Current liabilities 1,965 37
Noncurrent liabilities 167 1,760
Membership interests (1,996) 2,311
Years Ended December 31,
2020 2019 2018
Net revenues $ 0 $ — $ —
Operating loss (4,612) (5) (6)
Net (loss) income (4,512) 246 138
Net (loss) income attributable to Duke Energy $ (2,121) $ 116 $ 65

~~188~~

For the years ended December 31, 2022, and 2021, there were no investments that met the significance requirements.











	Year Ended
	December 31, 2020
Net revenues	$	—
Operating loss	(4,612)

~~FINANCIAL STATEMENTS~~Net loss	(4,512)

Net loss attributable to Duke Energy	$	~~RELATED PARTY TRANSACTIONS~~(2,121)

~~13.~~14. RELATED PARTY TRANSACTIONS

The Subsidiary Registrants engage in related party transactions in accordance with the applicable state and federal commission regulations. Refer to the Consolidated Balance Sheets of the Subsidiary Registrants for balances due to or due from related parties. Material amounts related to transactions with related parties included in the Consolidated Statements of Operations and Comprehensive Income are presented in the following table.


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		2018		(in millions)	2022		2021		2020
Duke Energy Carolinas	Duke Energy Carolinas							Duke Energy Carolinas
Corporate governance and shared service expenses(a)	Corporate governance and shared service expenses(a)	$	753	$	841	$	985	Corporate governance and shared service expenses(a)	$	838	$	894	$	753
Indemnification coverages(b)	Indemnification coverages(b)	20		20		22		Indemnification coverages(b)	28		24		20
Joint Dispatch Agreement (JDA) revenue(c)	Joint Dispatch Agreement (JDA) revenue(c)	25		60		84		Joint Dispatch Agreement (JDA) revenue(c)	109		41		25
JDA expense(c)	JDA expense(c)	114		186		207		JDA expense(c)	600		207		114
Intercompany natural gas purchases(d)	Intercompany natural gas purchases(d)	15		15		15		Intercompany natural gas purchases(d)	12		11		15
Progress Energy	Progress Energy							Progress Energy
Corporate governance and shared service expenses(a)	Corporate governance and shared service expenses(a)	$	715	$	778	$	906	Corporate governance and shared service expenses(a)	$	818	$	856	$	715
Indemnification coverages(b)	Indemnification coverages(b)	36		37		34		Indemnification coverages(b)	43		41		36
JDA revenue(c)	JDA revenue(c)	114		186		207		JDA revenue(c)	600		207		114
JDA expense(c)	JDA expense(c)	25		60		84		JDA expense(c)	109		41		25
Intercompany natural gas purchases(d)	Intercompany natural gas purchases(d)	75		76		78		Intercompany natural gas purchases(d)	76		75		75
Duke Energy Progress	Duke Energy Progress							Duke Energy Progress
Corporate governance and shared service expenses(a)	Corporate governance and shared service expenses(a)	$	420	$	462	$	577	Corporate governance and shared service expenses(a)	$	469	$	504	$	420
Indemnification coverages(b)	Indemnification coverages(b)	17		15		13		Indemnification coverages(b)	20		19		17
JDA revenue(c)	JDA revenue(c)	114		186		207		JDA revenue(c)	600		207		114
JDA expense(c)	JDA expense(c)	25		60		84		JDA expense(c)	109		41		25
Intercompany natural gas purchases(d)	Intercompany natural gas purchases(d)	75		76		78		Intercompany natural gas purchases(d)	76		75		75
Duke Energy Florida	Duke Energy Florida							Duke Energy Florida
Corporate governance and shared service expenses(a)	Corporate governance and shared service expenses(a)	$	295	$	316	$	329	Corporate governance and shared service expenses(a)	$	349	$	352	$	295
Indemnification coverages(b)	Indemnification coverages(b)	19		22		21		Indemnification coverages(b)	23		22		19
Duke Energy Ohio	Duke Energy Ohio							Duke Energy Ohio
Corporate governance and shared service expenses(a)	Corporate governance and shared service expenses(a)	$	326	$	354	$	374	Corporate governance and shared service expenses(a)	$	334	$	329	$	326
Indemnification coverages(b)	Indemnification coverages(b)	4		4		5		Indemnification coverages(b)	5		4		4
Duke Energy Indiana	Duke Energy Indiana							Duke Energy Indiana
Corporate governance and shared service expenses(a)	Corporate governance and shared service expenses(a)	$	401	$	412	$	405	Corporate governance and shared service expenses(a)	$	447	$	409	$	401
Indemnification coverages(b)	Indemnification coverages(b)	8		7		7		Indemnification coverages(b)	8		8		8
Piedmont	Piedmont							Piedmont
Corporate governance and shared service expenses(a)	Corporate governance and shared service expenses(a)	$	140	$	138	$	170	Corporate governance and shared service expenses(a)	$	155	$	139	$	140
Indemnification coverages(b)	Indemnification coverages(b)	3		3		2		Indemnification coverages(b)	3		3		3
Intercompany natural gas sales(d)	Intercompany natural gas sales(d)	90		91		93		Intercompany natural gas sales(d)	88		86		90
Natural gas storage and transportation costs(e)	Natural gas storage and transportation costs(e)	23		23		25		Natural gas storage and transportation costs(e)	23		22		23

174


FINANCIAL STATEMENTS			RELATED PARTY TRANSACTIONS

(a)The Subsidiary Registrants are charged their proportionate share of corporate governance and other shared services costs, primarily related to human resources, employee benefits, information technology, legal and accounting fees, as well as other third-party costs. These amounts are primarily recorded in Operation, maintenance and other on the Consolidated Statements of Operations and Comprehensive Income.

(b)The Subsidiary Registrants incur expenses related to certain indemnification coverages through Bison, Duke Energy’s wholly owned captive insurance subsidiary. These expenses are recorded in Operation, maintenance and other on the Consolidated Statements of Operations and Comprehensive Income.

(c)Duke Energy Carolinas and Duke Energy Progress participate in a JDA, which allows the collective dispatch of power plants between the service territories to reduce customer rates. Revenues from the sale of power and expenses from the purchase of power pursuant to the JDA are recorded in Operating Revenues and Fuel used in electric generation and purchased power, respectively, on the Consolidated Statements of Operations and Comprehensive Income.

(d)Piedmont provides long-term natural gas delivery service to certain Duke Energy Carolinas and Duke Energy Progress natural gas-fired generation facilities. Piedmont records the sales in Operating Revenues, and Duke Energy Carolinas and Duke Energy Progress record the related purchases as a component of Fuel used in electric generation and purchased power on their respective Consolidated Statements of Operations and Comprehensive Income. These intercompany revenues and expenses are eliminated in consolidation.

(e)Piedmont has related party transactions as a customer of its equity method investments in Pine Needle, Hardy Storage, and Cardinal natural gas storage and transportation facilities. These expenses are included in Cost of natural gas on Piedmont's Consolidated Statements of Operations and Comprehensive Income.

~~189~~


~~FINANCIAL STATEMENTS~~			~~RELATED PARTY TRANSACTIONS~~

In addition to the amounts presented above, the Subsidiary Registrants have other affiliate transactions, including rental of office space, participation in a money pool arrangement, other operational transactions and their proportionate share of certain charged expenses. See Note 67 for more information regarding money pool. These transactions of the Subsidiary Registrants are incurred in the ordinary course of business and are eliminated in consolidation.

As discussed in Note ~~17,~~18, certain trade receivables have been sold by Duke Energy Ohio and Duke Energy Indiana to CRC, an affiliate formed by a subsidiary of Duke Energy. The proceeds obtained from the sales of receivables are largely cash but do include a subordinated note from CRC for a portion of the purchase price.

Intercompany Income Taxes

Duke Energy and the Subsidiary Registrants file a consolidated federal income tax return and other state and jurisdictional returns. The Subsidiary Registrants have a tax sharing agreement with Duke Energy for the allocation of consolidated tax liabilities and benefits. Income taxes recorded represent amounts the Subsidiary Registrants would incur as separate C-Corporations. The following table includes the balance of intercompany income tax receivables and payables for the Subsidiary Registrants.


		Duke				Duke											Duke				Duke
		Energy		Progress		Energy											Energy		Progress		Energy
(in millions)	(in millions)	Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
December 31, 2020
December 31, 2022																December 31, 2022
Intercompany income tax receivable	Intercompany income tax receivable	$	—	$	—	$	—	$	—	$	—	$	9	$	10	Intercompany income tax receivable	$	—	$	95	$	36	$	17	$	—	$	—	$	—
Intercompany income tax payable	Intercompany income tax payable	31		33		46		35		2		—		—		Intercompany income tax payable	37		—		—		—		17		18		38

December 31, 2019
December 31, 2021																December 31, 2021
Intercompany income tax receivable	Intercompany income tax receivable	$	—	$	125	$	28	$	—	$	9	$	28	$	13	Intercompany income tax receivable	$	—	$	—	$	—	$	40	$	19	$	—	$	—
Intercompany income tax payable	Intercompany income tax payable	5		—		—		2		—		—		—		Intercompany income tax payable	62		—		84		—		—		10		27

~~14.~~15. DERIVATIVES AND HEDGING

The Duke Energy Registrants use commodity, ~~and~~ interest rate and foreign currency contracts to manage commodity price risk, interest rate risk and ~~interest~~foreign currency exchange rate risk. The primary use of commodity derivatives is to hedge the generation portfolio against changes in the prices of electricity and natural gas. Piedmont enters into natural gas supply contracts to provide diversification, reliability and natural gas cost benefits to its customers. Interest rate derivatives are used to manage interest rate risk associated with borrowings. Foreign currency derivatives are used to manage risk related to foreign currency exchange rates on certain issuances of debt. Derivatives related to interest rate risk for the Commercial Renewables Disposal Groups are included in the following disclosures. See Note 2 for further information.

All derivative instruments not identified as NPNS are recorded at fair value as assets or liabilities on the Consolidated Balance Sheets. Cash collateral related to derivative instruments executed under master netting arrangements is offset against the collateralized derivatives on the Consolidated Balance Sheets. The cash impacts of settled derivatives are recorded as operating activities on the Consolidated Statements of Cash Flows.

INTEREST RATE RISK

The Duke Energy Registrants are exposed to changes in interest rates as a result of their issuance or anticipated issuance of variable-rate and fixed-rate debt and commercial paper. Interest rate risk is managed by limiting variable-rate exposures to a percentage of total debt and by monitoring changes in interest rates. To manage risk associated with changes in interest rates, the Duke Energy Registrants may enter into interest rate swaps, U.S. Treasury lock agreements and other financial contracts. In anticipation of certain fixed-rate debt issuances, a series of forward-starting interest rate swaps or Treasury locks may be executed to lock in components of current market interest rates. These instruments are later terminated prior to or upon the issuance of the corresponding debt.

175


FINANCIAL STATEMENTS			DERIVATIVES AND HEDGING

Cash Flow Hedges

For a derivative designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the effective portion of the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Amounts for interest rate contracts are reclassified to earnings as interest expense over the term of the related debt. See Note 2 for information on the de-designation of interest rate swaps and related gain reclassified out of AOCI for the year ended December 31, 2022, related to the Commercial Renewables Disposal Groups. Gains and losses reclassified out of AOCI for the years ended December 31, ~~2020, 2019~~2021, and ~~2018,~~2020, were not material. Duke Energy's interest rate derivatives designated as hedges include ~~interest rate swaps used to hedge existing debt within the Commercial Renewables segment and~~ forward-starting interest rate swaps not accounted for under regulatory accounting.

Undesignated Contracts

Undesignated contracts primarily include contracts not designated as a hedge because they are accounted for under regulatory accounting or contracts that do not qualify for hedge accounting.

Duke Energy’s interest rate swaps for its regulated operations employ regulatory accounting. With regulatory accounting, the mark-to-market gains or losses on the swaps are deferred as regulatory liabilities or regulatory assets, respectively. Regulatory assets and liabilities are amortized consistent with the treatment of the related costs in the ratemaking process. The accrual of interest on the swaps is recorded as Interest Expense on the Duke Energy Registrant's Consolidated Statements of Operations and Comprehensive Income.

~~190~~


~~FINANCIAL STATEMENTS~~			~~DERIVATIVES AND HEDGING~~

The following tables show notional amounts of outstanding derivatives related to interest rate risk.


		December 31, 2020													December 31, 2022
				Duke				Duke		Duke		Duke					Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy			Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Indiana		Ohio
Cash flow hedges	Cash flow hedges	$	632	$	—	$	—	$	—	$	—	$	—	Cash flow hedges	$	500	$	—	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	Undesignated contracts	1,177		400		750		750		—		27		Undesignated contracts	2,979		1,250		800		500		300		300		27
Total notional amount~~(a)~~	Total notional amount~~(a)~~	$	1,809	$	400	$	750	$	750	$	—	$	27	Total notional amount~~(a)~~	$	3,479	$	1,250	$	800	$	500	$	300	$	300	$	27

December 31, 2019
Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio
Cash flow hedges $ 993 $ — $ — $ — $ — $ —
Undesignated contracts 1,277 450 800 250 550 27
Total notional amount(a)
$ 2,270 $ 450 $ 800 $ 250 $ 550 $ 27

~~(a) Duke Energy includes amounts related to consolidated VIEs of $632 million in cash flow hedges as of December 31, 2020, and $693 million in cash flow hedges as of December 31, 2019.~~


	December 31, 2021
			Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Indiana		Ohio
Cash flow hedges	$	2,415	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	1,177		350		500		500		300		27
Total notional amount	$	3,592	$	350	$	500	$	500	$	300	$	27

COMMODITY PRICE RISK

The Duke Energy Registrants are exposed to the impact of changes in the prices of electricity purchased and sold in bulk power markets and natural gas purchases, including Piedmont's natural gas supply contracts. Exposure to commodity price risk is influenced by a number of factors including the term of contracts, the liquidity of markets and delivery locations. To manage risk associated with commodity prices, the Duke Energy Registrants may enter into long-term power purchase or sales contracts and long-term natural gas supply agreements.

~~Cash Flow Hedges~~

For derivatives designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Gains and losses reclassified out of accumulated other comprehensive income (loss) for the year ended December 31, 2020, ~~2019~~ ~~and~~ ~~2018,~~ w~~ere not material. Duke Energy’s commodity derivatives designated as hedges include long-term electricity sales in the Commercial Renewables segment.~~

Undesignated Contracts

For the Subsidiary Registrants, bulk power electricity and natural gas purchases flow through fuel adjustment clauses, formula-based contracts or other cost sharing mechanisms. Differences between the costs included in rates and the incurred costs, including undesignated derivative contracts, are largely deferred as regulatory assets or regulatory liabilities. Piedmont policies allow for the use of financial instruments to hedge commodity price risks. The strategy and objective of these hedging programs are to use the financial instruments to reduce natural gas cost volatility for customers.

Volumes

The tables below include volumes of outstanding commodity derivatives. Amounts disclosed represent the absolute value of notional volumes of commodity contracts excluding NPNS. The Duke Energy Registrants have netted contractual amounts where offsetting purchase and sale contracts exist with identical delivery locations and times of delivery. Where all commodity positions are perfectly offset, no quantities are shown.


		December 31, 2020						December 31, 2022
			Duke		Duke	Duke	Duke					Duke		Duke	Duke	Duke
		Duke	Energy	Progress	Energy	Energy	Energy				Duke	Energy	Progress	Energy	Energy	Energy
		Energy	Carolinas	Energy	Progress	Ohio	Indiana		Piedmont		Energy	Carolinas	Energy	Progress	Ohio	Indiana	Piedmont
Electricity (GWh)~~(a)~~	Electricity (GWh)~~(a)~~	35,409	—	—	—	2,559	10,802		—	Electricity (GWh)~~(a)~~	14,086	—	—	—	1,820	12,266	—
Natural gas (millions of Dth)	Natural gas (millions of Dth)	678	145	158	158	—	2		373	Natural gas (millions of Dth)	909	307	292	292	—	11	299

~~191~~176


FINANCIAL STATEMENTS			DERIVATIVES AND HEDGING


	December 31, 2021
		Duke		Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Ohio	Indiana	Piedmont
Electricity (GWh)	12,369	—	—	—	1,681	10,688	—
Natural gas (millions of Dth)	823	264	215	215	—	8	336

December 31, 2019
Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy
Energy Carolinas Energy Progress Ohio Indiana Piedmont
Electricity (GWh) 15,858 — — — 1,887 13,971 —
Natural gas (millions of Dth) 704 130 160 160 — 3 411
FOREIGN CURRENCY RISK

Duke Energy may enter into foreign currency derivatives to hedge exposure to changes in foreign currency exchange rates, such as that arising from the issuance of debt denominated in a currency other than U.S. dollars.

Fair Value Hedges

Derivatives related to existing fixed rate securities are accounted for as fair value hedges, where the derivatives’ fair value gains or losses and hedged items’ fair value gains or losses are both recorded directly to earnings on the same income statement line item, including foreign currency gains or losses arising from changes in the U.S. currency exchange rates. Duke Energy has elected to exclude the cross-currency basis spread from the assessment of effectiveness in the fair value hedges of its foreign currency risk and record any difference between the change in the fair value of the excluded components and the amounts recognized in earnings as a component of other comprehensive income or loss.

The following table shows Duke Energy's outstanding derivatives related to foreign currency risk. There were no fair value hedges in 2021.


	December 31, 2022
					Receive					Fair Value
	Pay Notional				Notional		Receive		Hedge	Gain (Loss)(a)
	(in millions)		Pay Rate		(in millions)		Rate		Maturity Date	(in millions)
Fair value hedges
	$	645	4.75	%	600	euros	3.10	%	June 2028	$	(3)
	537		5.31	%	500	euros	3.85	%	June 2034	(2)
Total notional amount	$	1,182			1,100	euros				$	(5)

(a) ~~Duke Energy includes 22,048 GWh that relates to cash flow hedges.~~Amounts are recorded in Other Income and expenses, net on the Consolidated Statement of Operations, which offsets an equal translation adjustment of the foreign denominated debt. See the Consolidated Statements of Comprehensive Income for amounts excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded.

LOCATION AND FAIR VALUE OF DERIVATIVE ASSETS AND LIABILITIES RECOGNIZED IN THE CONSOLIDATED BALANCE SHEETS

The following tables show the fair value and balance sheet location of derivative instruments. Although derivatives subject to master netting arrangements are netted on the Consolidated Balance Sheets, the fair values presented below are shown gross and cash collateral on the derivatives has not been netted against the fair values shown.

Derivative Assets December 31, 2020
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current $ 30 $ 14 $ 9 $ 9 $ — $ 1 $ 6 $ 1
Noncurrent 13 6 6 6 — — — —
Total Derivative Assets – Commodity Contracts $ 43 $ 20 $ 15 $ 15 $ — $ 1 $ 6 $ 1
Interest Rate Contracts
Not Designated as Hedging Instruments
Current $ 18 $ 0 $ 18 $ 18 $ — $ — $ — $ —
Total Derivative Assets – Interest Rate Contracts $ 18 $ 0 $ 18 $ 18 $ — $ — $ — $ —
Total Derivative Assets $ 61 $ 20 $ 33 $ 33 $ — $ 1 $ 6 $ 1


Derivative Liabilities		December 31, 2020
Derivative Assets																		Derivative Assets	December 31, 2022
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts	Commodity Contracts																	Commodity Contracts
Designated as Hedging Instruments
Current		$	14	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent		70		—		—		—		—		—		—		—

Not Designated as Hedging Instruments	Not Designated as Hedging Instruments																	Not Designated as Hedging Instruments
Current	Current	$	30	$	13	$	2	$	2	$	—	$	—	$	1	$	15	Current	$	265	$	132	$	99	$	99	$	—	$	5	$	29	$	—
Noncurrent	Noncurrent	137		3		27		12		—		—		—		107		Noncurrent	213		104		108		108		—		—		—		—
Total Derivative Liabilities – Commodity Contracts		$	251	$	16	$	29	$	14	$	—	$	—	$	1	$	122
Total Derivative Assets – Commodity Contracts																		Total Derivative Assets – Commodity Contracts	$	478	$	236	$	207	$	207	$	—	$	5	$	29	$	—
Interest Rate Contracts	Interest Rate Contracts																	Interest Rate Contracts
Designated as Hedging Instruments	Designated as Hedging Instruments																	Designated as Hedging Instruments
Current	Current	$	15	$	—	$	—	$	—	$	—	$	—	$	—	$	—	Current	$	101	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent		48		—		—		—		—		—		—		—

Not Designated as Hedging Instruments	Not Designated as Hedging Instruments																	Not Designated as Hedging Instruments
Current	Current	5		4		—		—		—		1		—		—		Current	$	228	$	94	$	41	$	23	$	17	$	—	$	81	$	—
Noncurrent	Noncurrent	5		—		—		—		—		5		—		—		Noncurrent	29		—		—		—		—		—		—		—
Total Derivative Liabilities – Interest Rate Contracts		$	73	$	4	$	—	$	—	$	—	$	6	$	—	$	—
Total Derivative Assets – Interest Rate Contracts																		Total Derivative Assets – Interest Rate Contracts	$	358	$	94	$	41	$	23	$	17	$	—	$	81	$	—

Total Derivative Liabilities		$	324	$	20	$	29	$	14	$	—	$	6	$	1	$	122
Total Derivative Assets																		Total Derivative Assets	$	836	$	330	$	248	$	230	$	17	$	5	$	110	$	—

~~192~~177


FINANCIAL STATEMENTS			DERIVATIVES AND HEDGING


Derivative Liabilities	December 31, 2022
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts



Not Designated as Hedging Instruments
Current	$	175	$	96	$	36	$	18	$	19	$	—	$	16	$	27
Noncurrent	202		31		30		30		—		—		—		141
Total Derivative Liabilities – Commodity Contracts	$	377	$	127	$	66	$	48	$	19	$	—	$	16	$	168
Interest Rate Contracts



Not Designated as Hedging Instruments

Noncurrent	2		—		—		—		—		2		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	2	$	—	$	—	$	—	$	—	$	2	$	—	$	—
Foreign Currency Contracts
Designated as Hedging Instruments
Current	$	18	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	40		—		—		—		—		—		—		—



Total Derivative Liabilities – Foreign Currency Contracts	$	58	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total Derivative Liabilities	$	437	$	127	$	66	$	48	$	19	$	2	$	16	$	168

Derivative Assets December 31, 2019
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current $ 17 $ — $ — $ — $ — $ 3 $ 13 $ 1
Noncurrent 1 — — — — 1 — —
Total Derivative Assets – Commodity Contracts $ 18 $ — $ — $ — $ — $ 4 $ 13 $ 1
Interest Rate Contracts
Not Designated as Hedging Instruments
Current 6 — 6 — 6 — — —
Total Derivative Assets – Interest Rate Contracts $ 6 $ — $ 6 $ — $ 6 $ — $ — $ —
Equity Securities Contracts
Not Designated as Hedging Instruments
Current $ 1 $ — $ 1 $ — $ 1 $ — $ — $ —
Total Derivative Assets – Equity Securities Contracts $ 1 $ — $ 1 $ — $ 1 $ — $ — $ —
Total Derivative Assets $ 25 $ — $ 7 $ — $ 7 $ 4 $ 13 $ 1


Derivative Liabilities		December 31, 2019
Derivative Assets																		Derivative Assets	December 31, 2021
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts	Commodity Contracts																	Commodity Contracts

Not Designated as Hedging Instruments	Not Designated as Hedging Instruments																	Not Designated as Hedging Instruments
Current	Current	$	67	$	33	$	26	$	26	$	—	$	—	$	1	$	7	Current	$	199	$	99	$	72	$	72	$	—	$	2	$	23	$	3
Noncurrent	Noncurrent	156		10		37		22		—		—		—		110		Noncurrent	113		63		50		50		—		—		—		—
Total Derivative Liabilities – Commodity Contracts		$	223	$	43	$	63	$	48	$	—	$	—	$	1	$	117
Total Derivative Assets – Commodity Contracts																		Total Derivative Assets – Commodity Contracts	$	312	$	162	$	122	$	122	$	—	$	2	$	23	$	3
Interest Rate Contracts	Interest Rate Contracts																	Interest Rate Contracts
Designated as Hedging Instruments	Designated as Hedging Instruments																	Designated as Hedging Instruments
Current	Current	$	19	$	—	$	—	$	—	$	—	$	—	$	—	$	—	Current	$	3	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	Noncurrent	21		—		—		—		—		—		—		—		Noncurrent	3		—		—		—		—		—		—		—
Not Designated as Hedging Instruments	Not Designated as Hedging Instruments																	Not Designated as Hedging Instruments
Current	Current	8		6		1		1		—		1		—		—		Current	$	2	$	—	$	2	$	2	$	—	$	—	$	—	$	—
Noncurrent		5		—		—		—		—		5		—		—
Total Derivative Liabilities – Interest Rate Contracts		$	53	$	6	$	1	$	1	$	—	$	6	$	—	$	—
Equity Securities Contracts
Not Designated as Hedging Instruments
Current		$	24	$	—	$	24	$	—	$	24	$	—	$	—	$	—
Total Derivative Liabilities – Equity Securities Contracts		$	24	$	—	$	24	$	—	$	24	$	—	$	—	$	—
Total Derivative Liabilities		$	300	$	49	$	88	$	49	$	24	$	6	$	1	$	117

Total Derivative Assets – Interest Rate Contracts																		Total Derivative Assets – Interest Rate Contracts	$	8	$	—	$	2	$	2	$	—	$	—	$	—	$	—

Total Derivative Assets																		Total Derivative Assets	$	320	$	162	$	124	$	124	$	—	$	2	$	23	$	3

~~193~~178


FINANCIAL STATEMENTS			DERIVATIVES AND HEDGING


Derivative Liabilities	December 31, 2021
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont




Not Designated as Hedging Instruments
Current	$	72	$	18	$	19	$	5	$	14	$	—	$	13	$	21
Noncurrent	132		9		5		5		—		—		—		118
Total Derivative Liabilities – Commodity Contracts	$	204	$	27	$	24	$	10	$	14	$	—	$	13	$	139
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	75	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	21		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	10		8		—		—		—		1		—		—
Noncurrent	18		—		—		—		—		4		14		—
Total Derivative Liabilities – Interest Rate Contracts	$	124	$	8	$	—	$	—	$	—	$	5	$	14	$	—




Total Derivative Liabilities	$	328	$	35	$	24	$	10	$	14	$	5	$	27	$	139

OFFSETTING ASSETS AND LIABILITIES

The following tables present the line items on the Consolidated Balance Sheets where derivatives are reported. Substantially all of Duke Energy's outstanding derivative contracts are subject to enforceable master netting arrangements. The gross amounts offset in the tables below show the effect of these netting arrangements on financial position and include collateral posted to offset the net position. The amounts shown are calculated by counterparty. Accounts receivable or accounts payable may also be available to offset exposures in the event of bankruptcy. These amounts are not included in the tables below.


Derivative Assets	Derivative Assets	December 31, 2020																Derivative Assets	December 31, 2022
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Current	Current																	Current
Gross amounts recognized	Gross amounts recognized	$	48	$	14	$	27	$	27	$	—	$	1	$	6	$	1	Gross amounts recognized	$	594	$	226	$	140	$	122	$	17	$	5	$	110	$	—
Gross amounts offset	Gross amounts offset	(3)		(2)		(2)		(2)		—		—		—		—		Gross amounts offset	(64)		(33)		(30)		(30)		—		—		—		—
Net amounts presented in Current Assets: Other	Net amounts presented in Current Assets: Other	$	45	$	12	$	25	$	25	$	—	$	1	$	6	$	1	Net amounts presented in Current Assets: Other	$	530	$	193	$	110	$	92	$	17	$	5	$	110	$	—
Noncurrent	Noncurrent																	Noncurrent
Gross amounts recognized	Gross amounts recognized	$	13	$	6	$	6	$	6	$	—	$	—	$	—	$	—	Gross amounts recognized	$	242	$	104	$	108	$	108	$	—	$	—	$	—	$	—
Gross amounts offset	Gross amounts offset	(5)		(1)		(4)		(4)		—		—		—		—		Gross amounts offset	(97)		(40)		(57)		(57)		—		—		—		—
Net amounts presented in Other Noncurrent Assets: Other	Net amounts presented in Other Noncurrent Assets: Other	$	8	$	5	$	2	$	2	$	—	$	—	$	—	$	—	Net amounts presented in Other Noncurrent Assets: Other	$	145	$	64	$	51	$	51	$	—	$	—	$	—	$	—

Derivative Liabilities December 31, 2020
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Current
Gross amounts recognized $ 64 $ 17 $ 2 $ 2 $ 0 $ 1 $ 1 $ 15
Gross amounts offset (3) (2) (2) (2) 0 0 0 0
Net amounts presented in Current Liabilities: Other $ 61 $ 15 $ — $ — $ 0 $ 1 $ 1 $ 15
Noncurrent
Gross amounts recognized $ 260 $ 3 $ 27 $ 12 $ 0 $ 5 $ 0 $ 107
Gross amounts offset (5) (1) (4) (4) 0 0 0 0
Net amounts presented in Other Noncurrent Liabilities: Other $ 255 $ 2 $ 23 $ 8 $ 0 $ 5 $ 0 $ 107


Derivative Assets		December 31, 2019
Derivative Liabilities																		Derivative Liabilities	December 31, 2022
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Current	Current																	Current
Gross amounts recognized	Gross amounts recognized	$	24	$	—	$	7	$	—	$	7	$	3	$	13	$	1	Gross amounts recognized	$	193	$	96	$	36	$	18	$	19	$	—	$	16	$	27
Gross amounts offset	Gross amounts offset	(1)		—		(1)		—		(1)		—		—		—		Gross amounts offset	(49)		(15)		(18)		(18)		—		—		(16)		—
Net amounts presented in Current Assets: Other		$	23	$	—	$	6	$	—	$	6	$	3	$	13	$	1
Net amounts presented in Current Liabilities: Other																		Net amounts presented in Current Liabilities: Other	$	144	$	81	$	18	$	—	$	19	$	—	$	—	$	27
Noncurrent	Noncurrent																	Noncurrent
Gross amounts recognized	Gross amounts recognized	$	1	$	—	$	—	$	—	$	—	$	1	$	—	$	—	Gross amounts recognized	$	244	$	31	$	30	$	30	$	—	$	2	$	—	$	141
Gross amounts offset	Gross amounts offset	—		—		—		—		—		—		—		—		Gross amounts offset	(59)		(29)		(30)		(30)		—		—		—		—
Net amounts presented in Other Noncurrent Assets: Other		$	1	$	—	$	—	$	—	$	—	$	1	$	—	$	—
Net amounts presented in Other Noncurrent Liabilities: Other																		Net amounts presented in Other Noncurrent Liabilities: Other	$	185	$	2	$	—	$	—	$	—	$	2	$	—	$	141

~~194~~179


FINANCIAL STATEMENTS			DERIVATIVES AND HEDGING


Derivative Assets	December 31, 2021
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Current
Gross amounts recognized	$	204	$	99	$	74	$	74	$	—	$	2	$	23	$	3
Gross amounts offset	(25)		(16)		(9)		(9)		—		—		—		—
Net amounts presented in Current Assets: Other	$	179	$	83	$	65	$	65	$	—	$	2	$	23	$	3
Noncurrent
Gross amounts recognized	$	116	$	63	$	50	$	50	$	—	$	—	$	—	$	—
Gross amounts offset	(23)		(15)		(8)		(8)		—		—		—		—
Net amounts presented in Other Noncurrent Assets: Other	$	93	$	48	$	42	$	42	$	—	$	—	$	—	$	—


Derivative Liabilities	Derivative Liabilities	December 31, 2019																Derivative Liabilities	December 31, 2021
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Current	Current																	Current
Gross amounts recognized	Gross amounts recognized	$	118	$	39	$	51	$	27	$	24	$	1	$	1	$	7	Gross amounts recognized	$	157	$	26	$	19	$	5	$	14	$	1	$	13	$	21
Gross amounts offset	Gross amounts offset	(24)		—		(24)		—		(24)		—		—		—		Gross amounts offset	(11)		(6)		(5)		(5)		—		—		—		—
Net amounts presented in Current Liabilities: Other	Net amounts presented in Current Liabilities: Other	$	94	$	39	$	27	$	27	$	—	$	1	$	1	$	7	Net amounts presented in Current Liabilities: Other	$	146	$	20	$	14	$	—	$	14	$	1	$	13	$	21
Noncurrent	Noncurrent																	Noncurrent
Gross amounts recognized	Gross amounts recognized	$	182	$	10	$	37	$	22	$	—	$	5	$	—	$	110	Gross amounts recognized	$	171	$	9	$	5	$	5	$	—	$	4	$	14	$	118
Gross amounts offset	Gross amounts offset	—		—		—		—		—		—		—		—		Gross amounts offset	(12)		(8)		(5)		(5)		—		—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	Net amounts presented in Other Noncurrent Liabilities: Other	$	182	$	10	$	37	$	22	$	—	$	5	$	—	$	110	Net amounts presented in Other Noncurrent Liabilities: Other	$	159	$	1	$	—	$	—	$	—	$	4	$	14	$	118

OBJECTIVE CREDIT CONTINGENT FEATURES

Certain derivative contracts contain objective credit contingent features. These features include the requirement to post cash collateral or letters of credit if specific events occur, such as a credit rating downgrade below investment grade. The following tables show information with respect to derivative contracts that are in a net liability position and contain objective ~~credit-risk-related~~credit risk-related payment provisions.


		December 31, 2020								December 31, 2022
				Duke				Duke						Duke				Duke		Duke
		Duke		Energy		Progress		Energy				Duke		Energy		Progress		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress			(in millions)	Energy		Carolinas		Energy		Progress		Florida
Aggregate fair value of derivatives in a net liability position	Aggregate fair value of derivatives in a net liability position	$	24	$	9	$	14	$	14		Aggregate fair value of derivatives in a net liability position	$	141	$	86	$	55	$	48	$	7
Fair value of collateral already posted	Fair value of collateral already posted	0		0		0		0			Fair value of collateral already posted	—		—		—		—		—
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered		24		9		14		14
Additional cash collateral or letters of credit in the event credit risk-related contingent features were triggered											Additional cash collateral or letters of credit in the event credit risk-related contingent features were triggered	141		86		55		48		7


		December 31, 2019								December 31, 2021
				Duke				Duke						Duke				Duke		Duke
		Duke		Energy		Progress		Energy				Duke		Energy		Progress		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress			(in millions)	Energy		Carolinas		Energy		Progress		Florida
Aggregate fair value of derivatives in a net liability position	Aggregate fair value of derivatives in a net liability position	$	79	$	35	$	44	$	44		Aggregate fair value of derivatives in a net liability position	$	32	$	18	$	14	$	10	$	4
Fair value of collateral already posted	Fair value of collateral already posted	0		0		0		0			Fair value of collateral already posted	—		—		—		—		—
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered		79		35		44		44
Additional cash collateral or letters of credit in the event credit risk-related contingent features were triggered											Additional cash collateral or letters of credit in the event credit risk-related contingent features were triggered	32		18		14		10		4

The Duke Energy Registrants have elected to offset cash collateral and fair values of derivatives. For amounts to be netted, the derivative and cash collateral must be executed with the same counterparty under the same master netting arrangement.

180

~~15.~~


FINANCIAL STATEMENTS			INVESTMENTS IN DEBT AND EQUITY SECURITIES

16. INVESTMENTS IN DEBT AND EQUITY SECURITIES

Duke Energy’s investments in debt and equity securities are primarily comprised of investments held in (i) the NDTF at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, (ii) the grantor trusts at Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana related to OPEB plans and (iii) Bison. The Duke Energy Registrants classify investments in debt securities as AFS and investments in equity securities as FV-NI.

For investments in debt securities classified as AFS, the unrealized gains and losses are included in other comprehensive income until realized, at which time they are reported through net income. For investments in equity securities classified as FV-NI, both realized and unrealized gains and losses are reported through net income. Substantially all of Duke Energy’s investments in debt and equity securities qualify for regulatory accounting, and accordingly, all associated realized and unrealized gains and losses on these investments are deferred as a regulatory asset or liability.

Duke Energy classifies the majority of investments in debt and equity securities as long term, unless otherwise noted.

~~195~~


~~FINANCIAL STATEMENTS~~			~~INVESTMENTS IN DEBT AND EQUITY SECURITIES~~

Investment Trusts

The investments within the Investment Trusts are managed by independent investment managers with discretion to buy, sell and invest pursuant to the objectives set forth by the investment manager agreements and trust agreements. The Duke Energy Registrants have limited oversight of the day-to-day management of these investments. As a result, the ability to hold investments in unrealized loss positions is outside the control of the Duke Energy Registrants. Accordingly, all unrealized losses associated with debt securities within the Investment Trusts are recognized immediately and deferred to regulatory accounts where appropriate.

Other AFS Securities

Unrealized gains and losses on all other AFS securities are included in other comprehensive income until realized, unless it is determined the carrying value of an investment has a credit loss. The Duke Energy Registrants analyze all investment holdings each reporting period to determine whether a decline in fair value is related to a credit loss. If a credit loss exists, the unrealized credit loss is included in earnings. There were no material credit losses as of December 31, ~~2020,~~2022, and ~~2019.~~2021.

Other Investments amounts are recorded in Other within Other Noncurrent Assets on the Consolidated Balance Sheets.

DUKE ENERGY

The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.

December 31, 2020 December 31, 2019
Gross Gross Gross Gross
Unrealized Unrealized Unrealized Unrealized
Holding Holding Estimated Holding Holding Estimated
(in millions) Gains Losses Fair Value Gains Losses Fair Value
NDTF
Cash and cash equivalents $ — $ — $ 177 $ — $ — $ 101
Equity securities 4,138 54 6,235 3,523 55 5,661
Corporate debt securities 76 1 806 37 1 603
Municipal bonds 22 0 370 13 0 368
U.S. government bonds 51 — 1,361 33 1 1,256
Other debt securities 8 0 180 3 0 141
Total NDTF Investments $ 4,295 $ 55 $ 9,129 $ 3,609 $ 57 $ 8,130
Other Investments
Cash and cash equivalents $ — $ — $ 127 $ — $ — $ 52
Equity securities 79 0 146 57 0 122
Corporate debt securities 8 0 110 3 0 67
Municipal bonds 5 0 86 4 0 94
U.S. government bonds 0 0 42 2 0 41
Other debt securities 0 0 47 0 0 56
Total Other Investments $ 92 $ 0 $ 558 $ 66 $ 0 $ 432
Total Investments $ 4,387 $ 55 $ 9,687 $ 3,675 $ 57 $ 8,562

~~The table below summarizes the maturity date for debt securities.~~


~~(in millions)~~	~~December 31, 2020~~
~~Due in one year or less~~	$	~~149~~
~~Due after one through five years~~	~~922~~
~~Due after five through 10 years~~	~~671~~
~~Due after 10 years~~	~~1,260~~
~~Total~~	$	~~3,002~~


	December 31, 2022						December 31, 2021
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	215	$	—	$	—	$	160
Equity securities	3,658		105		5,871		4,905		43		7,350
Corporate debt securities	1		85		641		39		6		829
Municipal bonds	—		39		330		14		1		314
U.S. government bonds	2		112		1,423		31		12		1,568
Other debt securities	—		18		156		3		1		180
Total NDTF Investments	$	3,661	$	359	$	8,636	$	4,992	$	63	$	10,401
Other Investments
Cash and cash equivalents	$	—	$	—	$	22	$	—	$	—	$	36
Equity securities	21		16		128		36		—		156
Corporate debt securities	—		12		84		2		1		119
Municipal bonds	—		3		78		3		1		80
U.S. government bonds	—		2		62		—		—		56
Other debt securities	—		3		41		—		1		45
Total Other Investments	$	21	$	36	$	415	$	41	$	3	$	492
Total Investments	$	3,682	$	395	$	9,051	$	5,033	$	66	$	10,893

~~196~~181


FINANCIAL STATEMENTS			INVESTMENTS IN DEBT AND EQUITY SECURITIES

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the years ended December 31, ~~2020, 2019~~2022, 2021 and ~~2018,~~2020, were as follows.


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		2018		(in millions)	2022		2021		2020
FV-NI:	FV-NI:							FV-NI:
Realized gains	Realized gains	$	366	$	172	$	168	Realized gains	$	201	$	724	$	366
Realized losses	Realized losses	174		151		126		Realized losses	316		141		174
AFS:	AFS:							AFS:
Realized gains	Realized gains	96		94		22		Realized gains	28		56		96
Realized losses	Realized losses	51		67		51		Realized losses	151		54		51

DUKE ENERGY CAROLINAS

The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.

~~The table below summarizes the maturity date for debt securities.~~


~~(in millions)~~	~~December 31, 2020~~
~~Due in one year or less~~	$	14
~~Due after one through five years~~	~~299~~
~~Due after five through 10 years~~	~~279~~
~~Due after 10 years~~	~~658~~
~~Total~~	$	~~1,250~~


	December 31, 2022						December 31, 2021
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	117	$	—	$	—	$	53
Equity securities	2,147		51		3,367		2,887		19		4,265
Corporate debt securities	1		62		401		24		4		506
Municipal bonds	—		10		64		2		—		48
U.S. government bonds	1		51		685		16		3		712
Other debt securities	—		18		148		3		1		175
Total NDTF Investments	$	2,149	$	192	$	4,782	$	2,932	$	27	$	5,759


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		2018		(in millions)	2022		2021		2020
FV-NI:	FV-NI:							FV-NI:
Realized gains	Realized gains	$	64	$	113	$	89	Realized gains	$	124	$	440	$	64
Realized losses	Realized losses	99		107		73		Realized losses	177		96		99
AFS:	AFS:							AFS:
Realized gains	Realized gains	60		55		19		Realized gains	22		38		60
Realized losses	Realized losses	37		38		35		Realized losses	86		37		37

~~197~~182


FINANCIAL STATEMENTS			INVESTMENTS IN DEBT AND EQUITY SECURITIES

PROGRESS ENERGY

The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.

December 31, 2020 December 31, 2019
Gross Gross Gross Gross
Unrealized Unrealized Unrealized Unrealized
Holding Holding Estimated Holding Holding Estimated
(in millions) Gains Losses Fair Value Gains Losses Fair Value
NDTF
Cash and cash equivalents $ — $ — $ 147 $ — $ — $ 80
Equity securities 1,696 31 2,550 1,609 47 2,507
Corporate debt securities 27 0 296 16 — 242
Municipal bonds 16 0 279 10 — 272
U.S. government bonds 26 0 886 17 — 678
Other debt securities 1 0 6 0 0 4
Total NDTF Investments $ 1,766 $ 31 $ 4,164 $ 1,652 $ 47 $ 3,783
Other Investments
Cash and cash equivalents $ — $ — $ 106 $ — $ — $ 49
Municipal bonds 3 0 26 3 0 51
Total Other Investments $ 3 $ 0 $ 132 $ 3 $ 0 $ 100
Total Investments $ 1,769 $ 31 $ 4,296 $ 1,655 $ 47 $ 3,883

~~The table below summarizes the maturity date for debt securities.~~


~~(in millions)~~	~~December 31, 2020~~
~~Due in one year or less~~	$	~~109~~
~~Due after one through five years~~	~~567~~
~~Due after five through 10 years~~	~~298~~
~~Due after 10 years~~	~~519~~
~~Total~~	$	~~1,493~~


	December 31, 2022						December 31, 2021
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	98	$	—	$	—	$	107
Equity securities	1,511		54		2,504		2,018		24		3,085
Corporate debt securities	—		23		240		15		2		323
Municipal bonds	—		29		266		12		1		266
U.S. government bonds	1		61		738		15		9		856
Other debt securities	—		—		8		—		—		5
Total NDTF Investments	$	1,512	$	167	$	3,854	$	2,060	$	36	$	4,642
Other Investments
Cash and cash equivalents	$	—	$	—	$	11	$	—	$	—	$	20
Municipal bonds	—		—		25		2		—		26
Total Other Investments	$	—	$	—	$	36	$	2	$	—	$	46
Total Investments	$	1,512	$	167	$	3,890	$	2,062	$	36	$	4,688

Years Ended December 31,
(in millions) 2020 2019 2018
FV-NI:
Realized gains $ 302 $ 59 $ 79
Realized losses 75 44 53
AFS:
Realized gains 24 36 3
Realized losses 13 29 15

~~198~~


~~FINANCIAL STATEMENTS~~			~~INVESTMENTS IN DEBT AND EQUITY SECURITIES~~


	Years Ended December 31,
(in millions)	2022		2021		2020
FV-NI:
Realized gains	$	77	$	284	$	302
Realized losses	139		45		75
AFS:
Realized gains	6		16		24
Realized losses	48		14		13

DUKE ENERGY PROGRESS

The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.


		December 31, 2020						December 31, 2019							December 31, 2022						December 31, 2021
		Gross		Gross				Gross		Gross					Gross		Gross				Gross		Gross
		Unrealized		Unrealized				Unrealized		Unrealized					Unrealized		Unrealized				Unrealized		Unrealized
		Holding		Holding		Estimated		Holding		Holding		Estimated			Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value		(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF	NDTF													NDTF
Cash and cash equivalents	Cash and cash equivalents	$	—	$	—	$	76	$	—	$	—	$	53	Cash and cash equivalents	$	—	$	—	$	56	$	—	$	—	$	94
Equity securities	Equity securities	1,617		31		2,459		1,258		21		2,077		Equity securities	1,431		54		2,411		1,915		23		2,970
Corporate debt securities	Corporate debt securities	27		—		296		16		—		242		Corporate debt securities	—		22		230		15		2		282
Municipal bonds	Municipal bonds	16		—		279		10		—		272		Municipal bonds	—		29		266		12		1		266
U.S. government bonds	U.S. government bonds	26		—		412		16		—		403		U.S. government bonds	1		37		460		15		3		472
Other debt securities	Other debt securities	1		0		6		0		0		4		Other debt securities	—		—		7		—		—		5
Total NDTF Investments	Total NDTF Investments	$	1,687	$	31	$	3,528	$	1,300	$	21	$	3,051	Total NDTF Investments	$	1,432	$	142	$	3,430	$	1,957	$	29	$	4,089
Other Investments	Other Investments													Other Investments
Cash and cash equivalents	Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	2	Cash and cash equivalents	$	—	$	—	$	9	$	—	$	—	$	16
Total Other Investments	Total Other Investments	$	0	$	0	$	1	$	0	$	0	$	2	Total Other Investments	$	—	$	—	$	9	$	—	$	—	$	16
Total Investments	Total Investments	$	1,687	$	31	$	3,529	$	1,300	$	21	$	3,053	Total Investments	$	1,432	$	142	$	3,439	$	1,957	$	29	$	4,105

~~The table below summarizes the maturity date for debt securities.~~

183


~~(in millions)~~FINANCIAL STATEMENTS	~~December 31, 2020~~INVESTMENTS IN DEBT AND EQUITY SECURITIES
~~Due in one year or less~~	$	21
~~Due after one through five years~~	~~259~~
~~Due after five through 10 years~~	~~210~~
~~Due after 10 years~~	~~503~~
~~Total~~	$	~~993~~

Years Ended December 31,
(in millions) 2020 2019 2018
FV-NI:
Realized gains $ 52 $ 38 $ 68
Realized losses 59 33 48
AFS:
Realized gains 24 7 2
Realized losses 13 5 10

~~199~~


~~FINANCIAL STATEMENTS~~			~~INVESTMENTS IN DEBT AND EQUITY SECURITIES~~


	Years Ended December 31,
(in millions)	2022		2021		2020
FV-NI:
Realized gains	$	76	$	283	$	52
Realized losses	136		44		59
AFS:
Realized gains	6		15		24
Realized losses	44		13		13

DUKE ENERGY FLORIDA

The following table presents the estimated fair value of investments in debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.


		December 31, 2020						December 31, 2019							December 31, 2022						December 31, 2021
		Gross		Gross				Gross		Gross					Gross		Gross				Gross		Gross
		Unrealized		Unrealized				Unrealized		Unrealized					Unrealized		Unrealized				Unrealized		Unrealized
		Holding		Holding		Estimated		Holding		Holding		Estimated			Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value		(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF	NDTF													NDTF
Cash and cash equivalents	Cash and cash equivalents	$	—	$	—	$	71	$	—	$	—	$	27	Cash and cash equivalents	$	—	$	—	$	42	$	—	$	—	$	13
Equity securities	Equity securities	79		—		91		351		26		430		Equity securities	80		—		93		103		1		115

Corporate debt securities														Corporate debt securities	—		1		10		—		—		41

U.S. government bonds	U.S. government bonds	—		—		474		1		—		275		U.S. government bonds	—		24		278		—		6		384

Other debt securities														Other debt securities	—		—		1		—		—		—
Total NDTF Investments(a)	Total NDTF Investments(a)	$	79	$	0	$	636	$	352	$	26	$	732	Total NDTF Investments(a)	$	80	$	25	$	424	$	103	$	7	$	553
Other Investments	Other Investments													Other Investments
Cash and cash equivalents	Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	4	Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	3
Municipal bonds	Municipal bonds	3		0		26		3		0		51		Municipal bonds	—		—		25		2		—		26
Total Other Investments	Total Other Investments	$	3	$	0	$	27	$	3	$	0	$	55	Total Other Investments	$	—	$	—	$	26	$	2	$	—	$	29
Total Investments	Total Investments	$	82	$	0	$	663	$	355	$	26	$	787	Total Investments	$	80	$	25	$	450	$	105	$	7	$	582

(a) During the years ended December 31, ~~2020,~~2022, and ~~2019,~~2021, Duke Energy Florida continued to receive reimbursements from the NDTF for costs related to ongoing decommissioning activity of the Crystal River Unit 3.

~~The table below summarizes the maturity date for debt securities.~~


~~(in millions)~~	~~December 31, 2020~~
~~Due in one year or less~~	$	88
~~Due after one through five years~~	~~308~~
~~Due after five through 10 years~~	88
~~Due after 10 years~~	16
~~Total~~	$	~~500~~


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		2018		(in millions)	2022		2021		2020
FV-NI:	FV-NI:							FV-NI:
Realized gains	Realized gains	$	250	$	21	$	11	Realized gains	$	1	$	1	$	250
Realized losses	Realized losses	16		11		5		Realized losses	3		1		16
AFS:	AFS:							AFS:
Realized gains	Realized gains	0		29		1		Realized gains	—		1		—
Realized losses	Realized losses	0		24		5		Realized losses	4		1		—

~~200~~184


FINANCIAL STATEMENTS			INVESTMENTS IN DEBT AND EQUITY SECURITIES

DUKE ENERGY INDIANA

The following table presents the estimated fair value of investments in debt and equity securities; equity investments are measured at FV-NI and debt investments are classified as AFS.

~~The table below summarizes the maturity date for debt securities.~~


~~(in millions)~~	~~December 31, 2020~~
~~Due in one year or less~~	$	3
~~Due after one through five years~~	17
~~Due after five through 10 years~~	10
~~Due after 10 years~~	15
~~Total~~	$	45


	December 31, 2022						December 31, 2021
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
Investments
Cash and cash equivalents	$	—	$	—	$	1	$	—	$	—	$	—
Equity securities	2		16		79		6		—		97
Corporate debt securities	—		1		8		—		—		6
Municipal bonds	—		3		45		1		1		46
U.S. government bonds	—		—		7		—		—		12


Total Investments	$	2	$	20	$	140	$	7	$	1	$	161

DEBT SECURITY MATURITIES

~~16.~~The table below summarizes the maturity date for debt securities.


	December 31, 2022
			Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Indiana
Due in one year or less	$	137	$	7	$	89	$	24	$	65	$	8
Due after one through five years	807		287		443		244		199		22
Due after five through 10 years	469		230		193		178		15		6
Due after 10 years	1,402		774		552		517		35		24
Total	$	2,815	$	1,298	$	1,277	$	963	$	314	$	60

17. FAIR VALUE MEASUREMENTS

Fair value is the exchange price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The fair value definition focuses on an exit price versus the acquisition cost. Fair value measurements use market data or assumptions market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs may be readily observable, corroborated by market data, or generally unobservable. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. A midmarket pricing convention (the midpoint price between bid and ask prices) is permitted for use as a practical expedient.

Fair value measurements are classified in three levels based on the fair value hierarchy as defined by GAAP. Certain investments are not categorized within the fair value hierarchy. These investments are measured at fair value using the net asset value per share practical expedient. The net asset value is derived based on the investment cost, less any impairment, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer.

Fair value accounting guidance permits entities to elect to measure certain financial instruments that are not required to be accounted for at fair value, such as equity method investments or the company’s own debt, at fair value. The Duke Energy Registrants have not elected to record any of these items at fair value.

Valuation methods of the primary fair value measurements disclosed below are as follows.

Investments in equity securities

The majority of investments in equity securities are valued using Level 1 measurements. Investments in equity securities are typically valued at the closing price in the principal active market as of the last business day of the quarter. Principal active markets for equity prices include published exchanges such as the NYSE and Nasdaq Stock Market. Foreign equity prices are translated from their trading currency using the currency exchange rate in effect at the close of the principal active market. There was no after-hours market activity that was required to be reflected in the reported fair value measurements.

Investments in debt securities

Most investments in debt securities are valued using Level 2 measurements because the valuations use interest rate curves and credit spreads applied to the terms of the debt instrument (maturity and coupon interest rate) and consider the counterparty credit rating. If the market for a particular fixed-income security is relatively inactive or illiquid, the measurement is Level 3.

~~201~~185


FINANCIAL STATEMENTS			FAIR VALUE MEASUREMENTS

Commodity derivatives

Commodity derivatives with clearinghouses are classified as Level 1. Commodity derivatives with observable forward curves are classified as Level 2. If forward price curves are not observable for the full term of the contract and the unobservable period had more than an insignificant impact on the valuation, the commodity derivative is classified as Level 3. In isolation, increases (decreases) in natural gas forward prices result in favorable (unfavorable) fair value adjustments for natural gas purchase contracts; and increases (decreases) in electricity forward prices result in unfavorable (favorable) fair value adjustments for electricity sales contracts. Duke Energy regularly evaluates and validates pricing inputs used to estimate the fair value of natural gas commodity contracts by a market participant price verification procedure. This procedure provides a comparison of internal forward commodity curves to market participant generated curves.

Interest rate derivatives

Most over-the-counter interest rate contract derivatives are valued using financial models that utilize observable inputs for similar instruments and are classified as Level 2. Inputs include forward interest rate curves, notional amounts, interest rates and credit quality of the counterparties. Derivatives related to interest rate risk for the Commercial Renewables Disposal Groups are included in the following disclosures. See Note 2 for further information.

Other fair value considerations

See Note 112 for further information on the valuation of the Commercial Renewables Disposal Groups. See Note 12 for a discussion of the valuation of goodwill and intangible assets.

DUKE ENERGY

The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets. Derivative amounts in the tables below for all Duke Energy Registrants exclude cash collateral, which is disclosed in Note ~~14.~~15. See Note 1516 for additional information related to investments by major security type for the Duke Energy Registrants.


		December 31, 2020											December 31, 2022
(in millions)	(in millions)	Total Fair Value		Level 1		Level 2		Level 3		Not Categorized		(in millions)	Total Fair Value		Level 1		Level 2		Level 3		Not Categorized
NDTF cash and cash equivalents	NDTF cash and cash equivalents	$	177	$	177	$	0	$	0	$	0	NDTF cash and cash equivalents	$	215	$	215	$	—	$	—	$	—
NDTF equity securities	NDTF equity securities	6,235		6,189		—		—		46		NDTF equity securities	5,871		5,829		—		—		42
NDTF debt securities	NDTF debt securities	2,717		874		1,843		—		—		NDTF debt securities	2,550		780		1,770		—		—
Other equity securities	Other equity securities	146		146		—		—		—		Other equity securities	128		128		—		—		—
Other debt securities	Other debt securities	285		37		248		—		—		Other debt securities	265		55		210		—		—
Other cash and cash equivalents	Other cash and cash equivalents	127		127		0		0		0		Other cash and cash equivalents	22		22		—		—		—
Derivative assets	Derivative assets	61		1		53		7		—		Derivative assets	836		1		801		34		—
Total assets	Total assets	9,748		7,551		2,144		7		46		Total assets	9,887		7,030		2,781		34		42

Derivative liabilities	Derivative liabilities	(324)		0		(240)		(84)		—		Derivative liabilities	(437)		(16)		(421)		—		—
Net assets (liabilities)	Net assets (liabilities)	$	9,424	$	7,551	$	1,904	$	(77)	$	46	Net assets (liabilities)	$	9,450	$	7,014	$	2,360	$	34	$	42


		December 31, 2019											December 31, 2021
(in millions)	(in millions)	Total Fair Value		Level 1		Level 2		Level 3		Not Categorized		(in millions)	Total Fair Value		Level 1		Level 2		Level 3		Not Categorized
NDTF cash and cash equivalents	NDTF cash and cash equivalents	$	101	$	101	$	0	$	0	$	0	NDTF cash and cash equivalents	$	160	$	160	$	—	$	—	$	—
NDTF equity securities	NDTF equity securities	5,684		5,633		—		—		51		NDTF equity securities	7,350		7,300		—		—		50
NDTF debt securities	NDTF debt securities	2,368		725		1,643		—		—		NDTF debt securities	2,891		967		1,924		—		—
Other equity securities	Other equity securities	122		122		—		—		—		Other equity securities	156		156		—		—		—
Other debt securities	Other debt securities	258		39		219		—		—		Other debt securities	300		45		255		—		—
Other cash and cash equivalents	Other cash and cash equivalents	52		52		0		0		0		Other cash and cash equivalents	36		36		—		—		—
Derivative assets	Derivative assets	25		3		7		15		—		Derivative assets	320		3		293		24		—
Total assets	Total assets	8,610		6,675		1,869		15		51		Total assets	11,213		8,667		2,472		24		50
NDTF equity security contracts		(23)		0		(23)		0		—

Derivative liabilities	Derivative liabilities	(277)		(15)		(145)		(117)		—		Derivative liabilities	(327)		(13)		(314)		—		—
Net assets (liabilities)	Net assets (liabilities)	$	8,310	$	6,660	$	1,701	$	(102)	$	51	Net assets (liabilities)	$	10,886	$	8,654	$	2,158	$	24	$	50

~~202~~186


FINANCIAL STATEMENTS			FAIR VALUE MEASUREMENTS

The following table provides reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.

Derivatives (net)
Years Ended December 31,
(in millions) 2020 2019
Balance at beginning of period $ (102) $ (113)
Total pretax realized or unrealized losses included in comprehensive income (84) 0
Purchases, sales, issuances and settlements:
Purchases 14 37
Settlements (19) (44)
Net transfers Out of Level 3(a)
117 0
Total (losses) gains included on the Consolidated Balance Sheet (3) 18
Balance at end of period $ (77) $ (102)

~~(a)Transferred from Level 3 to Level 2 because observable market data became available.~~


	Derivatives (net)
	Years Ended December 31,

(in millions)	2022		2021
Balance at beginning of period	$	24	$	8



Purchases, sales, issuances and settlements:
Purchases	78		21


Settlements	(36)		(20)

Total gains (losses) included on the Consolidated Balance Sheet	(32)		15
Balance at end of period	$	34	$	24

DUKE ENERGY CAROLINAS

The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.


		December 31, 2020								December 31, 2022
(in millions)	(in millions)	Total Fair Value		Level 1		Level 2		Not Categorized			(in millions)	Total Fair Value		Level 1		Level 2		Not Categorized
NDTF cash and cash equivalents	NDTF cash and cash equivalents	$	30	$	30	$	0	$	0		NDTF cash and cash equivalents	$	117	$	117	$	—	$	—
NDTF equity securities	NDTF equity securities	3,685		3,639		—		46			NDTF equity securities	3,367		3,325		—		42
NDTF debt securities	NDTF debt securities	1,250		192		1,058		—			NDTF debt securities	1,298		323		975		—

Derivative assets	Derivative assets	20		0		20		0			Derivative assets	330		—		330		—
Total assets	Total assets	4,985		3,861		1,078		46			Total assets	5,112		3,765		1,305		42
Derivative liabilities	Derivative liabilities	(20)		—		(20)		—			Derivative liabilities	(127)		—		(127)		—
Net assets	Net assets	$	4,965	$	3,861	$	1,058	$	46		Net assets	$	4,985	$	3,765	$	1,178	$	42

December 31, 2019
(in millions) Total Fair Value Level 1 Level 2 Not Categorized
NDTF cash and cash equivalents $ 21 $ 21 $ 0 $ 0
NDTF equity securities 3,154 3,103 — 51
NDTF debt securities 1,172 206 966 —
Total assets 4,347 3,330 966 51
Derivative liabilities (49) — (49) —
Net assets $ 4,298 $ 3,330 $ 917 $ 51

~~203~~


~~FINANCIAL STATEMENTS~~			~~FAIR VALUE MEASUREMENTS~~


	December 31, 2021
(in millions)	Total Fair Value		Level 1		Level 2		Not Categorized
NDTF cash and cash equivalents	$	53	$	53	$	—	$	—
NDTF equity securities	4,265		4,215		—		50
NDTF debt securities	1,441		339		1,102		—

Derivative assets	162		—		162		—
Total assets	5,921		4,607		1,264		50
Derivative liabilities	(35)		—		(35)		—
Net assets	$	5,886	$	4,607	$	1,229	$	50

PROGRESS ENERGY

The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.


		December 31, 2020						December 31, 2019							December 31, 2022						December 31, 2021
(in millions)	(in millions)	Total Fair Value		Level 1		Level 2			Total Fair Value		Level 1		Level 2			(in millions)	Total Fair Value		Level 1		Level 2		Total Fair Value		Level 1		Level 2
NDTF cash and cash equivalents	NDTF cash and cash equivalents	$	147	$	147	$	0		$	80	$	80	$	0		NDTF cash and cash equivalents	$	98	$	98	$	—	$	107	$	107	$	—
NDTF equity securities	NDTF equity securities	2,550		2,550		—			2,530		2,530		—			NDTF equity securities	2,504		2,504		—		3,085		3,085		—
NDTF debt securities	NDTF debt securities	1,467		682		785			1,196		519		677			NDTF debt securities	1,252		457		795		1,450		628		822
Other debt securities	Other debt securities	26		—		26			51		—		51			Other debt securities	25		—		25		26		—		26
Other cash and cash equivalents	Other cash and cash equivalents	106		106		0			49		49		0			Other cash and cash equivalents	11		11		—		20		20		—
Derivative assets	Derivative assets	33		—		33			7		—		7			Derivative assets	248		—		248		124		—		124
Total assets	Total assets	4,329		3,485		844			3,913		3,178		735			Total assets	4,138		3,070		1,068		4,812		3,840		972
NDTF equity security contracts		—		—		—			(23)		—		(23)

Derivative liabilities	Derivative liabilities	(29)		—		(29)			(65)		—		(65)			Derivative liabilities	(66)		—		(66)		(24)		—		(24)
Net assets	Net assets	$	4,300	$	3,485	$	815		$	3,825	$	3,178	$	647		Net assets	$	4,072	$	3,070	$	1,002	$	4,788	$	3,840	$	948

187


FINANCIAL STATEMENTS			FAIR VALUE MEASUREMENTS

DUKE ENERGY PROGRESS

The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.


		December 31, 2020						December 31, 2019							December 31, 2022								December 31, 2021
(in millions)	(in millions)	Total Fair Value		Level 1		Level 2			Total Fair Value		Level 1		Level 2			(in millions)	Total Fair Value		Level 1		Level 2			Total Fair Value		Level 1		Level 2
NDTF cash and cash equivalents	NDTF cash and cash equivalents	$	76	$	76	$	0		$	53	$	53	$	0		NDTF cash and cash equivalents	$	56	$	56	$	—		$	94	$	94	$	—
NDTF equity securities	NDTF equity securities	2,459		2,459		—			2,077		2,077		—			NDTF equity securities	2,411		2,411		—			2,970		2,970		—
NDTF debt securities	NDTF debt securities	993		237		756			921		244		677			NDTF debt securities	963		225		738			1,025		289		736

Other cash and cash equivalents	Other cash and cash equivalents	1		1		0			2		2		0			Other cash and cash equivalents	9		9		—			16		16		—
Derivative assets	Derivative assets	33		—		33			—		—		0			Derivative assets	230		—		230			124		—		124
Total assets	Total assets	3,562		2,773		789			3,053		2,376		677			Total assets	3,669		2,701		968			4,229		3,369		860
Derivative liabilities	Derivative liabilities	(14)		—		(14)			(49)		—		(49)			Derivative liabilities	(48)		—		(48)			(10)		—		(10)
Net assets	Net assets	$	3,548	$	2,773	$	775		$	3,004	$	2,376	$	628		Net assets	$	3,621	$	2,701	$	920		$	4,219	$	3,369	$	850

DUKE ENERGY FLORIDA

The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.


		December 31, 2020						December 31, 2019							December 31, 2022						December 31, 2021
(in millions)	(in millions)	Total Fair Value		Level 1		Level 2		Total Fair Value		Level 1		Level 2		(in millions)	Total Fair Value		Level 1		Level 2		Total Fair Value		Level 1		Level 2
NDTF cash and cash equivalents	NDTF cash and cash equivalents	$	71	$	71	$	0	$	27	$	27	$	0	NDTF cash and cash equivalents	$	42	$	42	$	—	$	13	$	13	$	—
NDTF equity securities	NDTF equity securities	91		91		—		453		453		—		NDTF equity securities	93		93		—		115		115		—
NDTF debt securities	NDTF debt securities	474		445		29		275		275		—		NDTF debt securities	289		232		57		425		339		86
Other debt securities	Other debt securities	26		—		26		51		—		51		Other debt securities	25		—		25		26		—		26
Other cash and cash equivalents	Other cash and cash equivalents	1		1		0		4		4		0		Other cash and cash equivalents	1		1		—		3		3		—
Derivative assets	Derivative assets	—		—		—		7		—		7		Derivative assets	17		—		17		—		—		—
Total assets	Total assets	663		608		55		817		759		58		Total assets	467		368		99		582		470		112
NDTF equity security contracts		—		—		—		(23)		—		(23)

Derivative liabilities	Derivative liabilities	—		—		—		(1)		—		(1)		Derivative liabilities	(19)		—		(19)		(14)		—		(14)
Net assets	Net assets	$	663	$	608	$	55	$	793	$	759	$	34	Net assets	$	448	$	368	$	80	$	568	$	470	$	98

DUKE ENERGY OHIO

The recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets were not material at December 31, ~~2020,~~2022, and ~~2019.~~

~~204~~


~~FINANCIAL STATEMENTS~~			~~FAIR VALUE MEASUREMENTS~~

2021.

DUKE ENERGY INDIANA

The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.


		December 31, 2020								December 31, 2019									December 31, 2022								December 31, 2021
(in millions)	(in millions)	Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		(in millions)	Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3
Other equity securities	Other equity securities	$	97	$	97	$	—	$	—	$	81	$	81	$	—	$	—	Other equity securities	$	79	$	79	$	—	$	—	$	97	$	97	$	—	$	—
Other debt securities	Other debt securities	45		—		45		—		44		—		44		—		Other debt securities	60		—		60		—		64		—		64		—
Other cash equivalents	Other cash equivalents	1		1		0		0		0		0		0		—		Other cash equivalents	1		1		—		—		—		—		—		—
Derivative assets	Derivative assets	6		—		—		6		13		2		—		11		Derivative assets	110		—		81		29		23		1		—		22
Total assets	Total assets	149		98		45		6		138		83		44		11		Total assets	250		80		141		29		184		98		64		22
Derivative liabilities	Derivative liabilities	(1)		(1)		—		—		(1)		(1)		—		—		Derivative liabilities	(16)		(16)		—		—		(27)		(13)		(14)		—
Total assets		$	148	$	97	$	45	$	6	$	137	$	82	$	44	$	11
Net assets																		Net assets	$	234	$	64	$	141	$	29	$	157	$	85	$	50	$	22

188


FINANCIAL STATEMENTS			FAIR VALUE MEASUREMENTS

The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.


		Derivatives (net)					Derivatives (net)
		Years Ended December 31,					Years Ended December 31,
(in millions)	(in millions)	2020		2019		(in millions)	2022		2021
Balance at beginning of period	Balance at beginning of period	$	11	$	22	Balance at beginning of period	$	22	$	6

Purchases, sales, issuances and settlements:	Purchases, sales, issuances and settlements:					Purchases, sales, issuances and settlements:
Purchases	Purchases	10		28		Purchases	74		18

Settlements	Settlements	(13)		(36)		Settlements	(32)		(16)

Total losses included on the Consolidated Balance Sheet		(2)		(3)
Total (losses) gains included on the Consolidated Balance Sheet						Total (losses) gains included on the Consolidated Balance Sheet	(35)		14
Balance at end of period	Balance at end of period	$	6	$	11	Balance at end of period	$	29	$	22

PIEDMONT

The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets.

December 31, 2020 December 31, 2019
(in millions) Total Fair Value Level 1 Level 2 Total Fair Value Level 1 Level 3
Derivative assets $ 1 $ 1 $ — $ 1 $ 1 $ —
Derivative liabilities (122) — (122) (117) — (117)
Net (liabilities) assets $ (121) $ 1 $ (122) $ (116) $ 1 $ (117)

~~The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.~~

Derivatives (net)
Years Ended December 31,
(in millions) 2020 2019
Balance at beginning of period $ (117) $ (141)
Net transfers Out of Level 3(a)
117 0
Total gains and settlements 0 24
Balance at end of period $ 0 $ (117)

~~(a) Transferred from Level 3 to Level 2 because observable market data became available.~~

~~205~~


~~FINANCIAL STATEMENTS~~			~~FAIR VALUE MEASUREMENTS~~


	December 31, 2022						December 31, 2021
(in millions)	Total Fair Value		Level 1		Level 2			Total Fair Value		Level 1		Level 2


Derivative assets	$	—	$	—	$	—		$	3	$	3	$	—

Derivative liabilities	(168)		—		(168)			(139)		—		(139)
Net (liabilities) assets	$	(168)	$	—	$	(168)		$	(136)	$	3	$	(139)

QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS

The following tables include quantitative information about the Duke Energy Registrants' derivatives classified as Level 3.

December 31, 2020

December 31, 2022

Weighted

Fair Value

Average

Fair Value

Average

Investment Type

(in millions)

Valuation Technique

Unobservable Input

Range

Investment Type

(in millions)

Valuation Technique

Unobservable Input

Range

Duke Energy

Electricity contracts

(84)

Discounted cash flow

Forward electricity curves – price per MWh

14.68

–

151.84

28.84

Duke Energy Ohio

FTRs

RTO auction pricing

FTR price – per MWh

0.25

–

1.68

0.79

FTRs

RTO auction pricing

FTR price – per MWh

0.89

–

6.25

3.35

Duke Energy Indiana

FTRs

RTO auction pricing

FTR price – per MWh

(2.40)

–

7.41

1.05

FTRs

RTO auction pricing

FTR price – per MWh

0.09

–

21.79

2.74

Duke Energy

Total Level 3 derivatives

(77)

Total Level 3 derivatives

December 31, 2019

December 31, 2021

Weighted

Fair Value

Average

Fair Value

Average

Investment Type

(in millions)

Valuation Technique

Unobservable Input

Range

Investment Type

(in millions)

Valuation Technique

Unobservable Input

Range

Duke Energy Ohio

FTRs

RTO auction pricing

FTR price – per MWh

0.59

–

3.47

2.07

FTRs

RTO auction pricing

FTR price – per MWh

0.06

–

1.79

0.96

Duke Energy Indiana

FTRs

RTO auction pricing

FTR price – per MWh

(0.66)

–

9.24

1.15

FTRs

RTO auction pricing

FTR price – per MWh

(1.18)

–

13.11

2.68

Piedmont

Natural gas contracts

(117)

Discounted cash flow

Forward natural gas curves – price per MMBtu

1.59

–

2.46

1.91

Duke Energy

Total Level 3 derivatives

(102)

Total Level 3 derivatives

189


FINANCIAL STATEMENTS			FAIR VALUE MEASUREMENTS

OTHER FAIR VALUE DISCLOSURES

The fair value and book value of long-term debt, including current maturities, is summarized in the following table. The following disclosures include debt attributable to the Commercial Renewables Disposal Groups. See Note 2 for further details. Estimates determined are not necessarily indicative of amounts that could have been settled in current markets. Fair value of long-term debt uses Level 2 measurements.


		December 31, 2020				December 31, 2019					December 31, 2022				December 31, 2021
(in millions)	(in millions)	Book Value		Fair Value		Book Value		Fair Value		(in millions)	Book Value		Fair Value		Book Value		Fair Value
Duke Energy(a)	Duke Energy(a)	$	59,863	$	69,292	$	58,126	$	63,062	Duke Energy(a)	$	71,215	$	63,454	$	63,835	$	69,683
Duke Energy Carolinas	Duke Energy Carolinas	12,218		14,917		11,900		13,516		Duke Energy Carolinas	14,266		12,943		13,275		15,101
Progress Energy	Progress Energy	19,264		23,470		19,634		22,291		Progress Energy	22,439		20,467		20,823		23,751
Duke Energy Progress	Duke Energy Progress	9,258		10,862		9,058		9,934		Duke Energy Progress	11,087		9,689		10,249		11,252
Duke Energy Florida	Duke Energy Florida	7,915		9,756		7,987		9,131		Duke Energy Florida	9,709		8,991		8,482		9,772
Duke Energy Ohio	Duke Energy Ohio	3,089		3,650		2,619		2,964		Duke Energy Ohio	3,245		2,927		3,193		3,570
Duke Energy Indiana	Duke Energy Indiana	4,091		5,204		4,057		4,800		Duke Energy Indiana	4,307		3,913		4,323		5,067
Piedmont	Piedmont	2,780		3,306		2,384		2,642		Piedmont	3,363		2,940		2,968		3,278

(a) Book value of long-term ~~debt~~debt includes ~~$1.3~~$1.17 billion as of December 31, ~~2020,~~2022, and ~~$1.5~~$1.25 billion as of December 31, ~~2019,~~2021, of unamortized debt discount and premium, net in purchase accounting adjustments related to the mergers with Progress Energy and Piedmont that are excluded from fair value of long-term debt.

At both December 31, ~~2020,~~2022, and December 31, ~~2019,~~2021, fair value of cash and cash equivalents, accounts and notes receivable, accounts payable, notes payable and commercial paper, and nonrecourse notes payable of VIEs are not materially different from their carrying amounts because of the short-term nature of these instruments and/or because the stated rates approximate market rates.

~~206~~


~~FINANCIAL STATEMENTS~~			~~VARIABLE INTEREST ENTITIES~~

~~17.~~18. VARIABLE INTEREST ENTITIES

A VIE is an entity that is evaluated for consolidation using more than a simple analysis of voting control. The analysis to determine whether an entity is a VIE considers contracts with an entity, credit support for an entity, the adequacy of the equity investment of an entity and the relationship of voting power to the amount of equity invested in an entity. This analysis is performed either upon the creation of a legal entity or upon the occurrence of an event requiring reevaluation, such as a significant change in an entity’s assets or activities. A qualitative analysis of control determines the party that consolidates a VIE. This assessment is based on (i) what party has the power to direct the activities of the VIE that most significantly impact its economic performance and (ii) what party has rights to receive benefits or is obligated to absorb losses that could potentially be significant to the VIE. The analysis of the party that consolidates a VIE is a continual reassessment.

CONSOLIDATED VIEs

The obligations of the consolidated VIEs discussed in the following paragraphs are nonrecourse to the Duke Energy Registrants. The registrants have no requirement to provide liquidity to, purchase assets of or guarantee performance of these VIEs unless noted in the following paragraphs.

~~NaN~~No financial support was provided to any of the consolidated VIEs during the years ended December 31, ~~2020, 2019~~2022, 2021 and ~~2018,~~2020, or is expected to be provided in the future, that was not previously contractually required.

Receivables Financing – DERF/DEPR/DEFR

DERF, DEPR and DEFR are bankruptcy remote, special purpose subsidiaries of Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, respectively. DERF, DEPR and DEFR are wholly owned LLCs with separate legal existence from their parent companies, and their assets are not generally available to creditors of their parent companies. On a revolving basis, DERF, DEPR and DEFR buy certain accounts receivable arising from the sale of electricity and related services from their parent companies.

DERF, DEPR and DEFR borrow amounts under credit facilities to buy these receivables. Borrowing availability from the credit facilities is limited to the amount of qualified receivables purchased, which generally exclude receivables past due more than a predetermined number of days and reserves for expected past-due balances. The sole source of funds to satisfy the related debt obligations is cash collections from the receivables. Amounts borrowed under the credit facilities ~~for DERF and DEPR~~ are reflected on the Consolidated Balance Sheets as Long-Term Debt. ~~Amounts borrowed under the credit facilities for DEFR are reflected on the Consolidated Balance Sheets as Current maturities of long-term debt.~~

Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. Since taking action to suspend customer disconnections for nonpayment, certain jurisdictions have now returned to normal operations and billing practices. The full impact of COVID-19 and the Duke Energy Registrant’s related response on customers’ ability to pay for service is uncertain. However, the level of past-due receivables at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida have increased significantly during the COVID-19 pandemic, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates. In 2020, DERF, DEPR and DEFR executed amendments to their credit facilities to manage the impact of past-due receivables resulting from the suspension of customer disconnections from COVID-19. See Note 3 for information about COVID-19 filings with state utility commissions.

The most significant activity that impacts the economic performance of DERF, DEPR and DEFR are the decisions made to manage delinquent receivables. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are considered the primary beneficiaries and consolidate DERF, DEPR and DEFR, respectively, as they make those decisions.

Receivables Financing – CRC

CRC is a bankruptcy remote, special purpose entity indirectly owned by Duke Energy. On a revolving basis, CRC buys certain accounts receivable arising from the sale of electricity, natural gas and related services from Duke Energy Ohio and Duke Energy Indiana. CRC borrows amounts under a credit facility to buy the receivables from Duke Energy Ohio and Duke Energy Indiana. Borrowing availability from the credit facility is limited to the amount of qualified receivables sold to CRC, which generally exclude receivables past due more than a predetermined number of days and reserves for expected past-due balances. The sole source of funds to satisfy the related debt obligation is cash collections from the receivables. Amounts borrowed under the credit facility are reflected on Duke Energy's Consolidated Balance Sheets as Long-Term Debt.

190


FINANCIAL STATEMENTS			VARIABLE INTEREST ENTITIES

The proceeds Duke Energy Ohio and Duke Energy Indiana receive from the sale of receivables to CRC are approximately 75% cash and 25% in the form of a subordinated note from CRC. The subordinated note is a retained interest in the receivables sold. Depending on collection experience, additional equity infusions to CRC may be required by Duke Energy to maintain a minimum equity balance of $3 million.

Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. Since taking action to suspend customer disconnections for nonpayment, certain jurisdictions have now returned to normal operations and billing practices. The full impact of COVID-19 and the Duke Energy Registrant’s related response on customers’ ability to pay for service is uncertain. However, the level of past-due receivables at Duke Energy Ohio and Duke Energy Indiana have increased significantly during the COVID-19 pandemic, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates. In July of 2020, CRC executed an amendment to its credit facility to manage the impact of past-due receivables resulting from the suspension of customer disconnections from COVID-19. See Note 3 for information about COVID-19 filings with state utility commissions.

CRC is considered a VIE because (i) equity capitalization is insufficient to support its operations, (ii) power to direct the activities that most significantly impact the economic performance of the entity is not held by the equity holder and (iii) deficiencies in net worth of CRC are funded by Duke Energy. The most significant activities that impact the economic performance of CRC are decisions made to manage delinquent receivables. Duke Energy is considered the primary beneficiary and consolidates CRC as it makes these decisions. Neither Duke Energy Ohio nor Duke Energy Indiana consolidate CRC.

~~207~~


~~FINANCIAL STATEMENTS~~			~~VARIABLE INTEREST ENTITIES~~

Receivables Financing – Credit Facilities

The following table summarizes the amounts and expiration dates of the credit facilities and associated restricted receivables described above.

Duke Energy
Duke Energy Duke Energy Duke Energy
Carolinas Progress Florida
(in millions) CRC DERF DEPR DEFR
Expiration date February 2023 December 2022 April 2023 April 2021
Credit facility amount $ 350 $ 475 $ 350 $ 250
Amounts borrowed at December 31, 2020 350 364 250 250
Amounts borrowed at December 31, 2019 350 474 325 250
Restricted Receivables at December 31, 2020 547 696 500 397
Restricted Receivables at December 31, 2019 522 642 489 336


	Duke Energy
			Duke Energy		Duke Energy		Duke Energy
			Carolinas		Progress		Florida
(in millions)	CRC		DERF		DEPR		DEFR
Expiration date	February 2025		January 2025		April 2025		April 2023
Credit facility amount	$	350	$	500	$	400	$	250
Amounts borrowed at December 31, 2022	350		471		400		250
Amounts borrowed at December 31, 2021	350		475		350		250
Restricted Receivables at December 31, 2022	917		928		793		490
Restricted Receivables at December 31, 2021	587		844		574		427

Nuclear Asset-Recovery Bonds – Duke Energy Florida Project Finance, LLC (DEFPF)

DEFPF is a bankruptcy remote, wholly owned special purpose subsidiary of Duke Energy Florida. DEFPF was formed in 2016 for the sole purpose of issuing nuclear asset-recovery bonds to finance Duke Energy Florida's unrecovered regulatory asset related to Crystal River Unit 3.

In 2016, DEFPF issued senior secured bonds and used the proceeds to acquire nuclear asset-recovery property from Duke Energy Florida. The nuclear asset-recovery property acquired includes the right to impose, bill, collect and adjust a non-bypassable nuclear asset-recovery charge from all Duke Energy Florida retail customers until the bonds are paid in full and all financing costs have been recovered. The nuclear asset-recovery bonds are secured by the nuclear asset-recovery property and cash collections from the nuclear asset-recovery charges are the sole source of funds to satisfy the debt obligation. The bondholders have no recourse to Duke Energy Florida.

DEFPF is considered a VIE primarily because the equity capitalization is insufficient to support its operations. Duke Energy Florida has the power to direct the significant activities of the VIE as described above and therefore Duke Energy Florida is considered the primary beneficiary and consolidates DEFPF.

The following table summarizes the impact of DEFPF on Duke Energy Florida's Consolidated Balance Sheets.


		December 31,					December 31,
(in millions)	(in millions)	2020		2019		(in millions)	2022		2021
Receivables of VIEs	Receivables of VIEs	$	4	$	5	Receivables of VIEs	$	6	$	5
Regulatory Assets: Current	Regulatory Assets: Current	53		52		Regulatory Assets: Current	55		54
Current Assets: Other	Current Assets: Other	39		39		Current Assets: Other	41		39
Other Noncurrent Assets: Regulatory assets	Other Noncurrent Assets: Regulatory assets	937		989		Other Noncurrent Assets: Regulatory assets	826		883
Current Liabilities: Other	Current Liabilities: Other	10		10		Current Liabilities: Other	9		9
Current maturities of long-term debt	Current maturities of long-term debt	55		54		Current maturities of long-term debt	56		56
Long-Term Debt	Long-Term Debt	1,002		1,057		Long-Term Debt	890		946

~~Commercial Renewables~~Storm Recovery Bonds – Duke Energy Carolinas NC Storm Funding and Duke Energy Progress NC Storm Funding

~~Certain~~Duke Energy Carolinas NC Storm Funding, LLC. (DECNCSF) and Duke Energy Progress NC Storm Funding, LLC. (DEPNCSF) are bankruptcy remote, wholly owned special purpose subsidiaries of Duke ~~Energy’s renewable energy facilities~~Energy Carolinas and Duke Energy Progress, respectively. These entities were formed in 2021 for the sole purpose of issuing storm recovery bonds to finance certain of Duke Energy Carolinas’ and Duke Energy Progress’ unrecovered regulatory assets related to storm costs.

In November 2021, DECNCSF and DEPNCSF issued $237 million and $770 million of senior secured bonds, respectively and used the proceeds to acquire storm recovery property from Duke Energy Carolinas and Duke Energy Progress. The storm recovery property was created by state legislation and NCUC financing orders for the purpose of financing storm costs incurred in 2018 and 2019. The storm recovery property acquired includes the right to impose, bill, collect and adjust a non-bypassable charge from all Duke Energy Carolinas’ and Duke Energy Progress’ retail customers until the bonds are ~~VIEs due~~paid in full and all financing costs have been recovered. The storm recovery bonds are secured by the storm recovery property and cash collections from the storm recovery charges are the sole source of funds to satisfy the debt obligation. The bondholders have no recourse to Duke Energy ~~issuing guarantees for debt service and operations and maintenance reserves in support of debt financings. Assets are restricted and cannot be pledged as collateral~~Carolinas or ~~sold to third parties without prior approval of debt holders. Additionally,~~ Duke Energy has VIEs associated with tax equity arrangements entered into with third-party investors in order to finance the cost of renewable assets eligible for tax credits. The activities that most significantly impacted the economic performance of these renewable energy facilities were decisions associated with siting, negotiating PPAsProgress. For additional information, see Notes 4 and EPC agreements, and decisions associated with ongoing operations and maintenance-related activities. Duke Energy is considered the primary beneficiary and consolidates the entities as it is responsible for all of these decisions.7.

~~208~~191


FINANCIAL STATEMENTS			VARIABLE INTEREST ENTITIES

DECNCSF and DEPNCSF are considered VIEs primarily because the equity capitalization is insufficient to support their operations. Duke Energy Carolinas and Duke Energy Progress have the power to direct the significant activities of the VIEs as described above and therefore Duke Energy Carolinas and Duke Energy Progress are considered the primary beneficiaries and consolidate DECNCSF and DEPNCSF, respectively.

The following table ~~below presents material balances reported~~summarizes the impact of these VIEs on Duke ~~Energy's~~Energy Carolinas’ and Duke Energy Progress’ Consolidated Balance ~~Sheets related to Commercial Renewables VIEs.~~Sheets.


							Duke Energy Carolinas				Duke Energy Progress
		December 31,					December 31,
(in millions)	(in millions)	2020		2019		(in millions)	2022		2021		2022		2021
Regulatory Assets: Current						Regulatory Assets: Current	$	12	$	12	$	39	$	39
Current Assets: Other	Current Assets: Other	$	257	$	203	Current Assets: Other	8		—		29		—
Property, Plant and Equipment: Cost		6,394		5,747
Accumulated depreciation and amortization		(1,242)		(1,041)
Other Noncurrent Assets: Regulatory assets						Other Noncurrent Assets: Regulatory assets	208		220		681		720
Other Noncurrent Assets: Other	Other Noncurrent Assets: Other	67		106		Other Noncurrent Assets: Other	1		1		2		4

Current maturities of long-term debt	Current maturities of long-term debt	167		162		Current maturities of long-term debt	10		5		34		15
Current Liabilities: Other						Current Liabilities: Other	3		1		8		2
Long-Term Debt	Long-Term Debt	1,569		1,541		Long-Term Debt	219		228		714		747

Other Noncurrent Liabilities: AROs		148		127
Other Noncurrent Liabilities: Other		316		228

NON-CONSOLIDATED VIEs

The following tables summarize the impact of non-consolidated VIEs on the Consolidated Balance Sheets.


		December 31, 2020								December 31, 2022
		Duke Energy				Duke		Duke		Duke Energy						Duke	Duke
		Pipeline		Commercial				Energy			Energy			Natural Gas				Energy		Energy
(in millions)	(in millions)	Investments		Renewables		Total		Ohio			Indiana		(in millions)	Investments				Ohio		Indiana
Receivables from affiliated companies	Receivables from affiliated companies	$	—	$	—	$	—	$	83		$	110	Receivables from affiliated companies	$	—			$	198	$	317

Investments in equity method unconsolidated affiliates	Investments in equity method unconsolidated affiliates	—		530		530		—			—		Investments in equity method unconsolidated affiliates	43				—		—
Other noncurrent assets	Other noncurrent assets	31		—		31		—			—		Other noncurrent assets	45				—		—
Total assets	Total assets	$	31	$	530	$	561	$	83		$	110	Total assets	$	88			$	198	$	317

Other current liabilities	Other current liabilities	928		5		933		—			—		Other current liabilities	59				—		—

Other noncurrent liabilities	Other noncurrent liabilities	8		10		18		—			—		Other noncurrent liabilities	47				—		—
Total liabilities	Total liabilities	$	936	$	15	$	951	$	—		$	—	Total liabilities	$	106			$	—	$	—
Net assets (liabilities)		$	(905)	$	515	$	(390)	$	83		$	110
Net (liabilities) assets													Net (liabilities) assets	$	(18)			$	198	$	317


		December 31, 2019								December 31, 2021
		Duke Energy				Duke		Duke		Duke Energy						Duke	Duke
		Pipeline		Commercial				Energy			Energy			Natural Gas				Energy		Energy
(in millions)	(in millions)	Investments		Renewables		Total		Ohio			Indiana		(in millions)	Investments				Ohio		Indiana
Receivables from affiliated companies	Receivables from affiliated companies	$	—	$	(1)	$	(1)	$	64		$	77	Receivables from affiliated companies	$	—			$	79	$	97

Investments in equity method unconsolidated affiliates	Investments in equity method unconsolidated affiliates	1,179		300		1,479		—			—		Investments in equity method unconsolidated affiliates	15				—		—
Other noncurrent assets													Other noncurrent assets	61				—		—
Total assets													Total assets	$	76			$	79	$	97

Total assets		$	1,179	$	299	$	1,478	$	64		$	77
Taxes accrued		(1)		—		(1)		—			—
Other current liabilities	Other current liabilities	—		4		4		—			—		Other current liabilities	47				—		—
Deferred income taxes		59		—		59		—			—

Other noncurrent liabilities	Other noncurrent liabilities	—		11		11		—			—		Other noncurrent liabilities	54				—		—
Total liabilities	Total liabilities	$	58	$	15	$	73	$	—		$	—	Total liabilities	$	101			$	—	$	—
Net assets		$	1,121	$	284	$	1,405	$	64		$	77
Net (liabilities) assets													Net (liabilities) assets	$	(25)			$	79	$	97

The Duke Energy Registrants are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying values shown ~~above except for the PPA with OVEC, which is discussed below, and future exit costs associated with the cancellation of the ACP pipeline, as discussed below.~~above.

~~Pipeline~~Natural Gas Investments

Duke Energy has investments in various joint ventures ~~to construct~~including pipeline and ~~operate pipeline~~renewable natural gas projects. These entities are considered VIEs due to having insufficient equity to finance their own activities without subordinated financial support. Duke Energy does not have the power to direct the activities that most significantly impact the economic performance, the obligation to absorb losses or the right to receive benefits of these VIEs and therefore does not consolidate these entities.

Duke Energy has a 47% ownership interest in ACP. In 2020, Duke Energy determined that it would no longer invest in the construction of the ACP pipeline. ~~The current liability related to the cancellation of the ACP pipeline represents~~In February 2021, Duke ~~Energy's continuing obligation~~Energy paid approximately $855 million to fund ACP's outstanding debt, relieving Duke Energy of its ~~share of ACP's obligations.~~guarantee. See Notes ~~3, 7~~4, 8 and 1213 for further information regarding this transaction.

~~209~~192


FINANCIAL STATEMENTS			VARIABLE INTEREST ENTITIES

~~Commercial Renewables~~

Duke Energy has investments in various renewable energy project entities. Some of these entities are VIEs due to Duke Energy issuing guarantees for debt service and operations and maintenance reserves in support of debt financings. Duke Energy does not consolidate these VIEs because power to direct and control key activities is shared jointly by Duke Energy and other owners.

~~OVEC~~

Duke Energy Ohio’s 9% ownership interest in OVEC is considered a non-consolidated VIE due to OVEC having insufficient equity to finance its activities without subordinated financial support. The activities that most significantly impact OVEC's economic performance include fuel strategy and supply activities and decisions associated with ongoing operations and maintenance-related activities. Duke Energy Ohio does not have the unilateral power to direct these activities, and therefore, does not consolidate OVEC.

As a counterparty to an Inter-Company Power Agreement (ICPA), Duke Energy Ohio has a contractual arrangement to receive entitlements to capacity and energy from OVEC’s power plants through June 2040 commensurate with its power participation ratio, which is equivalent to Duke Energy Ohio's ownership interest. Costs, including fuel, operating expenses, fixed costs, debt amortization and interest expense, are allocated to counterparties to the ICPA based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuation in power prices and changes in OVEC's cost of business. On March 31, 2018, FES, a subsidiary of FirstEnergy Corp. and an ICPA counterparty with a power participation ratio of 4.85%, filed for Chapter 11 bankruptcy, which could increase costs allocated to the counterparties. On July 31, 2018, the bankruptcy court rejected the FES ICPA, which means OVEC is an unsecured creditor in the FES bankruptcy proceeding. Duke Energy Ohio cannot predict the impact of the bankruptcy filing on its OVEC interests. In addition, certain proposed environmental rulemaking could result in future increased OVEC cost allocations. In July 2020, legislation was proposed to repeal HB 6. Duke Energy cannot predict the outcome of this matter. See Note 3 for additional information.

CRC

See discussion under Consolidated VIEs for additional information related to CRC.

Amounts included in Receivables from affiliated companies in the above table for Duke Energy Ohio and Duke Energy Indiana reflect their retained interest in receivables sold to CRC. These subordinated notes held by Duke Energy Ohio and Duke Energy Indiana are stated at fair value. Carrying values of retained interests are determined by allocating carrying value of the receivables between assets sold and interests retained based on relative fair value. The allocated bases of the subordinated notes are not materially different than their face value because (i) the receivables generally turnover in less than two months, (ii) credit losses are reasonably predictable due to the broad customer base and lack of significant concentration and (iii) the equity in CRC is subordinate to all retained interests and thus would absorb losses first. The hypothetical effect on fair value of the retained interests assuming both a 10% and a 20% unfavorable variation in credit losses or discount rates is not material due to the short turnover of receivables and historically low credit loss history. Interest accrues to Duke Energy Ohio and Duke Energy Indiana on the retained interests using the acceptable yield method. This method generally approximates the stated rate on the notes since the allocated basis and the face value are nearly equivalent. An impairment charge is recorded against the carrying value of both retained interests and purchased beneficial interest whenever it is determined that an ~~OTTI~~other-than-temporary impairment has occurred.

Key assumptions used in estimating fair value are detailed in the following table.


		Duke Energy Ohio				Duke Energy Indiana					Duke Energy Ohio				Duke Energy Indiana
		2020		2019		2020		2019			2022		2021		2022		2021
Anticipated credit loss ratio	Anticipated credit loss ratio	0.5	%	0.6	%	0.3	%	0.3	%	Anticipated credit loss ratio	0.5	%	0.5	%	0.3	%	0.3	%
Discount rate	Discount rate	1.6	%	3.3	%	1.6	%	3.3	%	Discount rate	2.7	%	1.1	%	2.7	%	1.1	%
Receivable turnover rate	Receivable turnover rate	13.4	%	13.4	%	11.3	%	11.5	%	Receivable turnover rate	13.5	%	13.5	%	11.3	%	11.3	%

The following table shows the gross and net receivables sold.

Duke Energy Ohio Duke Energy Indiana
December 31, December 31,
(in millions) 2020 2019 2020 2019
Receivables sold $ 270 $ 253 $ 344 $ 307
Less: Retained interests 83 64 110 77
Net receivables sold $ 187 $ 189 $ 234 $ 230

~~210~~


~~FINANCIAL STATEMENTS~~			~~VARIABLE INTEREST ENTITIES~~


	Duke Energy Ohio				Duke Energy Indiana
	December 31,				December 31,
(in millions)	2022		2021		2022		2021
Receivables sold	$	423	$	269	$	508	$	328
Less: Retained interests	198		79		317		97
Net receivables sold	$	225	$	190	$	191	$	231

The following table shows sales and cash flows related to receivables sold.


		Duke Energy Ohio						Duke Energy Indiana							Duke Energy Ohio						Duke Energy Indiana
		Years Ended December 31,						Years Ended December 31,							Years Ended December 31,						Years Ended December 31,
(in millions)	(in millions)	2020		2019		2018		2020		2019		2018		(in millions)	2022		2021		2020		2022		2021		2020
Sales	Sales													Sales
Receivables sold	Receivables sold	$	1,905	$	1,979	$	1,987	$	2,631	$	2,837	$	2,842	Receivables sold	$	2,562	$	2,023	$	1,905	$	3,744	$	2,909	$	2,631
Loss recognized on sale	Loss recognized on sale	10		14		13		12		17		16		Loss recognized on sale	18		10		10		26		13		12
Cash flows	Cash flows													Cash flows
Cash proceeds from receivables sold	Cash proceeds from receivables sold	1,875		1,993		1,967		2,586		2,860		2,815		Cash proceeds from receivables sold	2,424		2,018		1,875		3,498		2,909		2,586
Collection fees received	Collection fees received	1		1		1		1		1		1		Collection fees received	1		1		1		2		1		1
Return received on retained interests	Return received on retained interests	4		6		6		5		9		9		Return received on retained interests	10		4		4		15		6		5

Cash flows from sales of receivables are reflected within Cash Flows From Operating Activities and Cash Flows from Investing Activities on Duke Energy Ohio’s and Duke Energy Indiana’s Consolidated Statements of Cash Flows.

Collection fees received in connection with servicing transferred accounts receivable are included in Operation, maintenance and other on Duke Energy Ohio’s and Duke Energy Indiana’s Consolidated Statements of Operations and Comprehensive Income. The loss recognized on sales of receivables is calculated monthly by multiplying receivables sold during the month by the required discount. The required discount is derived monthly utilizing a three-year weighted average formula that considers charge-off history, late charge history and turnover history on the sold receivables, as well as a component for the time value of money. The discount rate, or component for the time value of money, is the prior month-end ~~LIBOR~~Daily Simple SOFR plus a fixed rate of 1%.

~~18.~~19. REVENUE

Duke Energy recognizes revenue consistent with amounts billed under tariff offerings or at contractually agreed upon rates based on actual physical delivery of electric or natural gas service, including estimated volumes delivered when billings have not yet occurred. As such, the majority of Duke Energy’s revenues have fixed pricing based on the contractual terms of the published tariffs, with variability in expected cash flows attributable to the customer’s volumetric demand and ultimate quantities of energy or natural gas supplied and used during the billing period. The stand-alone selling price of related sales are designed to support recovery of prudently incurred costs and an appropriate return on invested assets and are primarily governed by published tariff rates or contractual agreements approved by relevant regulatory bodies. As described in Note 1, certain excise taxes and franchise fees levied by state or local governments are required to be paid even if not collected from the customer. These taxes are recognized on a gross basis as part of revenues. Duke Energy elects to account for all other taxes net of revenues.

193


FINANCIAL STATEMENTS			REVENUE

Performance obligations are satisfied over time as energy or natural gas is delivered and consumed with billings generally occurring monthly and related payments due within 30 days, depending on regulatory requirements. In no event does the timing between payment and delivery of the goods and services exceed one year. Using this output method for revenue recognition provides a faithful depiction of the transfer of electric and natural gas service as customers obtain control of the commodity and benefit from its use at delivery. Additionally, Duke Energy has an enforceable right to consideration for energy or natural gas delivered at any discrete point in time and will recognize revenue at an amount that reflects the consideration to which Duke Energy is entitled for the energy or natural gas delivered.

As described above, the majority of Duke Energy’s tariff revenues are at-will and, as such, related contracts with customers have an expected duration of one year or less and will not have future performance obligations for disclosure. Additionally, other long-term revenue streams, including wholesale contracts, generally provide services that are part of a single performance obligation, the delivery of electricity or natural gas. As such, other than material fixed consideration under long-term contracts, related disclosures for future performance obligations are also not applicable.

Duke Energy earns substantially all of its revenues through its reportable segments, ~~Electric Utilities~~EU&I and ~~Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables.~~GU&I.

Electric Utilities and Infrastructure

~~Electric Utilities and Infrastructure~~EU&I earns the majority of its revenues through retail and wholesale electric service through the generation, transmission, distribution and sale of electricity. Duke Energy generally provides retail and wholesale electric service customers with their full electric load requirements or with supplemental load requirements when the customer has other sources of electricity.

Retail electric service is generally marketed throughout Duke Energy's electric service territory through standard service offers. The standard service offers are through tariffs determined by regulators in Duke Energy's regulated service territory. Each tariff, which is assigned to customers based on customer class, has multiple components such as an energy charge, a demand charge, a basic facilities charge and applicable riders. Duke Energy considers each of these components to be aggregated into a single performance obligation for providing electric service, or in the case of distribution only customers in Duke Energy Ohio, for delivering electricity. Electricity is considered a single performance obligation satisfied over time consistent with the series guidance and is provided and consumed over the billing period, generally one month. Retail electric service is typically provided to at-will customers who can cancel service at any time, without a substantive penalty. Additionally, Duke Energy adheres to applicable regulatory requirements in each jurisdiction to ensure the collectability of amounts billed and appropriate mitigating procedures are followed when necessary. As such, revenue from contracts with customers for such contracts is equivalent to the electricity supplied and billed in that period (including unbilled estimates).

~~211~~


~~FINANCIAL STATEMENTS~~			~~REVENUE~~

Wholesale electric service is generally provided under long-term contracts using cost-based pricing. FERC regulates costs that may be recovered from customers and the amount of return companies are permitted to earn. Wholesale contracts include both energy and demand charges. For full requirements contracts, Duke Energy considers both charges as a single performance obligation for providing integrated electric service. For contracts where energy and demand charges are considered separate performance obligations, energy and demand are each a distinct performance obligation under the series guidance and are satisfied as energy is delivered and stand-ready service is provided on a monthly basis. This service represents consumption over the billing period and revenue is recognized consistent with billings and unbilled estimates, which generally occur monthly. Contractual amounts owed are typically trued up annually based upon incurred costs in accordance with FERC published filings and the specific customer’s actual peak demand. Estimates of variable consideration related to potential additional billings or refunds owed are updated quarterly.

The majority of wholesale revenues are full requirements contracts where the customers purchase the substantial majority of their energy needs and do not have a fixed quantity of contractually required energy or capacity. As such, related forecasted revenues are considered optional purchases. Supplemental requirements contracts that include contracted blocks of energy and capacity at contractually fixed prices have the following estimated remaining performance obligations:


		Remaining Performance Obligations															Remaining Performance Obligations
(in millions)	(in millions)	2021		2022		2023		2024		2025		Thereafter		Total		(in millions)	2023		2024		2025		2026		2027		Thereafter		Total

Progress Energy	Progress Energy	$	93	$	107	$	44	$	45	$	7	$	51	$	347	Progress Energy	$	61	$	66	$	7	$	7	$	7	$	36	$	184
Duke Energy Progress	Duke Energy Progress	8		8		8		8		—		—		32		Duke Energy Progress	8		8		—		—		—		—		16
Duke Energy Florida	Duke Energy Florida	85		99		36		37		7		51		315		Duke Energy Florida	53		58		7		7		7		36		168
Duke Energy Indiana	Duke Energy Indiana	5		—		7		12		12		24		60		Duke Energy Indiana	11		16		17		15		7		5		71

Revenues for block sales are recognized monthly as energy is delivered and stand-ready service is provided, consistent with invoiced amounts and unbilled estimates.

Gas Utilities and Infrastructure

~~Gas Utilities and Infrastructure~~GU&I earns its revenue through retail and wholesale natural gas service through the transportation, distribution and sale of natural gas. Duke Energy generally provides retail and wholesale natural gas service customers with all natural gas load requirements. Additionally, while natural gas can be stored, substantially all natural gas provided by Duke Energy is consumed by customers simultaneously with receipt of delivery.

Retail natural gas service is marketed throughout Duke Energy's natural gas service territory using published tariff rates. The tariff rates are established by regulators in Duke Energy's service territories. Each tariff, which is assigned to customers based on customer class, have multiple components, such as a commodity charge, demand charge, customer or monthly charge and transportation costs. Duke Energy considers each of these components to be aggregated into a single performance obligation for providing natural gas service. For contracts where Duke Energy provides all of the customer’s natural gas needs, the delivery of natural gas is considered a single performance obligation satisfied over time, and revenue is recognized monthly based on billings and unbilled estimates as service is provided and the commodity is consumed over the billing period. Additionally, natural gas service is typically at-will and customers can cancel service at any time, without a substantive penalty. Duke Energy also adheres to applicable regulatory requirements to ensure the collectability of amounts billed and receivable and appropriate mitigating procedures are followed when necessary.

194


FINANCIAL STATEMENTS			REVENUE

Certain long-term individually negotiated contracts exist to provide natural gas service. These contracts are regulated and approved by state commissions. The negotiated contracts have multiple components, including a natural gas and a demand charge, similar to retail natural gas contracts. Duke Energy considers each of these components to be a single performance obligation for providing natural gas service. This service represents consumption over the billing period, generally one month.

Fixed capacity payments under long-term contracts for the ~~Gas Utilities and Infrastructure~~GU&I segment include minimum margin contracts and supply arrangements with municipalities and power generation facilities. Revenues for related sales are recognized monthly as natural gas is delivered and stand-ready service is provided, consistent with invoiced amounts and unbilled estimates. Estimated remaining performance obligations are as follows:

Remaining Performance Obligations
(in millions) 2021 2022 2023 2024 2025 Thereafter Total
Piedmont $ 65 $ 64 $ 61 $ 59 $ 58 $ 319 $ 626

~~Commercial Renewables~~

Commercial Renewables earns the majority of its revenues through long-term PPAs and generally sells all of its wind and solar facility output, electricity and RECs to customers. The majority of these PPAs have historically been accounted for as leases. For PPAs that are not accounted for as leases, the delivery of electricity and the delivery of RECs are considered separate performance obligations.

~~212~~


~~FINANCIAL STATEMENTS~~			~~REVENUE~~

The delivery of electricity is a performance obligation satisfied over time and represents generation and consumption of the electricity over the billing period, generally one month. The delivery of RECs is a performance obligation satisfied at a point in time and represents delivery of each REC generated by the wind or solar facility. The majority of self-generated RECs are bundled with energy in Duke Energy’s contracts and, as such, related revenues are recognized as energy is generated and delivered as that pattern is consistent with Duke Energy’s performance. Commercial Renewables recognizes revenue based on the energy generated and billed for the period, generally one month, at contractual rates (including unbilled estimates) according to the invoice practical expedient. Amounts are typically due within 30 days of invoice.

Commercial Renewables also earns revenues from installation of distributed solar generation resources, which is primarily composed of EPC projects to deliver functioning solar power systems, generally completed within two to 12 months from commencement of construction. The installation of distributed solar generation resources is a performance obligation that is satisfied over time. Revenue from fixed-price EPC contracts is recognized using the input method as work is performed based on the estimated ratio of incurred costs to estimated total costs.


	Remaining Performance Obligations
(in millions)	2023		2024		2025		2026		2027		Thereafter		Total
Piedmont	$	68	$	62	$	61	$	51	$	49	$	241	$	532

Other

The remainder of Duke Energy’s operations is presented as Other, which does not include material revenues from contracts with customers.

Disaggregated Revenues

For the ~~Electric~~EU&I and ~~Gas Utility and Infrastructure~~GU&I segments, revenue by customer class is most meaningful to Duke Energy as each respective customer class collectively represents unique customer expectations of service, generally has different energy and demand requirements, and operates under tailored, regulatory approved pricing structures. Additionally, each customer class is impacted differently by weather and a variety of economic factors including the level of population growth, economic investment, employment levels, and regulatory activities in each of Duke Energy’s jurisdictions. As such, analyzing revenues disaggregated by customer class allows Duke Energy to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. For the Commercial Renewables segment, the majority of revenues from contracts with customers are from selling all of the unit-contingent output at contractually defined pricing under long-term PPAs with consistent expectations regarding the timing and certainty of cash flows. Disaggregated revenues are presented as follows:

Year Ended December 31, 2020
Duke Duke Duke Duke Duke
(in millions) Duke Energy Progress Energy Energy Energy Energy
By market or type of customer Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Electric Utilities and Infrastructure
Residential $ 9,806 $ 2,997 $ 5,017 $ 2,059 $ 2,958 $ 726 $ 1,064 $ —
General 6,194 2,233 2,779 1,312 1,467 442 740 —
Industrial 2,859 1,137 901 649 252 137 683 —
Wholesale 1,864 380 1,228 1,034 194 32 224 —
Other revenues 914 281 596 294 302 82 72 —
Total Electric Utilities and Infrastructure revenue from contracts with customers $ 21,637 $ 7,028 $ 10,521 $ 5,348 $ 5,173 $ 1,419 $ 2,783 $ —
Gas Utilities and Infrastructure
Residential $ 930 $ — $ — $ — $ — $ 300 $ — $ 630
Commercial 446 — — — — 117 — 329
Industrial 127 — — — — 17 — 110
Power Generation — — — — — — — 34
Other revenues 87 — — — — 17 — 70
Total Gas Utilities and Infrastructure revenue from contracts with customers $ 1,590 $ — $ — $ — $ — $ 451 $ — $ 1,173
Commercial Renewables
Revenue from contracts with customers $ 227 $ — $ — $ — $ — $ — $ — $ —
Other
Revenue from contracts with customers $ 26 $ — $ — $ — $ — $ — $ — $ —
Total revenue from contracts with customers $ 23,480 $ 7,028 $ 10,521 $ 5,348 $ 5,173 $ 1,870 $ 2,783 $ 1,173
Other revenue sources(a)
$ 388 $ (13) $ 106 $ 74 $ 15 $ (12) $ 12 $ 124
Total revenues $ 23,868 $ 7,015 $ 10,627 $ 5,422 $ 5,188 $ 1,858 $ 2,795 $ 1,297

~~213~~


~~FINANCIAL STATEMENTS~~			~~REVENUE~~

(a) Other revenue sources include revenues from leases, derivatives and alternative revenue programs that are not considered revenues from contracts with customers. Alternative revenue programs in certain jurisdictions include regulatory mechanisms that periodically adjust for over or under collection of related revenues.


		Year Ended December 31, 2019																	Year Ended December 31, 2022
				Duke				Duke													Duke				Duke
(in millions)	(in millions)	Duke		Energy		Progress		Energy										(in millions)	Duke		Energy		Progress		Energy
By market or type of customer	By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Electric Utilities and Infrastructure	Electric Utilities and Infrastructure																	Electric Utilities and Infrastructure
Residential	Residential	$	9,863	$	3,044	$	4,998	$	2,144	$	2,854	$	733	$	1,087	$	—	Residential	$	11,377	$	3,275	$	5,812	$	2,378	$	3,434	$	862	$	1,430	$	—
General	General	6,431		2,244		2,935		1,368		1,567		451		802		—		General	7,356		2,396		3,396		1,480		1,916		517		1,049		—
Industrial	Industrial	3,071		1,215		934		675		259		147		774		—		Industrial	3,504		1,251		1,095		770		325		202		956		—
Wholesale	Wholesale	2,212		462		1,468		1,281		187		46		235		—		Wholesale	2,856		561		1,785		1,346		439		127		383		—
Other revenues	Other revenues	770		276		548		317		231		80		89		—		Other revenues	795		372		994		768		226		61		19		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	Total Electric Utilities and Infrastructure revenue from contracts with customers	$	22,347	$	7,241	$	10,883	$	5,785	$	5,098	$	1,457	$	2,987	$	—	Total Electric Utilities and Infrastructure revenue from contracts with customers	$	25,888	$	7,855	$	13,082	$	6,742	$	6,340	$	1,769	$	3,837	$	—

Gas Utilities and Infrastructure	Gas Utilities and Infrastructure																	Gas Utilities and Infrastructure
Residential	Residential	$	976	$	—	$	—	$	—	$	—	$	315	$	—	$	661	Residential	$	1,462	$	—	$	—	$	—	$	—	$	488	$	—	$	974
Commercial	Commercial	508		—		—		—		—		130		—		378		Commercial	765		—		—		—		—		180		—		585
Industrial	Industrial	141		—		—		—		—		19		—		122		Industrial	170		—		—		—		—		24		—		144
Power Generation	Power Generation	—		—		—		—		—		—		—		51		Power Generation	—		—		—		—		—		—		—		94
Other revenues	Other revenues	129		—		—		—		—		19		—		110		Other revenues	360		—		—		—		—		25		—		271
Total Gas Utilities and Infrastructure revenue from contracts with customers	Total Gas Utilities and Infrastructure revenue from contracts with customers	$	1,754	$	—	$	—	$	—	$	—	$	483	$	—	$	1,322	Total Gas Utilities and Infrastructure revenue from contracts with customers	$	2,757	$	—	$	—	$	—	$	—	$	717	$	—	$	2,068

Commercial Renewables
Revenue from contracts with customers		$	223	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other	Other																	Other
Revenue from contracts with customers	Revenue from contracts with customers	$	24	$	—	$	—	$	—	$	—	$	—	$	—	$	—	Revenue from contracts with customers	$	30	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total revenue from contracts with customers	Total revenue from contracts with customers	$	24,348	$	7,241	$	10,883	$	5,785	$	5,098	$	1,940	$	2,987	$	1,322	Total revenue from contracts with customers	$	28,675	$	7,855	$	13,082	$	6,742	$	6,340	$	2,486	$	3,837	$	2,068

Other revenue sources(a)	Other revenue sources(a)	$	731	$	154	$	319	$	172	$	133	$	—	$	17	$	59	Other revenue sources(a)	$	93	$	2	$	43	$	11	$	13	$	28	$	85	$	56
Total revenues	Total revenues	$	25,079	$	7,395	$	11,202	$	5,957	$	5,231	$	1,940	$	3,004	$	1,381	Total revenues	$	28,768	$	7,857	$	13,125	$	6,753	$	6,353	$	2,514	$	3,922	$	2,124

~~214~~195


FINANCIAL STATEMENTS			REVENUE


	Year Ended December 31, 2021
			Duke				Duke		Duke		Duke		Duke
(in millions)	Duke		Energy		Progress		Energy		Energy		Energy		Energy
By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Electric Utilities and Infrastructure
Residential	$	10,097	$	3,054	$	5,084	$	2,156	$	2,928	$	767	$	1,188	$	—
General	6,375		2,210		2,883		1,378		1,505		440		825		—
Industrial	2,924		1,145		894		634		260		135		750		—
Wholesale	2,199		472		1,385		1,164		221		56		285		—
Other revenues	879		264		716		387		329		83		86		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	22,474	$	7,145	$	10,962	$	5,719	$	5,243	$	1,481	$	3,134	$	—

Gas Utilities and Infrastructure
Residential	$	1,131	$	—	$	—	$	—	$	—	$	354	$	—	$	777
Commercial	561		—		—		—		—		143		—		418
Industrial	158		—		—		—		—		20		—		137
Power Generation	—		—		—		—		—		—		—		92
Other revenues	133		—		—		—		—		28		—		45
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	1,983	$	—	$	—	$	—	$	—	$	545	$	—	$	1,469




Other
Revenue from contracts with customers	$	29	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total revenue from contracts with customers	$	24,486	$	7,145	$	10,962	$	5,719	$	5,243	$	2,026	$	3,134	$	1,469

Other revenue sources(a)	$	135	$	(43)	$	95	$	61	$	16	$	11	$	40	$	100
Total revenues	$	24,621	$	7,102	$	11,057	$	5,780	$	5,259	$	2,037	$	3,174	$	1,569

Year Ended December 31, 2018
Duke Duke Duke Duke Duke
(in millions) Duke Energy Progress Energy Energy Energy Energy
By market or type of customer Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Electric Utilities and Infrastructure
Residential $ 9,587 $ 2,981 $ 4,785 $ 2,019 $ 2,766 $ 743 $ 1,076 $ —
General 6,127 2,119 2,809 1,280 1,529 422 778 —
Industrial 2,974 1,180 904 642 262 131 760 —
Wholesale 2,324 508 1,462 1,303 159 57 298 —
Other revenues 717 320 502 320 182 73 91 —
Total Electric Utilities and Infrastructure revenue from contracts with customers $ 21,729 $ 7,108 $ 10,462 $ 5,564 $ 4,898 $ 1,426 $ 3,003 $ —
Gas Utilities and Infrastructure
Residential $ 1,000 $ — $ — $ — $ — $ 331 $ — $ 669
Commercial 514 — — — — 135 — 378
Industrial 147 — — — — 18 — 128
Power Generation — — — — — — — 54
Other revenues 139 — — — — 19 — 120
Total Gas Utilities and Infrastructure revenue from contracts with customers $ 1,800 $ — $ — $ — $ — $ 503 $ — $ 1,349
Commercial Renewables
Revenue from contracts with customers $ 209 $ — $ — $ — $ — $ — $ — $ —
Other
Revenue from contracts with customers $ 19 $ — $ — $ — $ — $ 1 $ — $ —
Total revenue from contracts with customers $ 23,757 $ 7,108 $ 10,462 $ 5,564 $ 4,898 $ 1,930 $ 3,003 $ 1,349
Other revenue sources(a)
$ 764 $ 192 $ 266 $ 135 $ 123 $ 27 $ 56 $ 26
Total revenues $ 24,521 $ 7,300 $ 10,728 $ 5,699 $ 5,021 $ 1,957 $ 3,059 $ 1,375
(a) Other revenue sources include revenues from leases, derivatives and alternative revenue programs that are not considered revenues from contracts with customers. Alternative revenue programs in certain jurisdictions include regulatory mechanisms that periodically adjust for over or under collection of related revenues.

196


FINANCIAL STATEMENTS			REVENUE


	Year Ended December 31, 2020
			Duke				Duke		Duke		Duke		Duke
(in millions)	Duke		Energy		Progress		Energy		Energy		Energy		Energy
By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Electric Utilities and Infrastructure
Residential	$	9,806	$	2,997	$	5,017	$	2,059	$	2,958	$	726	$	1,064	$	—
General	6,194		2,233		2,779		1,312		1,467		442		740		—
Industrial	2,859		1,137		901		649		252		137		683		—
Wholesale	1,864		380		1,228		1,034		194		32		224		—
Other revenues	914		281		596		294		302		82		72		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	21,637	$	7,028	$	10,521	$	5,348	$	5,173	$	1,419	$	2,783	$	—

Gas Utilities and Infrastructure
Residential	$	930	$	—	$	—	$	—	$	—	$	300	$	—	$	630
Commercial	446		—		—		—		—		117		—		329
Industrial	127		—		—		—		—		17		—		110
Power Generation	—		—		—		—		—		—		—		34
Other revenues	87		—		—		—		—		17		—		70
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	1,590	$	—	$	—	$	—	$	—	$	451	$	—	$	1,173




Other
Revenue from contracts with customers	$	26	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total revenue from contracts with customers	$	23,253	$	7,028	$	10,521	$	5,348	$	5,173	$	1,870	$	2,783	$	1,173

Other revenue sources(a)	$	113	$	(13)	$	106	$	74	$	15	$	(12)	$	12	$	124
Total revenues	$	23,366	$	7,015	$	10,627	$	5,422	$	5,188	$	1,858	$	2,795	$	1,297

As described in Note 1, Duke Energy adopted the new guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. The following table presents the reserve for credit losses for trade and other receivables based on adoption of the new standard.

Year Ended December 31, 2020
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Balance at December 31, 2019 $ 76 $ 10 $ 16 $ 8 $ 7 $ 4 $ 3 $ 6
Cumulative Change in Accounting Principle 5 1 2 1 1 — — 1
Write-Offs (58) (13) (23) (8) (14) — — (6)
Credit Loss Expense 75 13 29 9 20 — — 11
Other Adjustments 48 12 13 13 — — — —
Balance at December 31, 2020 $ 146 $ 23 $ 37 $ 23 $ 14 $ 4 $ 3 $ 12

~~215~~


~~FINANCIAL STATEMENTS~~			~~REVENUE~~



			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Balance at December 31, 2019	$	76	$	10	$	16	$	8	$	7	$	4	$	3	$	6
Cumulative Change in Accounting Principle	5		1		2		1		1		—		—		1
Write-Offs	(58)		(13)		(23)		(8)		(14)		—		—		(6)
Credit Loss Expense	75		13		29		9		20		—		—		11
Other Adjustments	48		12		13		13		—		—		—		—
Balance at December 31, 2020	$	146	$	23	$	37	$	23	$	14	$	4	$	3	$	12
Write-Offs	(58)		(21)		(25)		(12)		(13)		—		—		(9)
Credit Loss Expense	53		27		25		11		14		—		—		7
Other Adjustments	(20)		13		(1)		(1)		1		—		—		5
Balance at December 31, 2021	$	121	$	42	$	36	$	21	$	16	$	4	$	3	$	15
Write-Offs	(158)		(73)		(70)		(36)		(34)		—		—		(12)
Credit Loss Expense	160		40		72		17		55		2		1		11
Other Adjustments	93		59		43		42		(1)		—		—		—
Balance at December 31, 2022	$	216	$	68	$	81	$	44	$	36	$	6	$	4	$	14

Trade and other receivables are evaluated based on an estimate of the risk of loss over the life of the receivable and current and historical conditions using supportable assumptions. Management evaluates the risk of loss for trade and other receivables by comparing the historical write-off amounts to total revenue over a specified period. Historical loss rates are adjusted due to the impact of current conditions, ~~including the impacts of COVID-19,~~ as well as forecasted conditions over a reasonable time period. The calculated write-off rate can be applied to the receivable balance for which an established reserve does not already exist. Management reviews the assumptions and risk of loss periodically for trade and other receivables. Due to the COVID-19 pandemic, as described in Note 1, certain jurisdictions have resumed standard billing and credit practices, disconnections for nonpayment and late payment charges, all of which were previously suspended in the first quarter of 2020. The specific actions taken by each Duke Energy Registrant are described in Note 3 and the impact of COVID-19 on certain receivables financing entities are described in Note 17. The impact of COVID-19 and Duke Energy’s related response on customers’ ability to pay for service is uncertain, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates.

197


FINANCIAL STATEMENTS			REVENUE

The aging of trade receivables is presented in the table below. ~~Duke Energy considers receivables greater than 30 days outstanding past due.~~

December 31, 2020
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Unbilled Receivables $ 969 $ 328 $ 283 $ 167 $ 116 $ 2 $ 16 $ 86
0-30 days 1,789 445 707 398 307 60 26 149
30-60 days 185 80 54 25 29 8 3 8
60-90 days 22 1 10 4 6 2 1 3
90+ days 119 16 32 9 23 30 12 9
Deferred Payment Arrangements(a)
215 96 80 52 28 — — 7
Trade and Other Receivables $ 3,299 $ 966 $ 1,166 $ 655 $ 509 $ 102 $ 58 $ 262


	December 31, 2022
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Unbilled Receivables(a)(b)	$	1,457	$	486	$	355	$	232	$	123	$	20	$	28	$	160
Current	2,347		577		1,059		637		417		15		52		265
1-30 days past due	261		96		60		15		45		5		17		15
31-60 days past due	123		23		61		49		12		6		2		3
61-90 days past due	74		25		18		9		9		3		11		2
91+ days past due	209		70		74		27		47		26		6		4
Deferred Payment Arrangements(c)	160		57		62		35		27		4		—		1
Trade and Other Receivables	$	4,631	$	1,334	$	1,689	$	1,004	$	680	$	79	$	116	$	450


	December 31, 2021
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Unbilled Receivables(a)(b)	$	922	$	316	$	266	$	193	$	73	$	4	$	27	$	106
Current	1,941		592		716		405		311		42		50		202
1-30 days past due	288		77		128		44		82		4		5		12
31-60 days past due	98		30		49		21		28		1		10		2
61-90 days past due	118		32		48		28		20		23		5		4
91+ days past due	161		84		37		9		28		24		6		3
Deferred Payment Arrangements(c)	115		55		45		22		23		2		—		4
Trade and Other Receivables	$	3,643	$	1,186	$	1,289	$	722	$	565	$	100	$	103	$	333

(a) Due to certain customer financial hardships created by the COVID-19 pandemic and resulting stay-at-home orders, Duke Energy permitted customers to defer payment of past-due amounts through an installment payment plan over a period of several months.

~~IMPACT OF WEATHER AND THE TIMING OF BILLING PERIODS~~

Revenues and costs are influenced by seasonal weather patterns. Peak sales of electricity occur during the summer and winter months, which results in higher revenue and cash flows during these periods. By contrast, lower sales of electricity occur during the spring and fall, allowing for scheduled plant maintenance. Residential and general service customers are more impacted by weather than industrial customers. Estimated weather impacts are based on actual current period weather compared to normal weather conditions. Normal weather conditions are defined as the long-term average of actual historical weather conditions. Heating degree days measure the variation in weather based on the extent the average daily temperature falls below a base temperature. Cooling degree days measure the variation in weather based on the extent the average daily temperature rises above the base temperature. Each degree of temperature below the base temperature counts as one heating degree day and each degree of temperature above the base temperature counts as one cooling degree day.

The estimated impact of weather on earnings for Electric Utilities and Infrastructure is based on the temperature variances from a normal condition and customers' historic usage patterns. The methodology used to estimate the impact of weather does not consider all variables that may impact customer response to weather conditions, such as humidity in the summer or wind chill in the winter. The precision of this estimate may also be impacted by applying long-term weather trends to shorter-term periods.

Gas Utilities and Infrastructure's costs and revenues are influenced by seasonal patterns due to peak natural gas sales occurring during the winter months as a result of space heating requirements. Residential customers are the most impacted by weather. There are certain regulatory mechanisms for the North Carolina, South Carolina, Tennessee, Ohio and Kentucky service territories that normalize the margins collected from certain customer classes during the winter. In North Carolina, rate design provides protection from both weather and other usage variations such as conservation, while South Carolina, Tennessee and Kentucky revenues are adjusted solely based on weather. Ohio primarily employs a fixed charge each month regardless of the season and usage.

~~UNBILLED REVENUE~~

Unbilled revenues are recognized by applying customer billing rates to the estimated volumes of energy or natural gas delivered but not yet billed. Unbilled revenues can vary significantly from period to period as a result of seasonality, weather, customer usage patterns, customer mix, average price in effect for customer classes, timing of rendering customer billsbilled and ~~meter reading schedules, and the impact of weather normalization or margin decoupling mechanisms.~~

~~216~~


~~FINANCIAL STATEMENTS~~			~~REVENUE~~

~~Unbilled revenues~~ are included within Receivables and Receivables of VIEs on the Consolidated Balance ~~Sheets as shown in the following table.~~Sheets.

December 31,
(in millions) 2020 2019
Duke Energy $ 969 $ 843
Duke Energy Carolinas 328 298
Progress Energy 283 217
Duke Energy Progress 167 122
Duke Energy Florida 116 95
Duke Energy Ohio 2 1
Duke Energy Indiana 16 16
Piedmont 86 78

~~Additionally,~~(b) Duke Energy Ohio and Duke Energy Indiana sell, on a revolving basis, nearly all of their retail accounts receivable, including receivables for unbilled revenues, to an affiliate, CRC, and account for the transfers of receivables as sales. Accordingly, the receivables sold are not reflected on the Consolidated Balance Sheets of Duke Energy Ohio and Duke Energy Indiana. See Note 1718 for further information. These receivables for unbilled revenues are ~~shown in the table below.~~$148 million and $260 million for Duke Energy Ohio and Duke Energy Indiana, respectively, as of December 31, 2022, and $82 million and $121 million for Duke Energy Ohio and Duke Energy Indiana, respectively, as of December 31, 2021.

December 31,
(in millions) 2020 2019
Duke Energy Ohio $ 87 $ 82
Duke Energy Indiana 134 115
(c) Due to ongoing financial hardships impacting customers, Duke Energy has permitted customers to defer payment of past-due amounts through installment payment plans.

~~19.~~20. STOCKHOLDERS' EQUITY

Basic EPS is computed by dividing net income available to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities and accumulated preferred dividends, by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income available to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities and accumulated preferred dividends, by the diluted weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common stock, such as equity forward sale agreements, were exercised or settled. Duke Energy’s participating securities are RSUs that are entitled to dividends declared on Duke Energy common stock during the RSUs vesting periods. Dividends declared on preferred stock are recorded on the Consolidated Statements of Operations as a reduction of net income to arrive at net income available to Duke Energy common stockholders. Dividends accumulated on preferred stock are an adjustment to net income used in the calculation of basic and diluted EPS.

198


FINANCIAL STATEMENTS			STOCKHOLDERS' EQUITY

The following table presents Duke Energy’s basic and diluted EPS calculations, the weighted average number of common shares outstanding and common and preferred share dividends declared.


		Years Ended December 31,							Years Ended December 31,
(in millions, except per share amounts)	(in millions, except per share amounts)	2020		2019		2018		(in millions, except per share amounts)	2022		2021		2020
Net Income available to Duke Energy common stockholders	Net Income available to Duke Energy common stockholders	$	1,270	$	3,707	$	2,666	Net Income available to Duke Energy common stockholders	$	2,444	$	3,802	$	1,270
Less: Income (Loss) from discontinued operations		7		(7)		19
Less: (Loss) Income from discontinued operations attributable to Duke Energy common stockholders								Less: (Loss) Income from discontinued operations attributable to Duke Energy common stockholders	(1,215)		200		289
Accumulated preferred stock dividends adjustment	Accumulated preferred stock dividends adjustment	1		(15)		0		Accumulated preferred stock dividends adjustment	—		—		1
Less: Impact of participating securities	Less: Impact of participating securities	2		5		5		Less: Impact of participating securities	2		3		2
Income from continuing operations available to Duke Energy common stockholders	Income from continuing operations available to Duke Energy common stockholders	$	1,262	$	3,694	$	2,642	Income from continuing operations available to Duke Energy common stockholders	$	3,657	$	3,599	$	980

Loss from discontinued operations, net of tax								Loss from discontinued operations, net of tax	$	(1,323)	$	(144)	$	(7)
Add: Loss attributable to NCI								Add: Loss attributable to NCI	108		344		296
(Loss) Income from discontinued operations attributable to Duke Energy common stockholders								(Loss) Income from discontinued operations attributable to Duke Energy common stockholders	$	(1,215)	$	200	$	289
Weighted average common shares outstanding – basic	Weighted average common shares outstanding – basic	737		729		708		Weighted average common shares outstanding – basic	770		769		737

Equity forwards	Equity forwards	1		0		0		Equity forwards	—		—		1
Weighted average common shares outstanding – diluted	Weighted average common shares outstanding – diluted	738		729		708		Weighted average common shares outstanding – diluted	770		769		738
EPS from continuing operations available to Duke Energy common stockholders	EPS from continuing operations available to Duke Energy common stockholders							EPS from continuing operations available to Duke Energy common stockholders
Basic and Diluted	Basic and Diluted	$	1.71	$	5.07	$	3.73	Basic and Diluted	$	4.74	$	4.68	$	1.33

(Loss) Earnings Per Share from discontinued operations attributable to Duke Energy common stockholders								(Loss) Earnings Per Share from discontinued operations attributable to Duke Energy common stockholders
Basic and Diluted								Basic and Diluted	$	(1.57)	$	0.26	$	0.39
Potentially dilutive items excluded from the calculation(a)	Potentially dilutive items excluded from the calculation(a)	2		2		2		Potentially dilutive items excluded from the calculation(a)	2		2		2
Dividends declared per common share	Dividends declared per common share	$	3.82	$	3.75	$	3.64	Dividends declared per common share	$	3.98	$	3.90	$	3.82
Dividends declared on Series A preferred stock per depositary share		$	1.437	$	1.03	$	—
Dividends declared on Series B preferred stock per share		$	49.292	$	—	$	0
Dividends declared on Series A preferred stock per depositary share(b)								Dividends declared on Series A preferred stock per depositary share(b)	$	1.437	$	1.437	$	1.437
Dividends declared on Series B preferred stock per share(c)								Dividends declared on Series B preferred stock per share(c)	$	48.750	$	48.750	$	49.292

(a) Performance stock awards were not included in the dilutive securities calculation because the performance measures related to the awards had not been met.

~~217~~

(b) 5.75% Series A Cumulative Redeemable Perpetual Preferred Stock dividends are payable quarterly in arrears on the 16th day of March, June, September and December. The preferred stock has a $25 liquidation preference per depositary share.


~~FINANCIAL STATEMENTS~~			~~STOCKHOLDERS' EQUITY~~

(c) 4.875% Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock dividends are payable semiannually in arrears on the 16th day of March and September. The preferred stock has a $1,000 liquidation preference per share. On September 16, 2024, the First Call Date, and any fifth anniversary of the First Call Date, the dividend rate will reset based on the then current five-year U.S. Treasury rate plus a spread of 3.388%.

Common Stock

In November ~~2019,~~2022, Duke Energy filed a prospectus supplement and executed an ~~Equity Distribution Agreement (EDA)~~EDA under which it may sell up to $1.5 billion of its common stock through a new ATM offering program, including an equity forward sales component. Under the terms of the EDA, Duke Energy may issue and sell shares of common stock through September ~~2022.~~

Separately, in November 2019, Duke Energy marketed an equity offering of 28.75 million shares of common stock through an Underwriting Agreement. In connection with the offering, Duke Energy entered into equity forward sales agreements with an initial forward price of $85.99 per share. In March 2020, Duke Energy marketed approximately 940,000 shares of common stock through an equity forward transaction under the ATM with an initial forward price of $89.76 per share. In May 2020, Duke Energy marketed approximately 903,000 shares of common stock through an equity forward transaction under the ATM with an initial forward price of $82.44 per share. In August 2020, Duke Energy marketed approximately 936,000 shares of common stock through an equity forward transaction under the ATM with an initial forward price of $79.52 per share.

~~In December 2020, Duke Energy physically settled the equity forwards by delivering 32 million shares of common stock in exchange for net cash proceeds of approximately $2.6 billion.~~2025.

Preferred Stock

On March 29, 2019, Duke Energy completed the issuance of 40 million depositary shares, each representing 1/1,000th share of its Series A Cumulative Redeemable Perpetual Preferred Stock, at a price of $25 per depositary share. The transaction resulted in net proceeds of $973 million after issuance costs with proceeds used for general corporate purposes and to reduce short-term debt. The preferred stock has a $25 liquidation preference per depositary share and earns dividends on a cumulative basis at a rate of 5.75% per annum. Dividends are payable quarterly in arrears on the 16th day of March, June, September and December, and began on June 16, 2019.

The Series A Preferred Stock has no maturity or mandatory redemption date, is not redeemable at the option of the holders and includes separate call options. The first call option allows Duke Energy to call the Series A Preferred Stock at a redemption price of $25.50 per depositary share prior to June 15, 2024, in whole but not in part, at any time within 120 days after a ratings event where a rating agency amends, clarifies or changes the criteria it uses to assign equity credit for securities such as the preferred stock. The second call option allows Duke Energy to call the preferred stock, in whole or in part, at any time, on or after June 15, 2024, at a redemption price of $25 per depositary share. Duke Energy is also required to redeem all accumulated and unpaid dividends if either call option is exercised.

On September 12, 2019, Duke Energy completed the issuance of 1 million shares of its Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, at a price of $1,000 per share. The transaction resulted in net proceeds of $989 million after issuance costs with proceeds being used to pay down short-term debt, repay at maturity $500 million senior notes due September 2019, and for general corporate purposes. The preferred stock has a $1,000 liquidation preference per share and earns dividends on a cumulative basis at an initial rate of 4.875% per annum. Dividends are payable semiannually in arrears on the 16th day of March and September, and began on March 16, 2020. On September 16, 2024, the First Call Date, and any fifth anniversary of the First Call Date (each a Reset Date), the dividend rate will reset based on the then current five-year U.S. Treasury rate plus a spread of 3.388%.

The Series B Preferred Stock has no maturity or mandatory redemption date, is not redeemable at the option of the holders and includes separate call options. The first call option allows Duke Energy to call the Series B Preferred Stock at a redemption price of $1,020 per share, in whole but not in part, at any time within 120 days after a ratings event. The second call option allows Duke Energy to call the preferred stock, in whole or in part, on the First Call Date or any subsequent Reset Date at a redemption price in cash equal to $1,000 per share. Duke Energy is also required to redeem all accumulated and unpaid dividends if either call option is exercised.

Dividends issued on its Series A and Series B Preferred Stock are subject to approval by the Board of Directors. However, the deferral of dividend payments on the preferred stock prohibits the declaration of common stock dividends.

The Series A and Series B Preferred Stock rank, with respect to dividends and distributions upon liquidation or dissolution:

•senior to Common Stock and to each other class or series of capital stock established after the original issue date of the Series A and Series B Preferred Stock that is expressly made subordinated to the Series A and Series B Preferred Stock;

•on a parity with any class or series of capital stock established after the original issue date of the Series A and Series B Preferred Stock that is not expressly made senior or subordinated to the Series A or Series B Preferred Stock;

199


FINANCIAL STATEMENTS			STOCKHOLDERS' EQUITY

•junior to any class or series of capital stock established after the original issue date of the Series A and Series B Preferred Stock that is expressly made senior to the Series A or Series B Preferred Stock;

•junior to all existing and future indebtedness (including indebtedness outstanding under Duke Energy's credit facilities, unsecured senior notes, junior subordinated debentures and commercial paper) and other liabilities with respect to assets available to satisfy claims against Duke Energy; and

•structurally subordinated to existing and future indebtedness and other liabilities of Duke Energy's subsidiaries and future preferred stock of subsidiaries.

~~218~~


~~FINANCIAL STATEMENTS~~			~~STOCKHOLDERS' EQUITY~~

Holders of Series A and Series B Preferred Stock have no voting rights with respect to matters that generally require the approval of voting stockholders. The limited voting rights of holders of Series A and Series B Preferred Stock include the right to vote as a single class, respectively, on certain matters that may affect the preference or special rights of the preferred stock, except in the instance that Duke Energy elects to defer the payment of dividends for a total of six quarterly full dividend periods for Series A Preferred Stock or three semiannual full dividend periods for Series B Preferred Stock. If dividends are deferred for a cumulative total of six quarterly full dividend periods for Series A Preferred Stock or three semiannual full dividend periods for Series B Preferred Stock, whether or not for consecutive dividend periods, holders of the respective preferred stock have the right to elect two additional Board members to the Board of Directors.

~~20.~~21. SEVERANCE

During 2022, Duke Energy identified opportunities to eliminate work and create sustainable savings through a workload reduction initiative with a focus on process improvement through digital technology, governance simplification and elimination of low-value work. As a result, Duke Energy extended involuntary severance benefits to certain employees in specific areas as a part of this initiative.

During 2021, Duke Energy reviewed its operations and identified opportunities for improvement to better serve its customers. This operational review included workforce realignment to ensure the company is staffed with the right skill sets and number of teammates to execute the long-term vision for Duke Energy. As such, Duke Energy extended involuntary severance benefits to certain employees in specific areas as a part of these workforce realignment efforts.

During 2020, as a result of partial settlements between Duke Energy Carolinas, Duke Energy Progress and the Public Staff, Duke Energy Carolinas and Duke Energy Progress deferred as Regulatory assets on the Consolidated Balance Sheets, approximately $65 million and $33 million, respectively, of previously recorded severance charges within Operation, maintenance and other on the Consolidated Statements of Operations. These severance charges were previously recorded during 2018, as Duke Energy reviewed its operations and identified opportunities for improvement to better serve its customers. This operational review included the company's workforce strategy and staffing levels to ensure the company was staffed with the right skill sets and number of teammates to execute the long-term vision for Duke Energy. As such, Duke Energy extended voluntary and involuntary severance benefits to certain employees in specific areas as a part of workforce planning and digital transformation efforts. ~~See Note 3 for more information.~~

The following table presents the direct and allocated severance and related charges accrued for approximately 233 employees in 2022, 290 employees in 2021 and 30 employees in 2020, ~~140 employees in 2019, and 1,900 employees in 2018,~~ by the Duke Energy Registrants within Operation, maintenance and other on the Consolidated Statements of Operations.

Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Year Ended December 31, 2020(a)(b)
$ (85) $ (58) $ (28) $ (31) $ 3 $ — $ — $ —
Year Ended December 31, 2019 16 8 6 3 3 — 1 1
Year Ended December 31, 2018 187 102 69 52 17 6 7 2


			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Year Ended December 31, 2022(a)(b)	$	65	$	40	$	20	$	17	$	3	$	1	$	2	$	2
Year Ended December 31, 2021(c)(d)	69		33		26		20		6		2		3		2
Year Ended December 31, 2020(e)(f)	(85)		(58)		(28)		(31)		3		—		—		—

(a) Includes amortization of deferred severance charges of approximately $33 million, $22 million, $11 million and $11 million for Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.

(b) Includes adjustments associated with 2021 severance charges of approximately $(19) million, $(6) million, $(8) million, $(4) million, $(4) million, $(1) million, $(2) million and $(1) million for Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont, respectively.

(c) Includes amortization of deferred severance charges of approximately $33 million, $22 million, $11 million and $11 million for Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.

(d) Includes adjustments associated with 2018 severance charges of approximately $(3) million, $(2) million and $(1) million for Duke Energy, Duke Energy Carolinas and Duke Energy Indiana, respectively.

(e) Includes unamortized deferred severance charges of approximately $(86) million, $(57) million, $(29) million and $(29) million for Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.

~~(b)~~(f) Includes adjustments associated with 2018 severance charges of approximately $(6) million, $(2) million, $(3) million and $(2) million for Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.

200


FINANCIAL STATEMENTS			SEVERANCE

The table below presents the severance liability for past and ongoing severance plans including the plans described above.


				Duke				Duke				Duke		Duke							Duke				Duke				Duke		Duke
		Duke		Energy		Progress		Energy											Duke		Energy		Progress		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Balance at December 31, 2019		$	41	$	11	$	13	$	6	$	7	$	1	$	2	$	—
Balance at December 31, 2020																		Balance at December 31, 2020	$	11	$	2	$	3	$	1	$	2	$	—	$	1	$	—
Provision/Adjustments	Provision/Adjustments	1		—		—		(2)		2		(1)		—		—		Provision/Adjustments	36		1		1		1		—		—		—		—
Cash Reductions	Cash Reductions	(31)		(9)		(10)		(3)		(7)		—		(1)		—		Cash Reductions	(8)		(1)		(2)		(1)		(1)		—		(1)		—
Balance at December 31, 2020		$	11	$	2	$	3	$	1	$	2	$	—	$	1	$	—
Balance at December 31, 2021																		Balance at December 31, 2021	$	39	$	2	$	2	$	1	$	1	$	—	$	—	$	—
Provision/Adjustments																		Provision/Adjustments	33		14		4		3		1		—		—		1
Cash Reductions																		Cash Reductions	(8)		(1)		—		—		—		—		—		—
Balance at December 31, 2022																		Balance at December 31, 2022	$	64	$	15	$	6	$	4	$	2	$	—	$	—	$	1

~~21.~~22. STOCK-BASED COMPENSATION

The Duke Energy Corporation 2015 Long-Term Incentive Plan (the 2015 Plan) provides for the grant of stock-based compensation awards to employees and outside directors. The 2015 Plan ~~reserves~~reserved 10 million shares of common stock for issuance. Duke Energy has historically issued new shares upon exercising or vesting of share-based awards. However, Duke Energy may use a combination of new share issuances and open market repurchases for share-based awards that are exercised or vest in the future. Duke Energy has not determined with certainty the amount of such new share issuances or open market repurchases.

~~219~~


~~FINANCIAL STATEMENTS~~			~~STOCK-BASED COMPENSATION~~

The following table summarizes the total expense recognized by the Duke Energy Registrants, net of tax, for stock-based compensation.


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		2018		(in millions)	2022		2021		2020
Duke Energy	Duke Energy	$	61	$	65	$	56	Duke Energy	$	74	$	64	$	61
Duke Energy Carolinas	Duke Energy Carolinas	22		24		20		Duke Energy Carolinas	27		23		22
Progress Energy	Progress Energy	23		24		21		Progress Energy	27		24		23
Duke Energy Progress	Duke Energy Progress	15		15		13		Duke Energy Progress	17		15		15
Duke Energy Florida	Duke Energy Florida	9		9		8		Duke Energy Florida	10		9		9
Duke Energy Ohio	Duke Energy Ohio	4		5		4		Duke Energy Ohio	5		5		4
Duke Energy Indiana	Duke Energy Indiana	6		6		5		Duke Energy Indiana	7		6		6
Piedmont	Piedmont	3		3		3		Piedmont	4		3		3

Duke Energy's pretax stock-based compensation costs, the tax benefit associated with stock-based compensation expense and stock-based compensation costs capitalized are included in the following table.


		Years Ended December 31,							Years Ended December 31,
(in millions)	(in millions)	2020		2019		2018		(in millions)	2022		2021		2020
RSU awards	RSU awards	$	46	$	44	$	43	RSU awards	$	58	$	49	$	46
Performance awards	Performance awards	38		45		35		Performance awards	42		39		38

Pretax stock-based compensation cost	Pretax stock-based compensation cost	$	84	$	89	$	78	Pretax stock-based compensation cost	$	100	$	88	$	84
Stock-based compensation costs capitalized	Stock-based compensation costs capitalized	5		5		5		Stock-based compensation costs capitalized	5		5		5
Stock-based compensation expense	Stock-based compensation expense	$	79	$	84	$	73	Stock-based compensation expense	$	95	$	83	$	79
Tax benefit associated with stock-based compensation expense	Tax benefit associated with stock-based compensation expense	$	18	$	19	$	17	Tax benefit associated with stock-based compensation expense	$	21	$	19	$	18

RESTRICTED STOCK UNIT AWARDS

RSU awards generally vest over periods from immediate to three years. Fair value amounts are based on the market price of Duke Energy's common stock on the grant date. The following table includes information related to RSU awards.


		Years Ended December 31,							Years Ended December 31,
		2020		2019		2018			2022		2021		2020
Shares granted (in thousands)	Shares granted (in thousands)	498		571		649		Shares granted (in thousands)	654		673		498
Fair value (in millions)	Fair value (in millions)	$	50	$	51	$	49	Fair value (in millions)	$	64	$	59	$	50

201


FINANCIAL STATEMENTS			STOCK-BASED COMPENSATION

The following table summarizes information about RSU awards outstanding.


			Weighted Average				Weighted Average
		Shares	Grant Date Fair Value			Shares	Grant Date Fair Value
		(in thousands)	(per share)			(in thousands)	(per share)
Outstanding at December 31, 2019		1,010	$	83
Outstanding at December 31, 2021					Outstanding at December 31, 2021	1,043	$	92
Granted	Granted	498	100		Granted	654	98
Vested	Vested	(532)	82		Vested	(527)	93
Forfeited	Forfeited	(37)	92		Forfeited	(73)	94
Outstanding at December 31, 2020		939	93
Outstanding at December 31, 2022					Outstanding at December 31, 2022	1,097	95
RSU awards expected to vest	RSU awards expected to vest	898	93		RSU awards expected to vest	1,056	95

The total grant date fair value of shares vested during the years ended December 31, 2022, 2021 and 2020, ~~2019 and 2018,~~ was ~~$43~~$49 million, ~~$49~~$45 million and $43 million, respectively. At December 31, ~~2020,~~2022, Duke Energy had ~~$31~~$34 million of unrecognized compensation cost, which is expected to be recognized over a weighted average period of 23 months.

PERFORMANCE AWARDS

Stock-based performance awards generally vest after three years ifto the extent performance targets are met. The actual number of shares issued will range from zero to 200% of target shares, depending on the level of performance achieved.

Performance awards contain performance conditions and a market condition. The performance conditions are based on Duke Energy's cumulative adjusted EPS and total incident case rate (total incident case rate is one of our key employee safety metrics). The market condition is based on TSR of Duke Energy relative to a predefined peer group.

~~220~~


~~FINANCIAL STATEMENTS~~			~~STOCK-BASED COMPENSATION~~

Relative TSR is valued using a path-dependent model that incorporates expected relative TSR into the fair value determination of Duke Energy’s performance-based share awards. The model uses three-year historical volatilities and correlations for all companies in the predefined peer group, including Duke Energy, to simulate Duke Energy’s relative TSR as of the end of the performance period. For each simulation, Duke Energy’s relative TSR associated with the simulated stock price at the end of the performance period plus expected dividends within the period results in a value per share for the award portfolio. The average of these simulations is the expected portfolio value per share. Actual life to date results of Duke Energy’s relative TSR for each grant are incorporated within the model. For performance awards granted in ~~2020,~~2022, the model used a risk-free interest rate of ~~1.4%~~1.78%, which reflects the yield on three-year Treasury bonds as of the grant date, and an expected volatility of ~~13.6%~~26.8% based on Duke Energy's historical volatility over three years using daily stock prices.

The following table includes information related to stock-based performance awards.


		Years Ended December 31,							Years Ended December 31,
		2020		2019		2018			2022		2021		2020
Shares granted assuming target performance (in thousands)	Shares granted assuming target performance (in thousands)	319		320		372		Shares granted assuming target performance (in thousands)	408		380		319
Fair value (in millions)	Fair value (in millions)	$	34	$	27	$	27	Fair value (in millions)	$	40	$	33	$	34

The following table summarizes information about stock-based performance awards outstanding and assumes payout at the target level.


			Weighted Average				Weighted Average
		Shares	Grant Date Fair Value			Shares	Grant Date Fair Value
		(in thousands)	(per share)			(in thousands)	(per share)
Outstanding at December 31, 2019		1,109	$	80
Outstanding at December 31, 2021					Outstanding at December 31, 2021	952	$	93
Granted	Granted	319	105		Granted	408	99

Vested	Vested	(448)	81		Vested	(297)	86
Forfeited	Forfeited	(18)	88		Forfeited	(30)	96
Outstanding at December 31, 2020		962	87
Outstanding at December 31, 2022					Outstanding at December 31, 2022	1,033	97
Stock-based performance awards expected to vest	Stock-based performance awards expected to vest	937	87		Stock-based performance awards expected to vest	1,006	97

The total grant date fair value of shares vested during the years ended December 31, ~~2020,~~2022, and ~~2019,~~2021, was ~~$36~~$25 million and ~~$23~~$25 million, respectively. At December 31, ~~2020,~~2022, Duke Energy had ~~$23~~$22 million of unrecognized compensation cost, which is expected to be recognized over a weighted average period of 2122 months.

202

~~22.~~


FINANCIAL STATEMENTS			EMPLOYEE BENEFIT PLANS

23. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT RETIREMENT PLANS

Duke Energy and certain subsidiaries maintain, and the Subsidiary Registrants participate in, qualified, non-contributory defined benefit retirement ~~plans. The~~plans, which consist of the Duke Energy Retirement Cash Balance Plan (RCBP), which is an active plan, and the Duke Energy Legacy Pension Plan (DELPP), which is an inactive plan. These plans cover most employees using a cash balance formula. Under a cash balance formula, a plan participant accumulates a retirement benefit consisting of pay credits based upon a percentage of current eligible earnings, age or age and years of service and interest credits. Certain employees are eligible for benefits that use a final average earnings formula. Under these final average earnings formulas, a plan participant accumulates a retirement benefit equal to the sum of percentages of their (i) highest ~~three-year, four-year,~~three-, four-, or five-year average earnings, (ii) highest ~~three-year, four-year,~~three-, four-, or five-year average earnings in excess of covered compensation per year of participation (maximum of 35 years) or (iii) highest three-year average earnings times years of participation in excess of 35 years. Duke Energy also maintains, and the Subsidiary Registrants participate in, non-qualified, non-contributory defined benefit retirement plans that cover certain executives. The qualified and non-qualified, non-contributory defined benefit plans are closed to new participants.

Duke Energy uses a December 31 measurement date for its defined benefit retirement plan assets and obligations. Actuarial losses experienced by the defined benefit retirement plans in remeasuring plan assets on December 31, 2022, were primarily attributable to actual investment performance that was less than expected investment performance. Actuarial gains experienced by the defined benefit retirement plans in remeasuring plan obligations as of December 31, 2022, were primarily attributable to the increase in the discount rate used to measure plan obligations. Actuarial losses experienced by the defined benefit retirement plans in remeasuring plan assets as of December 31, ~~2020, and 2019,~~2021, were primarily attributable to actual investment performance that ~~exceeded~~was less than expected investment performance. Actuarial ~~losses~~gains experienced by the defined benefit retirement plans in remeasuring plan obligations as of December 31, ~~2020, and 2019,~~2021, were primarily attributable to the ~~decrease~~increase in the discount rate used to measure plan obligations.

As a result of the application of settlement accounting due to total lump-sum benefit payments exceeding the settlement threshold (defined as the sum of ~~the~~ service cost and interest cost on projected benefit obligation components of net periodic ~~pension~~benefit costs) for one of its qualified pension plans, Duke Energy recognized settlement charges of ~~$94~~$117 million, ~~primarily as a regulatory asset~~of which $95 million was recorded to Regulatory Assets within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets and $22 million was recorded to Other Income and Expenses, net, within the Condensed Consolidated Statement of Operations as of December 31, ~~2019 (an immaterial amount was recorded in Other income and expenses, net within the Consolidated Statement of Operations).~~2022.

Settlement charges recognized by the Subsidiary Registrants as of December 31, ~~2019,~~2022, which represent amounts allocated by Duke Energy for employees of the Subsidiary Registrants and allocated charges for their proportionate share of settlement charges for employees of Duke ~~Energy’s~~Energy's shared services affiliate, and recorded to Regulatory Assets within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets were ~~$53~~$35 million for Duke Energy Carolinas, ~~$26~~$23 million for Progress Energy, ~~$20~~$16 million for Duke Energy Progress, $6$7 million for Duke Energy Florida, $4$8 million for Duke Energy Indiana $2and $29 million for Piedmont. Settlement charges recognized by the Subsidiary Registrants as of December 31, 2022, recorded to Other Income and Expenses, net, within the Condensed Consolidated Statement of Operations were $3 million for Duke Energy Carolinas, $5 million for Progress Energy, $5 million for Duke Energy Progress, $1 million for Duke Energy Florida, $5 million for Duke Energy Ohio and $8$6 million for Piedmont.

~~221~~


~~FINANCIAL STATEMENTS~~			~~EMPLOYEE BENEFIT PLANS~~

The settlement charges reflect the recognition of a pro-rata portion of previously unrecognized actuarial losses, equal to the percentage of reduction in the projected benefit obligation resulting from total ~~lump~~-~~sum~~lump-sum benefit payments as of December 31, ~~2019.~~2022. Settlement charges recognized as a regulatory asset within Other Noncurrent Assets on the Consolidated Balance Sheets are amortized over the average remaining service period for participants in the plan. Amortization of settlement charges is disclosed in the tables below as a component of net periodic pension costs.

Effective December 31, 2022, Duke Energy Florida changed its method for calculating the market related value of plan assets (MRVA) from the fair value method to a method that recognizes changes in fair value of its plan assets over a five-year period. This represents a change in regulatory treatment that will serve to mitigate the impact of market volatility on retail customer rates, resulting in the timing of net periodic pension cost recognition that is more consistent with treatment of the related cost in the ratemaking process. The three-year retrospective impact of this method change of $24 million was recognized by Duke Energy, Progress Energy and Duke Energy Florida, respectively, and was recorded to Other Income and Expenses, net, within the Condensed Consolidated Statement of Operations and has been disclosed in the tables below as a component of net periodic pension costs.

Net periodic benefit costs disclosed in the tables below represent the cost of the respective benefit plan for the periods presented prior to capitalization of amounts reflected as Net property, plant and equipment, on the Consolidated Balance Sheets. Only the service cost component of net periodic benefit costs is eligible to be capitalized. The remaining non-capitalized portions of net periodic benefit costs are classified as either: (1) service cost, which is recorded in Operations, maintenance and other on the Consolidated Statements of Operations; or as (2) components of non-service cost, which is recorded in Other income and expenses, net on the Consolidated Statements of Operations. Amounts presented in the tables below for the Subsidiary Registrants represent the amounts of pension and other post-retirement benefit cost allocated by Duke Energy for employees of the Subsidiary Registrants. Additionally, the Consolidated Statements of Operations of the Subsidiary Registrants also include allocated net periodic benefit costs for their proportionate share of pension and post-retirement benefit cost for employees of Duke Energy’s shared services affiliate that provide support to the Subsidiary Registrants. However, in the tables below, these amounts are only presented within the Duke Energy column (except for amortization of settlement charges). These allocated amounts are included in the governance and shared service costs discussed in Note ~~13.~~14.

203


FINANCIAL STATEMENTS			EMPLOYEE BENEFIT PLANS

Duke Energy’s policy is to fund amounts on an actuarial basis to provide assets sufficient to meet benefit payments to be paid to plan participants. ~~Duke Energy does not anticipate making any contributions in 2021.~~ The following table includes information related to the Duke Energy Registrants’ contributions to its qualified defined benefit pension plans. There were no contributions made in the years ended December 31, 2021 and 2020.

Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Contributions Made:
2020 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
2019 77 7 57 4 53 2 2 1
2018 141 46 45 25 20 0 8 0


			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont




Contributions Made:
2022	$	58	$	15	$	13	$	8	$	5	$	3	$	5	$	2

QUALIFIED PENSION PLANS

Components of Net Periodic Pension Costs


		Year Ended December 31, 2020																	Year Ended December 31, 2022
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Service cost	Service cost	$	165	$	51	$	48	$	27	$	21	$	5	$	9	$	6	Service cost	$	152	$	48	$	43	$	25	$	17	$	4	$	9	$	5
Interest cost on projected benefit obligation	Interest cost on projected benefit obligation	269		62		85		38		46		15		22		9		Interest cost on projected benefit obligation	249		59		77		35		41		13		20		8
Expected return on plan assets	Expected return on plan assets	(572)		(145)		(190)		(87)		(101)		(28)		(42)		(21)		Expected return on plan assets	(558)		(152)		(183)		(88)		(94)		(23)		(37)		(24)
Amortization of actuarial loss	Amortization of actuarial loss	128		28		41		18		23		6		12		9		Amortization of actuarial loss	81		16		23		12		12		4		9		5
Amortization of prior service credit	Amortization of prior service credit	(32)		(8)		(3)		(2)		(1)		0		(2)		(9)		Amortization of prior service credit	(18)		(3)		—		—		—		—		(2)		(7)
Amortization of settlement charges(c)	Amortization of settlement charges(c)	18		9		7		6		1		0		1		1		Amortization of settlement charges(c)	32		9		8		7		1		5		1		7
MRVA method change																		MRVA method change	24		—		24		—		24		—		—		—
Net periodic pension costs(a)(b)	Net periodic pension costs(a)(b)	$	(24)	$	(3)	$	(12)	$	0	$	(11)	$	(2)	$	0	$	(5)	Net periodic pension costs(a)(b)	$	(38)	$	(23)	$	(8)	$	(9)	$	1	$	3	$	—	$	(6)


		Year Ended December 31, 2019																	Year Ended December 31, 2021
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Service cost	Service cost	$	158	$	49	$	46	$	26	$	20	$	4	$	9	$	5	Service cost	$	176	$	56	$	50	$	29	$	21	$	5	$	10	$	6
Interest cost on projected benefit obligation	Interest cost on projected benefit obligation	317		75		100		45		54		18		26		10		Interest cost on projected benefit obligation	220		51		70		30		39		13		18		7
Expected return on plan assets	Expected return on plan assets	(567)		(147)		(178)		(88)		(89)		(28)		(43)		(22)		Expected return on plan assets	(558)		(141)		(187)		(84)		(102)		(28)		(40)		(20)
Amortization of actuarial loss	Amortization of actuarial loss	108		24		39		15		24		4		8		8		Amortization of actuarial loss	133		29		38		18		20		7		13		10
Amortization of prior service credit	Amortization of prior service credit	(32)		(8)		(3)		(2)		(1)		0		(2)		(9)		Amortization of prior service credit	(29)		(8)		(2)		(1)		(1)		(1)		(2)		(9)
Amortization of settlement charges	Amortization of settlement charges	6		2		1		1		0		2		0		0		Amortization of settlement charges	9		5		2		2		1		—		—		1

Net periodic pension costs(a)(b)	Net periodic pension costs(a)(b)	$	(10)	$	(5)	$	5	$	(3)	$	8	$	0	$	(2)	$	(8)	Net periodic pension costs(a)(b)	$	(49)	$	(8)	$	(29)	$	(6)	$	(22)	$	(4)	$	(1)	$	(5)

~~222~~


~~FINANCIAL STATEMENTS~~			~~EMPLOYEE BENEFIT PLANS~~


		Year Ended December 31, 2018																	Year Ended December 31, 2020
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Service cost	Service cost	$	182	$	58	$	51	$	29	$	22	$	5	$	11	$	7	Service cost	$	165	$	51	$	48	$	27	$	21	$	5	$	9	$	6
Interest cost on projected benefit obligation	Interest cost on projected benefit obligation	299		72		94		43		50		17		23		11		Interest cost on projected benefit obligation	269		62		85		38		46		15		22		9
Expected return on plan assets	Expected return on plan assets	(559)		(147)		(178)		(85)		(91)		(28)		(42)		(22)		Expected return on plan assets	(572)		(145)		(190)		(87)		(101)		(28)		(42)		(21)
Amortization of actuarial loss	Amortization of actuarial loss	132		29		44		21		23		5		10		11		Amortization of actuarial loss	128		28		41		18		23		6		12		9
Amortization of prior service credit	Amortization of prior service credit	(32)		(8)		(3)		(2)		(1)		0		(2)		(10)		Amortization of prior service credit	(32)		(8)		(3)		(2)		(1)		—		(2)		(9)

Amortization of settlement charges(c)																		Amortization of settlement charges(c)	18		9		7		6		1		—		1		1
Net periodic pension costs(a)(b)	Net periodic pension costs(a)(b)	$	22	$	4	$	8	$	6	$	3	$	(1)	$	0	$	(3)	Net periodic pension costs(a)(b)	$	(24)	$	(3)	$	(12)	$	—	$	(11)	$	(2)	$	—	$	(5)

(a) Duke Energy amounts exclude $4$3 million, $4$3 million and $5$4 million for the years ended December ~~2020, 2019~~2022, 2021 and ~~2018,~~2020, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.

(b) Duke Energy Ohio amounts exclude $2$1 million, $2$1 million and $2 million for the years ended December ~~2020, 2019~~2022, 2021 and ~~2018,~~2020, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.

~~Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets~~

Year Ended December 31, 2020
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Regulatory assets, net increase (decrease) $ (62) $ (39) $ (26) $ (30) $ 4 $ (2) $ 5 $ (1)
Accumulated other comprehensive loss (income)
Deferred income tax expense (benefit) $ 2 $ 0 $ 1 $ 0 $ 1 $ 0 $ 0 $ 0
Amortization of prior year service credit 1 0 0 0 0 0 0 0
Amortization of prior year actuarial losses (11) 0 (1) 0 (3) 0 0 0
Net amount recognized in accumulated other comprehensive income $ (8) $ 0 $ 0 $ 0 $ (2) $ 0 $ 0 $ 0

Year Ended December 31, 2019
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Regulatory assets, net (decrease) increase $ (212) $ (156) $ (79) $ (59) $ (20) $ 12 $ 22 $ 0
Accumulated other comprehensive (income) loss
Deferred income tax expense (benefit) $ 20 $ 0 $ 1 $ 0 $ (1) $ 0 $ 0 $ 0
Amortization of prior year service credit 1 0 0 0 0 0 0 0
Amortization of prior year actuarial losses (15) 0 (2) 0 3 0 0 0
Net amount recognized in accumulated other comprehensive income $ 6 $ 0 $ (1) $ 0 $ 2 $ 0 $ 0 $ 0
(c) Includes settlement charges not deferred as a regulatory asset.

~~223~~204


FINANCIAL STATEMENTS			EMPLOYEE BENEFIT PLANS

Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets


	Year Ended December 31, 2022
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Regulatory assets, net increase (decrease)	$	367	$	221	$	107	$	101	$	5	$	(1)	$	(12)	$	9
Accumulated other comprehensive loss (income)
Deferred income tax expense	$	(7)	$	—	$	(1)	$	—	$	—	$	—	$	—	$	—
Amortization of prior year service credit	—		—		—		—		—		—		—		—
Amortization of prior year actuarial losses	37		—		2		—		—		—		—		—
Net amount recognized in accumulated other comprehensive income	$	30	$	—	$	1	$	—	$	—	$	—	$	—	$	—


	Year Ended December 31, 2021
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Regulatory assets, net decrease	$	(261)	$	(57)	$	(128)	$	(31)	$	(97)	$	(17)	$	(19)	$	(5)
Accumulated other comprehensive loss (income)
Deferred income tax expense	$	1	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Amortization of prior year service credit	1		—		—		—		—		—		—		—
Amortization of prior year actuarial losses	(8)		—		(1)		—		—		—		—		—
Net amount recognized in accumulated other comprehensive income	$	(6)	$	—	$	(1)	$	—	$	—	$	—	$	—	$	—

Reconciliation of Funded Status to Net Amount Recognized

Year Ended December 31, 2020
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Change in Projected Benefit Obligation
Obligation at prior measurement date $ 8,321 $ 1,923 $ 2,608 $ 1,170 $ 1,424 $ 481 $ 693 $ 292
Service cost 157 49 46 26 20 4 8 5
Interest cost 269 62 85 38 46 15 22 9
Actuarial loss 433 83 144 50 93 21 46 14
Transfers 0 8 (8) (8) 0 15 0 0
Benefits paid (541) (137) (160) (83) (76) (34) (49) (27)
Benefits paid – settlements (5) 0 0 0 0 0 (5) 0
Obligation at measurement date $ 8,634 $ 1,988 $ 2,715 $ 1,193 $ 1,507 $ 502 $ 715 $ 293
Accumulated Benefit Obligation at measurement date $ 8,577 $ 1,989 $ 2,684 $ 1,194 $ 1,476 $ 493 $ 709 $ 294
Change in Fair Value of Plan Assets
Plan assets at prior measurement date $ 8,910 $ 2,263 $ 2,898 $ 1,364 $ 1,515 $ 443 $ 667 $ 335
Actual return on plan assets 973 247 319 149 166 48 71 35
Benefits paid (541) (137) (160) (83) (76) (34) (49) (27)
Benefits paid – settlements (5) 0 0 0 0 0 (5) 0
Transfers 0 8 (8) (8) 0 15 0 0
Plan assets at measurement date $ 9,337 $ 2,381 $ 3,049 $ 1,422 $ 1,605 $ 472 $ 684 $ 343
Funded status of plan $ 703 $ 393 $ 334 $ 229 $ 98 $ (30) $ (31) $ 50


		Year Ended December 31, 2019																	Year Ended December 31, 2022
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Change in Projected Benefit Obligation	Change in Projected Benefit Obligation																	Change in Projected Benefit Obligation
Obligation at prior measurement date	Obligation at prior measurement date	$	7,869	$	1,954	$	2,433	$	1,125	$	1,295	$	435	$	618	$	264	Obligation at prior measurement date	$	8,207	$	1,903	$	2,560	$	1,153	$	1,392	$	450	$	680	$	273

Service cost	Service cost	150		47		43		25		18		4		8		5		Service cost	145		47		40		24		16		4		8		5
Interest cost	Interest cost	317		75		100		45		54		18		26		10		Interest cost	249		59		77		35		41		13		20		8
Actuarial loss		716		101		223		87		135		54		87		33
Transfers		0		11		0		0		0		0		0		0

Actuarial gain																		Actuarial gain	(1,490)		(301)		(513)		(197)		(312)		(84)		(143)		(47)
Benefits paid	Benefits paid	(731)		(265)		(191)		(112)		(78)		(30)		(46)		(20)		Benefits paid	(753)		(159)		(184)		(101)		(82)		(50)		(66)		(69)

Transfers																		Transfers	—		5		(5)		(5)		—		—		—		—
Obligation at measurement date	Obligation at measurement date	$	8,321	$	1,923	$	2,608	$	1,170	$	1,424	$	481	$	693	$	292	Obligation at measurement date	$	6,358	$	1,554	$	1,975	$	909	$	1,055	$	333	$	499	$	170
Accumulated Benefit Obligation at measurement date	Accumulated Benefit Obligation at measurement date	$	8,262	$	1,923	$	2,578	$	1,170	$	1,392	$	471	$	686	$	292	Accumulated Benefit Obligation at measurement date	$	6,324	$	1,556	$	1,959	$	910	$	1,038	$	327	$	495	$	170
Change in Fair Value of Plan Assets	Change in Fair Value of Plan Assets																	Change in Fair Value of Plan Assets
Plan assets at prior measurement date	Plan assets at prior measurement date	$	8,233	$	2,168	$	2,606	$	1,268	$	1,322	$	405	$	611	$	305	Plan assets at prior measurement date	$	9,235	$	2,365	$	3,053	$	1,421	$	1,610	$	438	$	669	$	334

Employer contributions	Employer contributions	77		7		57		4		53		2		2		1		Employer contributions	58		15		13		8		5		3		5		2
Actual return on plan assets	Actual return on plan assets	1,331		342		426		204		218		66		100		49		Actual return on plan assets	(1,547)		(411)		(506)		(240)		(262)		(68)		(107)		(64)
Benefits paid	Benefits paid	(731)		(265)		(191)		(112)		(78)		(30)		(46)		(20)		Benefits paid	(753)		(159)		(184)		(101)		(82)		(50)		(66)		(69)

Transfers	Transfers	0		11		0		0		0		0		0		0		Transfers	—		5		(5)		(5)		—		—		—		—

Plan assets at measurement date	Plan assets at measurement date	$	8,910	$	2,263	$	2,898	$	1,364	$	1,515	$	443	$	667	$	335	Plan assets at measurement date	$	6,993	$	1,815	$	2,371	$	1,083	$	1,271	$	323	$	501	$	203
Funded status of plan	Funded status of plan	$	589	$	340	$	290	$	194	$	91	$	(38)	$	(26)	$	43	Funded status of plan	$	635	$	261	$	396	$	174	$	216	$	(10)	$	2	$	33

~~224~~205


FINANCIAL STATEMENTS			EMPLOYEE BENEFIT PLANS


	Year Ended December 31, 2021
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Change in Projected Benefit Obligation
Obligation at prior measurement date	$	8,634	$	1,988	$	2,715	$	1,193	$	1,507	$	502	$	715	$	293

Service cost	168		54		48		28		20		5		9		6
Interest cost	220		51		70		30		39		13		18		7
Actuarial gain	(200)		(42)		(108)		(18)		(89)		(10)		(10)		(5)
Benefits paid	(615)		(148)		(161)		(80)		(81)		(50)		(52)		(28)

Transfers	—		—		(4)		—		(4)		(10)		—		—
Obligation at measurement date	$	8,207	$	1,903	$	2,560	$	1,153	$	1,392	$	450	$	680	$	273
Accumulated Benefit Obligation at measurement date	$	8,144	$	1,904	$	2,529	$	1,154	$	1,361	$	439	$	672	$	274
Change in Fair Value of Plan Assets
Plan assets at prior measurement date	$	9,337	$	2,381	$	3,049	$	1,422	$	1,605	$	472	$	684	$	343


Actual return on plan assets	513		132		169		79		90		26		37		19
Benefits paid	(615)		(148)		(161)		(80)		(81)		(50)		(52)		(28)

Transfers	—		—		(4)		—		(4)		(10)		—		—

Plan assets at measurement date	$	9,235	$	2,365	$	3,053	$	1,421	$	1,610	$	438	$	669	$	334
Funded status of plan	$	1,028	$	462	$	493	$	268��	$	218	$	(12)	$	(11)	$	61

Amounts Recognized in the Consolidated Balance Sheets


		December 31, 2020																	December 31, 2022
				Duke				Duke		Duke		Duke		Duke							Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy					Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Prefunded pension(a)	Prefunded pension(a)	$	780	$	393	$	379	$	229	$	143	$	58	$	79	$	50	Prefunded pension(a)	$	885	$	261	$	396	$	174	$	216	$	62	$	90	$	33
Noncurrent pension liability(b)	Noncurrent pension liability(b)	$	77	$	0	$	45	$	0	$	45	$	88	$	110	$	0	Noncurrent pension liability(b)	$	250	$	—	$	—	$	—	$	—	$	72	$	88	$	—
Net asset (liability) recognized	Net asset (liability) recognized	$	703	$	393	$	334	$	229	$	98	$	(30)	$	(31)	$	50	Net asset (liability) recognized	$	635	$	261	$	396	$	174	$	216	$	(10)	$	2	$	33
Regulatory assets	Regulatory assets	$	1,910	$	381	$	691	$	283	$	408	$	110	$	209	$	80	Regulatory assets	$	2,016	$	545	$	670	$	353	$	316	$	92	$	178	$	84
Accumulated other comprehensive (income) loss	Accumulated other comprehensive (income) loss																	Accumulated other comprehensive (income) loss
Deferred income tax benefit	Deferred income tax benefit	$	(21)	$	0	$	0	$	0	$	0	$	0	$	0	$	0	Deferred income tax benefit	$	(27)	$	—	$	(1)	$	—	$	—	$	—	$	—	$	—
Prior service credit	Prior service credit	(2)		0		0		0		0		0		0		0		Prior service credit	(1)		—		—		—		—		—		—		—
Net actuarial loss	Net actuarial loss	100		0		2		0		0		0		0		0		Net actuarial loss	129		—		3		—		—		—		—		—
Net amounts recognized in accumulated other comprehensive loss	Net amounts recognized in accumulated other comprehensive loss	$	77	$	0	$	2	$	0	$	0	$	0	$	0	$	0	Net amounts recognized in accumulated other comprehensive loss	$	101	$	—	$	2	$	—	$	—	$	—	$	—	$	—

December 31, 2019
Duke Duke Duke Duke Duke
Duke Energy Progress Energy Energy Energy Energy
(in millions) Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
Prefunded pension(a)
$ 621 $ 340 $ 322 $ 194 $ 123 $ 38 $ 57 $ 43
Noncurrent pension liability(b)
$ 32 $ 0 $ 32 $ 0 $ 32 $ 76 $ 83 $ 0
Net asset recognized $ 589 $ 340 $ 290 $ 194 $ 91 $ (38) $ (26) $ 43
Regulatory assets $ 1,972 $ 420 $ 717 $ 313 $ 404 $ 112 $ 204 $ 81
Accumulated other comprehensive (income) loss
Deferred income tax benefit $ (23) $ 0 $ (1) $ 0 $ (1) $ 0 $ 0 $ 0
Prior service credit (3) 0 0 0 0 0 0 0
Net actuarial loss 111 0 3 0 3 0 0 0
Net amounts recognized in accumulated other comprehensive loss $ 85 $ 0 $ 2 $ 0 $ 2 $ 0 $ 0 $ 0
Amounts to be recognized in net periodic pension costs in the next year
Unrecognized net actuarial loss $ 135 $ 29 $ 43 $ 19 $ 24 $ 7 $ 10 $ 9
Unrecognized prior service credit (32) (8) (3) (2) (1) (1) (2) (9)

206


FINANCIAL STATEMENTS			EMPLOYEE BENEFIT PLANS


	December 31, 2021
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Prefunded pension(a)	$	1,071	$	462	$	494	$	268	$	219	$	74	$	100	$	61
Noncurrent pension liability(b)	$	43	$	—	$	1	$	—	$	1	$	86	$	111	$	—
Net asset (liability) recognized	$	1,028	$	462	$	493	$	268	$	218	$	(12)	$	(11)	$	61
Regulatory assets	$	1,649	$	324	$	563	$	252	$	311	$	93	$	190	$	75
Accumulated other comprehensive (income) loss
Deferred income tax benefit	$	(20)	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Prior service credit	(1)		—		—		—		—		—		—		—
Net actuarial loss	92		—		1		—		—		—		—		—
Net amounts recognized in accumulated other comprehensive loss	$	71	$	—	$	1	$	—	$	—	$	—	$	—	$	—

(a) Included in Other within Other Noncurrent Assets on the Consolidated Balance Sheets.

(b) Included in Accrued pension and other post-retirement benefit costs on the Consolidated Balance Sheets.

Information for Plans with Accumulated Benefit Obligation in Excess of Plan Assets


		December 31, 2020								December 31, 2022
						Duke		Duke			Duke					Duke		Duke
		Duke		Progress		Energy		Energy			Energy			Duke		Energy		Energy
(in millions)	(in millions)	Energy				Florida		Ohio			Indiana		(in millions)	Energy		Ohio		Indiana
Projected benefit obligation	Projected benefit obligation	$	4,914	$	828	$	828	$	184		$	293	Projected benefit obligation	$	3,323	$	103	$	198
Accumulated benefit obligation	Accumulated benefit obligation	4,856		796		796		176			285		Accumulated benefit obligation	3,288		99		193
Fair value of plan assets	Fair value of plan assets	4,837		783		783		96			183		Fair value of plan assets	3,073		31		110

~~225~~


~~FINANCIAL STATEMENTS~~			~~EMPLOYEE BENEFIT PLANS~~

December 31, 2019

December 31, 2021

Duke

Energy

(in millions)

Ohio

Indiana

(in millions)

Ohio

Indiana

Projected benefit obligation

155

260

Projected benefit obligation

153

284

Accumulated benefit obligation

146

252

Accumulated benefit obligation

143

275

Fair value of plan assets

177

Fair value of plan assets

173

Assumptions Used for Pension Benefits Accounting

The discount rate used to determine the current year pension obligation and following year’s pension expense is based on a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high-quality corporate bonds that generate sufficient cash flow to provide for projected benefit payments of the plan. The selected bond portfolio is derived from a universe of non-callable corporate bonds rated Aa quality or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plan’s projected benefit payments discounted at this rate with the market value of the bonds selected.

The average remaining service period for participants in active plans and life expectancy of participants in inactive plans is 13 years for Duke Energy and Duke Energy ~~Indiana~~Progress, 15 years for Duke Energy Florida and Duke Energy Ohio, 14 years for Progress Energy ~~Duke Energy Progress~~ and Duke Energy ~~Florida,~~Indiana, 12 years for Duke Energy Carolinas and nine years for Piedmont.

207


FINANCIAL STATEMENTS			EMPLOYEE BENEFIT PLANS

The following tables present the assumptions or range of assumptions used for pension benefit accounting.


		December 31,													December 31,
		2020				2019				2018					2022				2021				2020
Benefit Obligations	Benefit Obligations													Benefit Obligations
Discount rate	Discount rate				2.60%				3.30%				4.30%	Discount rate				5.60%				2.90%				2.60%
Interest crediting rate	Interest crediting rate				4.00%				4.00%				4.00%	Interest crediting rate				4.35%				4.00%				4.00%
Salary increase	Salary increase	3.50	%	–	4.00%	3.50	%	–	4.00%	3.50	%	–	4.00%	Salary increase	3.50	%	–	4.00%	3.50	%	–	4.00%	3.50	%	–	4.00%
Net Periodic Benefit Cost	Net Periodic Benefit Cost													Net Periodic Benefit Cost
Discount rate	Discount rate				3.30%				4.30%				3.60%	Discount rate	2.90	%	–	5.70%				2.60%				3.30%
Interest crediting rate	Interest crediting rate				4.00%				4.00%				4.00%	Interest crediting rate				4.00%				4.00%				4.00%
Salary increase	Salary increase	3.50	%	–	4.00%	3.50	%	–	4.00%	3.50	%	–	4.00%	Salary increase	3.50	%	–	4.00%	3.50	%	–	4.00%	3.50	%	–	4.00%
Expected long-term rate of return on plan assets	Expected long-term rate of return on plan assets				6.85%				6.85%	0			6.50%	Expected long-term rate of return on plan assets				6.50%				6.50%				6.85%

Expected Benefit Payments


				Duke				Duke													Duke				Duke
		Duke		Energy		Progress		Energy											Duke		Energy		Progress		Energy
(in millions)	(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Years ending December 31,	Years ending December 31,																	Years ending December 31,
2021		$	667	$	169	$	177	$	94	$	82	$	40	$	53	$	29
2022		650		170		176		92		83		39		51		25
2023	2023	655		174		181		95		85		38		49		22		2023	$	661	$	186	$	183	$	99	$	83	$	32	$	45	$	19
2024	2024	644		168		184		96		87		37		49		21		2024	635		176		180		95		84		31		45		18
2025	2025	617		163		181		93		88		35		47		19		2025	629		174		183		97		85		31		44		16
2025-2029		2,745		677		846		399		443		154		217		83
2026																		2026	607		164		180		91		87		30		44		16
2027																		2027	592		156		177		89		87		29		43		15
2028-2032																		2028-2032	2,581		628		804		372		427		135		205		71

NON-QUALIFIED PENSION PLANS

The accumulated benefit obligation, which equals the projected benefit obligation for non-qualified pension plans, was ~~$320~~$232 million for Duke Energy, ~~$13~~$10 million for Duke Energy Carolinas, ~~$111~~$78 million for Progress Energy, ~~$33~~$24 million for Duke Energy Progress, ~~$45~~$32 million for Duke Energy Florida, $4$3 million for Duke Energy Ohio, $2 million for Duke Energy Indiana and $4$3 million for Piedmont as of December 31, ~~2020.~~2022.

Employer contributions, which equal benefits paid for non-qualified pension plans, were ~~$23~~$24 million for Duke Energy, $2$1 million for Duke Energy Carolinas, $8$10 million for Progress Energy, $3 million for Duke Energy Progress and $3$4 million for Duke Energy Florida for the year ended December 31, ~~2020.~~2022. Employer contributions were not material for Duke Energy Ohio, Duke Energy Indiana or Piedmont for the year ended December 31, ~~2020.~~2022.

Net periodic pension costs for non-qualified pension plans were not material for the years ended December 31, ~~2020, 2019~~2022, 2021 or ~~2018.~~

~~226~~


~~FINANCIAL STATEMENTS~~			~~EMPLOYEE BENEFIT PLANS~~

2020.


	Qualified and Non-						Other Post-Retirement
	Qualified Pension Plans						Plans
(in millions)	0.25		%	(0.25)		%	0.25		%	(0.25)		%
Effect on 2020 pretax pension and other post-retirement expense:
Expected long-term rate of return	$	(21)		$	21		$	(1)		$	1
Discount rate	(9)			9			—			(1)
Effect on pension and other post-retirement benefit obligation at December 31, 2020:
Discount rate	(208)			213			(13)			14


	Payments Due By Period
									More than
			Less than		2-3 years		4-5 years		5 years
			1 year		(2022 &		(2024 &		(2026 &
(in millions)	Total		(2021)		2023)		2025)		beyond)
Long-term debt(a)	$	58,134	$	4,110	$	8,011	$	4,408	$	41,605
Interest payments on long-term debt(b)	33,858		2,099		3,898		3,577		24,284
Finance leases(c)	1,465		186		347		170		762
Operating leases(c)	1,861		229		414		348		870
Purchase obligations:(d)
Fuel and purchased power(e)(f)	16,591		3,489		4,248		2,998		5,856
Other purchase obligations(g)	9,916		8,850		974		52		40
Nuclear decommissioning trust annual funding(h)	363		20		40		40		263
Land easements(i)	400		12		24		24		340
Total contractual cash obligations(j)(k)	$	122,588	$	18,995	$	17,956	$	11,617	$	74,020


			Accumulated Other
			Comprehensive
			Loss
			Net Gains
			(Losses) on
	Member's		Cash Flow		Total
(in millions)	Equity		Hedges		Equity
Balance at December 31, 2017	$	11,368	$	(7)	$	11,361
Net income	1,071		—		1,071
Other comprehensive income	—		1		1
Distributions to parent	(750)		—		(750)

Balance at December 31, 2018	$	11,689	$	(6)	$	11,683
Net income	1,403		—		1,403

Distributions to parent	(275)		—		(275)
Other	1		(1)		0
Balance at December 31, 2019	$	12,818	$	(7)	$	12,811
Net income	956		—		956

Distributions to parent	(600)		—		(600)
Other(a)	(13)		—		(13)
Balance at December 31, 2020	$	13,161	$	(7)	$	13,154


			Provisions/		Cash
(in millions)	December 31, 2019		Adjustments		Reductions		December 31, 2020
Duke Energy Ohio	$	54	$	(1)	$	(3)	$	50


	Electric Utilities		Gas Utilities		Commercial
(in millions)	and Infrastructure		and Infrastructure		Renewables		Total
Goodwill Balance at December 31, 2019	$	17,379	$	1,924	$	122	$	19,425
Accumulated impairment charges	—		—		(122)		(122)
Goodwill balance at December 31, 2019, adjusted for accumulated impairment charges	$	17,379	$	1,924	$	—	$	19,303

Goodwill Balance at December 31, 2020	$	17,379	$	1,924	$	122	$	19,425
Accumulated impairment charges	—		—		(122)		(122)
Goodwill balance at December 31, 2020, adjusted for accumulated impairment charges	$	17,379	$	1,924	$	—	$	19,303


			Investment Amount (in millions)
	Ownership		December 31,
Entity Name	Interest		2020		2019
Pipeline Investments(a)
ACP(b)	47	%	$	—	$	1,179
Sabal Trail	7.5	%	120		121

Cardinal(c)	21.49	%	9		9
Storage Facilities
Pine Needle(c)	45	%	27		28
Hardy Storage(c)	50	%	56		51
Other	29.68	%	3		—
Total Investments(d)			$	215	$	1,388


				Actual Allocation at							Actual Allocation at
		Target		December 31,					Target		December 31,

		Allocation		2020		2019			Allocation		2022		2021

Global equity securities	Global equity securities	28	%	30	%	27	%	Global equity securities	45	%	49	%	24	%
Global private equity securities	Global private equity securities	1	%	1	%	1	%	Global private equity securities	2	%	2	%	1	%
Debt securities	Debt securities	58	%	55	%	57	%	Debt securities	35	%	30	%	62	%
Return seeking debt securities	Return seeking debt securities	4	%	5	%	5	%	Return seeking debt securities	7	%	7	%	4	%
Hedge funds	Hedge funds	3	%	3	%	3	%	Hedge funds	4	%	6	%	3	%
Real estate and cash	Real estate and cash	6	%	6	%	7	%	Real estate and cash	7	%	6	%	6	%

Total	Total	100	%	100	%	100	%	Total	100	%	100	%	100	%


		December 31, 2020											December 31, 2022
		Total Fair								Not			Total Fair								Not
(in millions)	(in millions)	Value		Level 1		Level 2		Level 3		Categorized(b)		(in millions)	Value		Level 1		Level 2		Level 3		Categorized(b)
Equity securities	Equity securities	$	3,202	$	3,162	$	0	$	0	$	40	Equity securities	$	2,234	$	2,014	$	194	$	—	$	26
Corporate debt securities	Corporate debt securities	4,162		0		4,162		0		0		Corporate debt securities	2,944		—		2,944		—		—
Short-term investment funds	Short-term investment funds	397		247		150		0		0		Short-term investment funds	193		1		192		—		—
Partnership interests	Partnership interests	97		0		0		0		97		Partnership interests	62		—		—		62		—
Hedge funds	Hedge funds	198		0		0		0		198		Hedge funds	209		—		—		—		209

U.S. government securities	U.S. government securities	1,164		0		1,164		0		0		U.S. government securities	1,254		—		1,254		—		—

Governments bonds – foreign	Governments bonds – foreign	73		0		73		0		0		Governments bonds – foreign	112		—		112		—		—
Cash	Cash	98		98		0		0		0		Cash	45		45		—		—		—

Government and commercial mortgage backed securities												Government and commercial mortgage backed securities	6		—		6		—		—
Net pending transactions and other investments	Net pending transactions and other investments	88		34		54		0		0		Net pending transactions and other investments	14		5		9		—		—
Total assets(a)	Total assets(a)	$	9,479	$	3,541	$	5,603	$	0	$	335	Total assets(a)	$	7,073	$	2,065	$	4,711	$	62	$	235


	First		Second		Third		Fourth
(in millions, except per share data)	Quarter		Quarter		Quarter		Quarter		Total
2022
Operating revenues	$	7,011	$	6,564	$	7,842	$	7,351	$	28,768
Operating income	1,314		1,448		2,056		1,194		6,012
Income from continuing operations	835		898		1,410		635		3,778
(Loss) Income from discontinued operations, net of tax	(15)		(18)		3		(1,293)		(1,323)
Net income (loss)	820		880		1,413		(658)		2,455
Net income (loss) available to Duke Energy Corporation common stockholders	818		893		1,383		(650)		2,444
Earnings per share:
Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and diluted	$	1.06	$	1.11	$	1.78	$	0.80	$	4.74

Income (Loss) from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic and diluted	$	0.02	$	0.03	$	0.03	$	(1.66)	$	(1.57)

Net income (loss) available to Duke Energy Corporation common stockholders
Basic and diluted	$	1.08	$	1.14	$	1.81	$	(0.86)	$	3.17

2021
Operating revenues	$	6,032	$	5,638	$	6,834	$	6,117	$	24,621
Operating income	1,466		1,198		1,726		1,110		5,500
Income from continuing operations	967		723		1,333		700		3,723
Loss from discontinued operations, net of tax	(26)		(25)		(57)		(36)		(144)
Net income	941		698		1,276		664		3,579
Net income available to Duke Energy Corporation common stockholders	953		751		1,366		732		3,802
Earnings per share:
Income from continuing operations available to Duke Energy Corporation common stockholders
Basic and diluted	$	1.22	$	0.90	$	1.69	$	0.86	$	4.68

Income from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic and diluted	$	0.03	$	0.06	$	0.10	$	0.07	$	0.26

Net income available to Duke Energy Corporation common stockholders
Basic and diluted	$	1.25	$	0.96	$	1.79	$	0.93	$	4.94


Plan Category	Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted average exercise price of outstanding options, warrants and rights (b)(1)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)		Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted average exercise price of outstanding options, warrants and rights (b)(1)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	Equity compensation plans approved by security holders	3,256,542	(2)	n/a	4,450,675	(3)	Equity compensation plans approved by security holders	3,385,638	(2)	n/a	2,410,473	(3)
Equity compensation plans not approved by security holders	Equity compensation plans not approved by security holders	143,272	(4)	n/a		(5)	Equity compensation plans not approved by security holders	109,690	(4)	n/a	n/a	(5)
Total	Total	3,399,814		n/a	4,450,675		Total	3,495,328		n/a	2,410,473


			DUKE ENERGY CORPORATION (Registrant)
			By:						/s/ LYNN J. GOOD
									Lynn J. Good Chair, President and Chief Executive Officer


			DUKE ENERGY CAROLINAS, LLC (Registrant)
			By:						/s/ LYNN J. GOOD
									Lynn J. Good Chief Executive Officer



(i)			/s/ LYNN J. GOOD
			Lynn J. Good
			Chief Executive Officer (Principal Executive Officer)

(ii)			/s/ ~~STEVEN K. YOUNG~~BRIAN D. SAVOY
			~~Steven K. Young~~Brian D. Savoy
			Executive Vice President and Chief Financial Officer (Principal Financial Officer)

(iii)			/s/ ~~DWIGHT L. JACOBS~~CYNTHIA S. LEE
			~~Dwight L. Jacobs~~Cynthia S. Lee
			~~Senior~~ Vice President, Chief Accounting Officer ~~Tax~~ and Controller (Principal Accounting Officer)

(iv)			Directors:

			/s/ LYNN J. GOOD
			Lynn J. Good

			/s/ DHIAA M. JAMIL
			Dhiaa M. Jamil

			/s/ JULIA S. JANSON
			Julia S. Janson


			PROGRESS ENERGY, INC. (Registrant)
			By:						/s/ LYNN J. GOOD
									Lynn J. Good Chief Executive Officer


			DUKE ENERGY PROGRESS, LLC (Registrant)
			By:						/s/ LYNN J. GOOD
									Lynn J. Good Chief Executive Officer


			DUKE ENERGY FLORIDA, LLC (Registrant)
			By:						/s/ LYNN J. GOOD
									Lynn J. Good Chief Executive Officer


			DUKE ENERGY OHIO, INC. (Registrant)
			By:						/s/ LYNN J. GOOD
									Lynn J. Good Chief Executive Officer


			DUKE ENERGY INDIANA, LLC (Registrant)
			By:						/s/ LYNN J. GOOD
									Lynn J. Good Chief Executive Officer


			PIEDMONT NATURAL GAS COMPANY, INC. (Registrant)
			By:						/s/ LYNN J. GOOD
									Lynn J. Good Chief Executive Officer