0001326160 duk:PiedmontNaturalGasMember us-gaap:OtherNoncurrentLiabilitiesMember 2019-12-31

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended ~~September 30, 2017~~March 31, 2020



¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

~~________________________~~_________to_________



Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices and Telephone Number	IRS Employer Identification ~~No.~~Number

1-32853	DUKE ENERGY CORPORATION ~~(a Delaware corporation)~~ ~~550 South Tryon Street~~ ~~Charlotte, North Carolina 28202-1803~~ ~~704-382-3853~~	20-2777218

(a Delaware corporation)

550 South Tryon Street

Charlotte, North Carolina28202-1803

704-382-3853



~~Commission file number~~	~~Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number~~	~~Commission file number~~	~~Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number~~
1-4928	DUKE ENERGY CAROLINAS, LLC	56-0205520

(a North Carolina limited liability company)

526 South Church Street

Charlotte, North Carolina28202-1803

704-382-3853

~~(a North Carolina limited liability company)~~



1-15929	PROGRESS ENERGY, INC.	56-2155481

(a North Carolina corporation)

410 South Wilmington Street

Raleigh, North Carolina27601-1748

704-382-3853

~~526 South Church~~



1-3382	DUKE ENERGY PROGRESS, LLC	56-0165465

(a North Carolina limited liability company)

410 South Wilmington Street

Raleigh, North Carolina27601-1748

704-382-3853

~~Charlotte, North Carolina 28202-1803~~

~~704-382-3853~~

~~56-0205520~~



1-3274	DUKE ENERGY FLORIDA, LLC	59-0247770

(a Florida limited liability company)

299 First Avenue North

St. Petersburg, Florida33701

704-382-3853

~~(a Florida limited liability company)~~

~~299 First Avenue North~~

~~St. Petersburg, Florida 33701~~

~~704-382-3853~~

~~59-0247770~~


~~1-15929~~	~~PROGRESS ENERGY, INC.~~ ~~(a North Carolina corporation)~~ ~~410 South Wilmington Street~~ ~~Raleigh, North Carolina 27601-1748~~ ~~704-382-3853~~ ~~56-2155481~~
1-1232	DUKE ENERGY OHIO, INC.	31-0240030

(an Ohio corporation)

139 East Fourth Street

Cincinnati, Ohio45202

704-382-3853

~~(an Ohio corporation)~~

~~139 East Fourth Street~~

~~Cincinnati, Ohio 45202~~

~~704-382-3853~~

~~31-0240030~~


~~1-3382~~	~~DUKE ENERGY PROGRESS, LLC~~ ~~(a North Carolina limited liability company)~~ ~~410 South Wilmington Street~~ ~~Raleigh, North Carolina 27601-1748~~ ~~704-382-3853~~ ~~56-0165465~~
1-3543	DUKE ENERGY INDIANA, LLC	35-0594457

(an Indiana limited liability company)

1000 East Main Street

Plainfield, Indiana46168

704-382-3853

~~(an Indiana limited liability company)~~

~~1000 East Main Street~~

~~Plainfield, Indiana 46168~~

~~704-382-3853~~

~~35-0594457~~



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

(a North Carolina corporation)

4720 Piedmont Row Drive

Charlotte, North Carolina28210

704-364-3120

~~(a North Carolina corporation)~~

~~4720 Piedmont Row Drive~~

~~Charlotte, North Carolina 28210~~

~~704-364-3120~~

~~56-0556998~~

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

Name of each exchange on


Registrant	Title of each classTrading symbolswhich registered


Duke Energy	Common Stock, $0.001 par valueDUKNew York Stock Exchange LLC


Duke Energy	5.125% Junior Subordinated Debentures due DUKHNew York Stock Exchange LLC

January 15, 2073


Duke Energy	5.625% Junior Subordinated Debentures due DUKBNew York Stock Exchange LLC

September 15, 2078


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

interest in a share of 5.75% Series A Cumulative

Redeemable Perpetual Preferred Stock, par value

$0.001 per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Duke Energy Corporation (Duke Energy)	Yesx	☒	No¨	☐	Duke Energy Florida, LLC (Duke Energy Florida)	Yesx	☒	No¨	☐
Duke Energy Carolinas, LLC (Duke Energy Carolinas)	Yesx	☒	No¨	☐	Duke Energy Ohio, Inc. (Duke Energy Ohio)	Yesx	☒	No¨	☐
Progress Energy, Inc. (Progress Energy)	Yesx	☒	No¨	☐	Duke Energy Indiana, LLC (Duke Energy Indiana)	Yesx	☒	No¨	☐
Duke Energy Progress, LLC (Duke Energy Progress)	Yesx	☒	No¨	☐	Piedmont Natural Gas Company, Inc. (Piedmont)	Yesx	☒	No¨	☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).



Duke Energy	Yesx	☒	No¨	☐	Duke Energy Florida	Yesx	☒	No¨	☐
Duke Energy Carolinas	Yesx	☒	No¨	☐	Duke Energy Ohio	Yesx	☒	No¨	☐
Progress Energy	Yesx	☒	No¨	☐	Duke Energy Indiana	Yesx	☒	No¨	☐
Duke Energy Progress	Yesx	☒	No¨	☐	Piedmont	Yesx	☒	No¨	☐

Indicate by check mark whether the registrant 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.



Duke Energy	Large accelerated filerx	☒	Accelerated filer¨	☐	Non-accelerated filer¨	☐	Smaller reporting company¨	☐	Emerging ~~Growth Company~~ ¨growth company	☐
Duke Energy Carolinas	Large accelerated filer¨	☐	Accelerated filer¨	☐	Non-accelerated filerx	☒	Smaller reporting company¨	☐	Emerging ~~Growth Company~~ ¨growth company	☐
Progress Energy	Large accelerated filer¨	☐	Accelerated filer¨	☐	Non-accelerated filerx	☒	Smaller reporting company¨	☐	Emerging ~~Growth Company~~ ¨growth company	☐
Duke Energy Progress	Large accelerated filer¨	☐	Accelerated filer¨	☐	Non-accelerated filerx	☒	Smaller reporting company¨	☐	Emerging ~~Growth Company~~ ¨growth company	☐
Duke Energy Florida	Large accelerated filer¨	☐	Accelerated filer¨	☐	Non-accelerated filerx	☒	Smaller reporting company¨	☐	Emerging ~~Growth Company~~ ¨growth company	☐
Duke Energy Ohio	Large accelerated filer¨	☐	Accelerated filer¨	☐	Non-accelerated filerx	☒	Smaller reporting company¨	☐	Emerging ~~Growth Company~~ ¨growth company	☐
Duke Energy Indiana	Large accelerated filer¨	☐	Accelerated filer¨	☐	Non-accelerated filerx	☒	Smaller reporting company¨	☐	Emerging ~~Growth Company~~ ¨growth company	☐
Piedmont	Large accelerated filer¨	☐	Accelerated filer¨	☐	Non-accelerated filerx	☒	Smaller reporting company¨	☐	Emerging ~~Growth Company~~ ¨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 the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Duke Energy	Yes¨	☐	Nox	☒	Duke Energy Florida	Yes¨	☐	Nox	☒
Duke Energy Carolinas	Yes¨	☐	Nox	☒	Duke Energy Ohio	Yes¨	☐	Nox	☒
Progress Energy	Yes¨	☐	Nox	☒	Duke Energy Indiana	Yes¨	☐	Nox	☒
Duke Energy Progress	Yes¨	☐	Nox	☒	Piedmont	Yes¨	☐	Nox	☒

Number of shares of ~~Common~~common stock outstanding at ~~September~~April 30, ~~2017:~~2020:



Registrant	Description	Shares
Duke Energy	Common stock, $0.001 par value	~~699,975,614~~734,852,539

This combined Form 10-Q 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 H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.

TABLE OF CONTENTS



	Cautionary Statement Regarding Forward-Looking Information

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements

	Duke Energy Corporation Financial Statements	69

	Duke Energy Carolinas, LLC Financial Statements	1114

	Progress Energy, Inc. Financial Statements	1518

	Duke Energy Progress, LLC Financial Statements	1922

	Duke Energy Florida, LLC Financial Statements	2326

	Duke Energy Ohio, Inc. Financial Statements	2730

	Duke Energy Indiana, LLC Financial Statements	3134

	Piedmont Natural Gas Company, Inc. Financial Statements	3538

	Combined Notes to Condensed Consolidated Financial Statements
	Note 1 – Organization and Basis of Presentation	3942
	Note 2 – ~~Acquisitions and Dispositions~~Business Segments	44
	Note 3 – ~~Business Segments~~Regulatory Matters	4645
	Note 4 – ~~Regulatory Matters~~Commitments and Contingencies	4958
	Note 5 – ~~Commitments~~Debt and ~~Contingencies~~Credit Facilities	5761
	Note 6 – ~~Debt and Credit Facilities~~Goodwill	62
	Note 7 – ~~Asset Retirement Obligations~~Related Party Transactions	6563
	Note 8 – ~~Goodwill~~Derivatives and ~~Intangible Assets~~Hedging	6564
	Note 9 ~~– Related Party Transactions~~	67
	~~Note 10 – Derivatives and Hedging~~	68
	~~Note 11~~ – Investments in Debt and Equity Securities	7470
	Note 1210 – Fair Value Measurements	75
	Note 11 – Variable Interest Entities	80
	Note 12 – Revenue	84
	Note 13 – ~~Variable Interest Entities~~Stockholders' Equity	8687
	Note 14 – ~~Common Stock~~Employee Benefit Plans	9188
	Note 15 – ~~Stock-Based Compensation~~Income Taxes	9189
	Note 16 – ~~Employee Benefit Plans~~	92
	~~Note 17 – Income Taxes~~	96
	~~Note 18 –~~ Subsequent Events	9790

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	9891

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~126~~109

Item 4.	Controls and Procedures	~~126~~109

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	~~128~~111

Item 1A.	Risk Factors	~~128~~111

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~128~~111

Item 6.	Exhibits	~~129~~112

	Signatures	~~132~~115



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;


◦	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 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 ~~Crystal River Unit 3 and other~~ nuclear facilities could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process;


◦	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 and the economic health of our service territories or variations in customer usage patterns, including energy efficiency efforts 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 and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in customers leaving the electric distribution system, excess generation resources as well as stranded costs;


◦	Advancements in technology;


◦	Additional competition in electric 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;


◦	The ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to the company resulting from an incident that affects the ~~U.S.~~United States electric grid or generating resources;


◦	The ability to obtain the necessary permits and approvals and to complete necessary or desirable pipeline expansion or infrastructure projects in our natural gas business;


◦	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 attack, cybersecurity threats, data security breaches, ~~and~~operational accidents, 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 ~~and potential construction~~ 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 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;

◦

Construction and development risks associated with the completion of the Duke Energy Registrants’ capital investment projects, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner, or at all;


◦	Changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants;


◦	The ability to control operation and maintenance costs;


◦	The level of creditworthiness of counterparties to transactions;


◦	The ability to obtain adequate insurance at acceptable costs;


◦	Employee workforce factors, including the potential inability to attract and retain key personnel;



FORWARD-LOOKING STATEMENTS


◦	The ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent);


◦	The performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities;


◦	The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;


◦	~~Substantial revision to the U.S. tax code, such as changes to the corporate tax rate or material change in the deductibility of interest;~~


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


◦	The ~~ability to successfully complete future merger, acquisition~~impacts from potential impairments of goodwill or ~~divestiture plans;~~


◦	~~The ability to successfully integrate the natural gas businesses following the acquisition of Piedmont Natural Gas Company, Inc. and realize anticipated benefits;~~equity method investment carrying values; and


◦	The ability to implement our business ~~strategy.~~strategy, including enhancing existing technology systems.

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 ~~www.sec.gov.~~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.

~~PART I. FINANCIAL INFORMATION~~



GLOSSARY OF TERMS

Glossary of Terms

The following terms or acronyms used in this Form 10-Q 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 OPC and other customer representatives

2017 Settlement	Second Revised and Restated Settlement Agreement in 2017 among Duke Energy Florida, the Florida OPC and other customer representatives, which replaces and supplants the 2013 Settlement

ACP	Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy, Inc. and Duke Energy

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

AFS	Available for Sale

AFUDC	Allowance for funds used during construction

AMI	Advanced Metering Infrastructure

AMT	Alternative Minimum Tax

ARO	Asset retirement obligations

Bison	Bison Insurance Company Limited

CC	Combined Cycle

CCR	Coal Combustion Residuals

CARES Act	Coronavirus Aid, Relief and Economic Security Act

Citrus County CC	Citrus County Combined Cycle Facility

Coal Ash Act	North Carolina Coal Ash Management Act of 2014

the Company	Duke Energy Corporation and its subsidiaries

Constitution	Constitution Pipeline Company, LLC

COVID-19	Coronavirus Disease 2019

CRC	Cinergy Receivables Company, LLC

Crystal River Unit 3	Crystal River Unit 3 Nuclear Plant

DEFPF	Duke Energy Florida Project Finance, LLC

DEFR	Duke Energy Florida Receivables, LLC

DEPR	Duke Energy Progress Receivables, LLC

DERF	Duke Energy Receivables Finance Company, LLC

Duke Energy	Duke Energy Corporation (collectively with its subsidiaries)

Duke Energy Ohio	Duke Energy Ohio, Inc.

Duke Energy Progress	Duke Energy Progress, LLC

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

EDIT	Excess deferred income tax

EPA	U.S. Environmental Protection Agency

EPS	Earnings Per Share

ESP	Electric Security Plan

ETR	Effective tax rate



GLOSSARY OF TERMS




Exchange Act	Securities Exchange Act of 1934

FASB	Financial Accounting Standards Board

FERC	Federal Energy Regulatory Commission

FPSC	Florida Public Service Commission

FTR	Financial transmission rights

GAAP	Generally accepted accounting principles in the U.S.

GAAP Reported Earnings	Net Income Available to Duke Energy Corporation Common Stockholders

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

GWh	Gigawatt-hours

IGCC	Integrated Gasification Combined Cycle

IMR	Integrity Management Rider

IRP	Integrated Resource Plan

IRS	Internal Revenue Service

Investment Trusts	NDTF investments and grantor trusts of Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana

IURC	Indiana Utility Regulatory Commission

KPSC	Kentucky Public Service Commission

LLC	Limited Liability Company

MGP	Manufactured gas plant

MMBtu	Million British Thermal Unit

MW	Megawatt

MWh	Megawatt-hour

NCDEQ	North Carolina Department of Environmental Quality

NCUC	North Carolina Utilities Commission

NDTF	Nuclear decommissioning trust funds

NPNS	Normal purchase/normal sale

OPEB	Other Post-Retirement Benefit Obligations

ORS	South Carolina Office of Regulatory Staff

OTTI	Other-than-temporary impairment

OVEC	Ohio Valley Electric Corporation

Piedmont	Piedmont Natural Gas Company, Inc.

PPA	Purchase Power Agreement

Progress Energy	Progress Energy, Inc.

PSCSC	Public Service Commission of South Carolina

PUCO	Public Utilities Commission of Ohio

ROU assets	Right-of-use assets

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

the Tax Act	Tax Cuts and Jobs Act

TPUC	Tennessee Public Utility Commission

U.S.	United States

VIE	Variable Interest Entity

WACC	Weighted Average Cost of Capital



FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(in millions, except per-share amounts)	2017			2016			2017			2016
(in millions, except per share amounts)													2020			2019
Operating Revenues
Regulated electric	$	6,091		$	6,303		$	16,122		$	16,321		$	5,124		$	5,285
Regulated natural gas	247			89			1,168			355			638			728
Nonregulated electric and other	144			184			476			490			187			150
Total operating revenues	6,482			6,576			17,766			17,166			5,949			6,163
Operating Expenses
Fuel used in electric generation and purchased power	1,863			2,031			4,853			5,140			1,447			1,609
Cost of natural gas	68			6			402			64			199			327
Operation, maintenance and other	1,442			1,460			4,282			4,227			1,339			1,419
Depreciation and amortization	900			819			2,594			2,402			1,130			1,089
Property and other taxes	313			302			924			887			345			343
Impairment charges	207			10			216			14			2			—
Total operating expenses	4,793			4,628			13,271			12,734			4,462			4,787
Gains on Sales of Other Assets and Other, net	6			6			24			21
Gains (Losses) on Sales of Other Assets and Other, net													1			(3		)
Operating Income	1,695			1,954			4,519			4,453			1,488			1,373
Other Income and Expenses
Equity in earnings (losses) of unconsolidated affiliates	36			(60		)	101			(37		)
Equity in earnings of unconsolidated affiliates													44			43
Other income and expenses, net	88			86			255			237			46			115
Total other income and expenses	124			26			356			200			90			158
Interest Expense	498			464			1,475			1,431			551			543
Income From Continuing Operations Before Income Taxes	1,321			1,516			3,400			3,222
Income Tax Expense from Continuing Operations	364			515			1,035			1,020
Income From Continuing Operations	957			1,001			2,365			2,202
(Loss) Income From Discontinued Operations, net of tax	(2		)	180			(4		)	190
Income Before Income Taxes													1,027			988
Income Tax Expense													137			95
Net Income	955			1,181			2,361			2,392			890			893
Less: Net Income Attributable to Noncontrolling Interests	1			5			5			13
Less: Net Loss Attributable to Noncontrolling Interests													(48		)	(7		)
Net Income Attributable to Duke Energy Corporation	$	954		$	1,176		$	2,356		$	2,379		938			900
Less: Preferred Dividends													39			—
Net Income Available to Duke Energy Corporation Common Stockholders													$	899		$	900

Earnings Per Share – Basic and Diluted
Income from continuing operations attributable to Duke Energy Corporation common stockholders
Basic	$	1.36		$	1.44		$	3.37		$	3.19
Diluted	$	1.36		$	1.44		$	3.37		$	3.18
Income (Loss) from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic	$	—		$	0.26		$	(0.01	)	$	0.26
Diluted	$	—		$	0.26		$	(0.01	)	$	0.26
Net income attributable to Duke Energy Corporation common stockholders
Basic	$	1.36		$	1.70		$	3.36		$	3.45
Diluted	$	1.36		$	1.70		$	3.36		$	3.44
Net income available to Duke Energy Corporation common stockholders
Basic and Diluted													$	1.24		$	1.24
Weighted average shares outstanding
Basic	700			689			700			689			734			727
Diluted	700			691			700			690			736			727

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(in millions)	2017			2016			2017			2016			2020			2019
Net Income	$	955		$	1,181		$	2,361		$	2,392		$	890		$	893
Other Comprehensive Income, net of tax
Foreign currency translation adjustments	—			(12		)	—			95
Other Comprehensive Loss, net of tax^(a)
Pension and OPEB adjustments	—			—			2			2			1			—
Net unrealized gains (losses) on cash flow hedges	2			6			(2		)	(19		)
Net unrealized losses on cash flow hedges													(81		)	(17		)
Reclassification into earnings from cash flow hedges	(2		)	1			3			3			2			1
Unrealized gains on available-for-sale securities	2			—			10			7			1			4
Other Comprehensive Income (Loss), net of tax	2			(5		)	13			88
Other Comprehensive Loss, net of tax													(77		)	(12		)
Comprehensive Income	957			1,176			2,374			2,480			813			881
Less: Comprehensive Income Attributable to Noncontrolling Interests	1			4			5			16
Comprehensive Income Attributable to Duke Energy Corporation	$	956		$	1,172		$	2,369		$	2,464
Less: Comprehensive Loss Attributable to Noncontrolling Interests													(62		)	(7		)
Comprehensive Income Attributable to Duke Energy													875			888
Less: Preferred Dividends													39			—
Comprehensive Income Available to Duke Energy Corporation Common Stockholders													$	836		$	888


(a)	Net of income tax impact of approximately $23 million in the first quarter of 2020 and immaterial income tax impact in the first quarter of 2019.

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2017			December 31, 2016			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	282		$	392		$	1,450		$	311
Receivables (net of allowance for doubtful accounts of $13 at 2017 and $14 at 2016)	528			751
Receivables of VIEs (net of allowance for doubtful accounts of $54 at 2017 and 2016)	2,089			1,893
Receivables (net of allowance for doubtful accounts of $28 at 2020 and $22 at 2019)							809			1,066
Receivables of VIEs (net of allowance for doubtful accounts of $61 at 2020 and $54 at 2019)							1,828			1,994
Inventory	3,265			3,522			3,324			3,232
Regulatory assets (includes $51 at 2017 and $50 at 2016 related to VIEs)	1,109			1,023
Other	433			458
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)							1,770			1,796
Other (includes $300 at 2020 and $242 at 2019 related to VIEs)							1,000			764
Total current assets	7,706			8,039			10,181			9,163
Property, Plant and Equipment
Cost	125,582			121,397			149,676			147,654
Accumulated depreciation and amortization	(41,161		)	(39,406		)	(46,599		)	(45,773		)
Generation facilities to be retired, net	441			529			31			246
Net property, plant and equipment	84,862			82,520			103,108			102,127
Other Noncurrent Assets
Goodwill	19,418			19,425			19,303			19,303
Regulatory assets (includes $1,101 at 2017 and $1,142 at 2016 related to VIEs)	13,367			12,878
Regulatory assets (includes $980 at 2020 and $989 at 2019 related to VIEs)							13,413			13,222
Nuclear decommissioning trust funds	6,814			6,205			7,052			8,140
Operating lease right-of-use assets, net							1,633			1,658
Investments in equity method unconsolidated affiliates	1,366			925			2,067			1,936
Other	2,792			2,769
Other (includes $87 at 2020 and $110 at 2019 related to VIEs)							3,315			3,289
Total other noncurrent assets	43,757			42,202			46,783			47,548
Total Assets	$	136,325		$	132,761		$	160,072		$	158,838
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	2,645		$	2,994		$	2,364		$	3,487
Notes payable and commercial paper	1,899			2,487			3,033			3,135
Taxes accrued	627			384			493			392
Interest accrued	538			503			571			565
Current maturities of long-term debt (includes $215 at 2017 and $260 at 2016 related to VIEs)	2,485			2,319
Current maturities of long-term debt (includes $216 at 2020 and 2019 related to VIEs)							5,077			3,141
Asset retirement obligations	619			411			802			881
Regulatory liabilities	273			409			826			784
Other	1,734			2,044			2,004			2,367
Total current liabilities	10,820			11,551			15,170			14,752
Long-Term Debt (includes $4,219 at 2017 and $3,587 at 2016 related to VIEs)	48,929			45,576
Long-Term Debt (includes $3,966 at 2020 and $3,997 at 2019 related to VIEs)							56,311			54,985
Other Noncurrent Liabilities
Deferred income taxes	15,058			14,155			9,321			8,878
Asset retirement obligations	9,586			10,200			12,497			12,437
Regulatory liabilities	7,027			6,881			14,029			15,264
Operating lease liabilities							1,414			1,432
Accrued pension and other post-retirement benefit costs	1,105			1,111			919			934
Investment tax credits	534			493			659			624
Other	1,624			1,753
Other (includes $258 at 2020 and $228 at 2019 related to VIEs)							1,669			1,581
Total other noncurrent liabilities	34,934			34,593			40,508			41,150
Commitments and Contingencies
Equity
Common stock, $0.001 par value, 2 billion shares authorized; 700 million shares outstanding at 2017 and 2016	1			1
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; 735 million shares outstanding at 2020 and 733 million shares outstanding at 2019							1			1
Additional paid-in capital	38,774			38,741			40,930			40,881
Retained earnings	2,936			2,384			4,221			4,108
Accumulated other comprehensive loss	(80		)	(93		)	(193		)	(130		)
Total Duke Energy Corporation stockholders' equity	41,631			41,033			46,921			46,822
Noncontrolling interests	11			8			1,162			1,129
Total equity	41,642			41,041			48,083			47,951
Total Liabilities and Equity	$	136,325		$	132,761		$	160,072		$	158,838

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2017			2016			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,361		$	2,392		$	890		$	893
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	2,990			2,847			1,301			1,238
Equity component of AFUDC	(175		)	(140		)	(40		)	(31		)
Gains on sales of other assets	(28		)	(27		)
(Gains) Losses on sales of other assets							(1		)	3
Impairment charges	216			279			2			—
Deferred income taxes	1,016			648			422			97
Equity in earnings of unconsolidated affiliates	(101		)	(34		)	(44		)	(43		)
Accrued pension and other post-retirement benefit costs	19			12
Contributions to qualified pension plans	(8		)	—
Payments for asset retirement obligations	(420		)	(443		)	(132		)	(152		)
Provision for rate refunds							(13		)	35
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	4			36			—			10
Receivables	80			(276		)	466			388
Inventory	248			455			(92		)	(31		)
Other current assets	(176		)	(163		)	(131		)	98
Increase (decrease) in
Accounts payable	(554		)	(207		)	(657		)	(636		)
Taxes accrued	233			417			113			(107		)
Other current liabilities	(532		)	(157		)	(455		)	(407		)
Other assets	(160		)	(64		)	(25		)	(162		)
Other liabilities	(2		)	36			(50		)	46
Net cash provided by operating activities	5,011			5,611			1,554			1,239
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(5,841		)	(5,252		)	(2,832		)	(2,536		)
Contributions to equity method investments	(370		)	(198		)	(77		)	(94		)
Purchases of available-for-sale securities	(3,170		)	(4,048		)
Proceeds from sales and maturities of available-for-sale securities	3,199			4,107
Change in restricted cash	(29		)	(34		)
Purchases of debt and equity securities							(1,392		)	(860		)
Proceeds from sales and maturities of debt and equity securities							1,347			851
Other	(149		)	(130		)	(68		)	(74		)
Net cash used in investing activities	(6,360		)	(5,555		)	(3,022		)	(2,713		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	5,710			8,647			1,954			2,737
Issuance of common stock related to employee benefit plans	—			7
Issuance of preferred stock							—			974
Issuance of common stock							40			13
Payments for the redemption of long-term debt	(2,035		)	(988		)	(292		)	(1,201		)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	265			1,424			1,784			135
Payments for the redemption of short-term debt with original maturities greater than 90 days	(237		)	(492		)	(17		)	(239		)
Notes payable and commercial paper	(647		)	(1,579		)	(198		)	(304		)
Contributions from noncontrolling interests							103			6
Dividends paid	(1,825		)	(1,731		)	(707		)	(649		)
Other	8			(22		)	(74		)	(39		)
Net cash provided by financing activities	1,239			5,266			2,593			1,433
Changes in cash and cash equivalents associated with assets held for sale	—			11
Net (decrease) increase in cash and cash equivalents	(110		)	5,333
Cash and cash equivalents at beginning of period	392			383
Cash and cash equivalents at end of period	$	282		$	5,716
Net increase (decrease) in cash, cash equivalents and restricted cash							1,125			(41		)
Cash, cash equivalents and restricted cash at beginning of period							573			591
Cash, cash equivalents and restricted cash at end of period							$	1,698		$	550
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	740		$	631		$	934		$	811
Non-cash dividends							27			27

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Accumulated Other Comprehensive Loss
Net Unrealized
Total

Foreign
Net
(Losses) Gains
Duke Energy

Common
Additional
Currency
Losses on
on Available-
Pension and
Corporation

Stock
Common
Paid-in
Retained
Translation
Cash Flow
for-Sale-
OPEB
Stockholders'
Noncontrolling
Total
(in millions) Shares
Stock
Capital
Earnings
Adjustments
Hedges
Securities
Adjustments
Equity
Interests
Equity
Balance at December 31, 2015 688
$ 1
$ 37,968
$ 2,564
$ (692 ) $ (50 ) $ (3 ) $ (61 ) $ 39,727
$ 44
$ 39,771
Net income —
—
—
2,379
—
—
—
—
2,379
13
2,392
Other comprehensive income (loss) —
—
—
—
92
(16 ) 7
2
85
3
88
Common stock issuances, including dividend reinvestment and employee benefits 1
—
29
—
—
—
—
—
29
—
29
Common stock dividends —
—
—
(1,731 ) —
—
—
—
(1,731 ) —
(1,731 )
Distributions to noncontrolling interest in subsidiaries —
—
—
—
—
—
—
—
—
(3 ) (3 )
Balance at September 30, 2016 689
$ 1

$ 37,997

$ 3,212

$ (600 )
$ (66 )
$ 4

$ (59 )
$ 40,489

$ 57

$ 40,546

Balance at December 31, 2016 700
$ 1
$ 38,741
$ 2,384
$ —
$ (20 ) $ (1 ) $ (72 ) $ 41,033
$ 8
$ 41,041
Net income —
—
—
2,356
—
—
—
—
2,356
5
2,361
Other comprehensive income —
—
—
—
—
1
10
2
13
—
13
Common stock issuances, including dividend reinvestment and employee benefits —
—
33
—
—
—
—
—
33
—
33
Common stock dividends —
—
—
(1,825 ) —
—
—
—
(1,825 ) —
(1,825 )
Distributions to noncontrolling interest in subsidiaries —
—
—
—
—
—
—
—
—
(2 ) (2 )
Other^(a)
—
—
—
21
—
—
—
—
21
—
21
Balance at September 30, 2017 700

$ 1

$ 38,774

$ 2,936

$ —

$ (19 )
$ 9

$ (70 )
$ 41,631

$ 11

$ 41,642



												Accumulated Other Comprehensive
												(Loss) Income
															Net Unrealized						Total
												Net			(Losses) Gains						Duke Energy
			Common			Additional						Losses on			on Available-			Pension and			Corporation
	Preferred		Stock	Common		Paid-in			Retained			Cash Flow			for-Sale-			OPEB			Stockholders'			Noncontrolling			Total
(in millions)	Stock		Shares	Stock		Capital			Earnings			Hedges			Securities			Adjustments			Equity			Interests			Equity
Balance at December 31, 2018	$	—	727	$	1	$	40,795		$	3,113		$	(14	)	$	(3	)	$	(75	)	$	43,817		$	17		$	43,834
Net income (loss)	—		—	—		—			900			—			—			—			900			(7		)	893
Other comprehensive (loss) income	—		—	—		—			—			(16		)	4			—			(12		)	—			(12		)
Preferred stock, Series A, issuances, net of issuance costs^(a)	974		—	—		—			—			—			—			—			974			—			974
Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		28			—			—			—			—			28			—			28
Common stock dividends	—		—	—		—			(676		)	—			—			—			(676		)	—			(676		)
Other^(b)	—		—	—		—			23			(6		)	(1		)	(17		)	(1		)	5			4
Balance at March 31, 2019	$	974	728	$	1	$	40,823		$	3,360		$	(36	)	$	—		$	(92	)	$	45,030		$	15		$	45,045

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)	—		—	—		—			899			—			—			—			899			(48		)	851
Other comprehensive (loss) income	—		—	—		—			—			(65		)	1			1			(63		)	(14		)	(77		)
Common stock issuances, including dividend reinvestment and employee benefits	—		2	—		50			—			—			—			—			50			—			50
Common stock dividends	—		—	—		—			(695		)	—			—			—			(695		)	—			(695		)
Contributions from noncontrolling interest in subsidiaries	—		—	—		—			—			—			—			—			—			103			103
Distributions to noncontrolling interest in subsidiaries	—		—	—		—			—			—			—			—			—			(7		)	(7		)
Other^(c)	—		—	—		(1		)	(91		)	—			—			—			(92		)	(1		)	(93		)
Balance at March 31, 2020	$	1,962	735	$	1	$	40,930		$	4,221		$	(116	)	$	4		$	(81	)	$	46,921		$	1,162		$	48,083


(a)	~~Cumulative-effect adjustment~~Duke Energy issued 40 million depositary shares of preferred stock, Series A.


(b)	Amounts in Retained Earnings and Accumulated Other Comprehensive (Loss) Income primarily represent impacts to accumulated other comprehensive income due to implementation of a new accounting standard related to ~~stock-based compensation and the associated income taxes.~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.


(c)	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 ~~more information.~~additional discussion.

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30,					September 30,					March 31,
(in millions)	2017		2016			2017		2016			2020		2019
Operating Revenues	$	2,136	$	2,226		$	5,581	$	5,641		$	1,748	$	1,744
Operating Expenses
Fuel used in electric generation and purchased power	531		581			1,394		1,391			453		472
Operation, maintenance and other	480		493			1,431		1,481			386		440
Depreciation and amortization	281		268			804		802			343		317
Property and other taxes	67		68			206		206			81		80
Impairment charges											2		—
Total operating expenses	1,359		1,410			3,835		3,880			1,265		1,309
Loss on Sales of Other Assets and Other, net	—		(1		)	—		(1		)
Gains on Sales of Other Assets and Other, net											1		—
Operating Income	777		815			1,746		1,760			484		435
Other Income and Expenses, net	26		39			99		121			43		31
Interest Expense	108		102			314		316			123		110
Income Before Income Taxes	695		752			1,531		1,565			404		356
Income Tax Expense	229		258			522		539			65		63
Net Income	$	466	$	494		$	1,009	$	1,026
Other Comprehensive Income, net of tax
Reclassification into earnings from cash flow hedges	—		—			1		1
Comprehensive Income	$	466	$	494		$	1,010	$	1,027
Net Income and Comprehensive Income											$	339	$	293

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2017			December 31, 2016			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	18		$	14		$	16		$	18
Receivables (net of allowance for doubtful accounts of $2 at 2017 and 2016)	180			160
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2017 and 2016)	691			645
Receivables (net of allowance for doubtful accounts of $3 at 2020 and 2019)							212			324
Receivables of VIEs (net of allowance for doubtful accounts of $8 at 2020 and $7 at 2019)							616			642
Receivables from affiliated companies	146			163			87			114
Notes receivable from affiliated companies	—			66			436			—
Inventory	1,000			1,055			1,067			996
Regulatory assets	237			238			524			550
Other	27			37			31			21
Total current assets	2,299			2,378			2,989			2,665
Property, Plant and Equipment
Cost	42,321			41,127			49,534			48,922
Accumulated depreciation and amortization	(14,969		)	(14,365		)	(16,884		)	(16,525		)
Net property, plant and equipment	27,352			26,762			32,650			32,397
Other Noncurrent Assets
Regulatory assets	3,077			3,159			3,427			3,360
Nuclear decommissioning trust funds	3,621			3,273			3,717			4,359
Operating lease right-of-use assets, net							132			123
Other	910			943			1,136			1,149
Total other noncurrent assets	7,608			7,375			8,412			8,991
Total Assets	$	37,259		$	36,515		$	44,051		$	44,053
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	726		$	833		$	605		$	954
Accounts payable to affiliated companies	159			247			225			210
Notes payable to affiliated companies	468			—			—			29
Taxes accrued	368			143			132			46
Interest accrued	135			102			144			115
Current maturities of long-term debt	705			116			457			458
Asset retirement obligations	304			222			197			206
Regulatory liabilities	105			161			275			255
Other	435			468			479			611
Total current liabilities	3,405			2,292			2,514			2,884
Long-Term Debt	8,520			9,187			12,050			11,142
Long-Term Debt Payable to Affiliated Companies	300			300			300			300
Other Noncurrent Liabilities
Deferred income taxes	6,796			6,544			3,968			3,921
Asset retirement obligations	3,297			3,673			5,552			5,528
Regulatory liabilities	2,884			2,840			5,766			6,423
Operating lease liabilities							112			102
Accrued pension and other post-retirement benefit costs	108			97			82			84
Investment tax credits	234			203			230			231
Other	559			607			640			627
Total other noncurrent liabilities	13,878			13,964			16,350			16,916
Commitments and Contingencies
Equity
Member's equity	11,164			10,781			12,844			12,818
Accumulated other comprehensive loss	(8		)	(9		)	(7		)	(7		)
Total equity	11,156			10,772			12,837			12,811
Total Liabilities and Equity	$	37,259		$	36,515		$	44,051		$	44,053

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2017			2016			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,009		$	1,026		$	339		$	293
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	1,051			1,020			414			388
Equity component of AFUDC	(79		)	(75		)	(14		)	(9		)
Losses on sales of other assets and other, net	—			1
Gains on sales of other assets							(1		)	—
Impairment charges							2			—
Deferred income taxes	330			382			22			64
Accrued pension and other post-retirement benefit costs	—			3
Payments for asset retirement obligations	(201		)	(204		)	(41		)	(65		)
Provision for rate refunds							—			19
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	1			4			—			1
Receivables	(40		)	(191		)	156			124
Receivables from affiliated companies	17			19			27			94
Inventory	50			217			(72		)	(59		)
Other current assets	8			81			96			(35		)
Increase (decrease) in
Accounts payable	(78		)	(179		)	(253		)	(266		)
Accounts payable to affiliated companies	(88		)	(100		)	15			18
Taxes accrued	225			248			87			(91		)
Other current liabilities	(149		)	51			(108		)	(70		)
Other assets	(18		)	57			(60		)	(31		)
Other liabilities	(26		)	(15		)	(11		)	(7		)
Net cash provided by operating activities	2,012			2,345			598			368
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,747		)	(1,531		)	(724		)	(721		)
Purchases of available-for-sale securities	(1,660		)	(2,070		)
Proceeds from sales and maturities of available-for-sale securities	1,664			2,070
Purchases of debt and equity securities							(607		)	(405		)
Proceeds from sales and maturities of debt and equity securities							607			405
Notes receivable from affiliated companies	66			131			(436		)	—
Other	(58		)	(65		)	(18		)	(9		)
Net cash used in investing activities	(1,735		)	(1,465		)	(1,178		)	(730		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	—			992			910			25
Payments for the redemption of long-term debt	(115		)	(3		)	(2		)	(1		)
Notes payable to affiliated companies	468			—			(29		)	306
Distributions to parent	(625		)	(1,800		)	(300		)	—
Other	(1		)	—			(1		)	(1		)
Net cash used in financing activities	(273		)	(811		)
Net increase in cash and cash equivalents	4			69
Net cash provided by financing activities							578			329
Net decrease in cash and cash equivalents							(2		)	(33		)
Cash and cash equivalents at beginning of period	14			13			18			33
Cash and cash equivalents at end of period	$	18		$	82		$	16		$	—
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	292		$	228		$	254		$	221

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)


				Accumulated Other
				Comprehensive									Accumulated Other
				Loss									Comprehensive
				Net Losses on									Loss
	Member's			Cash Flow			Total			Member's			Net Losses on			Total
(in millions)	Equity			Hedges			Equity			Equity			Cash Flow Hedges			Equity
Balance at December 31, 2015	$	11,617		$	(11	)	$	11,606
Balance at December 31, 2018										$	11,689		$	(6	)	$	11,683
Net income	1,026			—			1,026			293			—			293
Other comprehensive income	—			1			1
Other										—			(1		)	(1		)
Balance at March 31, 2019										$	11,982		$	(7	)	$	11,975

Balance at December 31, 2019										$	12,818		$	(7	)	$	12,811
Net income										339			—			339
Distributions to parent	(1,800		)	—			(1,800		)	(300		)	—			(300		)
Other	(3		)	—			(3		)
Balance at September 30, 2016	$	10,840		$	(10	)	$	10,830

Balance at December 31, 2016	$	10,781		$	(9	)	$	10,772
Net income	1,009			—			1,009
Other comprehensive income	—			1			1
Distributions to parent	(625		)	—			(625		)
Other	(1		)	—			(1		)
Balance at September 30, 2017	$	11,164		$	(8	)	$	11,156
Other^(a)										(13		)	—			(13		)
Balance at March 31, 2020										$	12,844		$	(7	)	$	12,837


(a)	Amounts primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended					Nine Months Ended				Three Months Ended
	September 30,					September 30,				March 31,
(in millions)	2017			2016		2017		2016		2020			2019
Operating Revenues	$	2,864		$	2,965	$	7,435	$	7,645	$	2,422		$	2,572
Operating Expenses
Fuel used in electric generation and purchased power	1,031			1,120		2,588		2,832		763			925
Operation, maintenance and other	572			582		1,650		1,699		554			567
Depreciation and amortization	334			318		958		904		452			455
Property and other taxes	140			136		386		375		135			137
Impairment charges	135			1		137		4
Total operating expenses	2,212			2,157		5,719		5,814		1,904			2,084
Gains on Sales of Other Assets and Other, net	5			6		19		18
Losses on Sales of Other Assets and Other, net										(1		)	—
Operating Income	657			814		1,735		1,849		517			488
Other Income and Expenses, net	20			31		65		79		32			31
Interest Expense	193			177		595		497		206			219
Income Before Income Taxes	484			668		1,205		1,431		343			300
Income Tax Expense	141			219		384		496		60			52
Net Income	343			449		821		935		283			248
Less: Net Income Attributable to Noncontrolling Interests	2			3		7		8
Less: Net Loss Attributable to Noncontrolling Interests										—			(1		)
Net Income Attributable to Parent	$	341		$	446	$	814	$	927	$	283		$	249

Net Income	$	343		$	449	$	821	$	935	$	283		$	248
Other Comprehensive Income, net of tax
Pension and OPEB adjustments	3			—		5		2		—			1
Net unrealized (loss) gain on cash flow hedges	(2		)	—		4		—
Reclassification into earnings from cash flow hedges	—			1		—		4
Net unrealized gains on cash flow hedges										1			2
Unrealized gains on available-for-sale securities	1			1		3		2		1			—
Other Comprehensive Income, net of tax	2			2		12		8		2			3
Comprehensive Income	345			451		833		943		285			251
Less: Comprehensive Income Attributable to Noncontrolling Interests	2			3		7		8
Less: Comprehensive Loss Attributable to Noncontrolling Interests										—			(1		)
Comprehensive Income Attributable to Parent	$	343		$	448	$	826	$	935	$	285		$	252

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2017			December 31, 2016			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	30		$	46		$	52		$	48
Receivables (net of allowance for doubtful accounts of $4 at 2017 and $6 at 2016)	93			114
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2017 and 2016)	900			692
Receivables (net of allowance for doubtful accounts of $8 at 2020 and $7 at 2019)							159			220
Receivables of VIEs (net of allowance for doubtful accounts of $12 at 2020 and $9 at 2019)							745			830
Receivables from affiliated companies	—			106			49			76
Notes receivable from affiliated companies	170			80			—			164
Inventory	1,584			1,717			1,463			1,423
Regulatory assets (includes $51 at 2017 and $50 at 2016 related to VIEs)	440			401
Other	243			148
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)							954			946
Other (includes $13 at 2020 and $39 at 2019 related to VIEs)							196			210
Total current assets	3,460			3,304			3,618			3,917
Property, Plant and Equipment
Cost	46,659			44,864			55,788			55,070
Accumulated depreciation and amortization	(15,760		)	(15,212		)	(17,461		)	(17,159		)
Generation facilities to be retired, net	441			529			31			246
Net property, plant and equipment	31,340			30,181			38,358			38,157
Other Noncurrent Assets
Goodwill	3,655			3,655			3,655			3,655
Regulatory assets (includes $1,101 at 2017 and $1,142 at 2016 related to VIEs)	6,438			5,722
Regulatory assets (includes $980 at 2020 and $989 at 2019 related to VIEs)							6,489			6,346
Nuclear decommissioning trust funds	3,194			2,932			3,335			3,782
Operating lease right-of-use assets, net							762			788
Other	909			856			1,121			1,049
Total other noncurrent assets	14,196			13,165			15,362			15,620
Total Assets	$	48,996		$	46,650		$	57,338		$	57,694
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	1,015		$	1,003		$	730		$	1,104
Accounts payable to affiliated companies	289			348			329			310
Notes payable to affiliated companies	576			729			2,300			1,821
Taxes accrued	227			83			117			46
Interest accrued	216			201			214			228
Current maturities of long-term debt (includes $53 at 2017 and $62 at 2016 related to VIEs)	770			778
Current maturities of long-term debt (includes $54 at 2020 and 2019 related to VIEs)							1,828			1,577
Asset retirement obligations	250			189			421			485
Regulatory liabilities	121			189			347			330
Other	652			745			821			902
Total current liabilities	4,116			4,265			7,107			6,803
Long-Term Debt (includes $1,689 at 2017 and $1,741 at 2016 related to VIEs)	16,717			15,590
Long-Term Debt (includes $1,603 at 2020 and $1,632 at 2019 related to VIEs)							17,377			17,907
Long-Term Debt Payable to Affiliated Companies	150			1,173			150			150
Other Noncurrent Liabilities
Deferred income taxes	6,463			5,246			4,537			4,462
Asset retirement obligations	5,189			5,286			6,020			5,986
Regulatory liabilities	2,511			2,395			4,708			5,225
Operating lease liabilities							678			697
Accrued pension and other post-retirement benefit costs	535			547			480			488
Other	298			341			404			383
Total other noncurrent liabilities	14,996			13,815			16,827			17,241
Commitments and Contingencies
Equity
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2017 and 2016	—			—
Common Stock, $0.01 par value, 100 shares authorized and outstanding at 2020 and 2019							—			—
Additional paid-in capital	9,143			8,094			9,143			9,143
Retained earnings	3,906			3,764			6,747			6,465
Accumulated other comprehensive loss	(26		)	(38		)	(16		)	(18		)
Total Progress Energy, Inc. stockholders' equity	13,023			11,820			15,874			15,590
Noncontrolling interests	(6		)	(13		)	3			3
Total equity	13,017			11,807			15,877			15,593
Total Liabilities and Equity	$	48,996		$	46,650		$	57,338		$	57,694

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2017			2016			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	821		$	935		$	283		$	248
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	1,130			1,071			552			546
Equity component of AFUDC	(68		)	(51		)	(14		)	(15		)
Gains on sales of other assets	(20		)	(23		)
Impairment charges	137			4
Losses on sales of other assets							1			—
Deferred income taxes	651			425			80			82
Accrued pension and other post-retirement benefit costs	(9		)	(19		)
Payments for asset retirement obligations	(190		)	(203		)	(79		)	(75		)
Provision for rate refunds							2			6
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	1			33			1			1
Receivables	(182		)	(155		)	149			187
Receivables from affiliated companies	102			329			27			122
Inventory	126			99			(40		)	(18		)
Other current assets	(279		)	(30		)	43			35
Increase (decrease) in
Accounts payable	(281		)	(24		)	(211		)	(196		)
Accounts payable to affiliated companies	(59		)	(109		)	19			(94		)
Taxes accrued	143			159			71			26
Other current liabilities	(184		)	(156		)	(128		)	(196		)
Other assets	(100		)	(90		)	(41		)	(111		)
Other liabilities	(85		)	(4		)	(56		)	(7		)
Net cash provided by operating activities	1,654			2,191			659			541
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,419		)	(2,286		)	(972		)	(1,012		)
Purchases of available-for-sale securities	(1,393		)	(1,849		)
Proceeds from sales and maturities of available-for-sale securities	1,411			1,899
Proceeds from insurance	4			58
Purchases of debt and equity securities							(651		)	(409		)
Proceeds from sales and maturities of debt and equity securities							643			405
Notes receivable from affiliated companies	(90		)	(43		)	164			(31		)
Change in restricted cash	5			(6		)
Other	(40		)	(17		)	(39		)	(45		)
Net cash used in investing activities	(2,522		)	(2,244		)	(855		)	(1,092		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,720			2,375			—			1,295
Payments for the redemption of long-term debt	(611		)	(327		)	(283		)	(1,132		)
Notes payable to affiliated companies	(129		)	(798		)	479			370
Dividends to parent	(125		)	(1,075		)
Other	(3		)	(1		)	(1		)	1
Net cash provided by financing activities	852			174			195			534
Net (decrease) increase in cash and cash equivalents	(16		)	121
Cash and cash equivalents at beginning of period	46			44
Cash and cash equivalents at end of period	$	30		$	165
Net decrease in cash, cash equivalents and restricted cash							(1		)	(17		)
Cash, cash equivalents and restricted cash at beginning of period							126			112
Cash, cash equivalents and restricted cash at end of period							$	125		$	95
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	174		$	228		$	310		$	310
Equitization of certain notes payable to affiliates	1,047			—
Dividend to parent related to a legal entity restructuring	547			—

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Accumulated Other Comprehensive Loss
Net Unrealized
Total Progress

Additional
Net Losses on
Gains on
Pension and
Energy, Inc.

Paid-in
Retained
Cash Flow
Available-for-
OPEB
Stockholders'
Noncontrolling
Total
(in millions) Capital
Earnings
Hedges
Sale Securities
Adjustments
Equity
Interests
Equity
Balance at December 31, 2015 $ 8,092
$ 4,831
$ (31 ) $ —
$ (17 ) $ 12,875
$ (22 ) $ 12,853
Net income —
927
—
—
—
927
8
935
Other comprehensive income —
—
4
2
2
8
—
8
Distributions to noncontrolling interests —
—
—
—
—
—
(1 ) (1 )
Dividends to parent —
(1,075 ) —
—
—
(1,075 ) —
(1,075 )
Other 4
—
—
—
—
4
(1 ) 3
Balance at September 30, 2016 $ 8,096

$ 4,683

$ (27 )
$ 2

$ (15 )
$ 12,739

$ (16 )
$ 12,723

Balance at December 31, 2016 $ 8,094
$ 3,764
$ (23 ) $ 1
$ (16 ) $ 11,820
$ (13 ) $ 11,807
Net income —
814
—
—
—
814
7
821
Other comprehensive income —
—
4
3
5
12
—
12
Dividends to parent^(a)
—
(672 ) —
—
—
(672 ) —
(672 )
Equitization of certain notes payable to affiliates 1,047
—
—
—
—
1,047
—
1,047
Other 2
—
—
—
—
2
—
2
Balance at September 30, 2017 $ 9,143

$ 3,906

$ (19 )
$ 4

$ (11 )
$ 13,023

$ (6 )
$ 13,017



						Accumulated Other Comprehensive Loss
						Net			Net Unrealized						Total Progress
	Additional					Losses on			Losses on			Pension and			Energy, Inc.
	Paid-in		Retained			Cash Flow			Available-for-			OPEB			Stockholders'			Noncontrolling			Total
	Capital		Earnings			Hedges			Sale Securities			Adjustments			Equity			Interests			Equity
Balance at December 31, 2018	$	9,143	$	5,131		$	(12	)	$	(1	)	$	(7	)	$	14,254		$	3		$	14,257
Net income (loss)	—		249			—			—			—			249			(1		)	248
Other comprehensive income	—		—			2			—			1			3			—			3
Other^(a)	—		6			(4		)	—			(2		)	—			—			—
Balance at March 31, 2019	$	9,143	$	5,386		$	(14	)	$	(1	)	$	(8	)	$	14,506		$	2		$	14,508

Balance at December 31, 2019	$	9,143	$	6,465		$	(10	)	$	(1	)	$	(7	)	$	15,590		$	3		$	15,593
Net income	—		283			—			—			—			283			—			283
Other comprehensive income	—		—			1			1			—			2			—			2
Other	—		(1		)	—			—			—			(1		)	—			(1		)
Balance at March 31, 2020	$	9,143	$	6,747		$	(9	)	$	—		$	(7	)	$	15,874		$	3		$	15,877


(a)	~~Includes~~Amounts in Retained Earnings and Accumulated Other Comprehensive Loss primarily represent impacts to accumulated other comprehensive income due to implementation of a ~~$547 million non-cash dividend~~new accounting standard related to ~~a legal entity restructuring.~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(in millions)	2017		2016		2017		2016		2020			2019
Operating Revenues	$	1,460	$	1,583	$	3,878	$	4,103	$	1,338		$	1,484
Operating Expenses
Fuel used in electric generation and purchased power	475		569		1,214		1,441		405			515
Operation, maintenance and other	352		360		1,032		1,067		305			335
Depreciation and amortization	182		176		536		526		287			290
Property and other taxes	40		40		120		119		47			44
Impairment charges	—		1		—		1
Total operating expenses	1,049		1,146		2,902		3,154		1,044			1,184
Gains on Sales of Other Assets and Other, net	—		1		3		2
Losses on Sales of Other Assets and Other, net									(1		)	—
Operating Income	411		438		979		951		293			300
Other Income and Expenses, net	14		18		47		47		22			24
Interest Expense	65		61		217		188		69			77
Income Before Income Taxes	360		395		809		810		246			247
Income Tax Expense	114		124		262		271		42			44
Net Income and Comprehensive Income	$	246	$	271	$	547	$	539	$	204		$	203

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2017			December 31, 2016			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	15		$	11		$	32		$	22
Receivables (net of allowance for doubtful accounts of $1 at 2017 and $4 at 2016)	29			51
Receivables of VIEs (net of allowance for doubtful accounts of $5 at 2017 and 2016)	472			404
Receivables (net of allowance for doubtful accounts of $2 at 2020 and $3 at 2019)							77			123
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2020 and $5 at 2019)							410			489
Receivables from affiliated companies	8			5			50			52
Notes receivable from affiliated companies	101			165
Inventory	1,018			1,076			956			934
Regulatory assets	230			188			503			526
Other	40			57			48			60
Total current assets	1,913			1,957			2,076			2,206
Property, Plant and Equipment
Cost	29,104			28,419			34,898			34,603
Accumulated depreciation and amortization	(10,793		)	(10,561		)	(12,114		)	(11,915		)
Generation facilities to be retired, net	441			529			31			246
Net property, plant and equipment	18,752			18,387			22,815			22,934
Other Noncurrent Assets
Regulatory assets	3,588			3,243			4,392			4,152
Nuclear decommissioning trust funds	2,463			2,217			2,644			3,047
Operating lease right-of-use assets, net							377			387
Other	565			525			682			651
Total other noncurrent assets	6,616			5,985			8,095			8,237
Total Assets	$	27,281		$	26,329		$	32,986		$	33,377
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	271		$	589		$	319		$	629
Accounts payable to affiliated companies	207			227			208			203
Notes payable to affiliated companies							229			66
Taxes accrued	137			104			43			17
Interest accrued	91			102			90			110
Current maturities of long-term debt	203			452			1,006			1,006
Asset retirement obligations	250			189			421			485
Regulatory liabilities	107			158			263			236
Other	318			365			429			478
Total current liabilities	1,584			2,186			3,008			3,230
Long-Term Debt	7,204			6,409			7,903			7,902
Long-Term Debt Payable to Affiliated Companies	150			150			150			150
Other Noncurrent Liabilities
Deferred income taxes	3,606			3,323			2,446			2,388
Asset retirement obligations	4,426			4,508			5,442			5,408
Regulatory liabilities	2,097			1,946			3,790			4,232
Operating lease liabilities							344			354
Accrued pension and other post-retirement benefit costs	246			252			235			238
Investment tax credits	144			146			135			137
Other	44			51			83			92
Total other noncurrent liabilities	10,563			10,226			12,475			12,849
Commitments and Contingencies
Equity
Member's Equity	7,780			7,358			9,450			9,246
Total Liabilities and Equity	$	27,281		$	26,329		$	32,986		$	33,377

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2017			2016			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	547		$	539		$	204		$	203
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	691			679			331			336
Equity component of AFUDC	(35		)	(34		)	(10		)	(14		)
Gains on sales of other assets	(4		)	(4		)
Impairment charges	—			1
Losses on sales of other assets							1			—
Deferred income taxes	287			325			43			33
Accrued pension and other post-retirement benefit costs	(15		)	(24		)
Payments for asset retirement obligations	(149		)	(163		)	(75		)	(68		)
Provision for rate refunds							2			6
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	(2		)	—			(2		)	(3		)
Receivables	(47		)	(78		)	133			87
Receivables from affiliated companies	(3		)	11			2			(5		)
Inventory	52			91			(22		)	(5		)
Other current assets	(34		)	37			54			96
Increase (decrease) in
Accounts payable	(286		)	(44		)	(220		)	(196		)
Accounts payable to affiliated companies	(20		)	(47		)	5			(57		)
Taxes accrued	33			76			26			(4		)
Other current liabilities	(139		)	37			(73		)	(109		)
Other assets	(49		)	(32		)	(51		)	(47		)
Other liabilities	(9		)	(10		)	(8		)	(7		)
Net cash provided by operating activities	818			1,360			340			246
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,247		)	(1,106		)	(466		)	(548		)
Purchases of available-for-sale securities	(995		)	(1,470		)
Proceeds from sales and maturities of available-for-sale securities	974			1,448
Purchases of debt and equity securities							(550		)	(315		)
Proceeds from sales and maturities of debt and equity securities							540			308
Notes receivable from affiliated companies	64			(65		)	—			(38		)
Other	(26		)	(27		)	(16		)	(20		)
Net cash used in investing activities	(1,230		)	(1,220		)	(492		)	(613		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	812			505			—			1,270
Payments for the redemption of long-term debt	(270		)	(15		)	(1		)	(601		)
Notes payable to affiliated companies	—			(209		)	163			(294		)
Distributions to parent	(125		)	(301		)
Other	(1		)	1			—			(1		)
Net cash provided by (used in) financing activities	416			(19		)
Net cash provided by financing activities							162			374
Net increase in cash and cash equivalents	4			121			10			7
Cash and cash equivalents at beginning of period	11			15			22			23
Cash and cash equivalents at end of period	$	15		$	136		$	32		$	30
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	116		$	66		$	87		$	117

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Member's
(in millions) Equity
Balance at December 31, 2015 $ 7,059
Net income 539
Distributions to parent (301 )
Balance at September 30, 2016 $ 7,297

Balance at December 31, 2016 $ 7,358
Net income 547
Distributions to parent (125 )
Balance at September 30, 2017 $ 7,780



	Member's
(in millions)	Equity
Balance at December 31, 2018	$	8,441
Net income	203
Balance at March 31, 2019	$	8,644

Balance at December 31, 2019	$	9,246
Net income	204
Balance at March 31, 2020	$	9,450

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
(in millions)	2017		2016		2017		2016		2020		2019
Operating Revenues	$	1,401	$	1,381	$	3,551	$	3,538	$	1,080	$	1,086
Operating Expenses
Fuel used in electric generation and purchased power	557		550		1,374		1,391		358		410
Operation, maintenance and other	216		219		610		623		245		230
Depreciation and amortization	154		142		423		378		165		165
Property and other taxes	99		96		265		256		88		93
Impairment charges	135		1		137		4
Total operating expenses	1,161		1,008		2,809		2,652		856		898
Operating Income	240		373		742		886		224		188
Other Income and Expenses, net	15		11		45		30		10		13
Interest Expense	71		62		211		143		84		82
Income Before Income Taxes	184		322		576		773		150		119
Income Tax Expense	64		116		208		286		30		23
Net Income	$	120	$	206	$	368	$	487	$	120	$	96
Other Comprehensive Income, net of tax
Unrealized gains on available-for-sale securities	1		1		3		2		1		1
Comprehensive Income	$	121	$	207	$	371	$	489	$	121	$	97

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2017			December 31, 2016			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	8		$	16		$	12		$	17
Receivables (net of allowance for doubtful accounts of $3 at 2017 and $2 at 2016)	61			61
Receivables of VIEs (net of allowance for doubtful accounts of $2 at 2017 and 2016)	428			288
Receivables from affiliated companies	—			5
Receivables (net of allowance for doubtful accounts of $6 at 2020 and $3 at 2019)							80			96
Receivables of VIEs (net of allowance for doubtful accounts of $5 at 2020 and $4 at 2019)							335			341
Notes receivable from affiliated companies	70			—			—			173
Inventory	566			641			508			489
Regulatory assets (includes $51 at 2017 and $50 at 2016 related to VIEs)	211			213
Other (includes $20 at 2017 and $53 at 2016 related to VIEs)	154			125
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)							451			419
Other (includes $13 at 2020 and $39 at 2019 related to VIEs)							37			58
Total current assets	1,498			1,349			1,423			1,593
Property, Plant and Equipment
Cost	17,546			16,434			20,880			20,457
Accumulated depreciation and amortization	(4,960		)	(4,644		)	(5,339		)	(5,236		)
Net property, plant and equipment	12,586			11,790			15,541			15,221
Other Noncurrent Assets
Regulatory assets (includes $1,101 at 2017 and $1,142 at 2016 related to VIEs)	2,850			2,480
Regulatory assets (includes $980 at 2020 and $989 at 2019 related to VIEs)							2,097			2,194
Nuclear decommissioning trust funds	731			715			691			734
Operating lease right-of-use assets, net							386			401
Other	293			278			329			311
Total other noncurrent assets	3,874			3,473			3,503			3,640
Total Assets	$	17,958		$	16,612		$	20,467		$	20,454
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	744		$	413		$	411		$	474
Accounts payable to affiliated companies	90			125			111			131
Notes payable to affiliated companies	—			297			305			—
Taxes accrued	143			33			74			43
Interest accrued	71			49			79			75
Current maturities of long-term debt (includes $53 at 2017 and $62 at 2016 related to VIEs)	567			326
Current maturities of long-term debt (includes $54 at 2020 and 2019 related to VIEs)							322			571
Regulatory liabilities	14			31			84			94
Other	310			352			383			415
Total current liabilities	1,939			1,626			1,769			1,803
Long-Term Debt (includes $1,389 at 2017 and $1,442 at 2016 related to VIEs)	6,129			5,799
Long-Term Debt (includes $1,278 at 2020 and $1,307 at 2019 related to VIEs)							7,384			7,416
Other Noncurrent Liabilities
Deferred income taxes	3,076			2,694			2,192			2,179
Asset retirement obligations	763			778			578			578
Regulatory liabilities	414			448			918			993
Operating lease liabilities							334			343
Accrued pension and other post-retirement benefit costs	257			262			214			218
Other	106			105			169			136
Total other noncurrent liabilities	4,616			4,287			4,405			4,447
Commitments and Contingencies
Equity
Member's equity	5,270			4,899			6,909			6,789
Accumulated other comprehensive income	4			1
Accumulated other comprehensive loss							—			(1		)
Total equity	5,274			4,900			6,909			6,788
Total Liabilities and Equity	$	17,958		$	16,612		$	20,467		$	20,454

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2017			2016			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	368		$	487		$	120		$	96
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	431			383			219			207
Equity component of AFUDC	(33		)	(16		)	(4		)	(1		)
Impairment charges	137			4
Deferred income taxes	366			136			34			45
Accrued pension and other post-retirement benefit costs	3			2
Payments for asset retirement obligations	(41		)	(41		)	(5		)	(7		)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	3			34			3			2
Receivables	(140		)	(78		)	15			55
Receivables from affiliated companies	1			41			—			(6		)
Inventory	74			8			(19		)	(13		)
Other current assets	(162		)	(32		)	7			(35		)
Increase (decrease) in
Accounts payable	6			20			11			—
Accounts payable to affiliated companies	(35		)	(55		)	(20		)	(62		)
Taxes accrued	109			61			31			20
Other current liabilities	(45		)	(183		)	(58		)	(84		)
Other assets	(35		)	(56		)	13			(63		)
Other liabilities	(71		)	1			(46		)	(1		)
Net cash provided by operating activities	936			716			301			153
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,172		)	(1,179		)	(506		)	(422		)
Purchases of available-for-sale securities	(398		)	(379		)
Proceeds from sales and maturities of available-for-sale securities	437			450
Proceeds from insurance	4			58
Purchases of debt and equity securities							(101		)	(95		)
Proceeds from sales and maturities of debt and equity securities							103			97
Notes receivable from affiliated companies	(70		)	—			173			—
Change in restricted cash	—			(6		)
Other	(14		)	10			(23		)	(25		)
Net cash used in investing activities	(1,213		)	(1,046		)	(354		)	(445		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	908			1,870			—			25
Payments for the redemption of long-term debt	(341		)	(12		)	(282		)	(81		)
Notes payable to affiliated companies	(297		)	(750		)	305			291
Distributions to parent	—			(774		)
Other	(1		)	(2		)	(1		)	2
Net cash provided by financing activities	269			332			22			237
Net (decrease) increase in cash and cash equivalents	(8		)	2
Cash and cash equivalents at beginning of period	16			8
Cash and cash equivalents at end of period	$	8		$	10
Net decrease in cash, cash equivalents and restricted cash							(31		)	(55		)
Cash, cash equivalents and restricted cash at beginning of period							56			75
Cash, cash equivalents and restricted cash at end of period							$	25		$	20
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	102		$	162		$	223		$	193

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Accumulated
Other
Comprehensive
Income
Net Unrealized

Gains on

Member's
Available-for-Sale
Total
(in millions) Equity
Securities
Equity
Balance at December 31, 2015 $ 5,121
$ —
$ 5,121
Net income 487
—
487
Other comprehensive income —
2
2
Distributions to parent (774 ) —
(774 )
Other 3
—
3
Balance at September 30, 2016 $ 4,837
$ 2
$ 4,839

Balance at December 31, 2016 $ 4,899
$ 1
$ 4,900
Net income 368
—
368
Other comprehensive income —
3
3
Other 3
—
3
Balance at September 30, 2017 $ 5,270
$ 4
$ 5,274



			Accumulated
			Other
			Comprehensive
			Income (Loss)
			Net Unrealized
			Gains on
	Member's		Available-for-Sale			Total
(in millions)	Equity		Securities			Equity
Balance at December 31, 2018	$	6,097	$	(2	)	$	6,095
Net income	96		—			96
Other comprehensive income	—		1			1
Balance at March 31, 2019	$	6,193	$	(1	)	$	6,192

Balance at December 31, 2019	$	6,789	$	(1	)	$	6,788
Net income	120		—			120
Other comprehensive income	—		1			1
Balance at March 31, 2020	$	6,909	$	—		$	6,909

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30,					September 30,					March 31,
(in millions)	2017			2016		2017			2016		2020		2019
Operating Revenues
Regulated electric	$	371		$	390	$	1,036		$	1,053	$	346	$	355
Regulated natural gas	90			89		360			358		152		176
Nonregulated electric and other	10			10		30			22
Total operating revenues	471			489		1,426			1,433		498		531
Operating Expenses
Fuel used in electric generation and purchased power – regulated	100			129		283			340
Fuel used in electric generation and purchased power – nonregulated	13			14		42			37
Fuel used in electric generation and purchased power											87		93
Cost of natural gas	5			6		69			64		37		54
Operation, maintenance and other	124			126		385			367		123		132
Depreciation and amortization	63			50		193			175		68		64
Property and other taxes	65			59		204			195		83		84
Impairment charges	—			—		1			—
Total operating expenses	370			384		1,177			1,178		398		427
Gains on Sales of Other Assets and Other, net	1			1		1			2
Operating Income	102			106		250			257		100		104
Other Income and Expenses, net	4			3		12			6		3		9
Interest Expense	22			22		67			63		24		30
Income From Continuing Operations Before Income Taxes	84			87		195			200
Income Tax Expense From Continuing Operations	28			32		67			65
Income From Continuing Operations	56			55		128			135
(Loss) Income From Discontinued Operations, net of tax	(1		)	34		(1		)	36
Income Before Income Taxes											79		83
Income Tax Expense											14		14
Net Income and Comprehensive Income	$	55		$	89	$	127		$	171	$	65	$	69

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2017			December 31, 2016			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	7		$	13		$	14		$	17
Receivables (net of allowance for doubtful accounts of $2 at 2017 and 2016)	68			71
Receivables (net of allowance for doubtful accounts of $5 at 2020 and $4 at 2019)							84			84
Receivables from affiliated companies	81			129			52			92
Notes receivable from affiliated companies	87			94
Inventory	139			137			121			135
Regulatory assets	57			37			33			49
Other	18			37			11			21
Total current assets	457			518			315			398
Property, Plant and Equipment
Cost	8,509			8,126			10,401			10,241
Accumulated depreciation and amortization	(2,658		)	(2,579		)	(2,883		)	(2,843		)
Net property, plant and equipment	5,851			5,547			7,518			7,398
Other Noncurrent Assets
Goodwill	920			920			920			920
Regulatory assets	510			520			567			549
Operating lease right-of-use assets, net							21			21
Other	27			23			56			52
Total other noncurrent assets	1,457			1,463			1,564			1,542
Total Assets	$	7,765		$	7,528		$	9,397		$	9,338
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	251		$	282		$	227		$	288
Accounts payable to affiliated companies	59			63			68			68
Notes payable to affiliated companies	—			16			399			312
Taxes accrued	157			178			170			219
Interest accrued	33			19			30			30
Current maturities of long-term debt	—			1
Asset retirement obligations	6			—			3			1
Regulatory liabilities	15			21			66			64
Other	74			91			68			75
Total current liabilities	595			671			1,031			1,057
Long-Term Debt	2,042			1,858			2,595			2,594
Long-Term Debt Payable to Affiliated Companies	25			25			25			25
Other Noncurrent Liabilities
Deferred income taxes	1,512			1,443			942			922
Asset retirement obligations	75			77			78			79
Regulatory liabilities	232			236			760			763
Operating lease liabilities							20			21
Accrued pension and other post-retirement benefit costs	52			56			101			100
Other	134			166			97			94
Total other noncurrent liabilities	2,005			1,978			1,998			1,979
Commitments and Contingencies
Equity
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2017 and 2016	762			762
Common Stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2020 and 2019							762			762
Additional paid-in capital	2,670			2,695			2,776			2,776
Accumulated deficit	(334		)	(461		)
Retained earnings							210			145
Total equity	3,098			2,996			3,748			3,683
Total Liabilities and Equity	$	7,765		$	7,528		$	9,397		$	9,338

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2017			2016			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	127		$	171		$	65		$	69
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	196			178			69			65
Equity component of AFUDC	(8		)	(4		)	(1		)	(3		)
Gains on sales of other assets	(1		)	(2		)
Impairment charges	1			—
Deferred income taxes	70			36			14			20
Accrued pension and other post-retirement benefit costs	3			4
Contributions to qualified pension plans	(4		)	—
Payments for asset retirement obligations	(4		)	(4		)	—			(1		)
Provision for rate refunds							3			4
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	1			—
Receivables	3			(1		)	1			5
Receivables from affiliated companies	48			(3		)	40			35
Inventory	1			(5		)	14			15
Other current assets	(8		)	50			8			(6		)
Increase (decrease) in
Accounts payable	(48		)	13			(19		)	(5		)
Accounts payable to affiliated companies	(4		)	(4		)	—			(8		)
Taxes accrued	(21		)	(13		)	(49		)	(45		)
Other current liabilities	(6		)	(53		)	2			14
Other assets	(13		)	(8		)	(2		)	(10		)
Other liabilities	(2		)	(28		)	(8		)	(4		)
Net cash provided by operating activities	331			327			137			145
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(457		)	(334		)	(217		)	(233		)
Notes receivable from affiliated companies	7			(47		)	—			(463		)
Other	(25		)	(21		)	(10		)	(11		)
Net cash used in investing activities	(475		)	(402		)	(227		)	(707		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	182			341			—			794
Payments for the redemption of long-term debt	(2		)	(53		)
Notes payable to affiliated companies	(16		)	(103		)	87			(236		)
Dividends to parent	(25		)	(25		)
Other	(1		)	—
Net cash provided by financing activities	138			160			87			558
Net (decrease) increase in cash and cash equivalents	(6		)	85
Net decrease in cash and cash equivalents							(3		)	(4		)
Cash and cash equivalents at beginning of period	13			14			17			21
Cash and cash equivalents at end of period	$	7		$	99		$	14		$	17
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	65		$	56		$	66		$	68

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



			Additional		Retained
	Common		Paid-in		Earnings			Total
(in millions)	Stock		Capital		(Deficit)			Equity
Balance at December 31, 2018	$	762	$	2,776	$	(93	)	$	3,445
Net income	—		—		69			69
Balance at March 31, 2019	$	762	$	2,776	$	(24	)	$	3,514

Balance at December 31, 2019	$	762	$	2,776	$	145		$	3,683
Net income	—		—		65			65
Balance at March 31, 2020	$	762	$	2,776	$	210		$	3,748

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

Additional

Common
Paid-in
Accumulated
Total
(in millions) Stock
Capital
Deficit
Equity
Balance at December 31, 2015 $ 762
$ 2,720
$ (698 ) $ 2,784
Net income —
—
171
171
Dividends to parent —
(25 ) —
(25 )
Contribution from parent —
—
9
9
Balance at September 30, 2016 $ 762
$ 2,695
$ (518 ) $ 2,939

Balance at December 31, 2016 $ 762
$ 2,695
$ (461 ) $ 2,996
Net income —
—
127
127
Dividends to parent —
(25 ) —
(25 )
Balance at September 30, 2017 $ 762

$ 2,670

$ (334 )
$ 3,098

~~PART I~~

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended				Nine Months Ended					Three Months Ended
	September 30,				September 30,					March 31,
(in millions)	2017		2016		2017		2016			2020		2019
Operating Revenues	$	802	$	809	$	2,302	$	2,225		$	692	$	768
Operating Expenses
Fuel used in electric generation and purchased power	259		242		744		690			194		257
Operation, maintenance and other	175		175		541		526			186		189
Depreciation and amortization	120		123		336		345			132		131
Property and other taxes	19		22		56		67			22		19
Impairment charges	—		8		—		8
Total operating expenses	573		570		1,677		1,636			534		596
Gain on Sale of Other Assets and Other, net	1		—		1		—
Losses on Sales of Other Assets and Other, net										—		(3		)
Operating Income	230		239		626		589			158		169
Other Income and Expenses, net	10		5		27		15			10		19
Interest Expense	44		45		132		136			43		43
Income Before Income Taxes	196		199		521		468			125		145
Income Tax Expense	75		70		203		159			26		35
Net Income	$	121	$	129	$	318	$	309
Other Comprehensive Loss, net of tax
Reclassification into earnings from cash flow hedges	—		—		—		(1		)
Comprehensive Income	$	121	$	129	$	318	$	308
Net Income and Comprehensive Income										$	99	$	110

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2017			December 31, 2016			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	22		$	17		$	15		$	25
Receivables (net of allowance for doubtful accounts of $1 at 2017 and 2016)	74			105
Receivables (net of allowance for doubtful accounts of $3 at 2020 and 2019)							50			60
Receivables from affiliated companies	83			114			76			79
Notes receivable from affiliated companies	29			86			543			—
Inventory	450			504			538			517
Regulatory assets	158			149			78			90
Other	34			45			36			60
Total current assets	850			1,020			1,336			831
Property, Plant and Equipment
Cost	14,716			14,241			16,481			16,305
Accumulated depreciation and amortization	(4,592		)	(4,317		)	(5,349		)	(5,233		)
Net property, plant and equipment	10,124			9,924			11,132			11,072
Other Noncurrent Assets
Regulatory assets	1,123			1,073			1,098			1,082
Operating lease right-of-use assets, net							57			57
Other	170			147			214			234
Total other noncurrent assets	1,293			1,220			1,369			1,373
Total Assets	$	12,267		$	12,164		$	13,837		$	13,276
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	188		$	263		$	157		$	201
Accounts payable to affiliated companies	73			74			66			87
Notes payable to affiliated companies							—			30
Taxes accrued	146			31			81			49
Interest accrued	54			61			60			58
Current maturities of long-term debt	3			3			503			503
Asset retirement obligations	58			—			181			189
Regulatory liabilities	28			40			46			55
Other	111			93			92			112
Total current liabilities	661			565			1,186			1,284
Long-Term Debt	3,632			3,633			3,950			3,404
Long-Term Debt Payable to Affiliated Companies	150			150			150			150
Other Noncurrent Liabilities
Deferred income taxes	1,979			1,900			1,158			1,150
Asset retirement obligations	735			866			645			643
Regulatory liabilities	735			748			1,672			1,685
Operating lease liabilities							54			55
Accrued pension and other post-retirement benefit costs	78			71			148			148
Investment tax credits	147			137			170			164
Other	65			27			30			18
Total other noncurrent liabilities	3,739			3,749			3,877			3,863
Commitments and Contingencies
Equity
Member's Equity	4,085			4,067			4,674			4,575
Total Liabilities and Equity	$	12,267		$	12,164		$	13,837		$	13,276

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2017			2016			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	318		$	309		$	99		$	110
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	339			347			133			132
Equity component of AFUDC	(20		)	(11		)	(6		)	(4		)
Gain on sale of other assets and other, net	(1		)	—
Impairment charges	—			8
Losses on sale of other assets							—			3
Deferred income taxes	101			122			16			28
Accrued pension and other post-retirement benefit costs	4			6
Payments for asset retirement obligations	(26		)	(31		)	(12		)	(11		)
(Increase) decrease in
Receivables	53			16			15			4
Receivables from affiliated companies	31			(3		)	3			20
Inventory	54			146			(21		)	(13		)
Other current assets	18			(105		)	25			19
Increase (decrease) in
Accounts payable	(71		)	(14		)	(13		)	8
Accounts payable to affiliated companies	(1		)	(1		)	(21		)	(11		)
Taxes accrued	115			12			43			20
Other current liabilities	(18		)	(85		)	(27		)	(15		)
Other assets	(24		)	(38		)	(4		)	12
Other liabilities	32			64			8			6
Net cash provided by operating activities	904			742			238			308
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(603		)	(540		)	(210		)	(208		)
Purchases of available-for-sale securities	(15		)	(12		)
Proceeds from sales and maturities of available-for-sale securities	6			9
Purchases of debt and equity securities							(5		)	(6		)
Proceeds from sales and maturities of debt and equity securities							2			4
Notes receivable from affiliated companies	57			45			(543		)	—
Other	(40		)	(28		)	(6		)	(11		)
Net cash used in investing activities	(595		)	(526		)	(762		)	(221		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	—			495			544			—
Payments for the redemption of long-term debt	(3		)	(476		)	—			(60		)
Distributions to parent	(300		)	(149		)
Other	(1		)	(1		)
Net cash used in financing activities	(304		)	(131		)
Net increase in cash and cash equivalents	5			85
Notes payable to affiliated companies							(30		)	(31		)
Net cash provided by (used in) financing activities							514			(91		)
Net decrease in cash and cash equivalents							(10		)	(4		)
Cash and cash equivalents at beginning of period	17			9			25			24
Cash and cash equivalents at end of period	$	22		$	94		$	15		$	20
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	101		$	56		$	70		$	76

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Accumulated
Other
Comprehensive
Income
Additional
Net Gains on

Common
Paid-in
Retained
Member's
Cash Flow
Total
(in millions) Stock
Capital
Earnings
Equity
Hedges
Equity
Balance at December 31, 2015 $ 1
$ 1,384
$ 2,450
$ —
$ 1
$ 3,836
Net income —
—
—
309
—
309
Other comprehensive loss —
—
—
—
(1 ) (1 )
Distributions to parent —
—
—
(149 ) —
(149 )
Transfer to Member's Equity (1 ) (1,384 ) (2,450 ) 3,835
—
—
Balance at September 30, 2016 $ —
$ —
$ —

$ 3,995
$ —
$ 3,995

Balance at December 31, 2016 $ —
$ —
$ —
$ 4,067
$ —
$ 4,067
Net income —
—
—
318
—
318
Distributions to parent —
—
—
(300 ) —
(300 )
Balance at September 30, 2017 $ —
$ —
$ —

$ 4,085
$ —
$ 4,085



	Member's
(in millions)	Equity
Balance at December 31, 2018	$	4,339
Net income	110
Balance at March 31, 2019	$	4,449

Balance at December 31, 2019	$	4,575
Net income	99
Balance at March 31, 2020	$	4,674

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2017
2016
2017
2016
Operating Revenues
Regulated natural gas $ 181
$ 155
$ 877
$ 815
Nonregulated natural gas and other 2
3
7
8
Total operating revenues 183
158
884
823
Operating Expenses
Cost of natural gas 63
42
333
289
Operation, maintenance and other 73
74
226
221
Depreciation and amortization 38
35
109
103
Property and other taxes 13
11
38
33
Impairment charges —
—
7
—
Total operating expenses 187
162
713
646
Operating (Loss) Income (4 ) (4 ) 171
177
Equity in earnings of unconsolidated affiliates 3
2
8
25
Other income and expenses, net —
(1 ) (1 ) (1 )
Total other income and expenses 3
1
7
24
Interest Expense 20
17
59
50
(Loss) Income Before Income Taxes (21 ) (20 ) 119
151
Income Tax (Benefit) Expense (10 ) (8 ) 43
57
Net (Loss) Income $ (11 ) $ (12 ) $ 76
$ 94
Other Comprehensive Income, net of tax
Reclassification into earnings from hedging activities of equity method investments —
1
—
1
Comprehensive (Loss) Income $ (11 ) $ (11 ) $ 76
$ 95



	Three Months Ended
	March 31,
(in millions)	2020		2019
Operating Revenues	$	512	$	579
Operating Expenses
Cost of natural gas	162		273
Operation, maintenance and other	80		80
Depreciation and amortization	45		42
Property and other taxes	12		12
Total operating expenses	299		407
Operating Income	213		172
Other Income and Expenses, net	12		6
Interest Expense	27		22
Income Before Income Taxes	198		156
Income Tax Expense	20		34
Net Income and Comprehensive Income	$	178	$	122

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	September 30, 2017			December 31, 2016			March 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	12		$	25		$	4		$	—
Receivables (net of allowance for doubtful accounts of $2 at 2017 and $3 at 2016)	77			232
Receivables (net of allowance for doubtful accounts of $9 at 2020 and $6 at 2019)							191			241
Receivables from affiliated companies	8			7			13			10
Inventory	53			66			39			72
Regulatory assets	133			124			96			73
Income taxes receivable	99			9
Other	31			12			13			28
Total current assets	413			475			356			424
Property, Plant and Equipment
Cost	6,579			6,174			8,653			8,446
Accumulated depreciation and amortization	(1,454		)	(1,360		)	(1,703		)	(1,681		)
Net property, plant and equipment	5,125			4,814			6,950			6,765
Other Noncurrent Assets
Goodwill	49			49			49			49
Regulatory assets	322			373			263			290
Operating lease right-of-use assets, net							23			24
Investments in equity method unconsolidated affiliates	76			212			84			83
Other	11			21			132			121
Total other noncurrent assets	458			655			551			567
Total Assets	$	5,996		$	5,944		$	7,857		$	7,756
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	98		$	155		$	145		$	215
Accounts payable to affiliated companies	7			8			12			3
Notes payable and commercial paper	—			330
Notes payable to affiliated companies	284			—			486			476
Taxes accrued	30			67			36			24
Interest accrued	24			33			32			33
Current maturities of long-term debt	—			35
Regulatory liabilities	3			—			91			81
Other	72			102			54			67
Total current liabilities	518			730			856			899
Long-Term Debt	2,036			1,786			2,385			2,384
Other Noncurrent Liabilities
Deferred income taxes	1,046			931			742			708
Asset retirement obligations	15			14			17			17
Regulatory liabilities	627			608			1,087			1,131
Operating lease liabilities							22			23
Accrued pension and other post-retirement benefit costs	14			14			7			3
Other	141			189			121			148
Total other noncurrent liabilities	1,843			1,756			1,996			2,030
Commitments and Contingencies
Equity
Common stock, no par value: 100 shares authorized and outstanding at 2017 and 2016	860			860
Common stock, no par value: 100 shares authorized and outstanding at 2020 and 2019							1,310			1,310
Retained earnings	739			812			1,310			1,133
Total equity	1,599			1,672			2,620			2,443
Total Liabilities and Equity	$	5,996		$	5,944		$	7,857		$	7,756

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2017			2016			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	76		$	94		$	178		$	122
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	112			111			46			42
Impairment charges	7			—
Equity component of AFUDC							(5		)	—
Deferred income taxes	127			50			12			23
Equity in earnings from unconsolidated affiliates	(8		)	(25		)	(2		)	(2		)
Accrued pension and other post-retirement benefit costs	9			2
Contributions to qualified pension plans	—			(1		)
Payments for asset retirement obligations	—			(5		)
Provision for rate refunds							(18		)	7
(Increase) decrease in
Receivables	157			88			65			27
Receivables from affiliated companies	(1		)	—			(3		)	12
Inventory	13			33			33			45
Other current assets	(129		)	(50		)	(9		)	22
Increase (decrease) in
Accounts payable	(52		)	11			(76		)	(44		)
Accounts payable to affiliated companies	(1		)	—			9			(4		)
Taxes accrued	(37		)	12			12			(49		)
Other current liabilities	(21		)	(11		)	(12		)	15
Other assets	(9		)	55			1			(3		)
Other liabilities	(7		)	17			(1		)	(5		)
Net cash provided by operating activities	236			381			230			208
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(407		)	(416		)	(231		)	(209		)
Contributions to equity method investments	(12		)	(40		)
Other	2			(2		)	(5		)	(2		)
Net cash used in investing activities	(417		)	(458		)	(236		)	(211		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	250			296
Issuance of common stock	—			121
Payments for the redemption of long-term debt	(35		)	(40		)
Notes payable and commercial paper	(330		)	(210		)
Notes payable to affiliated companies	284			—			10			3
Dividends paid	—			(82		)
Other	(1		)	—
Net cash provided by financing activities	168			85			10			3
Net (decrease) increase in cash and cash equivalents	(13		)	8
Net increase in cash and cash equivalents							4			—
Cash and cash equivalents at beginning of period	25			33			—			—
Cash and cash equivalents at end of period	$	12		$	41		$	4		$	—
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	47		$	30		$	114		$	92
Transfer of ownership interest of certain equity method investees to parent	149			—

See Notes to Condensed Consolidated Financial Statements

~~PART I~~



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Accumulated
Other
Comprehensive
Income
Net Loss on

Hedging Activities

Common
Retained
of Unconsolidated
Total
(in millions) Stock
Earnings
Affiliates
Equity
Balance at December 31, 2015 $ 728
$ 731
$ (1 ) $ 1,458
Net income —
94
—
94
Other comprehensive income —
—
1
1
Common stock issuances, including dividend reinvestments and employee benefits 121
—
—
121
Common stock dividends —
(87 ) —
(87 )
Balance at September 30, 2016 $ 849
$ 738
$ —
$ 1,587

Balance at December 31, 2016 $ 860
$ 812
$ —
$ 1,672
Net income —
76
—
76
Transfer of ownership interest of certain equity method investees to parent —
(149 ) —
(149 )
Balance at September 30, 2017 $ 860
$ 739
$ —
$ 1,599



	Common		Retained			Total
(in millions)	Stock		Earnings			Equity
Balance at December 31, 2018	$	1,160	$	931		$	2,091
Net income	—		122			122
Balance at March 31, 2019	$	1,160	$	1,053		$	2,213

Balance at December 31, 2019	$	1,310	$	1,133		$	2,443
Net income	—		178			178
Other	—		(1		)	(1		)
Balance at March 31, 2020	$	1,310	$	1,310		$	2,620

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined~~See Notes to Condensed Consolidated Financial Statements– ~~(Unaudited)~~



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

Index to Combined Notes to Condensed Consolidated Financial Statements

The unaudited notes to the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements that follow are a combined presentation. The following list indicates the registrants to which the footnotes apply.

Applicable Notes
Registrant 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Duke Energy Corporation • • • • • • • • • • • • • • • • •
Duke Energy Carolinas, LLC • • • • • • • • • • • • • •
Progress Energy, Inc. • • • • • • • • • • • • • • •
Duke Energy Progress, LLC • • • • • • • • • • • • • •
Duke Energy Florida, LLC • • • • • • • • • • • • • •
Duke Energy Ohio, Inc. • • • • • • • • • • • • • • •
Duke Energy Indiana, LLC • • • • • • • • • • • • • •
Piedmont Natural Gas Company, Inc. • • • • • • • • • • • • • • • • •

Applicable Notes

Registrant

Duke Energy

•

Duke Energy Carolinas

•

Progress Energy

•

Duke Energy Progress

•

Duke Energy Florida

•

Duke Energy Ohio

•

Duke Energy Indiana

•

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 and (iii) the Piedmont registrant not included in the consolidated Duke Energy results for the three and nine months ended September 30, 2016, as Piedmont results were not consolidated by Duke Energy until after the acquisition date of October 3, 2016.balances.

1. ORGANIZATION AND BASIS OF PRESENTATION

~~NATURE OF OPERATIONS AND BASIS OF CONSOLIDATION~~

Duke Energy Corporation (collectively with its subsidiaries, Duke Energy) is an energy company headquartered in Charlotte, North Carolina, subject to regulation by the Federal Energy Regulatory Commission (FERC). Duke Energy operates in the United States (U.S.) primarily through its direct and indirect subsidiaries. Certain Duke Energy subsidiaries are also subsidiary registrants, including Duke Energy Carolinas, LLC (Duke Energy Carolinas); Progress Energy, Inc. (Progress Energy); Duke Energy Progress, LLC (Duke Energy Progress); Duke Energy Florida, LLC (Duke Energy Florida); Duke Energy Ohio, Inc. (Duke Energy Ohio), Duke Energy Indiana, LLC (Duke Energy Indiana) and Piedmont Natural Gas Company, Inc. (Piedmont). When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of its separate subsidiary registrants (collectively referred to as the Subsidiary Registrants), which, along with Duke Energy, are collectively referred to as the Duke Energy Registrants.

On October 3, 2016, Duke Energy completed the acquisition of Piedmont. Piedmont's results of operations and cash flows are included in the accompanying condensed consolidated financial statements of Duke Energy for the three and nine months ended September 30, 2017, but not for the three and nine months ended September 30, 2016, as Piedmont's earnings and cash flows are only included in Duke Energy's consolidated results subsequent to the acquisition date. See Note 2 for additional information regarding the acquisition.

In December 2016, Duke Energy completed an exit of the Latin American market to focus on its domestic regulated business, which was further bolstered by the acquisition of Piedmont. The sale of the International Energy business segment, excluding an equity method investment in National Methanol Company (NMC), was completed through two transactions including a sale of assets in Brazil to China Three Gorges (Luxembourg) Energy S.à.r.l. (China Three Gorges) and a sale of Duke Energy's remaining Latin American assets in Peru, Chile, Ecuador, Guatemala, El Salvador and Argentina to ISQ Enerlam Aggregator, L.P. and Enerlam (UK) Holding Ltd. (I Squared Capital) (collectively, the International Disposal Group). See Note 2 for additional information on the sale of International Energy.

The results of operations of the International Disposal Group have been classified as Discontinued Operations on the Condensed Consolidated Statements of 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 Condensed Consolidated Financial Statements exclude amounts related to discontinued operations. See Note 2 ~~for additional information.~~

These Condensed Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the Duke Energy Registrants and subsidiaries where the respective Duke Energy Registrants have control. These Condensed Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities. Substantially all of the Subsidiary Registrants' operations qualify for regulatory accounting.

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 is subject to the regulatory provisions of the North Carolina Utilities Commission (NCUC), Public Service Commission of South Carolina (PSCSC), U.S. Nuclear Regulatory Commission (NRC) and FERC.

Progress Energy is a public utility holding company headquartered in Raleigh, North Carolina, subject to regulation by FERC. Progress Energy conducts operations through its wholly owned subsidiaries, Duke Energy Progress and Duke Energy Florida.

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 is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.

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 is subject to the regulatory provisions of the Florida Public Service Commission (FPSC), NRC and FERC.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

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 Condensed Consolidated Statements of Operations and Comprehensive Income. Operations in Kentucky are conducted through its wholly owned subsidiary, Duke Energy Kentucky, Inc. (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 Public Utilities Commission of Ohio (PUCO), Kentucky Public Service Commission (KPSC) and FERC.

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 is subject to the regulatory provisions of the Indiana Utility Regulatory Commission (IURC) 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, Tennessee Public Utility Commission (formerly the Tennessee Regulatory Authority) (TPUC) and FERC.

BASIS OF PRESENTATION

These Condensed Consolidated Financial Statements have been prepared in accordance with ~~generally accepted accounting principles (GAAP) in the U.S.~~GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these Condensed Consolidated Financial Statements do not include all information and notes required by GAAP ~~in the U.S. for annual financial statements. Since the interim Condensed Consolidated Financial Statements and Notes do not include all information and notes required by GAAP in the U.S.~~ for annual financial statements ~~the Condensed Consolidated Financial Statements~~ and ~~other information included in this quarterly report~~ should be read in conjunction with the Consolidated Financial Statements ~~and Notes~~ in the Duke Energy Registrants’ combined Annual Report on Form 10-K for the year ended December 31, ~~2016, and the Consolidated Financial Statements and Notes in the Piedmont Annual Report on Form 10‑K for the year ended October 31, 2016.~~

Effective November 1, 2016, Piedmont's fiscal year-end was changed from October 31 to December 31, the year-end of Duke Energy. A transition report was filed on Form 10-Q (Form 10-QT) as of December 31, 2016, for the transition period from November 1, 2016, to December 31, 2016.2019.

The information in these combined notes relates to each of the Duke Energy Registrants as noted in the Index to Combined Notes to Condensed Consolidated Financial Statements. However, none of the registrants make any representations as to information related solely to Duke Energy or the subsidiaries of Duke Energy other than itself.

These Condensed Consolidated Financial Statements, in the opinion of the respective companies’ management, reflect all normal recurring adjustments necessary to fairly present the financial position and results of operations of each of the Duke Energy Registrants. Amounts reported in Duke Energy’s interim Condensed Consolidated Statements of Operations and each of the Subsidiary Registrants’ interim Condensed Consolidated Statements of Operations and Comprehensive Income are not necessarily indicative of amounts expected for the respective annual periods due to effects of seasonal temperature variations on energy consumption, regulatory rulings, timing of maintenance on electric generating units, changes in mark-to-market valuations, changing commodity prices and other factors.

In preparing financial statements that conform to GAAP, management 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.

~~Certain prior year amounts~~BASIS OF CONSOLIDATION

These Condensed 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 ~~been reclassified~~control. See Note 11 for additional information on VIEs. These Condensed Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities.

COVID-19

The COVID-19 pandemic is having a significant impact on global health and economic environments. In March 2020, the World Health Organization (WHO) declared COVID-19 a global pandemic, and President Trump proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency. The COVID-19 pandemic has not had a material financial impact on the Duke Energy Registrants as of March 31, 2020; however, the extent to ~~conform~~which the COVID-19 pandemic will impact the Duke Energy Registrants during 2020 and beyond is uncertain at this time. The Duke Energy Registrants are monitoring developments closely. See Notes 3, 5, 11, 12 and 15 for information on COVID-19 and steps taken to mitigate the ~~current year presentation.~~impacts to our business and customers.

~~UNBILLED REVENUE~~NONCONTROLLING INTEREST

~~Revenues on sales~~Duke Energy maintains a controlling financial interest in certain less than wholly owned nonregulated subsidiaries. As a result, Duke Energy consolidates these subsidiaries and presents the third-party investors' portion of ~~electricity~~Duke Energy's net income (loss), net assets and ~~natural gas are recognized when service~~comprehensive income (loss) as noncontrolling interest. Noncontrolling interest is provided or the product is delivered. Unbilled revenues are recognized by applying customer billing rates to the estimated volumes of energy and natural gas delivered but not yet billed. Unbilled revenues can vary significantly from period to periodincluded as a ~~result~~component of seasonality, weather, customer usage patterns, customer mix, average price in effect for customer classes, timing of rendering customer bills, meter reading schedules, and the impact of weather normalization or margin decoupling mechanisms.

~~Unbilled revenues are included within Receivables and Receivables of variable interest entities (VIEs)~~equity on the Condensed Consolidated Balance ~~Sheets as shown~~Sheet.



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

Several operating agreements of Duke Energy's subsidiaries with noncontrolling interest are subject to allocations of earnings, 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 ~~following table.~~

(in millions) September 30, 2017
December 31, 2016
Duke Energy $ 771
$ 831
Duke Energy Carolinas 307
313
Progress Energy 216
161
Duke Energy Progress 113
102
Duke Energy Florida 103
59
Duke Energy Ohio 2
2
Duke Energy Indiana 29
32
Piedmont 4
77

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes~~subsidiaries are not fixed, and the subsidiaries apply the Hypothetical Liquidation at Book Value (HLBV) method in allocating income or loss and other comprehensive income or loss (all measured on a pretax basis) to ~~Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~Additionally,~~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, 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. Duke Energy ~~Ohio~~has received $103 million for the sale of noncontrolling interests to tax equity members for the three months ended March 31, 2020. Duke Energy allocated approximately $49 million and $7 million of losses to noncontrolling tax equity members utilizing the HLBV method for the three months ended March 31, 2020, and March 31, 2019, respectively.

Other 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.

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Duke Energy, Progress Energy and Duke Energy ~~Indiana sell nearly all of their retail accounts receivable~~Florida have restricted cash balances related primarily to ~~an affiliate, Cinergy Receivables Company, LLC (CRC), on a revolving basis. These transfers of receivables~~collateral assets, escrow deposits and VIEs. See Note 11 for additional information. Restricted cash amounts are ~~accounted for as sales~~included in Other within Current Assets and ~~include receivables for unbilled revenues. Accordingly, the receivables sold are not reflected~~Other Noncurrent Assets on the Condensed Consolidated Balance ~~Sheets of Duke Energy Ohio and Duke Energy Indiana. See Note~~ 13 ~~for further information. These receivables for unbilled revenues are shown in the table below.~~

(in millions) September 30, 2017
December 31, 2016
Duke Energy Ohio $ 70
$ 97
Duke Energy Indiana 119
123

~~AMOUNTS ATTRIBUTABLE TO CONTROLLING INTERESTS~~

For the three and nine months ended September 30, 2017, the Loss from Discontinued Operations, net of tax on Duke Energy's Condensed Consolidated Statements of Operations is entirely attributable to controlling interests.Sheets. The following table presents ~~Net Income Attributable to Duke Energy Corporation for continuing operations~~the components of cash, cash equivalents and ~~discontinued operations for~~restricted cash included in the ~~three and nine months ended September 30, 2016.~~Condensed Consolidated Balance Sheets.



	March 31, 2020						December 31, 2019
					Duke						Duke
	Duke		Progress		Energy		Duke		Progress		Energy
	Energy		Energy		Florida		Energy		Energy		Florida
Current Assets
Cash and cash equivalents	$	1,450	$	52	$	12	$	311	$	48	$	17
Other	185		13		13		222		39		39
Other Noncurrent Assets
Other	63		60		—		40		39		—
Total cash, cash equivalents and restricted cash	$	1,698	$	125	$	25	$	573	$	126	$	56

Three Months Ended Nine Months Ended
(in millions) September 30, 2016 September 30, 2016
Income from Continuing Operations $ 1,001
$ 2,202
Income from Continuing Operations Attributable to Noncontrolling Interests 2
5
Income from Continuing Operations Attributable to Duke Energy Corporation $ 999
$ 2,197
Income from Discontinued Operations, net of tax $ 180
$ 190
Income from Discontinued Operations Attributable to Noncontrolling Interests, net of tax 3
8
Income from Discontinued Operations Attributable to Duke Energy Corporation, net of tax $ 177
$ 182
Net Income $ 1,181
$ 2,392
Net Income Attributable to Noncontrolling Interests 5
13
Net Income Attributable to Duke Energy Corporation $ 1,176
$ 2,379

INVENTORY

Inventory is used for operations and is recorded primarily using the average cost method. Inventory related to regulated operations is valued at historical cost. Inventory related to nonregulated operations is valued at the lower of cost or market. Materials and supplies are recorded as inventory when purchased and subsequently charged to expense or capitalized to property, plant and equipment when installed. Inventory, including excess or obsolete inventory, is written-down to the lower of cost or market 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 ~~September 30, 2017,~~March 31, 2020, and December 31, ~~2016.~~2019. The components of inventory are presented in the tables below.


	September 30, 2017																March 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)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,335	$	767	$	1,132	$	780	$	351	$	83	$	312	$	2	$	2,280	$	759	$	1,018	$	678	$	340	$	83	$	319	$	5
Coal	581		197		231		130		101		17		136		—		742		268		246		167		79		10		218		—
Natural gas, oil and other fuel	349		36		221		108		114		39		2		51		302		40		199		111		89		28		1		34
Total inventory	$	3,265	$	1,000	$	1,584	$	1,018	$	566	$	139	$	450	$	53	$	3,324	$	1,067	$	1,463	$	956	$	508	$	121	$	538	$	39


	December 31, 2016																December 31, 2019
			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)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,374	$	767	$	1,167	$	813	$	354	$	84	$	312	$	1	$	2,297	$	768	$	1,038	$	686	$	351	$	79	$	318	$	5
Coal	774		251		314		148		166		19		190		—		586		187		186		138		48		15		198		—
Natural gas, oil and other fuel	374		37		236		115		121		34		2		65		349		41		199		110		90		41		1		67
Total inventory	$	3,522	$	1,055	$	1,717	$	1,076	$	641	$	137	$	504	$	66	$	3,232	$	996	$	1,423	$	934	$	489	$	135	$	517	$	72

~~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. Otherwise, excise taxes are accounted for on a net basis.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~Excise taxes accounted for on a gross basis as both operating revenues and property and other taxes on the Condensed Consolidated Statements of Operations were as follows.~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017
2016
2017
2016
Duke Energy $ 107

$ 107

$ 289

$ 285
Duke Energy Carolinas 9
6
27
21
Progress Energy 67
65
168
161
Duke Energy Progress 5
4
14
13
Duke Energy Florida 62
61
154
148
Duke Energy Ohio 24
26
75
77
Duke Energy Indiana 6
10
16
26
Piedmont 1
1
3
2

NEW ACCOUNTING STANDARDS

The following new accounting ~~standards~~standard was adopted ~~for 2017 and 2016 had no material impact on the presentation or results of operations, cash flows or financial position of~~by the Duke Energy ~~Registrants. While immaterial, adoption of~~Registrants in 2020.



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

Current Expected Credit Losses. In June 2016, the ~~following~~FASB issued new accounting ~~standards had the most significant impact on the Duke Energy results of operations, cash flows and financial position~~guidance for ~~the nine months ended September 30, 2017.~~

~~Stock-Based Compensation and Income Taxes.~~ ~~In first quarter 2017,~~credit losses. Duke Energy adopted ~~Financial Accounting Standards Board (FASB) guidance, which revised~~ the accounting for stock-based compensation and the associated income taxes. The adopted guidance changes certain aspects of accounting for stock-based payment awards to employees including the accounting for income taxes and classification on the Condensed Consolidated Statements of Cash Flows. The primary impact to Duke Energy as a result of implementing this guidance was a cumulative-effect adjustment to retained earnings for tax benefits not previously recognized and additional income tax expense for the nine months ended September 30, 2017. See the Duke Energy Condensed Consolidated Statements of Changes in Equity for further information.

~~Goodwill Impairment.~~ In January 2017, the FASB issued revised guidance for the subsequent measurement of goodwill. Under the guidance, a company will recognize an impairment to goodwill for the amount by which a reporting unit's carrying value exceeds the reporting unit's fair value, not to exceed the amount of goodwill allocated to that reporting unit. Duke Energy early adopted this guidance for the 2017 annual goodwill impairment test.

~~The following~~ new ~~Accounting Standards Updates (ASUs) have been issued, but have not yet been adopted by Duke Energy, as of September 30, 2017.~~

~~Retirement Benefits.~~ ~~In March 2017, the FASB issued revised~~ accounting guidance for the presentation of net periodic costs related to benefit plans. Current GAAP permits the aggregation of all the components of net periodic costs on the income statement and does not require the disclosure of the location of net periodic costs on the Condensed Consolidated Statement of Operations. Under the amended guidance, the service cost component of net periodic costs must be included within Operating income within the same line as other compensation expenses. All other components of net periodic costs must be outside of Operating income. In addition, the updated guidance permits only the service cost component of net periodic costs to be capitalized to Inventory or Property, Plant and Equipment. This represents a change from current GAAP, which permits all components of net periodic costs to be capitalized. These amendments should be applied retrospectively for the presentation of the various components of net periodic costs and prospectively for the change in eligible costs to be capitalized. The guidance allows for a practical expedient that permits a company to use amounts disclosed in prior-period financial statements as the estimation basis for applying the retrospective presentation requirements.

~~For Duke Energy, this guidance is~~credit losses effective ~~for interim and annual periods beginning~~ January 1, 2018. Duke Energy currently presents the total non-capitalized net periodic costs within Operation, maintenance and other on the Condensed Consolidated Statement of Operations. The adoption of this guidance will result in a retrospective change to reclassify the presentation of the non-service cost (benefit) components of net periodic costs to Other income and expenses. Duke Energy intends to utilize the practical expedient for retrospective presentation. The change in net periodic costs eligible for capitalization is applicable prospectively. Since Duke Energy’s service cost component is expected to be greater than the total net periodic costs, the change will result in increased capitalization of net periodic costs, higher Operation, maintenance and other and higher Other income and expenses. The resulting impact to Duke Energy is expected to be an immaterial increase in net income resulting from the limitation of eligible capitalization of net periodic costs to the service cost component, which is larger than the total net periodic costs.

~~Revenue from Contracts with Customers~~. In May 2014, the FASB issued revised accounting guidance for revenue recognition from contracts with customers. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this update also require disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

Duke Energy has identified material revenue streams, which served as the basis for accounting analysis and documentation of the impact of this guidance on revenue recognition. The accounting analysis included reviewing representative contracts and tariffs for each material revenue stream. Most of Duke Energy’s revenue is expected to be in scope of the new guidance. The majority of our sales, including energy provided to residential customers, are from tariff offerings that provide natural gas or electricity without a defined contractual term ("at-will"). For such arrangements, Duke Energy expects that the revenue from contracts with customers will be equivalent to the electricity or natural gas supplied and billed in that period (including estimated billings). As such, Duke Energy does not expect that there will be a significant shift in the timing or pattern of revenue recognition for such sales.

Also included in the accounting analysis was the evaluation of certain long-term revenue streams including electric wholesale contracts and renewables power purchase agreements (PPAs) under this guidance. For such arrangements, Duke Energy does not expect material changes to the pattern of revenue recognition on the registrants. In addition, the power and utilities industry revenue recognition task force released several draft positions on specific industry issues in October 2017 for public comment. Duke Energy has been working closely with the industry task force and will be reviewing these updated positions to evaluate the impact, if any, on Duke Energy’s specific contracts and preliminary conclusions to date. The evaluation of other revenue streams is ongoing along with consideration of potential revisions to processes, policies and controls, primarily related to evaluating supplemental disclosures required as a result of adopting this guidance. Some revenue arrangements, such as alternative revenue programs and certain PPAs accounted for as leases, are excluded from the scope of this guidance and, therefore, will be accounted for and evaluated for separate presentation and disclosure under other relevant accounting guidance.

Duke Energy continues to evaluate what information would be most useful for users of the financial statements, including information already provided in disclosures outside of the financial statement footnotes. These additional disclosures could include the disaggregation of revenues by geographic location, type of service, customer class or by duration of contract ("at-will" versus contracted revenue).

~~Duke Energy intends to use~~2020, using the modified retrospective method of adoption, ~~effective January 1, 2018. Under the modified retrospective method~~which does not require restatement of ~~adoption,~~ prior year reported results are not restated and a cumulative-effect adjustment, if applicable, is recorded to retained earnings at January 1, 2018, as if the standard had always been in effect. In addition, disclosures, if applicable, include a comparison to what would have been reported for 2018 under the previous revenue recognition rules to assist financial statement users in understanding how revenue recognition has changed as a result of this standard and to facilitate comparability with prior year reported results, which are not restated under the modified retrospective approach as described above.results. Duke Energy ~~also plans to utilize certain~~did not adopt any practical ~~expedients including applying this guidance to open contracts at the date~~expedients.

Duke Energy recognizes allowances for credit losses based on management's estimate of ~~adoption and recognizing revenues for certain contracts under the invoice practical expedient, which allows revenue recognition~~losses expected to be ~~consistent with invoiced~~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 new credit loss standard, for allowances for credit losses of trade and other receivables, insurance receivables and financial guarantees. These amounts ~~(including estimated billings) provided certain criteria~~ are ~~met, including consideration~~included in the Condensed Consolidated Balance Sheets in Receivables, Receivables of ~~whether~~VIEs, Other Noncurrent Assets and Other Noncurrent Liabilities. See Notes 4 and 12 for more information.

Duke Energy recorded an adjustment for the ~~invoiced amounts reasonably represent the value provided~~cumulative effect of a change in accounting principle due to ~~customers. While~~ the adoption of this ~~guidance, including the cumulative-effect adjustment, is not expected to have a material impact~~standard on either the timing or amount of revenues recognized in Duke Energy's financial statements, Duke Energy anticipates additional disclosures around the nature, amount, timing and uncertainty of our revenues and cash flows arising from contracts with customers and will continue to evaluate the requirements, as well as any additional clarifying guidance that may be issued.

~~Leases.~~ In February 2016, the FASB issued revised accounting guidance for leases. The core principle of this guidance is that a lessee should recognize the assets and liabilities that arise from leases on the balance sheet.

~~For Duke Energy, this guidance is effective for interim and annual periods beginning~~ January 1, ~~2019, although it can be early adopted.~~ 2020, as shown in the table below:



	January 1, 2020
			Duke				Duke		Duke
	Duke		Energy		Progress		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Piedmont
Total pretax impact to Retained Earnings	$	120	$	16	$	2	$	1	$	1	$	1

The guidance is applied using a modified retrospective approach. Duke Energy is currently evaluating the financial statement impact of adopting this standard and is continuing to monitor industry implementation issues, including easements, pole attachments and renewable PPAs. Other than an expected increase in assets and liabilities, the ultimate impact of thefollowing new accounting standard has been issued but not yet been determined. Significant system enhancements, including additional processes and controls, may be required to facilitate the identification, tracking and reporting of potential leases based upon requirements of the new lease standard.

~~Statement of Cash Flows.~~ In November 2016, the FASB issued revised accounting guidance to reduce diversity in practice for the presentation and classification of restricted cash on the statement of cash flows. Under the updated guidance, restricted cash and restricted cash equivalents will be included within beginning-of-period and end-of-period cash and cash equivalents on the statement of cash flows.

For Duke Energy, this guidance is effective for the interim and annual periods beginning January 1, 2018. The guidance will be applied using a retrospective transition method to each period presented. Upon adoptionadopted by Duke Energy, the revised guidance will result in a change to the amount of cash and cash equivalents and restricted cash explained when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prior to adoption, the Duke Energy Registrants reflect changes in non-current restricted cash within Cash Flows from Investing Activities and changes in current restricted cash within Cash Flows from Operating Activities on the Condensed Consolidated Statementas of ~~Cash Flows.~~March 31, 2020.

~~Financial Instruments Classification and Measurement.~~ Reference Rate Reform.In ~~January 2016,~~March 2020, the FASB issued ~~revised~~new accounting guidance for the classification and measurement of financial instruments. Changes in the fair value of all equity securities will be required to be recorded in net income. Current GAAP allows some changes in fair value for available-for-sale equity securities to be recorded in Accumulated other comprehensive income (AOCI). Additional disclosures will be required to present separately the financial assets and financial liabilities by measurement category and form of financial asset. An entity's equity investments that are accounted for under the equity method of accounting are not included within the scope of the new guidance.

For Duke Energy, the revised accounting guidance is effective for interim and annual periods beginning January 1, 2018, by recording a cumulative-effect adjustment to retained earnings as of January 1, 2018.reference rate reform. This guidance is ~~expected~~elective and provides expedients to ~~have minimal impact on~~facilitate financial reporting for the Duke Energy Registrant's Condensed Consolidated Statements of Operations and Comprehensive Income as changes in the fair value of most of the Duke Energy Registrants' available-for-sale equity securities are deferred as regulatory assets or liabilities pursuant to accounting guidance for regulated operations.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~2. ACQUISITIONS AND DISPOSITIONS~~

~~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.~~

~~2016 Acquisition of Piedmont Natural Gas~~

On October 3, 2016, Duke Energy acquired all outstanding common stock of Piedmont for a total cash purchase price of $5.0 billion and assumed Piedmont's existing long-term debt, which had a fair value of approximately $2.0 billion at the time of the acquisition. The acquisition provides a foundation for Duke Energy to establish a broader, long-term strategic natural gas infrastructure platform to complement its existing natural gas pipeline investments and regulated natural gas business in the Midwest. In connection with the closing of the acquisition, Piedmont became a wholly owned subsidiary of Duke Energy.

~~Purchase Price Allocation~~

~~The purchase price allocation of the Piedmont acquisition is as follows:~~

(in millions)
Current assets $ 497
Property, plant and equipment, net 4,714
Goodwill 3,353
Other long-term assets 804
Total assets 9,368
Current liabilities, including current maturities of long-term debt 576
Long-term liabilities 1,790
Long-term debt 2,002
Total liabilities 4,368
Total purchase price $ 5,000

The fair value of Piedmont's assets and liabilities was determined based on significant estimates and assumptions that are judgmental in nature, including the amount and timing of projected future cash flows, discount rates reflecting risk inherent in the future cash flows and market prices of long-term debt.

The majority of Piedmont’s operations are subject to the rate-setting authority of the NCUC, the PSCSC and the TPUC and are accounted for pursuant to accounting guidance for regulated operations. The rate-setting and cost recovery provisions currently in place for Piedmont’s regulated operations provide revenues derived from costs, including a return on investment of assets and liabilities included in rate base. Thus, the fair value of Piedmont's assets and liabilities subject to these rate-setting provisions approximates the pre-acquisition carrying value and does not reflect any net valuation adjustments.

The significant assets and liabilities for which valuation adjustments were reflected within the purchase price allocation include the acquired equity method investments and long-term debt. The difference between the fair value and the pre-acquisition carrying value of long-term debt for regulated operations was recorded as a regulatory asset.

The excess of the purchase price over the fair value of Piedmont's assets and liabilities on the acquisition date was recorded as goodwill. The goodwill reflects the value paid by Duke Energy primarily for establishing a broader, long-term strategic natural gas infrastructure growth platform, an improved risk profile and expected synergies resultinganticipated transition away from the ~~combined entities.~~

~~Under Securities~~London Inter-bank Offered Rate (LIBOR) and ~~Exchange Commission (SEC) regulations, Duke Energy elected not to apply push down accounting to~~other interbank reference rates by the ~~stand-alone Piedmont financial statements.~~

~~Other Acquisition-Related Matters~~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.

Duke Energy ~~recorded realized losses on forward-starting~~has variable-rate debt and manages interest rate risk by entering into financial contracts including interest rate swaps ~~related~~that are generally indexed to ~~the acquisition financing of $22 million and $190 million for the three and nine months ended September 30, 2016, respectively. See Note 10 for additional information.~~

~~During the nine months ended September 30, 2017, Piedmont recorded~~LIBOR. Impacted financial arrangements extending beyond 2021 may require contractual amendment or termination to fully adapt to a ~~$7 million software impairment resulting from planned accounting system and process integration.~~

~~Pro Forma Financial Information~~

~~The following unaudited pro forma financial information reflects the combined results of operations of~~post-LIBOR environment. Duke Energy ~~and Piedmont as if the merger had occurred as of January 1, 2016. The pro forma~~is assessing these financial information excludes potential cost savings, intercompany revenues, Piedmont’s earnings from the equity method investment in SouthStar Energy Services, LLC (SouthStar) sold immediately prior to the merger, and after-tax nonrecurring transaction and integration costs incurred by Duke Energy and Piedmont of $41 million and $161 million for the three and nine months ended September 30, 2016, respectively. See Note 3 for additional information on Piedmont's sale of SouthStar.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~This information has been presented for illustrative purposes only~~arrangements and is ~~not necessarily indicative~~evaluating the use of optional expedients outlined in the ~~consolidated results of operations~~new accounting guidance. Alternative index provisions are also being assessed and incorporated into new financial arrangements that ~~would have been achieved or the future consolidated results of operations of Duke Energy.~~

Three Months Ended Nine Months Ended
(in millions) September 30, 2016 September 30, 2016
Operating Revenues $ 6,713
$ 17,927
Net Income Attributable to Duke Energy Corporation 1,180
2,552

~~DISPOSITIONS~~

~~2016 Sale of International Energy~~

In December 2016, Duke Energy sold its International Energy businesses, excluding the equity method investment in NMC (the International Disposal Group), in two separate transactions. Duke Energy sold its Brazilian business to China Three Gorges for approximately $1.2 billion, including the assumption of debt, and its remaining Central and South American businesses to I Squared Capital in a deal also valued at approximately $1.2 billion, including the assumption of debt. The transactions generated cash proceeds of ~~$1.9 billion, excluding transaction costs, which were primarily used to reduce Duke Energy holding company debt.~~

The following table presents the results of the International Disposal Group, which are included in (Loss) Income from Discontinued Operations, net of tax in Duke Energy's Condensed Consolidated Statements of Operations. Interest expense directly associated with the International Disposal Group was allocated to discontinued operations. No interest from corporate level debt was allocated to discontinued operations.

Three Months Ended Nine Months Ended
(in millions) September 30, 2016 September 30, 2016
Operating Revenues $ 245
$ 761
Fuel used in electric generation and purchased power 60
177
Cost of natural gas 11
34
Operation, maintenance and other 85
240
Depreciation and amortization 18
62
Property and other taxes 1
6
Impairment charges^(a)
—
194
Loss on Sales of Other Assets and Other, net (3 ) (2 )
Other Income and Expenses, net 14
35
Interest Expense 19
63
Income before income taxes 62
18
Income tax expense (benefit) ^(b)
4
(48 )
Income from discontinued operations of the International Disposal Group 58
66
Income from discontinued operations of other businesses^(c)
122
124
Income from Discontinued Operations, net of tax $ 180
$ 190

~~(a)~~

In conjunction with the advancements of marketing efforts during 2016, Duke Energy performed recoverability tests of the long-lived asset groups of International Energy. As a result, Duke Energy determined the carrying value of certain assets in Central America was not fully recoverable and recorded a pretax impairment charge of $194 million. The charge represents the excess carrying value over the estimated fair value of the assets, which was based on a Level 3 Fair Value measurement that was primarily determined from the income approach using discounted cash flows but also considered market information obtained in 2016.


~~(b)~~	~~Includes an income tax benefit of $95 million for the nine months ended September 30, 2016, related to historical undistributed foreign earnings. See Note 17 for additional information.~~


~~(c)~~	Duke Energy recognized an income tax benefit of $122 million resulting from immaterial out of period deferred tax liability adjustments for the three and nine months ended September 30, 2016. The amount includes $34 million recorded at Duke Energy Ohio.

Duke Energy has elected not to separately disclose discontinued operations on the Condensed Consolidated Statements of Cash Flows. The following table summarizes Duke Energy's cash flows from discontinued operations related to the International Disposal Group.

Nine Months Ended
(in millions) September 30, 2016
Cash flows provided by (used in):
Operating activities $ 201
Investing activities (35 )

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~Other Sale-Related Matters~~

During 2017, Duke Energy provided certain transition services to China Three Gorges and I Squared Capital. Cash flows related to providing the transition services were not material and as of September 30, 2017, all transition services related to the International Disposal Group ended. Additionally, Duke Energy will reimburse China Three Gorges and I Squared Capital for all tax obligations arising from the period preceding consummation on the transactions, totaling approximately $78 million. Duke Energy has not recorded any other liabilities, contingent liabilities or indemnifications related to the International Disposal Group.extend beyond 2021.

3.2. BUSINESS SEGMENTS

Operating 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. Segment income includes intercompany revenues and expenses that are eliminated on the Condensed Consolidated Financial Statements.

Duke Energy

The Electric Utilities and Infrastructure segment primarily 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 also includes Duke Energy's electric transmission infrastructure investments.

The Gas Utilities and Infrastructure 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 investments. ~~Gas Utilities and Infrastructure's operations are substantially all regulated and, accordingly, qualify for regulatory accounting treatment.~~

The Commercial Renewables segment is primarily comprised of nonregulated ~~utility scale~~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 ~~corporate~~ interest expense on holding company debt, unallocated corporate costs, ~~contributions to the Duke Energy Foundation and the operations of~~ Duke Energy’s wholly owned captive insurance ~~subsidiary,~~company, Bison, ~~Insurance Company Limited (Bison). Other also includes~~and Duke Energy's ~~25 percent~~ interest in NMC, a large regional producer of methyl tertiary butyl ether (MTBE) located in Saudi Arabia. In October 2017, Duke Energy's economic ownership interest in NMC decreased from 25 percent to 17.5 percent. The investment in NMC is accounted for under the equity method of accounting.National Methanol Company.



FINANCIAL STATEMENTS	BUSINESS SEGMENTS

Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.



	Three Months Ended March 31, 2020
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	5,174	$	640	$	129	$	5,943	$	6		$	—		$	5,949
Intersegment revenues	9		24		—		33		17			(50		)	—
Total revenues	$	5,183	$	664	$	129	$	5,976	$	23		$	(50	)	$	5,949
Segment income (loss)^(a)	$	705	$	249	$	57	$	1,011	$	(112	)	$	—		$	899
Add: Noncontrolling interests^(b)															(48		)
Add: Preferred stock dividend															39
Net income															$	890
Segment assets	$	134,838	$	14,098	$	6,184	$	155,120	$	4,964		$	(12	)	$	160,072

Three Months Ended September 30, 2017
Electric
Gas
Total

Utilities and
Utilities and
Commercial
Reportable

(in millions) Infrastructure
Infrastructure
Renewables
Segments
Other
Eliminations
Consolidated
Unaffiliated revenues $ 6,122
$ 249
$ 95
$ 6,466
$ 16
$ —
$ 6,482
Intersegment revenues 7
23
—
30
19
(49 ) —
Total revenues $ 6,129
$ 272
$ 95
$ 6,496
$ 35
$ (49 ) $ 6,482
Segment income (loss)^(a)(b)(c)
$ 1,020
$ 19
$ (49 ) $ 990
$ (34 ) $ —
$ 956
Add back noncontrolling interests 1
Loss from discontinued operations, net of tax (2 )
Net income $ 955
Segment assets $ 118,323
$ 11,361
$ 4,216
$ 133,900
$ 2,240
$ 185
$ 136,325



	Three Months Ended March 31, 2019
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	5,321	$	732	$	106	$	6,159	$	4		$	—		$	6,163
Intersegment revenues	8		24		—		32		17			(49		)	—
Total revenues	$	5,329	$	756	$	106	$	6,191	$	21		$	(49	)	$	6,163
Segment income (loss)	$	750	$	226	$	13	$	989	$	(89	)	$	—		$	900
Add: Noncontrolling interests^(b)															(7		)
Net income															$	893

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

Three Months Ended September 30, 2016
Electric
Gas
Total

Utilities and
Utilities and
Commercial
Reportable

(in millions) Infrastructure
Infrastructure
Renewables
Segments
Other
Eliminations
Consolidated
Unaffiliated revenues $ 6,332
$ 89
$ 139
$ 6,560
$ 16
$ —
$ 6,576
Intersegment revenues 8
—
—
8
16
(24 ) —
Total revenues $ 6,340
$ 89
$ 139
$ 6,568
$ 32
$ (24 ) $ 6,576
Segment income (loss)^(a)(c)
$ 1,189
$ 15
$ (24 ) $ 1,180
$ (181 ) $ —
$ 999
Add back noncontrolling interests 2
Income from discontinued operations, net of tax^(d)
180
Net income $ 1,181

Nine Months Ended September 30, 2017
Electric
Gas
Total

Utilities and
Utilities and
Commercial
Reportable

(in millions) Infrastructure
Infrastructure
Renewables
Segments
Other
Eliminations
Consolidated
Unaffiliated revenues $ 16,211
$ 1,175
$ 333
$ 17,719
$ 47
$ —
$ 17,766
Intersegment revenues 23
68
—
91
56
(147 ) —
Total revenues $ 16,234
$ 1,243
$ 333
$ 17,810
$ 103
$ (147 ) $ 17,766
Segment income (loss)^(a)(b)(c)
$ 2,384
$ 179
$ 2
$ 2,565
$ (205 ) $ —
$ 2,360
Add back noncontrolling interests 5
Loss from discontinued operations, net of tax (4 )
Net income $ 2,361

Nine Months Ended September 30, 2016
Electric
Gas
Total

Utilities and
Utilities and
Commercial
Reportable

(in millions) Infrastructure
Infrastructure
Renewables
Segments
Other
Eliminations
Consolidated
Unaffiliated revenues $ 16,406
$ 355
$ 365
$ 17,126
$ 40
$ —
$ 17,166
Intersegment revenues 24
3
—
27
51
(78 ) —
Total revenues $ 16,430
$ 358
$ 365
$ 17,153
$ 91
$ (78 ) $ 17,166
Segment income (loss)^(a)(c)
$ 2,557
$ 63
$ 13
$ 2,633
$ (436 ) $ —
$ 2,197
Add back noncontrolling interests 5
Income from discontinued operations, net of tax^(d)
190
Net income $ 2,392


(a)	Other includes a $98 million reversal, included in Operations, maintenance and other on the Condensed Consolidated Statements of Operations, of 2018 severance costs due to ~~achieve~~ the ~~Piedmont acquisition.~~partial settlement of the Duke Energy Carolina's 2019 North Carolina rate case. See ~~Notes 2 and 10~~Note 3 for additional information.


(b)	~~For~~Includes the ~~three and nine months ended September 30, 2017, Electric Utilities and Infrastructure includes an impairment charge related~~allocation of losses to ~~the Florida settlement agreement.~~noncontrolling tax equity members. See Note 41 for additional information.


~~(c)~~	~~Commercial Renewables includes impairment charges related to certain wind projects. See discussion below.~~


~~(d)~~	For the three and nine months ended September 30, 2016, Income from Discontinued Operations includes an income tax benefit resulting from immaterial out of period deferred tax liability adjustments. See Note 2 for additional information.

During the three and nine months ended September 30, 2017, Duke Energy recorded a pretax impairment charge of $69 million on a wholly owned non-contracted wind project. The impairment was recorded within Impairment charges on Duke Energy’s Condensed Consolidated Statements of Operations. The charge represents the excess carrying value over the estimated fair value of the project, which was based on a Level 3 Fair Value measurement that was determined from the income approach using discounted cash flows. The impairment was primarily due to the non-contracted wind project being located in a market that has experienced declining market pricing during 2017 and declining long-term forecasted energy and capacity prices, driven by low natural gas prices, additional renewable generation placed in service and lack of significant load growth.

During the three and nine months ended September 30, 2016, Duke Energy recorded an other than temporary impairment (OTTI) of certain Commercial Renewables wind project investments accounted for under the equity method. The $71 million pretax impairment was recorded within Equity in earnings (losses) of unconsolidated affiliates on Duke Energy's Condensed Consolidated Statements of Operations. The other than temporary decline in value of these investments was primarily attributable to a sustained decline in market pricing where the wind investments are located, the continued projected net losses for the projects and a reduction in the projected cash distributions to the class of investment owned by Duke Energy.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

Duke Energy Ohio

Duke Energy Ohio has ~~two~~2 reportable ~~operating~~ segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure.

Electric Utilities and Infrastructure transmits and distributes electricity in portions of Ohio and generates, distributes and sells electricity in portions of Northern Kentucky. Gas Utilities and Infrastructure transports and sells natural gas in portions of Ohio and Northern Kentucky. It conducts 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, which is primarily comprised of governance costs allocated by its parent, Duke Energy, and revenues and expenses related to Duke Energy Ohio's contractual arrangement to buy power from the Ohio Valley Electric Corporation's (OVEC) power plants. See Note 9 for additional information on related party transactions.

Three Months Ended September 30, 2017
Electric
Gas
Total

Utilities and
Utilities and
Reportable

(in millions) Infrastructure
Infrastructure
Segments
Other
Consolidated
Total revenues $ 371
$ 90
$ 461
$ 10
$ 471
Segment income (loss) 50
14
64
(8 ) 56
Loss from discontinued operations, net of tax (1 )
Net income 55
Segment assets $ 5,006
$ 2,708
$ 7,714
$ 51
$ 7,765
Other.

Three Months Ended September 30, 2016
Electric
Gas
Total

Utilities and
Utilities and
Reportable

(in millions) Infrastructure
Infrastructure
Segments
Other
Consolidated
Total revenues $ 390
$ 89
$ 479
$ 10
$ 489
Segment income (loss) 52
12
64
(9 ) 55
Income from discontinued operations, net of tax^(a)
34
Net income $ 89

Nine Months Ended September 30, 2017
Electric
Gas
Total

Utilities and
Utilities and
Reportable

(in millions) Infrastructure
Infrastructure
Segments
Other
Consolidated
Total revenues $ 1,036
$ 360
$ 1,396
$ 30
$ 1,426
Segment income (loss) 96
56
152
(24 ) 128
Loss from discontinued operations, net of tax (1 )
Net income $ 127

Nine Months Ended September 30, 2016
Electric
Gas
Total

Utilities and
Utilities and
Reportable

(in millions) Infrastructure
Infrastructure
Segments
Other
Consolidated
Total revenues $ 1,053
$ 358
$ 1,411
$ 22
$ 1,433
Segment income (loss) 107
57
164
(29 ) 135
Income from discontinued operations, net of tax^(a)
36
Net income $ 171


~~(a)~~	For the three and nine months ended September 30, 2016, Income from Discontinued Operations includes an income tax benefit resulting from immaterial out of period deferred tax liability adjustments. See Note 2 for additional information.

~~DUKE ENERGY CAROLINAS, PROGRESS ENERGY, DUKE ENERGY PROGRESS, DUKE ENERGY FLORIDA, DUKE ENERGY INDIANA AND PIEDMONT~~

Piedmont has one reportable segment, Gas Utilities and Infrastructure, which transports and sells natural gas. The remainder of Piedmont's operations is presented as Other, which is comprised of certain unallocated corporate costs, including acquisition-related expenses, and earnings from Piedmont's equity method investment in SouthStar prior to its sale. Piedmont sold its 15 percent membership interest in SouthStar on October 3, 2016. Piedmont's income, net of tax, from SouthStar for the three and nine months ended September 30, 2016, was $2 million and $12 million, respectively.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

The remaining Subsidiary Registrants each have one reportable operating segment, Electric Utilities and Infrastructure, which generates, transmits, distributes and sells electricity. The remainder of each company's operations is presented as Other, which is comprised of certain unallocated corporate costs. Other for Progress Energy also includes interest expense on corporate debt instruments of $56 million and $167 million for the three and nine months ended September 30, 2017, respectively, and $55 million and $166 million for the three and nine months ended September 30, 2016, respectively. The following table summarizes the net (loss) income of Other for each of these entities.

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2017
2016
2017
2016
Duke Energy Carolinas $ (6 ) $ (16 ) $ (18 ) $ (50 )
Progress Energy (32 ) (45 ) (120 ) (139 )
Duke Energy Progress (4 ) (10 ) (11 ) (26 )
Duke Energy Florida (2 ) (5 ) (7 ) (14 )
Duke Energy Indiana (2 ) (3 ) (5 ) (10 )
Piedmont (5 ) —
(18 ) 7



	Three Months Ended March 31, 2020
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Eliminations			Total
Total revenues	$	346	$	152	$	498	$	—		$	—		$	498
Segment income/Net (loss) income	$	30	$	36	$	66	$	(1	)	$	—		$	65
Segment assets	$	6,238	$	3,135	$	9,373	$	26		$	(2	)	$	9,397

The assets at Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana are substantially all included within the Electric Utilities and Infrastructure segment at September 30, 2017. The assets at Piedmont are substantially all included within the Gas Utilities and Infrastructure segment at September 30, 2017.



	Three Months Ended March 31, 2019
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Total
Total revenues	$	355	$	176	$	531	$	—		$	531
Segment income/Net (loss) income	$	36	$	35	$	71	$	(2	)	$	69

4.3. 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.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Duke Energy Carolinas and Duke Energy Progress

~~Ash Basin Closure Costs Deferral~~COVID-19 Filings

North Carolina

On ~~December 30, 2016,~~March 10, 2020, Governor Roy Cooper issued Executive Order No. 116 declaring 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 19, 2020, Duke Energy Carolinas and Duke Energy Progress filed a ~~joint~~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.

On March 31, 2020, the governor issued Executive Order No. 124, which, in addition to requiring the steps in the NCUC order noted above, stated that nothing in Executive Order No. 124 shall relieve a customer of its obligation to pay bills for receipt of utility services provided. Executive Order No. 124 remains in effect for 60 days unless otherwise rescinded or replaced with a superseding Executive Order.

On March 31, 2020, the Carolina Utility Customers Association (CUCA) filed a petition with the NCUC ~~seeking~~to temporarily suspend minimum demand charges for commercial and industrial customers. On April 2, 2020, the NCUC issued an ~~accounting~~ order ~~authorizing deferral~~requiring the North Carolina Public Staff (Public Staff) and Duke Energy Carolinas, Duke Energy Progress and other utilities to file responses. On April 9, 2020, Duke Energy Carolinas and Duke Energy Progress filed responses to CUCA’s petition opposing CUCA’s request. The companies assert that voiding commission-approved tariffs and allowing all commercial and industrial customers on the requested rate schedules to avoid paying a portion of ~~certain~~their bills is not legally permissible and would result in these costs ~~incurred in connection with federal and state environmental remediation requirements related~~unfairly being shifted to other customers that are already paying their respective fair share of similar fixed components. Pursuant to the permanent closure of ash basins and other ash storage units at coal-fired generating facilities that have provided or are providing generation to customers located in North Carolina. Initial comments were received in March 2017, andNCUC’s April 2 order, reply comments were filed ~~on April 19, 2017. The NCUC has consolidated Duke Energy Carolinas'~~by CUCA, the Public Staff and Duke Energy ~~Progress’ coal ash deferral requests into their respective general rate case dockets for decision. See "2017 North Carolina Rate Case" sections below for additional discussion.~~Carolinas and Duke Energy Progress on April 15, 2020. A final order from the NCUC deciding CUCA's request is pending. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

South Carolina

On March 13, 2020, Governor Henry McMaster issued Executive Order No. 2020-08 declaring 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 16, 2020, citing the governor’s letter, the ORS filed a request asking the PSCSC to grant waivers so that utilities could suspend disconnections of utility services for nonpayment. Duke Energy Carolinas and Duke Energy Progress supported such motion. 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 April 30, 2020, the ORS requested the PSCSC grant a waiver of the applicable regulations to allow customers the flexibility to obtain deferred payment plans longer than 6 months for past-due amounts. On May 5, 2020, Duke Energy Carolinas and Duke Energy Progress filed responsive comments stating that while utility bills will remain due, Duke Energy Carolinas and Duke Energy Progress do not plan to immediately reinstitute disconnection upon the expiration of the state of emergency and intend to work through a potential grace period as economic recovery begins. Duke Energy Carolinas and Duke Energy Progress also concurred with the observation of the ORS that reduced usage is impacting the fixed cost recovery and revenue assumptions included in rates. Those costs include not only ongoing operational and financing costs necessary to serve customers, but also the borrowings necessary to support extended payment arrangements that will be an important part of emerging from the COVID-19 pandemic. Duke Energy Carolinas and Duke Energy Progress will continue to track such costs, lost revenues and potential cost savings for future evaluation by the PSCSC.

Duke Energy Carolinas

2017 North Carolina Rate Case

On August 25, 2017, Duke Energy Carolinas filed an application with the NCUC for a rate increase for retail customers of approximately $647 million, which ~~represents~~represented an approximate ~~13.6 percent~~13.6% increase in annual base revenues. The request for rate increase iswas driven by capital investments subsequent to the previous base rate case, including the William States Lee Combined Cycle Facility, grid improvement projects, AMI, investments in customer service technologies, costs of complying with ~~coal combustion residuals (CCR)~~CCR regulations and the ~~North Carolina~~ Coal Ash ~~Management~~ Act ~~of 2014 (Coal Ash Act)~~ and recovery of costs related to licensing and development of the William States Lee III Nuclear ~~Station (Lee Nuclear Station) discussed below. An evidentiary hearing~~Station.

On February 28, 2018, Duke Energy Carolinas 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 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.



FINANCIAL STATEMENTS	REGULATORY MATTERS

On July 20, 2018, the North Carolina Attorney General filed a Notice of Appeal to the North Carolina Supreme Court from the June 22, 2018, Order Accepting Stipulation, Deciding Contested Issues and Requiring Revenue Reduction issued by the NCUC. The Attorney General contends the commission’s order should be reversed and remanded, as it is ~~scheduled~~in excess of the commission’s statutory authority; affected by errors of law; unsupported by competent, material and substantial evidence in view of the entire record as submitted; and arbitrary or capricious. The Sierra Club, North Carolina Sustainable Energy Association, North Carolina Justice Center, North Carolina Housing Coalition, Natural Resource Defense Council and Southern Alliance for Clean Energy also filed Notices of Appeal to ~~begin~~the North Carolina Supreme Court. On August 8, 2018, the Public Staff filed a Notice of Cross Appeal to the North Carolina Supreme Court, which contends the commission’s June 22, 2018, order should be reversed and remanded, as it is affected by errors of law, and is unsupported by substantial evidence with regard to the commission’s failure to consider substantial evidence of coal ash related environmental violations. On November 29, 2018, the North Carolina Attorney General's Office filed a motion with the North Carolina Supreme Court requesting the court consolidate the Duke Energy Carolinas and Duke Energy Progress appeals and enter an order adopting the parties’ proposed briefing schedule as set out in the filing. On November 29, 2018, the North Carolina Supreme Court adopted a schedule for briefing set forth in the motion to consolidate the Duke Energy Carolinas and Duke Energy Progress appeals. Appellant briefs were filed on ~~February 19, 2018.~~April 26, 2019. The Appellee response briefs were filed on September 25, 2019. Oral arguments before the North Carolina Supreme Court were held on March 11, 2020. Duke Energy Carolinas cannot predict the outcome of this matter.

~~Lincoln County Combustion Turbine Addition~~2019 North Carolina Rate Case

On ~~June 12, 2017,~~September 30, 2019, Duke Energy Carolinas filed an application with the NCUC for a ~~Certificate~~net rate increase for retail customers of ~~Public Convenience~~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 ~~Necessity (CPCN) to construct and operate a new 402-megawatt (MW) simple cycle advanced combustion turbine natural gas-fueled electric generating unit at its existing Lincoln County site.~~federal EDIT resulting from recent reductions in corporate tax rates. The request ~~also included construction of related transmission~~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 ~~natural gas pipeline interconnection facilities. If approved, construction would begin in~~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 ~~extended commissioning and validation period from 2020-2024 and an estimated commercial operation date in 2024. An~~ evidentiary hearing ~~was held~~to begin on March 23, 2020. On March 16, 2020, in ~~August 2017. Briefs~~consideration of public health and ~~proposed orders were~~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 ~~October 9, 2017. A decision~~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 ~~expected~~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. The joint motion suggests, health and safety permitting, that the commission consider the possibility of holding the consolidated hearing in July. If the NCUC grants the joint motion, Duke Energy Carolinas expects the NCUC to issue an order on its net rate increase by the end of ~~2017.~~the year. Duke Energy Carolinas cannot predict the outcome of this matter.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~William States Lee Combined Cycle Facility~~2018 South Carolina Rate Case

On ~~April 9, 2014, the PSCSC granted~~November 8, 2018, Duke Energy Carolinas filed an application with the PSCSC for a rate increase for retail customers of approximately $168 million, which represented an approximate 10% increase in retail revenues. The request for rate increase was driven by capital investments and North Carolina Electric Membership Corporation (NCEMC) a Certificate of Environmental Compatibility and Public Convenience and Necessity (CECPCN) for the construction and operation of a 750-MW combined-cycle natural gas-fired generating plant at Duke Energy Carolinas' existing William States Lee Generating Station in Anderson, South Carolina.environmental compliance progress made by Duke Energy Carolinas ~~began construction~~since its previous rate case, including the further implementation of Duke Energy Carolinas’ generation modernization program, which consists of retiring, replacing and upgrading generation plants, investments in ~~July 2015~~customer service technologies and ~~estimates a cost~~continued investments in base work to ~~build~~maintain its transmission and distribution systems. The request included net tax benefits resulting from the Tax Act of ~~$600~~$66 million ~~for its share of~~to reflect the ~~facility, including allowance for funds used during construction (AFUDC)~~change in ongoing tax expense, primarily from the reduction in the federal income tax rate from 35% to 21%. The ~~project is expected~~request also included $46 million to ~~be commercially available~~return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change and benefits of $17 million from a reduction in ~~late 2017. NCEMC will own approximately 13 percent of the project. On July 3, 2014, the~~North Carolina state income taxes allocable to South Carolina Coastal Conservation League (SCCL) and Southern Alliance for Clean Energy (SACE) jointly filed a Notice of Appeal with the Court of Appeals of South Carolina (S.C. Court of Appeals) seeking the court's review of the PSCSC's decision, claiming the PSCSC did not properly consider a request related to a proposed solar facility prior to granting approval of the CECPCN. The S.C. Court of Appeals affirmed the PSCSC's decision on February 10, 2016, and on March 24, 2016, denied a request for rehearing filed by SCCL and SACE. On April 21, 2016, SCCL and SACE petitioned the South Carolina Supreme Court for review of the S.C. Court of Appeals decision. On March 24, 2017, the South Carolina Supreme Court denied the request for review, thus concluding the matter.(EDIT Rider).

~~Lee Nuclear Station~~

~~In December 2007,~~



FINANCIAL STATEMENTS	REGULATORY MATTERS

Duke Energy Carolinas ~~applied~~also requested approval of its proposed Grid Improvement Plan (GIP), adjustments to ~~the NRC~~its Prepaid Advantage Program and a variety of accounting orders related to ongoing costs for ~~combined operating licenses (COLs) for two Westinghouse Electric Company (Westinghouse) AP1000 reactors for the proposed Lee Nuclear Station to be located at~~environmental compliance, including recovery over a ~~site in Cherokee County, South Carolina. The NCUC and PSCSC concurred with the prudency~~five-year period of ~~Duke Energy Carolinas decisions to incur certain project development and preconstruction~~$242 million of deferred coal ash related compliance costs, through several separately issued orders through 2011, although full cost recovery is not guaranteed. In December 2016, the NRC issued a COL for each reactor. Duke Energy Carolinas is not required to build the nuclear reactors asgrid investments between rate changes, incremental depreciation expense, a result of new depreciation rates from the ~~COLs being issued.~~

~~On March 29, 2017, Westinghouse filed for voluntary Chapter 11 bankruptcy~~depreciation study approved in the U.S. Bankruptcy Court for the Southern District of New York. On May 15, 2017, the NCUC issued an order requiring Duke Energy Carolinas to provide information regarding potential impacts of the Westinghouse bankruptcy on the Lee Nuclear Station, as well as Duke Energy Carolinas' plans for cost recovery and additional financial information regarding the project. As part of its 2017 North Carolina Rate Case ~~discussed~~ above, ~~Duke Energy Carolinas is seeking NCUC approval to cancel~~and the balance of development costs associated with the cancellation of the Lee Nuclear ~~Station project due to the Westinghouse bankruptcy filing and other market activity and is requesting recovery of incurred licensing and development costs.~~Project. Finally, Duke Energy Carolinas ~~will maintain~~sought approval to establish a reserve and accrual for end-of-life nuclear costs for nuclear fuel and materials and supplies. On March 8, 2019, the ~~license issued~~ORS moved to establish a new and separate hearing docket to review and consider the GIP proposed by Duke Energy Carolinas. Subsequently, on March 12, 2019, the ORS and Duke Energy Carolinas executed a Stipulation resolving the ORS’s motion. The Stipulation provided that costs incurred for the GIP after January 1, 2019, would be deferred with a return, subject to evaluation in a future rate proceeding. The Stipulation was approved by the ~~NRC in~~PSCSC on June 19, 2019. On December ~~2016.~~16, 2019, Duke Energy Carolinas and Duke Energy Progress filed a Joint Petition to Establish an Informational Docket for Review and Consideration of Grid Improvement Plans through which Duke Energy Carolinas and Duke Energy Progress would provide interested stakeholders information on the companies' grid activities. The PSCSC requested parties comment on procedural matters by January 31, 2020; accordingly, various groups filed comments, none of which opposed an informational docket. Duke Energy Carolinas cannot predict the outcome of this matter.

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 commission 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. Initial briefs were filed on April 21, 2020. Response briefs and reply briefs are due July 6, 2020, and August 11, 2020, respectively. Also on April 21, 2020, the South Carolina Energy User's Committee filed a brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to the Lee Nuclear Station. Based on legal analysis and the filing of the appeal, Duke Energy Carolinas has not recorded an adjustment for its deferred coal ash costs. Duke Energy Carolinas cannot predict the outcome of this matter.

Duke Energy Progress

2017 North Carolina Rate Case

On June 1, 2017, Duke Energy Progress filed an application with the NCUC for a rate increase for retail customers of approximately $477 million, which ~~represents~~represented an approximate ~~14.9 percent~~14.9% increase in annual base revenues. Subsequent to the filing, Duke Energy Progress adjusted the requested amount to $420 million, representing an approximate 13% increase. The request for rate increase iswas driven by capital investments subsequent to the previous base rate case, costs of complying with CCR regulations and the Coal Ash Act, costs relating to storm recovery, investments in customer service technologies and recovery of costs associated with renewable purchased power. ~~Intervenors~~

On November 22, 2017, Duke Energy Progress 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 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.



FINANCIAL STATEMENTS	REGULATORY MATTERS

On May 15, 2018, the Public Staff filed a Notice of Cross Appeal to the North Carolina Supreme Court from the NCUC's February 23, 2018, order. The Public Staff contends the NCUC’s order should be reversed and remanded, as it is affected by errors of law, and is unsupported by competent, material and substantial evidence in view of the ~~case~~entire record as submitted. The North Carolina Attorney General and Sierra Club also filed ~~testimony in October 2017~~Notices of Appeal to the North Carolina Supreme Court from the February 23, 2018, order. On November 29, 2018, the North Carolina Attorney General's Office filed a motion with the North Carolina Supreme Court requesting the court consolidate the Duke Energy Progress and Duke Energy ~~Progress' responses are due November 6, 2017. An evidentiary hearing is scheduled to begin November 20, 2017.~~Carolinas appeals and enter an order adopting the parties’ proposed briefing schedule as set out in the filing. Appellant briefs were filed on April 26, 2019. The Appellee response briefs were filed on September 25, 2019. Oral arguments before the North Carolina Supreme Court were held on March 11, 2020. Duke Energy Progress cannot predict the outcome of this matter.

~~Storm Cost Deferral Filing~~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 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. The joint motion suggests, health and safety permitting, that the commission consider the possibility of holding the consolidated hearing in July. If the NCUC grants the joint motion, Duke Energy Progress expects the NCUC to issue an order on its net rate increase by the end of the year. 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. Approximately 270,000 North Carolina customers and 30,000 South Carolina customers were impacted by the slow-moving storm that brought high winds, tornadoes and heavy rain. With storm-response mobilization occurring in preparation for the storm and the assistance of mutual aid partners, full restoration was accomplished within four days for all customers able to receive service. Total estimated incremental operation and maintenance expenses incurred to repair and restore the system are approximately $177 million with an additional $4 million in capital investments made for restoration efforts. Approximately $151 million and $179 million of the operation and maintenance expenses are deferred in Regulatory assets within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of March 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. 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.

2018 South Carolina Rate Case

On November 8, 2018, Duke Energy Progress filed an application with the PSCSC for a rate increase for retail customers of approximately $59 million, which represented an approximate 10.3% increase in annual base revenues. The request for rate increase was driven by capital investments and environmental compliance progress made by Duke Energy Progress since its previous rate case, including the further implementation of Duke Energy Progress’ generation modernization program, which consists of retiring, replacing and upgrading generation plants, investments in customer service technologies and continued investments in base work to maintain its transmission and distribution systems. The request included a decrease resulting from the Tax Act of $17 million to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%. The request also included $10 million to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change (EDIT Rider) and a $12 million increase due to the expiration of EDITs related to reductions in North Carolina state income taxes allocable to South Carolina.

Duke Energy Progress also requested approval of its proposed GIP, approval of a Prepaid Advantage Program and a variety of accounting orders related to ongoing costs for environmental compliance, including recovery over a five-year period of $51 million of deferred coal ash related compliance costs, AMI deployment, grid investments between rate changes and regulatory asset treatment related to the retirement of a generating plant located in Asheville, North Carolina. Finally, Duke Energy Progress sought approval to establish a reserve and accrual for end-of-life nuclear costs for materials and supplies and nuclear fuel. On March 8, 2019, the ORS moved to establish a new and separate hearing docket to review and consider the GIP proposed by Duke Energy Progress. Subsequently, on March 12, 2019, the ORS and Duke Energy Carolinas executed a Stipulation resolving the ORS’s motion, and Duke Energy Progress agreed to the Stipulation, as did other parties in the rate case. The Stipulation provided that costs incurred for the GIP after January 1, 2019, would be deferred with a return, with all costs subject to evaluation in a future rate proceeding, and that Duke Energy Progress would refile for consideration of the GIP in a new docket for resolution by January 1, 2020. The Stipulation was approved by the PSCSC on June 19, 2019. On December 16, ~~2016,~~2019, Duke Energy Progress and Duke Energy Carolinas filed a Joint Petition to Establish an Informational Docket for Review and Consideration of Grid Improvement Plans through which Duke Energy Progress and Duke Energy Carolinas would provide interested stakeholders information on the companies' grid activities. The PSCSC requested parties comment on procedural matters by January 31, 2020; accordingly, various groups filed comments, none of which opposed an informational docket. Duke Energy Progress cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

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:

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%.

As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a ~~petition with~~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 ~~NCUC requesting an accounting order~~commission on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Progress' request to ~~defer~~rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, ~~incurred in connection with response to Hurricane Matthew~~return on equity and ~~other significant storms in 2016. The final estimate~~the recovery of ~~incremental~~a return on deferred operation and maintenance ~~and capital~~expenses, but allowing additional litigation-related costs. As a result of the Directive allowing litigation-related costs, ~~of $116 million~~customer rates were revised effective July 1, 2019. An order detailing the commission's decision in the Directive was ~~filed with the NCUC in September 2017. On March 15, 2017, the NCUC Public Staff filed comments supporting deferral of a portion of Duke Energy Progress’ requested amount.~~issued on October 18, 2019. Duke Energy Progress filed ~~reply comments~~a notice of appeal on ~~April~~November 15, 2019, with the Supreme Court of South Carolina. The ORS filed a Notice of Cross Appeal on November 20, 2019. On February 12, ~~2017. On July 10, 2017, the NCUC consolidated Duke Energy Progress' storm deferral request into the~~2020, Duke Energy Progress ~~rate case docket~~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. Initial briefs were filed on April 21, 2020. Response briefs and reply briefs are due July 6, 2020, and August 11, 2020, respectively. Based on legal analysis and the filing of the appeal, Duke Energy Progress has not recorded an adjustment for ~~decision. See "2017 North Carolina Rate Case" for additional discussion.~~its deferred coal ash costs. Duke Energy Progress cannot predict the outcome of this matter.

Western Carolinas Modernization Plan

On November 4, 2015, Duke Energy Progress announced a Western Carolinas Modernization Plan, which included retirement of the existing Asheville coal-fired plant, the construction of two 280‑MW combined-cycle natural gas plants having ~~dual fuel~~dual-fuel capability, with the option to build a third natural gas simple cycle unit in 2023 based upon the outcome of initiatives to reduce the region's power demand. The plan also included upgrades to existing transmission lines and substations, installation of solar generation and a pilot battery storage project. ~~These investments will be made within the next seven years.~~

Duke Energy Progress ~~is also working with~~retired the ~~local natural gas distribution company~~376-MW Asheville coal-fired plant on January 29, 2020, at which time the net book value, including associated ash basin closure costs, of $214 million was transferred from Generation facilities to ~~upgrade an existing natural gas pipeline~~be retired, net to ~~serve~~Regulatory assets within Current Assets and Other Noncurrent Assets on the ~~natural gas plant.~~Condensed Consolidated Balance Sheets.

On March 28, 2016, the NCUC issued an order approving a ~~CPCN~~Certificate of Public Convenience and Necessity (CPCN) for the new combined-cycle natural gas plants with an estimated cost of $893 million, but ~~denying the CPCN for the contingent simple cycle unit without prejudice to~~required Duke Energy Progress to refile for CPCN approval for the contingent simple cycle unit.

On December 27, 2019, Asheville Combined Cycle Power Block 1 and the common systems that serve both combined cycle units went into commercial operation. Power Block 1 consists of the Unit 5 Combustion Turbine and Unit 6 Steam Turbine Generator (which together form the first combined cycle unit approved in the ~~future.~~ CPCN Order). Power Block 2 consists of the Unit 7 Combustion Turbine and Unit 8 Steam Turbine Generator (which together form the second combined cycle unit approved in the CPCN Order). Duke Energy Progress placed the Unit 7 Combustion Turbine portion of Power Block 2 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 ~~March 28, 2017,~~October 8, 2018, Duke Energy Progress filed an ~~annual~~application with the NCUC for a CPCN to construct the Hot Springs Microgrid Solar and Battery Storage Facility. On March 22, 2019, Duke Energy Progress and the Public Staff filed a Joint Proposed Order. On May 10, 2019, the NCUC issued an Order Granting Certificate of Public Convenience and Necessity with Conditions. On November 19, 2019, Duke Energy Progress filed a semiannual progress report for ~~the construction of the combined-cycle plants with the~~its Hot Springs Microgrid Solar and Battery Storage Facility. As required by an NCUC ~~with~~order issued December 6, 2019, an ~~estimated cost of $893 million. Site preparation activities for the combined-cycle plants are underway and construction of these plants~~updated progress report was filed on January 15, 2020. An evidentiary hearing was held on March 5, 2020. Construction is ~~scheduled~~expected to begin in ~~2017,~~the second quarter of 2020 with ancommercial operation expected ~~in-service date~~to begin in ~~late 2019.~~ December 2020.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Duke Energy ~~Progress plans~~Florida

COVID-19 Filings

On March 1, 2020, Governor Ron DeSantis issued Executive Order No. 20-51 directing the State Health Officer of Florida to ~~file for future approvals~~declare a public health emergency in Florida related to the ~~proposed solar generation~~COVID-19 pandemic. The governor then issued a second Executive Order No. 20-52 on March 9, 2020, in which he declared a state of emergency in Florida and ~~pilot battery storage project.~~

~~The carrying value~~directed the Director of the ~~376-MW Asheville coal-fired plant, including associated ash basin closure~~Division of Emergency Management to implement the state’s Comprehensive Emergency Management Plan. The governor issued additional Executive Orders – Nos. 2020-68, 2020-69, 2020-71, 2020-72 and 2020-83 – in response to the ongoing health care emergency that, among other things, suspended the in-person public meeting requirements for state agencies and local governments and directed the state surgeon general to issue public health advisories to limit potential exposure to COVID-19, advising against gatherings of 10 or more persons. On March 19, 2020, Duke Energy Florida filed a request to modify its tariff to allow it to waive late fees for customers, and on April 6, 2020, the FPSC issued an order approving the request. Duke Energy Florida had already voluntarily waived reconnect fees and credit card fees, and is not disconnecting customers for nonpayment. On 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.

Storm Restoration Cost Recovery

In October 2018, Duke Energy Florida’s service territory suffered damage when Hurricane Michael made landfall as a Category 5 hurricane with maximum sustained winds of 160 mph. The storm caused catastrophic damage from wind and storm surge, particularly from Panama City Beach to Mexico Beach, resulting in widespread outages and significant damage to transmission and distribution facilities across the central Florida Panhandle. In response to Hurricane Michael, Duke Energy Florida restored service to approximately 72,000 customers. Total estimated incremental operation and maintenance and capital costs ~~of $405~~are $311 million. Approximately $106 million and ~~$492~~$107 million isof the costs are included in ~~Generation facilities to be retired, net~~Net property, plant and equipment on ~~Duke Energy Progress'~~the Condensed Consolidated Balance Sheets as of ~~September 30, 2017,~~March 31, 2020, and December 31, ~~2016,~~2019, respectively.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to~~ Approximately $205 million and $204 million of costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated ~~Financial Statements – (Unaudited) – (Continued)~~

Balance Sheets as of March 31, 2020, and December 31, 2019, respectively, representing recoverable costs under the FPSC’s storm rule and Duke Energy Florida's OATT formula rates.

Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover the retail portion of estimated incremental storm restoration costs for Hurricane Michael. On June 11, 2019, the FPSC approved the petition for recovery of estimated incremental storm restoration costs related to Hurricane Michael. The FPSC also approved the stipulation Duke Energy Florida filed, which will allow 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. An Order Establishing Procedure was issued on January 30, 2020, and hearings are scheduled to begin September 15, 2020. Duke Energy Florida cannot predict the outcome of this matter.

Hurricane ~~Irma Storm Damage~~Dorian

In September ~~2017, all of~~2019, Duke Energy Florida’s service territory was ~~impacted~~threatened by Hurricane ~~Irma, which caused~~Dorian with landfall as a possible Category 5 hurricane. For several days, various forecasts and models predicted significant damage, resulting in approximately 1.3 million customers experiencing outages. Total storm restoration costs, including capital, are currently estimated at approximately $500 million. These estimates could change asimpact to Duke Energy Florida’s service territory; accordingly, Duke Energy Florida ~~receives additional information on actual costs. After depleting any existing storm reserves, which~~incurred costs to secure necessary resources to be prepared for that potential impact. Although Hurricane Dorian never made landfall in Florida, its effects were ~~approximately $60 million before~~still felt, and outages did occur. Preparations were required so that, if Hurricane ~~Irma,~~Dorian had made landfall and impacts had been more severe, Duke Energy Florida ~~is permitted~~would have been prepared to petition the FPSC for recovery of additional incremental operation and maintenance costs resulting from the storm and to replenish the storm reserve to approximately $132 million for retail customers. Duke Energy Florida plans to make this petition by the end of 2017. At September 30, 2017, Duke Energy Florida's Condensed Consolidated Balance Sheets included approximately $400 million of recoverable costs under the FPSC's storm rulerestore its customers’ power in Regulatory assets within Other Noncurrent Assets related to deferred Hurricane Irma storm costs. This amount is in addition to the storm reserve replenishment discussed above as part of Duke Energy Florida's petition to the FPSC.

~~2017 Second Revised and Restated Settlement Agreement~~a timely fashion.

On October 25, 2017, the FPSC approved a 2017 Second Revised and Restated Settlement Agreement (2017 Settlement) filed by Duke Energy Florida. The 2017 Settlement replaces and supplants the Revised and Restated Stipulation and Settlement Agreement approved in November 2013 (2013 Settlement). The 2017 Settlement extends the base rate case stay-out provision from the 2013 Settlement through the end of 2021 unless actual or projected return on equity falls below 9.5 percent; however, Duke Energy Florida is allowed a multiyear increase to its base rates of $67 million per year inDecember 19, 2019, 2020 and 2021, as well as base rate increases for solar generation. In addition to carrying forward the provisions contained in the 2013 Settlement related to the Crystal River 1 and 2 coal units and future generation needs in Florida, the 2017 Settlement contains provisions related to future investments in solar and renewable energy technology, future investments in AMI technology as well as recovery of existing meters, impacts of potential tax reform, an electric vehicle charging station pilot program, as well as the termination of the proposed Levy Nuclear Project discussed below. As part of the 2017 Settlement, Duke Energy Florida will not move forward with building the Levy nuclear plant and recorded an pretax impairment charge of approximately $135 million in third quarter 2017 to write off all unrecovered Levy Nuclear Project costs, including the COL.

The 2017 Settlement includes provisions to recover 2017 under-recovered fuel costs of approximately $196 million over a 24-month period beginning in January 2018. On September 1, 2017, Duke Energy Florida submitted Alternate 2018 Fuel and Capacity clause projection filings consistent with the terms of the 2017 Settlement. The updated capacity filing reflects the removal of all Levy costs. The FPSC approved Duke Energy Florida's 2018 Alternate projection filings on October 25, 2017. A final order is expected by the end of 2017.

~~Levy Nuclear Project~~

On July 28, 2008, Duke Energy Florida applied to the NRC for COLs for two Westinghouse AP1000 reactors at Levy (Levy Nuclear Project). In 2008, the FPSC granted Duke Energy Florida’s petition for an affirmative Determination of Need and related orders requesting cost recovery under Florida’s nuclear cost-recovery rule, together with the associated facilities, including transmission lines and substation facilities. In October 2016, the NRC issued COLs for the proposed Levy Nuclear Plant Units 1 and 2. Duke Energy Florida is not required to build the nuclear reactors as a result of the COLs being issued.

On January 28, 2014, Duke Energy Florida terminated the Levy engineering, procurement and construction agreement (EPC). Duke Energy Florida may be required to pay for work performed under the EPC. Duke Energy Florida recorded an exit obligation in 2014 for the termination of the EPC. This liability was recorded within Other in Other Noncurrent Liabilities with an offset primarily to Regulatory assets on the Condensed Consolidated Balance Sheets. Duke Energy Florida is allowed to recover reasonable and prudent EPC cancellation costs from its retail customers. On May 1, 2017, Duke Energy Florida filed a request with the FPSC to recover approximately $82 million of Levy Nuclear Project costs from retail customers in 2018. As part of the 2017 Settlement discussed above, Duke Energy Florida is no longer seeking recovery of costs related to the Levy Nuclear Project and the ongoing Westinghouse litigation discussed in Note 5. All remaining Levy Nuclear Project issues have been resolved.

~~Hines Chiller Uprate Project~~

~~On February 2, 2017,~~ Duke Energy Florida filed a petition ~~seeking approval~~with the FPSC to recover $169 million, the estimated retail portion of these costs, consistent with the provisions in the 2017 Settlement. On February 24, 2020, the commission approved the request for recovery over a 12-month period with rates effective in March 2020 and subject to true up. The final actual amount will be filed later in 2020 and the FPSC will hold a hearing to determine the final amount of incremental costs. Duke Energy Florida cannot predict the outcome of this matter. Approximately $147 million and $167 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of March 31, 2020, and December 31, 2019, respectively, representing recoverable costs under the FPSC’s storm rule and Duke Energy Florida's OATT formula rates.

Solar Base Rate Adjustment

On July 31, 2018, Duke Energy Florida petitioned the FPSC to include in base rates the revenue ~~requirement~~requirements for ~~a Chiller Uprate~~its first two solar generation projects, the Hamilton Project ~~(Uprate Project) at~~and the ~~Hines Energy Complex.~~Columbia Project, as authorized by the 2017 Settlement. The ~~Uprate~~Hamilton Project, which was placed into service on December 22, 2018, had an annual retail revenue requirement of $15 million. At its October 30, 2018, Agenda Conference, the FPSC approved the rate increase related to the Hamilton Project to go into effect beginning with the first billing cycle in January 2019 under its file and suspend authority, and revised customer rates became effective in January 2019. On April 2, 2019, the commission approved both solar projects as filed. The Columbia Project, which has a projected annual revenue requirement of $14 million, was placed in service in March 2020 and revised customer rates became effective in April 2020.

On March 25, 2019, Duke Energy Florida petitioned the FPSC to include in base rates the revenue requirements for its next wave of solar generation projects, the Trenton, Lake Placid and DeBary Solar Projects, as authorized by the 2017 ~~at a cost of approximately $150 million.~~Settlement. The annual retail revenue requirement ~~is approximately $19 million.~~for the Trenton and Lake Placid Projects was $13 million and $8 million, respectively, and they were placed into service in December 2019 with rates taking effect in January 2020. The DeBary Project has a projected annual revenue requirement of $11 million and a projected in-service date in the second quarter of 2020. The associated rate increase would take place with the first month’s billing cycle after each solar generation project goes into service. On ~~March 28, 2017,~~July 22, 2019, the FPSC issued an order approving ~~the revenue requirement, which was included in base rates~~Duke Energy Florida's request.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Crystal River Unit 3 Accelerated Decommissioning Filing

On May 29, 2019, Duke Energy Florida entered into a Decommissioning Services Agreement for the ~~first billing cycle~~accelerated decommissioning of the Crystal River Unit 3 nuclear power station located in Citrus County, Florida, with ADP CR3, LLC and ADP SF1, LLC, each of which is a wholly owned subsidiary of Accelerated Decommissioning Partners, LLC, a joint venture between NorthStar Group Services, Inc. and Orano USA LLC. Closing of this agreement is contingent upon the approval of the U.S. Nuclear Regulatory Commission (NRC) and FPSC. If approved, the decommissioning will be accelerated starting in 2020 and continuing through 2027, rather than the expected time frame under SAFSTOR of starting in 2067 and ending in 2074. Duke Energy Florida expects that the assets of the Nuclear Decommissioning Trust Fund will be sufficient to cover the contract price. On July 10, 2019, Duke Energy Florida petitioned the FPSC for approval of the agreement. On April ~~2017.~~1, 2020, the NRC issued an order approving the license transfer application. Following the NRC order, on April 15, 2020, the FPSC issued its Second Order Modifying Order Establishing Procedure in which hearings are scheduled to begin July 7, 2020. Duke Energy Florida cannot predict the outcome of this matter.

Duke Energy Ohio

Duke Energy ~~Kentucky Rate Case~~Ohio COVID-19 Filing

~~On September 1, 2017,~~In response to the COVID-19 pandemic, on March 9, 2020, Governor Mike DeWine issued Executive Order No. 2020-01D declaring 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 ~~Kentucky~~Ohio has ceased all disconnections except for safety-related concerns and is waiving late payment and reconnection fees. On March 19, 2020, Duke Energy Ohio filed ~~a rate case~~its compliance plan with the ~~KPSC requesting~~PUCO and sought waiver of several regulations to minimize direct customer contact.

On April 16, 2020, Duke Energy Ohio filed an ~~increase~~application for a Reasonable Arrangement to temporarily lower the minimum bill for demand-metered commercial and industrial customers. The proposal is conditioned on full recovery via Duke Energy Ohio's existing Economic Competitiveness Fund Rider (Rider ECF), which has been used by Duke Energy Ohio in ~~electric base rates of approximately $49 million, which represents an approximate 15 percent increase on~~ the average customer bill. The rate increase is driven by increased investment in utility plant, increased operations and maintenance expenses, and recovery of regulatory assets. The application also includes implementationpast for other reasonable arrangements with customers. On April 24, 2020, the Staff of the Environmental Surcharge Mechanism to recover environmental costs not recovered in base rates, requests to establish a Distribution Capital Investment Rider to recover incremental costs of specific programs, requests to establish a FERC Transmission Cost Reconciliation Rider to recover escalating transmission costs and modification to the Profit Sharing Mechanism to increase customers' share of proceeds from the benefits of owning generation and to mitigate shareholder risks associated with that generation. The KPSC set filing deadlines of December 29, 2017, and February 14, 2018, for intervenor testimony and rebuttal testimony, respectively. An evidentiary hearing has not been scheduled.PUCO filed its recommendation finding Duke Energy ~~Kentucky anticipates~~Ohio’s application is reasonable and that ~~rates will go into effect in mid-April 2018.~~the PUCO should approve it. Duke Energy ~~Kentucky~~Ohio cannot predict the outcome of this matter.

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. The request seeks to use existing bad debts and 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. Duke Energy Ohio cannot predict the outcome of this matter.

~~PART I~~Duke Energy Kentucky COVID-19

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~In response to the COVID-19 pandemic, on March 6, 2020, Governor Andy Beshear issued Executive Order No. 2020-215 declaring 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 and reconnection 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. Duke Energy Kentucky had already voluntarily ceased all disconnections except for safety-related concerns and was waiving late payment and reconnection fees.

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

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 ~~electric security plan (ESP). If approved by~~ESP. On February 15, 2018, the procedural schedule was suspended to facilitate ongoing settlement discussions. On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this proceeding with several other cases pending before the PUCO, including, but not limited to, its Electric Base Rate Case. Additionally, on April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation and Recommendation (Stipulation) with the PUCO resolving certain issues in this proceeding. The term of the ESP would be from June 1, 2018, to May 31, ~~2024. Terms of the ESP include~~2025, and included continuation of market-based customer rates through competitive procurement processes for generation, continuation and expansion of existing rider mechanisms and proposed new rider mechanisms relating to regulatory mandates, costs incurred to enhance the customer experience and transform the grid and a service reliability rider for vegetation management. ~~Public hearings~~The Stipulation established a regulatory model for the next seven years via the approval of the ESP and continued the current model for procuring supply for non-shopping customers, including recovery mechanisms. On December 19, 2018, the PUCO approved the Stipulation without material modification. Several parties, including the Office of the Ohio Consumers' Counsel (OCC), filed applications for rehearing. On February 6, 2019, the PUCO granted the parties rehearing. The PUCO issued its Second Entry on Rehearing on July 17, 2019, upholding its December 19, 2018 order and denying all assignments of error raised by the non-stipulating parties. On October 11, 2019, the OCC filed its Third Application for Rehearing arguing the PUCO erred in finding OCC’s Second Application for Rehearing as improper. Duke Energy Ohio filed its Memorandum Contra on October 21, 2019. The PUCO denied OCC's Third Application for Rehearing as a matter of law. On September 13, 2019, Interstate Gas Supply/Retail Supply Association filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error because it approved unsupported charges to competitive suppliers and cost subsidies shopping customers pay for non-shopping customers. On September 16, 2019, the OCC filed an appeal challenging the PUCO’s approval of OVEC recovery through Duke Energy Ohio's Price Stability Rider (Rider PSR) alleging the FPA pre-empts the commission’s jurisdiction and that the record does not support finding that Rider PSR results in a limitation on shopping. Appellant briefs were ~~held in October 2017 and an evidentiary hearing~~filed on January 6, 2020. Appellee briefs were scheduled to ~~begin~~be filed on ~~November~~March 16, 2020. On March 13, ~~2017,~~2020, the Supreme Court of Ohio granted OCC's motion to withdraw its appeal related to OVEC recovery. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of PUCO's December 19, 2018 order approving the stipulation. The case has been ~~continued to November 28,~~resolved.



FINANCIAL STATEMENTS	REGULATORY MATTERS

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 ~~cannot predict~~requested an estimated annual increase of approximately $15 million and a return on equity of 10.4%. The application also included requests to continue certain current riders and establish new riders. On September 26, 2017, the ~~outcome of~~PUCO staff filed a report recommending a revenue decrease between approximately $18 million and $29 million and a return on equity between 9.22% and 10.24%. On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this ~~matter.~~

~~Woodsdale Station Fuel System Filing~~

proceeding with several other cases pending before the PUCO. On ~~June 9, 2015,~~April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed the ~~FERC ruled~~Stipulation with the PUCO resolving numerous issues including those in ~~favor of PJM Interconnection, LLC (PJM) on a revised Tariff and Reliability Assurance Agreement including implementation of a Capacity Performance (CP) proposal and to amend sections~~this base rate proceeding. Major components of the ~~Operating Agreement~~Stipulation related to ~~generation non-performance. The CP proposal includes performance-based penalties for non-compliance.~~the base distribution rate case included 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 ~~Kentucky is a Fixed Resource Requirement (FRR) entity,~~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 the company's ESP, and ~~therefore is subject~~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 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 ~~compliance standards through its FRR plans. A partial CP obligation will apply~~changes in revenue attributable to the Stipulation, Duke Energy ~~Kentucky~~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. Several parties, including the OCC, filed applications for rehearing. On February 6, 2019, the PUCO granted the parties rehearing. The PUCO issued its Second Entry on Rehearing on July 17, 2019, upholding its December 19, 2018 order and denying all assignments of error raised by the non-stipulating parties. On October 11, 2019, the OCC filed its Third Application for Rehearing arguing the PUCO erred in ~~the delivery year beginning June 1, 2019, with full compliance beginning June 1, 2020.~~finding OCC’s Second Application for Rehearing as improper. Duke Energy ~~Kentucky has developed strategies~~Ohio filed its Memorandum Contra on October 21, 2019. The PUCO denied OCC's Third Application for ~~CP compliance investments.~~Rehearing as a matter of law. On ~~May 31, 2017, Duke Energy Kentucky~~September 13, 2019, Interstate Gas Supply/Retail Supply Association filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error because it approved unsupported charges to competitive suppliers and cost subsidies shopping customers pay for non-shopping customers. On September 16, 2019, the OCC filed an ~~application with~~appeal challenging the ~~KPSC requesting authority to construct an ultra-low sulfur diesel backup fuel system for~~PUCO’s approval of OVEC recovery through Rider PSR alleging the ~~Woodsdale Station. The back-up fuel system is projected to cost approximately $55 million~~FPA pre-empts the commission’s jurisdiction and ~~if approved, is anticipated~~that the record does not support finding that Rider PSR results in a limitation on shopping. Appellant briefs were filed on January 6, 2020. Appellee briefs were scheduled to be ~~in service prior~~filed on March 16, 2020. On March 13, 2020, the Supreme Court of Ohio granted OCC's motion to withdraw its appeal related to OVEC recovery. On April 22, 2020, the ~~CP compliance deadline~~Supreme Court of ~~April 2019. Duke Energy Kentucky cannot predict~~Ohio dismissed all remaining appeals of PUCO's December 19, 2018 order approving the ~~outcome of this matter.~~stipulation. The case has been resolved.

Ohio Valley Electric Corporation

On March 31, 2017, Duke Energy Ohio filed for approval to adjust its existing ~~price stabilization rider (Rider PSR), which is currently set at zero dollars,~~Rider PSR to pass through net costs related to its contractual entitlement to capacity and energy from the generating assets owned by OVEC. ~~The filing seeks to adjust Rider PSR for OVEC costs subsequent to April 1, 2017.~~ Duke Energy Ohio ~~is seeking~~sought deferral authority for net costs incurred from April 1, 2017, until the new rates under Rider PSR ~~are~~were put into effect. ~~Various intervenors have filed motions to dismiss or stay the proceeding and~~On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this proceeding with several other cases currently pending before the PUCO. Also, 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. Several parties, including the OCC, filed applications for rehearing. On February 6, 2019, the PUCO granted the parties rehearing. The PUCO issued its Second Entry on Rehearing on July 17, 2019, upholding its December 19, 2018 order and denying all assignments of error raised by the non-stipulating parties. On October 11, 2019, the OCC filed its Third Application for Rehearing arguing the PUCO erred in finding OCC’s Second Application for Rehearing as improper. Duke Energy Ohio filed its Memorandum Contra on October 21, 2019. The PUCO denied OCC's Third Application for Rehearing as a matter of law. On September 13, 2019, Interstate Gas Supply/Retail Supply Association filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error because it approved unsupported charges to competitive suppliers and cost subsidies shopping customers pay for non-shopping customers. On September 16, 2019, the OCC filed an appeal challenging the PUCO’s approval of OVEC recovery through Rider PSR alleging the FPA pre-empts the commission’s jurisdiction and that the record does not support finding that Rider PSR results in a limitation on shopping. Appellant briefs were filed on January 6, 2020. Appellee briefs were scheduled to be filed on March 16, 2020. On March 13, 2020, the Supreme Court of Ohio granted OCC's motion to withdraw its appeal related to OVEC recovery. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of PUCO's December 19, 2018 order approving the stipulation. The case has ~~opposed these filings.~~been resolved.

On July 23, 2019, an Ohio bill was signed into law that became effective January 1, 2020. Among other things, the bill allows for recovery of prudently incurred costs, net of any revenues, for Ohio investor-owned utilities that are participants under the OVEC power agreement. The recovery shall be through a non-bypassable rider that is to replace any existing recovery mechanism approved by the PUCO and will remain in place through 2030. The amounts recoverable from customers will be subject to an annual cap, with incremental costs that exceed such cap eligible for deferral and recovery subject to review. See Note 13 for additional discussion of Duke Energy Ohio's ownership interest in OVEC. ~~Duke Energy Ohio cannot predict the outcome of this matter.~~

~~East Bend Coal Ash Basin Filing~~

On December 2, 2016, Duke Energy Kentucky filed with the KPSC a request for a CPCN for construction projects necessary to close and repurpose an ash basin at the East Bend facility as a result of current and proposed U.S. Environmental Protection Agency (EPA) regulations. Duke Energy Kentucky estimated a total cost of approximately $93 million in the filing and expects in-service date in the fourth quarter of 2018. On June 6, 2017, the KPSC approved the CPCN request.

~~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 has requested an estimated annual increase of approximately $15 million and a return on equity of 10.4 percent. The application also includes requests to continue certain current riders and establish new riders related to LED Outdoor Lighting Service and regulatory mandates. On September 26, 2017, the PUCO staff filed a report recommending a revenue decrease between approximately $18 million and $29 million and a return on equity between 9.22 percent and 10.24 percent. Objections to the staff report are due by November 9, 2017. Public hearings were held in late October and early November. An evidentiary hearing is scheduled to begin on December 11, 2017. Duke Energy Ohio cannot predict the outcome of this matter.

~~Natural Gas Pipeline Extension~~

Duke Energy Ohio is proposing to install a new natural gas pipeline in its Ohio service territory to increase system reliability and enable the retirement of older infrastructure. On January 20, 2017, Duke Energy Ohio filed an amended application with the Ohio Power Siting Board for approval of one of two proposed routes. A public hearing was held on June 15, 2017, and an adjudicatory hearing was scheduled to begin September 11, 2017. On August 24, 2017, an administrative law judge (ALJ) granted a request made by Duke Energy Ohio to delay the procedural schedule while it works through various issues related to the pipeline route. If approved, construction of the pipeline extension is expected to be completed before the 2020/2021 winter season. The proposed project involves the installation of a natural gas line and is estimated to cost approximately $110 million, excluding AFUDC.

~~Advanced Metering Infrastructure~~

On April 25, 2016, Duke Energy Kentucky filed with the KPSC an application for approval of a CPCN for the construction of advanced metering infrastructure. Duke Energy Kentucky estimates the $49 million project will take two years to complete. Duke Energy Kentucky also requested approval to establish a regulatory asset for the remaining book value of existing meter equipment and inventory to be replaced. Duke Energy Kentucky and the Kentucky attorney general entered into a stipulation to settle matters related to the application. On May 25, 2017, the KPSC issued an order to approve the stipulation with certain modifications. On June 1, 2017, Duke Energy Kentucky filed its acceptance of the modifications. Duke Energy Ohio has approximately $7 million included in Regulatory assets on its Condensed Consolidated Balance Sheets at September 30, 2017, for the book value of existing meter equipment.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~



FINANCIAL STATEMENTS	REGULATORY MATTERS

~~Accelerated Natural Gas Service Line Replacement Rider~~

On January 20, 2015, Duke Energy Ohio filed an application for approval of an accelerated natural gas service line replacement program (ASRP). Under the ASRP, Duke Energy Ohio proposed to replace certain natural gas service lines on an accelerated basis over a 10-year period. Duke Energy Ohio also proposed to complete preliminary survey and investigation work related to natural gas service lines that are customer owned and for which it does not have valid records and, further, to relocate interior natural gas meters to suitable exterior locations where such relocation can be accomplished. Duke Energy Ohio's projected total capital and operations and maintenance expenditures under the ASRP were approximately $240 million. The filing also sought approval of a rider mechanism (Rider ASRP) to recover related expenditures. Duke Energy Ohio proposed to update Rider ASRP on an annual basis. Intervenors opposed the ASRP, primarily because they believe the program is neither required nor necessary under federal pipeline regulation. On October 26, 2016, the PUCO issued an order denying the proposed ASRP. Duke Energy Ohio's application for rehearing of the PUCO decision was denied on May 17, 2017.

Energy Efficiency Cost Recovery

On March 28, 2014, Duke Energy Ohio filed an application for recovery of program costs, lost distribution revenue and performance incentives related to its energy efficiency and peak demand reduction programs. These programs are undertaken to comply with environmental mandates set forth in Ohio law. The PUCO approved Duke Energy Ohio’s application but found that Duke Energy Ohio was not permitted to use banked energy savings from previous years in order to calculate the amount of allowed incentive. This conclusion represented a change to the cost recovery mechanism that had been agreed upon by intervenors and approved by the PUCO in previous cases. The PUCO granted the applications for rehearing filed by Duke Energy Ohio and an intervenor. On January 6, 2016, Duke Energy Ohio and the PUCO Staff entered into a stipulation, pending the PUCO's approval, to resolve issues related to performance incentives and the PUCO Staff audit of 2013 costs, among other issues. In December 2015, based upon the stipulation, Duke Energy Ohio re-established approximately $20 million of the revenues that had been previously reversed. On October 26, 2016, the PUCO issued an order approving the stipulation without modification. ~~Intervenors requested a rehearing of the PUCO decision.~~ In December 2016, the PUCO granted athe intervenors request for rehearing for the purpose of further review. On April 10, 2019, the PUCO issued an Entry on Rehearing denying the rehearing applications. On February 26, 2020, the PUCO issued an order 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 Ohio law that eliminated Ohio's energy efficiency mandates. On March 27, 2020, Duke Energy Ohio ~~cannot predict~~filed an Application for Rehearing seeking clarification on the ~~outcome of this matter.~~final true-up and reconciliation process after 2020. On April 22, 2020, the PUCO granted rehearing for further consideration.

On June 15, 2016, Duke Energy Ohio filed an application for approval of a three-year energy efficiency and peak demand reduction portfolio of programs. A stipulation and modified stipulation were filed on December 22, 2016, and January 27, 2017, respectively. Under the terms of the stipulations, which included support for deferral authority of all costs and a cap on shared savings incentives, Duke Energy Ohio has offered its energy efficiency and peak demand reduction programs throughout 2017. On February 3, 2017, Duke Energy Ohio filed for deferral authority of its costs incurred in 2017 in respect of its proposed energy efficiency and peak demand reduction portfolio. ~~The PUCO staff and one intervenor have proposed a cap on both program costs and shared savings.~~ On September 27, 2017, the PUCO issued an order approving a modified stipulation. The modifications impose an annual cap of approximately $38 million on program costs and shared savings incentives combined, but allowed for Duke Energy Ohio to file for a waiver of costs in excess of the cap in 2017. The PUCO approved the waiver request for 2017 up to a total cost of $56 million. On ~~October 12,~~November 21, 2017, the PUCO granted Duke Energy Ohio's and intervenor's applications for rehearing of the September 27, 2017, order. On January 10, 2018, the PUCO denied the OCC's application for rehearing of the PUCO order granting Duke Energy Ohio's waiver request; however, a decision on Duke Energy Ohio's application for rehearing remains pending. Duke Energy Ohio cannot predict the outcome of this matter.

Natural Gas Pipeline Extension

Duke Energy Ohio is proposing to install 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 the pipeline development costs and construction activities will range from $163 million to $245 million in direct costs (excluding overheads and AFUDC). On January 20, 2017, Duke Energy Ohio filed an amended application with the Ohio Power Siting Board (OPSB) for approval of one of two proposed routes. A public hearing was held on June 15, 2017. In April 2018, Duke Energy Ohio filed a motion with OPSB to establish a procedural schedule and filed supplemental information supporting its application. On December 18, 2018, the OPSB established a procedural schedule that included a local public hearing on March 21, 2019. An evidentiary hearing began on April 9, 2019, and concluded on April 11, 2019. Briefs were filed on May 13, 2019, and reply briefs were filed on June 10, 2019. On November 21, 2019, the 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. Duke Energy Ohio filed a memorandum contra on January 2, 2020. On February 20, 2020, the OPSB denied the rehearing requests. Construction of the pipeline extension is expected to be completed before the 2021/2022 winter season. 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 April 16, 2020, several of the Joint Appellants filed a motion for a ~~waiver for recovery of costs incurred~~Stay asking the court to suspend the OPSB’s order. On April 27, 2020, Duke Energy Ohio and the OPSB each filed a motion in ~~2017 above~~opposition to the ~~annual cap.~~Stay. If the Stay is granted, Duke Energy Ohio cannot continue working during the appeal process. Duke Energy Ohio cannot predict the outcome of this matter.

2012 Natural Gas Rate Case/~~Manufactured Gas Plant~~MGP Cost Recovery

~~On November 13, 2013, the PUCO issued an order approving a settlement~~As part of ~~Duke Energy Ohio’s~~its 2012 natural gas base rate case, Duke Energy Ohio has approval to defer and ~~authorizing the~~recover costs related to environmental remediation at two sites (East End and West End) that housed former MGP operations. Duke Energy Ohio has made annual applications for recovery of these deferred costs. Duke Energy Ohio has collected approximately $55 million in environmental remediation costs between 2009 through 2012 through a separate rider, 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 rate case. To date, the PUCO has not ruled on Duke Energy Ohio’s annual applications for the calendar years 2013 through 2017. On September 28, 2018, the staff of the PUCO issued a report recommending a disallowance of approximately $12 million of the $26 million in MGP remediation costs incurred between ~~2008~~2013 through 2017 that staff believes are not eligible for recovery. Staff interprets the PUCO’s 2012 Order granting Duke Energy Ohio recovery of MGP remediation as limiting the recovery to work directly on the East End and ~~2012~~West End sites. On October 30, 2018, Duke Energy Ohio filed reply comments objecting to the staff’s recommendations and explaining, among other things, the obligation Duke 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. To date, the PUCO has not ruled on Duke Energy Ohio’s applications. On March 29, 2019, Duke Energy Ohio filed its annual application to recover incremental remediation expense for ~~environmental investigation~~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 began on November 18, 2019, and concluded on November 21, 2019. Initial briefs were filed on January 17, 2020, and reply briefs were filed on February 14, 2020. Duke Energy Ohio cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

On March 31, 2020, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2019 seeking recovery of ~~two former manufactured gas plant (MGP) sites.~~ approximately $39 million in remediation costs incurred during 2019. Duke Energy Ohio cannot predict the outcome of this matter.

The 2012 PUCO order also authorized Duke Energy Ohio to continue deferring MGP environmental investigation and remediation costs incurred subsequent to 2012 and to submit annual filings to adjust the MGP rider for future costs. Intervening parties appealed this decision to the Ohio Supreme Court and on June 29, 2017, the Ohio Supreme Court issued its decision affirming the PUCO order. Appellants filed a request for reconsideration, which was denied on September 27, 2017. This matter is now final.

~~The PUCO order also~~ contained conditional deadlines for completing the MGP environmental investigation and remediation costs at the MGP sites. ~~For~~Subsequent to the ~~property known as~~order, the ~~East End site, the PUCO order established a~~ deadline ~~of December 31, 2016, which~~ was ~~subsequently~~ extended to December 31, 2019. ~~In January 2017, intervening parties filed for rehearing of the PUCO's decision.~~ On February 8, 2017, the PUCO denied the rehearing request. As of September 30, 2017, Duke Energy Ohio had approximately $36 million included in Regulatory assets on the Condensed Consolidated Balance Sheets for future remediation costs expected to be incurred at the East End site.

~~Regional Transmission Organization Realignment~~

Duke Energy Ohio, including Duke Energy Kentucky, transferred control of its transmission assets from Midcontinent Independent System Operator, Inc. (MISO) to PJM, effective December 31, 2011. The PUCO approved a settlement related to Duke Energy Ohio’s recovery of certain costs of the Regional Transmission Organization (RTO) realignment via a non-bypassable rider. Duke Energy Ohio is allowed to recover all MISO Transmission Expansion Planning (MTEP) costs, including but not limited to Multi Value Project (MVP) costs, directly or indirectly charged to Ohio customers. Duke Energy Ohio also agreed to vigorously defend against any charges for MVP projects from MISO. 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.

Duke Energy Ohio had a recorded liability for its exit obligation and share of MTEP costs, excluding MVP, of $90 million at September 30, 2017, and December 31, 2016, recorded within Other in Current liabilities and Other in Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets. The retail portions of MTEP costs billed by MISO are recovered by Duke Energy Ohio through a non-bypassable rider. As of September 30, 2017, and December 31, 2016, Duke Energy Ohio had $71 million recorded in Regulatory assets on the Condensed Consolidated Balance Sheets.

~~MVP.~~ MISO approved 17 MVP proposals prior to Duke Energy Ohio’s exit from MISO on December 31, 2011. Construction of these projects is expected to continue through 2020. Costs of these projects, including operating and maintenance costs, property and income taxes, depreciation and an allowed return, are allocated and billed to MISO transmission owners.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

On December 29, 2011, MISO filed a tariff with the FERC providing for the allocation of MVP costs to a withdrawing owner based on monthly energy usage. The FERC set for hearing (i) whether MISO’s proposed cost allocation methodology to transmission owners who withdrew from MISO prior to January 1, 2012, is consistent with the tariff at the time of their withdrawal from MISO and, (ii) if not, what the amount of and methodology for calculating any MVP cost responsibility should be. In 2012, MISO estimated Duke Energy Ohio’s MVP obligation over the period from 2012 to 2071 at $2.7 billion, on an undiscounted basis. On July 16, 2013, a FERC ALJ issued an initial decision. Under this Initial Decision, Duke Energy Ohio would be liable for MVP costs.May 10, 2019, Duke Energy Ohio filed ~~exceptions to the initial decision,~~an application requesting ~~FERC to overturn the ALJ’s decision.~~

a continuation of its existing deferral authority for MGP remediation and investigation that must occur after December 31, 2019. On September 13, 2019, intervenor comments were filed opposing Duke Energy Ohio's request for continuation of existing deferral authority and on October ~~29, 2015, the FERC issued an order reversing the ALJ's decision. The FERC ruled the cost allocation methodology is not consistent with the MISO tariff and that~~2, 2019, Duke Energy Ohio ~~has no liability for MVP costs after its withdrawal from MISO. On May 19, 2016, the FERC denied the request for rehearing~~ filed by MISO and the MISO Transmission Owners. On July 15, 2016, the MISO Transmission Owners filed a petition for review with the U.S. Court of Appeals for the Sixth Circuit. On June 21, 2017, a three-judge panel affirmed FERC's 2015 decision holding thatreply comments. Duke Energy Ohio ~~has no liability for~~cannot predict the ~~cost~~outcome of ~~the MVP projects constructed after~~ this matter.

Duke Energy ~~Ohio's withdrawal from MISO. MISO did not file further petitions~~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, which represents an approximate 12.5% increase across all customer classes. The request for ~~review~~rate increase is driven by increased investment in utility plant since the last electric base rate case in 2017. Duke Energy Kentucky seeks to implement a Storm Deferral Mechanism that will enable Duke Energy Kentucky to defer actual costs incurred for major storms that are over or under amounts in base rates. In response to large customers’ desire to have access to renewable resources, Duke Energy Kentucky is proposing a Green Source Advantage tariff designed for those large customers that wish to invest in renewable energy resources to meet sustainability goals. Duke Energy Kentucky is proposing an electric vehicle (EV) infrastructure pilot and modest incentives to assist customers in investing in EV technologies. Additionally, Duke Energy Kentucky is proposing to build an approximate 3.4-MW distribution battery energy storage system to be attached to Duke Energy Kentucky’s distribution system providing frequency regulation and enhanced reliability to Kentucky customers. The commission issued a procedural schedule with two rounds of discovery and opportunities for intervenor and rebuttal testimony. The Kentucky Attorney General filed its testimony recommending an increase of approximately $26 million. On January 31, 2020, Duke Energy Kentucky filed rebuttal testimony updating its rate increase calculations to approximately $44 million. Hearings were held on February 19-20, 2020, with briefing 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. Duke Energy Kentucky is evaluating the order and whether to seek rehearing. Duke Energy Kentucky cannot predict the outcome of this ~~matter is now final.~~matter.

Duke Energy Indiana

~~Coal Combustion Residual Plan~~COVID-19

In response to the COVID-19 pandemic, on March 6, 2020, Governor Eric Holcomb issued Executive Order No. 20-02, which by law expired in 30 days unless extended, declaring a public health disaster emergency in the state of Indiana. On April 3, 2020, the governor then issued Executive Order No. 20-17 which renewed the public health disaster emergency declaration for an additional 30 days to May 5, 2020. On May 1, 2020, Executive Order No, 20-25 further renewed the public health disaster emergency an additional 30 days to June 4, 2020. All other Executive Orders issued since March ~~17, 2016,~~6, 2020, (Nos. 20-04 – 20-16) were renewed for the same 30-day period, provided they were supplements to Executive Order No. 20-02. Executive Order No. 20-05 was issued on March 19, 2020, requiring utilities in the state to suspend disconnections of utility service. Duke Energy Indiana had already voluntarily suspended all disconnections and is waiving late payment fees and check return fees. The utility is also waiving credit card fees for residential customers.

On May 8, 2020, Duke Energy Indiana, along with other Indiana utilities, filed a request with the IURC ~~a request~~ for approval of ~~its first group of federally mandated CCR rule compliance projects (Phase I CCR Compliance Projects) to comply~~deferral treatment for costs and revenue reductions associated with the ~~EPA's CCR rule.~~COVID-19 pandemic. The ~~projects~~utilities requested initial deferral approval in ~~this Phase I filing are CCR compliance projects, including~~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. The same day, the ~~conversion~~Indiana Office of ~~Cayuga~~Utility Consumer Counselor filed a petition asking the IURC to continue to suspend disconnections, allow the utilities accounting deferrals and ~~Gibson stations to dry bottom ash handling and related water treatment.~~require tacking of cost savings. Duke Energy Indiana ~~has requested timely recovery~~cannot predict the outcome of approximately $380 million in retail capital costs, including AFUDC, and recovery of incremental operating and maintenance costs under a federal mandate tracker that provides for timely recovery of 80 percent of such costs and deferral with carrying costs of 20 percent of such costs for recovery in a subsequent retail base rate case. thIs matter.

2019 Indiana Rate Case

On January 24, 2017, Duke Energy Indiana and various intervenors filed a settlement agreement with the IURC. Terms of the settlement include recovery of 60 percent of the estimated CCR compliance construction project capital costs through existing rider mechanisms and deferral of 40 percent of these costs until Duke Energy Indiana's next general retail rate case. The deferred costs will earn a return based on Duke Energy Indiana's long-term debt rate of 4.73 percent until costs are included in retail rates, at which time the deferred costs will earn a full return. Costs are to be capped at $365 million, plus actual AFUDC. Costs above the cap would be considered for recovery in the next rate case. Terms of the settlement agreement also require Duke Energy Indiana to perform certain reporting and groundwater monitoring. An evidentiary hearing was held on February 23, 2017, andJuly 2, 2019, Duke Energy Indiana filed a ~~proposed order~~general rate case with the IURC, ~~on March 30, 2017. On May 24, 2017, the IURC approved the settlement agreement.~~

~~FERC Transmission Return on Equity Complaints~~

~~Customer groups have filed with the FERC complaints against MISO~~its first general rate case in 16 years, for a rate increase for retail customers of approximately $395 million. The request for rate increase is driven by strategic investments to generate cleaner electricity, improve reliability and ~~its transmission-owning members, including~~serve a growing customer base. The request is premised upon a Duke Energy Indiana ~~alleging, among other things,~~rate base of $10.2 billion as of December 31, 2018, and adjusted for projected changes through December 31, 2020. On September 9, 2019, Duke Energy Indiana revised its revenue request from $395 million to $393 million and filed updated testimony for the Retail Rate Case. The updated filing reflects a clarification in the presentation of Utility Receipts Tax, a $2 million reduction in the revenue requirement for revenues that will remain in riders and changes to allocation of revenue requirements within rate classes. The Utility Receipts Tax is currently embedded in base rates and rider rates. The proposed treatment is to include the ~~current base~~Utility Receipts Tax as a line item on the customer bill rather than included in rates. The request is an approximate 15% increase in retail revenues and approximately 17% when including estimated Utility Receipts Tax. 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 ~~return~~the Utility Receipts Tax. Hearings concluded on ~~equity earned~~February 7, 2020, and rates are expected to be effective mid-2020. Duke Energy Indiana cannot predict the outcome of these matters.

The IURC determined to take two issues out of the rate case and place them in separate subdocket proceedings due to the complexity of the rate case. The commission moved the request for approval of an electric transportation pilot and future coal ash recovery issues to separate subdockets. Coal ash expenditures prior to 2019 are still included in the rate case. 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 ~~MISO transmission owners~~the Indiana Department of ~~12.38 percent~~Environmental Management as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing is ~~unjust~~scheduled to begin on September 14, 2020, and unreasonable. The complaints, among other things, claim that the current base rate of return on equity earned by MISO transmission owners should be reduced to 8.67 percent. On January 5, 2015, the FERC issued an order ~~accepting the MISO transmission owners' adder of 0.50 percent to the base rate of return on equity based on participation in an RTO subject to it being applied to a return on equity that~~ is ~~shown to be just and reasonable in the pending return on equity complaints. On December 22, 2015, the presiding FERC ALJ~~expected in the first complaint issued an Initial Decision in which the base rate of return on equity was set at 10.32 percent. On September 28, 2016, the Initial Decision in the first complaint was affirmed by FERC, but is subject to rehearing requests. On June 30, 2016, the presiding FERC ALJ in the second complaint issued an Initial Decision setting the base rate of return on equity at 9.70 percent. The Initial Decision in the second complaint is pending FERC review. On April 14, 2017, the U.S. Court of Appeals for the District of Columbia Circuit, in ~~Emera Maine v. FERC~~, reversed and remanded certain aspects of the methodology employed by FERC to establish rates of return on equity. This decision may affect the outcome of the complaints against Duke Energy Indiana. Duke Energy Indiana currently believes these matters will not have a material impact on its results of operations, cash flows and financial position.

~~Grid Infrastructure Improvement Plan~~

In June 2016, the IURC issued an order approving a settlement agreement among Duke Energy Indiana and certain parties related to a proposed grid infrastructure improvement plan. The settlement agreement included the removal of an AMI project and also provided for deferral accounting for depreciation and post-in-service carrying costs for AMI projects outside the plan. Duke Energy Indiana withdrew its request for a regulatory asset for current meters and will retain any savings associated with future AMI installation until the next retail base rate case, which is required to be filed prior to the end of the plan. During the third quarter of 2016, Duke Energy Indiana decided to implement the AMI project. This decision resulted in a pretax impairment charge related to existing or non-AMI meters of approximately $8 million for the three and nine months ended September 30, 2016, based in part on the requirement to file a base rate case in 2022 under the approved plan. As of September 30, 2017, Duke Energy Indiana's remaining net book value of non-AMI meters is approximately $43 million and will be depreciated through 2022. In the event that Duke Energy Indiana were to file a base rate case earlier than 2022, it would result in additional impairment charges.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~Benton County Wind Farm Dispute~~

On December 16, 2013, Benton County Wind Farm LLC (BCWF) filed a lawsuit against Duke Energy Indiana seeking damages for past generation losses totaling approximately $16 million alleging Duke Energy Indiana violated its obligations under a 2006 PPA by refusing to offer electricity to the market at negative prices. Damage claims continue to increase during times that BCWF is not dispatched. Under 2013 revised MISO market rules, Duke Energy Indiana is required to make a price offer to MISO for the power it proposes to sell into MISO markets and MISO determines whether BCWF is dispatched. Because market prices would have been negative due to increased market participation, Duke Energy Indiana determined it would not bid at negative prices in order to balance customer needs against BCWF's need to run. BCWF contends Duke Energy Indiana must bid at the lowest negative price to ensure dispatch, while Duke Energy Indiana contends it is not obligated to bid at any particular price, that it cannot ensure dispatch with any bid and that it has reasonably balanced the parties' interests. On July 6, 2015, the U.S. District Court for the Southern District of Indiana entered judgment against BCWF on all claims. BCWF appealed the decision and on December 9, 2016, the appeals court ruled in favor of BCWF. On June 30, 2017, the parties finalized a settlement agreement. Terms of the settlement included Duke Energy Indiana paying $29 million for back damages. Additionally, the parties agreed on the method by which the contract will be bid into the market in the future. Duke Energy Indiana recorded an obligation and a regulatory asset related to the settlement amount in fourth quarter 2016. The settlement amount was paid in June 2017. The IURC issued an order on September 27, 2017, approving recovery of the settlement amount through Duke Energy Indiana's fuel clause. The IURC order has been appealed to the Indiana Court of Appeals.2021. Duke Energy Indiana cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Piedmont

COVID-19 Filings

North Carolina

On March 10, 2020, Governor Roy Cooper issued Executive Order No. 116 declaring 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 19, 2020, Piedmont 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 Piedmont’s request on March 20, 2020.

South Carolina ~~Rate Stabilization Adjustment Filing~~

~~In June 2017,~~On March 13, 2020, Governor Henry McMaster issued Executive Order No. 2020-08 declaring 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 16, 2020, citing the governor’s letter, the ORS filed a request asking the PSCSC to grant waivers so that utilities could suspend disconnections of utility services for nonpayment. Piedmont supported such motion. 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 April 30, 2020, the ORS requested the PSCSC grant a waiver of the applicable regulations to allow customers the flexibility to obtain deferred payment plans longer than 6 months for past-due amounts. On May 5, 2020, Piedmont filed responsive comments stating that while utility bills will remain due, Piedmont does not plan to immediately reinstitute disconnection upon the expiration of the state of emergency and intends to work through a potential grace period as economic recovery begins. Piedmont also concurred with the observation of the ORS that reduced usage is impacting the fixed cost recovery and revenue assumptions included in rates. Those costs include not only ongoing operational and financing costs necessary to serve customers, but also the borrowings necessary to support extended payment arrangements that will be an important part of emerging from the COVID-19 pandemic. Piedmont will continue to track such costs, lost revenues and potential cost savings for future evaluation by the PSCSC.

Additionally, on May 8, 2020, the ORS filed a motion for the PSCSC to solicit comments from utilities and interested stakeholders regarding measures to be taken to mitigate impacts of COVID-19 on utility customers and require recordkeeping. In a detailed motion, the ORS specifically asked the PSCSC to: (1) solicit input from utilities regarding the temporary mitigation measures to address COVID-19; (2) request utilities to inform the PSCSC of the plans utilities have to return to normalized operations; (3) require utilities to track revenue impacts, incremental costs and savings related to COVID-19 and file the findings with the PSCSC ~~under the South Carolina Rate Stabilization Act its~~on a quarterly ~~monitoring report for the 12-month period ending March 31, 2017. The filing included a revenue deficiency calculation~~basis; and ~~tariff rates in order to permit Piedmont the opportunity to earn the rate of return on equity of 12.6 percent established in its last general rate case. On October 4, 2017,~~(4) include any other matters that the PSCSC ~~approved~~believes should be addressed. The ORS requests that such comments be filed within 30 days of a ~~settlement agreement between Piedmont and~~PSCSC order approving the ~~PSCSC Office of Regulatory Staff. Terms of the settlement included implementation of rates for the 12-month period beginning November 2017 with a return on equity of 10.2 percent.~~

~~North Carolina Integrity Management Rider Filings~~

In October 2017, Piedmont filed a petition under the Integrity Management Rider (IMR) mechanism to collect an additional $8.9 million in annual revenues, effective December 2017, based on the eligible capital investments closed to integrity and safety projects over the six-month period ending September 30, 2017.motion. Piedmont cannot predict the outcome of this matter.

Tennessee

On March 12, 2020, Governor Bill Lee issued Executive Order No. 14 declaring a state of emergency due to the COVID-19 pandemic. In ~~May 2017,~~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.

North Carolina Integrity Management Rider Filing

In April 2020, Piedmont filed a petition with the NCUC ~~approved, a petition~~ under the IMR mechanism to collect an additional ~~$11.6~~$15 million in annual revenues, effective June ~~2017,~~2020, based on the eligible capital investments closed to integrity and safety projects over the six-month period ending March 31, ~~2017.~~2020. Piedmont cannot predict the outcome of this matter.

Tennessee Integrity Management Rider Filing

In November 2019, Piedmont filed a petition with the TPUC under the IMR mechanism to collect an additional $2 million in annual revenues, effective January 2020, based on the eligible capital investments closed to integrity and safety projects over the 12-month period ending October 31, 2019. An evidentiary hearing occurred on May 11, 2020. Upon approval from the TPUC, the revenue adjustment will be implemented, retroactive to January 2020. Piedmont cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

OTHER REGULATORY MATTERS

Atlantic Coast Pipeline, LLC

On September 2, 2014, Duke Energy, Dominion ~~Resources~~Energy, Inc. (Dominion), Piedmont and Southern Company Gas announced the formation of Atlantic Coast Pipeline, LLC (ACP) to build and own the proposed Atlantic Coast Pipeline (ACP pipeline), an approximately 600-mile interstate natural gas pipeline running from West Virginia to North Carolina. The ACP pipeline is designed to meet, in part, the needs identified by Duke Energy Carolinas, Duke Energy Progress and Piedmont. ~~The ACP pipeline development costs are estimated between $5.0 billion to $5.5 billion, excluding financing costs.~~ Dominion will ~~build~~be responsible for building and ~~operate~~operating the ACP pipeline and holds a leading ownership percentage in ACP of ~~48 percent.~~53%, following the purchase in March 2020 of Southern Company Gas' 5% ownership interest. Duke Energy owns a ~~47 percent~~47% interest, which is accounted for as an equity method investment through its Gas Utilities and Infrastructure segment. ~~Southern Company Gas maintains a 5 percent interest.~~ See Note 1311 for additional information related to Duke Energy's ownership interest.

Duke Energy Carolinas, Duke Energy Progress and Piedmont, among others, will be customers of the pipeline. Purchases will be made under several 20-year supply contracts, subject to state regulatory approval. ~~On September 18, 2015, ACP filed an application with~~

In 2018, the FERC requesting a CPCN authorizing ACP to construct the pipeline. ACP executed a construction agreement in September 2016. ACP also requested approval of an open access tariff and the precedent agreements it entered into with future pipeline customers. In December 2016, FERC issued a ~~draft Environmental Impact Statement (EIS) indicating that~~series of Notices to Proceed, which authorized the ~~proposed~~project to begin certain construction-related activities along the pipeline ~~would not cause significant harm to the environment or protected populations. The~~route, including supply header and compressors. On May 11, 2018, and October 19, 2018, FERC issued Notices to Proceed allowing full construction activities in all areas of West Virginia except in the ~~final EIS~~Monongahela National Forest. On July 24, 2018, FERC issued a Notice to Proceed allowing full construction activities along the project route in ~~July 2017.~~North Carolina. On October ~~13, 2017, FERC issued an order approving~~19, 2018, the ~~CPCN, subject~~conditions to ~~conditions. On October 16, 2017,~~effectiveness of the Virginia 401 water quality certification were satisfied and, following receipt of the Virginia 401 certification, ACP ~~accepted the FERC order subject to reserving its right to file~~filed a request for ~~rehearing or clarification on~~FERC to issue a ~~timely basis. Construction is projected~~Notice to ~~begin~~Proceed with full construction activities in ~~the fourth quarter of 2017, with a targeted in-service date in late 2019. The project remains subject~~Virginia. Due to ~~other pending federal and state approvals.~~

~~Sabal Trail Transmission, LLC~~

On May 4, 2015, Duke Energy acquired a 7.5 percent ownership interest in Sabal Trail Transmission, LLC (Sabal Trail) from Spectra Energy Partners, LP, a master limited partnership, formed by Enbridge Inc. (formerly Spectra Energy Corp.). Spectra Energy Partners, LP holds a 50 percent ownership interest in Sabal Trail and NextEra Energy has a 42.5 percent ownership interest. Sabal Trail is a joint venture to construct a 515-mile natural gas pipeline (Sabal Trail pipeline) to transport natural gas to Florida. Total estimated project costs are approximately $3.2 billion. The Sabal Trail pipeline traverses Alabama, Georgia and Florida. The primary customers of the Sabal Trail pipeline, Duke Energy Florida and Florida Power & Light Company (FP&L), have each contracted to buy pipeline capacity for 25-year initial terms. See Note 13 for additional informationlegal challenges not directly related to ~~Duke Energy's ownership interest.~~

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~On February 3, 2016, the FERC issued an order granting~~ the request for a ~~CPCN~~Notice to ~~construct~~Proceed in Virginia, this request is still pending.

ACP is the subject of challenges in state and ~~operate~~federal courts and agencies, including, among others, challenges of the ~~pipeline. On September 7, 2016,~~project’s biological opinion (BiOp) and incidental take statement (ITS), crossings of the Blue Ridge Parkway, the Appalachian Trail, and the Monongahela and George Washington National Forests, the project’s U.S. Army Corps of Engineers (USACE) 404 permit, the project's air permit for a compressor station at Buckingham, Virginia, the FERC ~~denied~~Environmental Impact Statement order and the ~~intervenors' rehearing requests. On September 21, 2016, intervenors filed an appeal~~FERC order approving the Certificate of ~~FERC's CPCN orders~~Public Convenience and Necessity. Each of these challenges alleges non-compliance on the part of federal and state permitting authorities and adverse ecological consequences if the project is permitted to proceed. Since December 2018, notable developments in these challenges include a stay in December 2018 issued by the U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit) and the same court's July 26, 2019, vacatur of the project's BiOp and ITS (which stay and subsequent vacatur halted most project construction activity), a Fourth Circuit decision vacating the project's permits to cross the Monongahela and George Washington National Forests and the Appalachian Trail, the Fourth Circuit's remand to USACE of ACP's Huntington District 404 verification, the Fourth Circuit’s remand to the National Park Service of ~~Columbia Circuit. On August 22, 2017,~~ACP’s Blue Ridge Parkway right-of-way and the ~~appeals court ruled against FERC~~most recent vacatur of the air permit for a compressor station at Buckingham, Virginia. ACP is vigorously defending these challenges and coordinating with the federal and state authorities which are the direct parties to the challenges. The Solicitor General of the United States and ACP filed petitions for certiorari to the Supreme Court of the United States on June 25, 2019, regarding the Appalachian Trail crossing and certiorari was granted on October 4, 2019. The Supreme Court hearing took place on February 24, 2020, and a ruling is expected in the ~~case~~second quarter of 2020.

In anticipation of the Fourth Circuit's vacatur of the BiOp and ITS, ACP and the FWS commenced work in mid-May of 2019 to set the basis for ~~failing to include enough information on the impact of greenhouse-gas emissions carried by the pipeline~~a reissued BiOp and ~~vacated the CPCN order. In response to the August 2017 court decision,~~ITS. On February 10, 2020, the FERC issued a ~~draft Supplemental Environmental Impact Statement (SEIS)~~letter to FWS requesting the re-initiation of formal consultation in support of reissuing the BiOp and ITS, and on ~~September 27,~~April 14, 2020, ACP submitted the Biological Assessment, which may form the foundation for FWS' BiOp. ACP continues coordinating and working with FWS and other parties in preparation for a reissuance of the BiOp and ITS.

ACP triggered the Adverse Government Actions (AGA) clause of its agreements with its customers in December 2019. Formal negotiations have resulted in agreement on material terms, such as updated pricing and construction milestones. The modified customer agreements are expected to be executed by the third quarter of 2020.

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 (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 FWS and/or National Marine Fisheries Service prior to NWP 12’s reissuance in 2017. ~~Comments~~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. ACP is reviewing the potential impact of this ruling to its own reliance on NWP 12 for small water body crossings along the pipeline route, as well as potential mitigation measures.

Given the legal challenges and ongoing discussions with customers, ACP expects the project to enter full in-service in the first half of 2022.

The delays resulting from the legal challenges described above have also impacted the cost for the project. Project cost is approximately $8 billion, excluding financing costs. This estimate is based on the ~~SEIS are~~current facts available around construction costs and timelines, and is subject to future changes as those facts develop. Abnormal weather, work delays (including delays due ~~by November 20, 2017. On October 6, 2017, FERC filed a petition with the D.C. Circuit Court of Appeals requesting a rehearing regarding the court's decision~~ to ~~vacate the CPCN order. On October 6, 2017, Sabal Trail~~judicial or regulatory action or COVID-19 social distancing) and other ~~natural gas shippers, including~~conditions may result in cost or schedule modifications, a suspension of AFUDC for ACP and/or impairment charges potentially material to Duke Energy's cash flows, financial position and results of operations.

Duke Energy’s investment in ACP was $1.2 billion at March 31, 2020. Duke Energy ~~Florida, also filed a rehearing request with the D.C. Circuit Court of Appeals regarding the decision to vacate the CPCN order. It is unclear how~~evaluated this ~~matter will impact the project going forward. The Sabal Trail pipeline has received other required regulatory approvals~~investment for impairment at March 31, 2020, and ~~the phase one mainline~~December 31, 2019, and determined that fair value approximated carrying value and therefore no impairment was ~~placed in service in July 2017. On October 12, 2017, Sabal Trail filed a request with FERC to place in-service a lateral line to~~necessary. Duke Energy ~~Florida's Citrus County Combined Cycle~~also has a guarantee agreement supporting its share of the ACP revolving credit facility. Duke Energy’s maximum exposure to loss under the terms of the guarantee is $845 million, which represents 47% of the outstanding borrowings under the credit facility as of March 31, 2020. See Note 13 for additional information.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Constitution Pipeline Company, LLC

Duke Energy ~~has~~owned a ~~24 percent~~24% ownership interest in Constitution, ~~Pipeline Company, LLC (Constitution).~~which was accounted for as an equity method investment. Constitution iswas a natural gas pipeline project slated to transport natural gas supplies from the Marcellus supply region in northern Pennsylvania to major northeastern markets. The pipeline ~~will~~was to be constructed and operated by Williams Partners L.P., which ~~has~~had a ~~41 percent~~41% ownership share. The remaining interest iswas held by Cabot Oil and Gas Corporation and WGL Holdings, Inc. ~~Duke Energy's total anticipated contributions are approximately $229 million.~~

~~On April 22, 2016, the New York State Department of Environmental Conservation (NYSDEC) denied Constitution’s application for a necessary water quality certification for the New York portion of the~~In December 2014, Constitution pipeline. Constitution filed legal actions in the U.S. Court of Appeals for the Second Circuit (U.S. Court of Appeals) challenging the legality and appropriateness of the NYSDEC’s decision and on August 18, 2017, the petition was denied in part and dismissed in part. On September 1, 2017, Constitution filed a petition for a rehearing of portions of the decision unrelated to the water quality certification, which was denied by the U.S. Court of Appeals. On October 11, 2017, Constitution filed a petition for declaratory order withreceived approval from the FERC ~~requesting FERC~~ to ~~issue an order finding~~construct and operate the NYSDEC waived its rights to issue a water quality certification by not acting on Constitution's application within the time frame required by statute, which would allow the project to proceed. Constitution has revised the target in-service date to as early as the first half of 2019 due to the NYDSEC's denial of the water quality certification and the legal actions being taken to challenge the decision, assuming the timely receipt of a Notice to Proceed from the FERC. Duke Energy cannot predict the outcome of this matter.

~~Since~~proposed pipeline. However, since April 2016, ~~with the actions of the NYSDEC,~~ Constitution had stopped construction and discontinued capitalization of future development costs ~~until the project's uncertainty is resolved. To the extent the legal~~due to permitting delays and adverse rulings by regulatory ~~proceedings have unfavorable outcomes, or if~~agencies and courts.

In late 2019, Constitution ~~concludes~~determined that its principal shipper would not agree to an amended precedent agreement. Without such an amendment, the project ~~is not~~would no longer be viable ~~or does not go forward, an impairment charge~~and, as of upFebruary 5, 2020, the Constitution partners formally resolved to initiate the ~~recorded investment in~~dissolution of Constitution, and to terminate the ~~project, net of any cash and working capital returned, may be recorded.~~

Constitution Pipeline project. See Note 1311 for additional information related to ownership interest and carrying value of the investment. Williams Partners L.P., as project Operator, is currently working to liquidate the project's assets.

Potential Coal Plant Retirements

The Subsidiary Registrants periodically file ~~Integrated Resource Plans (IRP)~~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. ~~Recent~~ IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in North Carolina ~~Florida~~ and Indiana earlier than their current estimated useful lives. Duke Energy continues to evaluate the potential need to retire these coal-fired generating facilities earlier than the current estimated useful lives ~~primarily because facilities do~~and plans to seek regulatory recovery for amounts that would not ~~have the requisite emission control equipment to meet EPA regulations recently approved or proposed.~~be otherwise recovered when any of these assets are retired.

The table below contains the net carrying value of generating facilities planned for retirement or included in recent IRPs as evaluated for potential retirement. Dollar amounts in the table below are included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of ~~September 30, 2017,~~March 31, 2020, 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
Allen Steam Station Units 1-3^(a)	585	$	164	585	$	149
Progress Energy and Duke Energy Florida
Crystal River Units 1 and 2^(b)	873	111
Duke Energy Indiana
Gallagher Units 2 and 4^(c)	280	130
Gallagher Units 2 and 4^(b)				280	118
Gibson Units 1-5^(c)				3,132	1,708
Cayuga Units 1-2^(c)				1,005	964
Total Duke Energy	1,738	$	405	5,002	$	2,939


(a)	Duke Energy Carolinas will retire Allen Steam Station Units 1 through 3 by December 31, 2024, as part of the resolution of a lawsuit involving alleged New Source Review violations.


(b)	Duke Energy ~~Florida will likely retire these coal units by 2018 to comply with environmental regulations.~~


~~(c)~~	~~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.

~~Refer to the "Western Carolinas Modernization Plan" discussion above for details~~


(c)	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. The rate case filed July 2, 2019, includes proposed depreciation rates reflecting retirement dates from 2026 to 2038.

Duke Energy ~~Progress' planned retirements.~~

continues to evaluate the potential need to retire generating facilities earlier than the current estimated useful lives, and plans to seek regulatory recovery, as necessary, for amounts that would not be otherwise recovered when any of these assets are retired. However, such recovery, including recovery of carrying costs on remaining book values, could be subject to future approvals and therefore cannot be assured.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to~~Duke Energy Carolinas and Duke Energy Progress are evaluating the potential for coal-fired generating unit retirements with a net carrying value of approximately $707 million and $1.2 billion, respectively, included in Net property, plant and equipment on the Condensed Consolidated ~~Financial Statements – (Unaudited) – (Continued)~~Balance Sheets as of March 31, 2020.

5.4. COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL

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, imposing new obligations on the Duke Energy Registrants. The following environmental matters impact all ~~of the~~ Duke Energy Registrants.



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

Remediation Activities

In addition to ~~asset retirement obligations (ARO)~~AROs recorded as a result of various environmental regulations, 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 on the Condensed Consolidated Statements of Operations unless regulatory recovery of the costs is deemed probable.

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 Accounts Payable within Current Liabilities and Other within Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets.


	Nine Months Ended September 30, 2017																						Three Months Ended March 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)	Energy			Carolinas			Energy			Progress		Florida			Ohio			Indiana			Piedmont		Energy			Carolinas			Energy			Progress		Florida		Ohio			Indiana		Piedmont
Balance at beginning of period	$	98		$	10		$	18		$	3	$	14		$	59		$	10		$	1	$	58		$	11		$	16		$	4	$	9	$	19		$	4	$	8
Provisions/adjustments	(1		)	2			1			—		1			(3		)	(2		)	1		3			—			—			1		—		1			1		—
Cash reductions	(13		)	(2		)	(3		)	—		(3		)	(7		)	(1		)	—		(3		)	(1		)	(1		)	—		—		(1		)	—		—
Balance at end of period	$	84		$	10		$	16		$	3	$	12		$	49		$	7		$	2	$	58		$	10		$	15		$	5	$	9	$	19		$	5	$	8

Nine Months Ended September 30, 2016
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Balance at beginning of period $ 94
$ 10
$ 17
$ 3
$ 14
$ 54
$ 12
$ 1
Provisions/adjustments 34
5
5
2
3
6
20
—
Cash reductions (12 ) (4 ) (6 ) (2 ) (4 ) (1 ) (2 ) —
Balance at end of period $ 116
$ 11
$ 16
$ 3
$ 13
$ 59
$ 30
$ 1

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 in the table below.



(in millions)
Duke Energy	$	58
Duke Energy Carolinas	11
Duke Energy Ohio	41
Piedmont	2

(in millions)
Duke Energy $ 58
Duke Energy Carolinas 20
Duke Energy Ohio 30
Duke Energy Indiana 3
Piedmont 2

~~North Carolina and South Carolina Ash Basins~~

In February 2014, a break in a stormwater pipe beneath an ash basin at Duke Energy Carolinas’ retired Dan River Steam Station caused a release of ash basin water and ash into the Dan River. Duke Energy Carolinas estimates 30,000 to 39,000 tons of ash and 24 million to 27 million gallons of basin water were released into the river. In July 2014, Duke Energy completed remediation work identified by the EPA. Future costs related to the Dan River release, including future civil enforcement, future regulatory directives, natural resources damages, future claims or litigation and long-term environmental impact costs, cannot be reasonably estimated at this time.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

The North Carolina Department of Environmental Quality (NCDEQ) has historically assessed Duke Energy Carolinas and Duke Energy Progress with Notices of Violations (NOV) for violations that were most often resolved through satisfactory corrective actions and minor, if any, fines or penalties. Subsequent to the Dan River ash release, Duke Energy Carolinas and Duke Energy Progress have been served with a higher level of NOVs, including assessed penalties for violations at L.V. Sutton Combined Cycle Plant (Sutton) and Dan River Steam Station. Duke Energy Carolinas and Duke Energy Progress cannot predict whether the NCDEQ will assess future penalties related to existing unresolved NOVs and if such penalties would be material. See "NCDEQ Notices of Violation" section below for additional discussion.

LITIGATION

~~Duke Energy~~

Duke Energy no longer has exposure to litigation matters related to the International Disposal Group as a result of the divestiture of the business in December 2016. See Note 2 for additional information related to the sale of International Energy.

~~Ash Basin Shareholder Derivative Litigation~~

Five shareholder derivative lawsuits were filed in Delaware Chancery Court related to the release at Dan River and to the management of Duke Energy’s ash basins. On October 31, 2014, the five lawsuits were consolidated in a single proceeding titled ~~In Re Duke Energy Corporation Coal Ash Derivative Litigation~~. On December 2, 2014, plaintiffs filed a Corrected Verified Consolidated Shareholder Derivative Complaint (Consolidated Complaint). The Consolidated Complaint names as defendants several current and former Duke Energy officers and directors (collectively, the Duke Energy Defendants). Duke Energy is named as a nominal defendant.

The Consolidated Complaint alleges the Duke Energy Defendants breached their fiduciary duties by failing to adequately oversee Duke Energy’s ash basins and that these breaches of fiduciary duty may have contributed to the incident at Dan River and continued thereafter. The lawsuit also asserts claims against the Duke Energy Defendants for corporate waste (relating to the money Duke Energy has spent and will spend as a result of the fines, penalties and coal ash removal) and unjust enrichment (relating to the compensation and director remuneration that was received despite these alleged breaches of fiduciary duty). The lawsuit seeks both injunctive relief against Duke Energy and restitution from the Duke Energy Defendants. On April 22, 2016, plaintiffs filed an Amended Verified Consolidated Shareholder Derivative Complaint (Amended Complaint) making the same allegations as in the Consolidated Complaint. The Duke Energy Defendants filed a motion to dismiss the Amended Complaint on June 21, 2016. On December 14, 2016, the Delaware Chancery Court entered an order dismissing the Amended Complaint. Plaintiffs filed an appeal to the Delaware Supreme Court on January 9, 2017. Oral argument was held on September 27, 2017, and a decision is pending.

On October 30, 2015, shareholder Saul Bresalier filed a shareholder derivative complaint (Bresalier Complaint) in the U.S. District Court for the District of Delaware. The lawsuit alleges that several current and former Duke Energy officers and directors (Bresalier Defendants) breached their fiduciary duties in connection with coal ash environmental issues, the post-merger change in Chief Executive Officer (CEO) and oversight of political contributions. Duke Energy is named as a nominal defendant. The Bresalier Complaint contends that the appointed Demand Review Committee failed to appropriately consider the shareholder’s earlier demand for litigation and improperly decided not to pursue claims against the Bresalier Defendants. On March 30, 2017, the court granted Defendants’ Motion to Dismiss on the claims relating to coal ash environmental issues and political contributions. As discussed below, a settlement agreement was approved for the merger-related claims in the Bresalier Complaint, and those claims were dismissed. On September 8, 2017, Bresalier filed a notice of appeal to the U.S. Court of Appeals for the Third Circuit (Third Circuit Court) challenging the dismissal of his coal ash and political contribution claims. Pursuant to a scheduling order issued by the Third Circuit Court, briefing will be complete on December 20, 2017.

~~It is not possible to predict whether Duke Energy will incur any liability or to estimate the damages, if any, it might incur in connection with these matters.~~

~~Progress Energy Merger Shareholder Litigation~~

On May 31, 2013, the Delaware Chancery Court consolidated four shareholder derivative lawsuits filed in 2012. The Court also appointed a lead plaintiff and counsel for plaintiffs and designated the case as ~~In Re Duke Energy Corporation Derivative Litigation~~ (Merger Chancery Litigation). The lawsuit names as defendants the Legacy Duke Energy Directors. Duke Energy is named as a nominal defendant. The case alleges claims for breach of fiduciary duties of loyalty and care in connection with the post-merger change in CEO.

~~Two shareholder Derivative Complaints, filed in 2012 in federal district court in Delaware, were consolidated as~~ ~~Tansey v. Rogers, et al.~~ The case alleges claims against the Legacy Duke Energy Directors for breach of fiduciary duty and waste of corporate assets, as well as claims under Section 14(a) and 20(a) of the Exchange Act. Duke Energy is named as a nominal defendant. On December 21, 2015, Plaintiff filed a Consolidated Amended Complaint asserting the same claims contained in the original complaints.

~~The Legacy Duke Energy Directors reached an agreement-in-principle to settle the Merger Chancery Litigation, conditioned on dismissal as well, of the~~ ~~Tansey v. Rogers, et al~~ case and the merger-related claims in the Bresalier Complaint discussed above, which was approved by the Delaware Chancery Court on July 13, 2017. The entire settlement amount was funded by insurance. The settlement amount, less court-approved attorney fees, totaled $20 million and was paid to Duke Energy in third quarter 2017.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~Price Reporting Cases~~

Duke Energy Trading and Marketing, LLC (DETM), a non-operating Duke Energy affiliate, was a defendant, along with numerous other energy companies, in four class-action lawsuits and a fifth single-plaintiff lawsuit in a consolidated federal court proceeding in Nevada. Each of these lawsuits contained similar claims that defendants allegedly manipulated natural gas markets by various means, including providing false information to natural gas trade publications and entering into unlawful arrangements and agreements in violation of the antitrust laws of the respective states. Plaintiffs sought damages in unspecified amounts. In February 2016, DETM reached agreements in principle to settle all of the pending lawsuits. Settlement of the single-plaintiff settlement was finalized and paid in March 2016. The proposed settlement of the class action lawsuits was approved by the Court and all settlement amounts, which are not material to Duke Energy, have been paid.

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 North Carolina Superior 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 South Carolina. Despite a stay of the litigation from May 2019 through September 2019 to allow the parties to discuss potential resolution, no resolution was reached, and litigation resumed. In February and March 2020, the court heard arguments on numerous cross motions filed by the parties to seek legal determinations concerning several insurance related defenses raised by the insurance providers. Trial is scheduled for February 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

~~NCDEQ State Enforcement Actions~~

~~In the first quarter of 2013, the Southern Environmental Law Center (SELC) sent notices of intent to sue~~ Duke Energy Carolinas and Duke Energy Progress related to alleged Clean Water Act (CWA) violations from coal ash basins at two of their coal-fired power plants in North Carolina. The NCDEQ filed enforcement actions against Duke Energy Carolinas and Duke Energy Progress alleging violations of water discharge permits and North Carolina groundwater standards. The cases have been consolidated and are being heard before a single judge in the North Carolina Superior Court.

On August 16, 2013, the NCDEQ filed an enforcement action against Duke Energy Carolinas and Duke Energy Progress related to their remaining plants in North Carolina, alleging violations of the CWA and violations of the North Carolina groundwater standards. Both of these cases have been assigned to the judge handling the enforcement actions discussed above. SELC is representing several environmental groups who have been permitted to intervene in these cases.

The court issued orders in 2016 granting Motions for Partial Summary Judgment for seven of the 14 North Carolina plants named in the enforcement actions. The litigation is concluded for these seven plants. Litigation continues for the remaining seven plants. On February 13, 2017, the court issued an order denying motions for partial summary judgment brought by both the environmental groups and Duke Energy Carolinas and Duke Energy Progress. On March 15, 2017, Duke Energy Carolinas and Duke Energy Progress filed a Notice of Appeal to challenge the trial court’s order. The parties were unable to reach an agreement at mediation in April 2017. The parties submitted briefs to the court on remaining issues to be tried and a ruling is pending. On August 22, 2017, Duke Energy Carolinas and Duke Energy Progress filed a Petition for Discretionary Review, requesting the North Carolina Supreme Court to accept the appeal. On August 24, 2017, SELC filed a motion to dismiss the appeal. Duke Energy Carolinas' and Duke Energy Progress’ opening appellate briefs were filed on October 12, 2017.

~~It is not possible to predict any liability or estimate any damages Duke Energy Carolinas or Duke Energy Progress might incur in connection with these matters.~~

~~Federal Citizens Suits~~

On June 13, 2016, the Roanoke River Basin Association (RRBA) filed a federal citizen suit in the Middle District of North Carolina alleging unpermitted discharges to surface water and groundwater violations at the Mayo Plant. On August 19, 2016, Duke Energy Progress filed a Motion to Dismiss. On April 26, 2017, the court entered an order dismissing four of the claims in the federal citizen suit. Two claims relating to alleged violations of National Pollutant Discharge Elimination System (NPDES) permit provisions survived the motion to dismiss, and Duke Energy Progress filed its response on May 10, 2017. The parties are engaged in pre-trial discovery. Trial has been scheduled for July 9, 2018.

On March 16, 2017, RRBA served Duke Energy Progress with a Notice of Intent to Sue under the CWA for alleged violations of effluent standards and limitations at the Roxboro Plant. In anticipation of litigation, Duke Energy Progress filed a Complaint for Declaratory Relief in the U.S. District Court for the Western District of Virginia on May 11, 2017, which was subsequently dismissed. On May 16, 2017, RRBA filed a federal citizen suit in the U.S. District Court for the Middle District of North Carolina which asserts two claims relating to alleged violations of NPDES permit provisions and one claim relating to the use of nearby water bodies.

On June 20, 2017, RRBA filed a federal citizen suit in the U.S. District Court for the Middle District of North Carolina challenging the closure plans at the Mayo Plant under the EPA CCR Rule. Duke Energy Progress filed a motion to dismiss on August 21, 2017.

On August 2, 2017, RRBA filed a federal citizen suit in the U.S. District Court for the Middle District of North Carolina challenging the closure plans at the Roxboro Plant under the EPA CCR Rule. Duke Energy Progress filed a motion to dismiss on October 2, 2017.

On October 3, 2017, various parties served Duke Energy Carolinas with a Notice of Intent to Sue under the CWA for alleged violations at Duke Energy Carolinas' Belews Creek Steam Station (Belews Creek). A lawsuit may be filed sixty days after service of notice.

~~It is not possible to predict whether Duke Energy Carolinas or Duke Energy Progress will incur any liability or to estimate the damages, if any, they might incur in connection with these matters.~~

~~Five previously filed cases involving the Riverbend, Cape Fear, H.F. Lee, Sutton and Buck plants were dismissed or settled in 2016.~~

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~Groundwater Contamination Claims~~

Beginning in May 2015, a number of residents living in the vicinity of the North Carolina facilities with ash basins received letters from the NCDEQ advising them not to drink water from the private wells on their land tested by the NCDEQ as the samples were found to have certain substances at levels higher than the criteria set by the North Carolina Department of Health and Human Services (DHHS). Results of Comprehensive Site Assessments (CSAs) testing performed by Duke Energy under the Coal Ash Act have been consistent with historical data provided to state regulators over many years. The DHHS and NCDEQ sent follow-up letters on October 15, 2015, to residents near coal ash basins who had their wells tested, stating that private well samplings at a considerable distance from coal ash basins, as well as some municipal water supplies, contain similar levels of vanadium and hexavalent chromium, which led investigators to believe these constituents are naturally occurring. In March 2016, DHHS rescinded the advisories.

Duke Energy Carolinas and Duke Energy Progress have received formal demand letters from residents near Duke Energy Carolinas' and Duke Energy Progress' coal ash basins. The residents claim damages for nuisance and diminution in property value, among other things. The parties held three days of mediation discussions that ended at an impasse. On January 6, 2017, Duke Energy Carolinas and Duke Energy Progress received the plaintiffs' notice of their intent to file suits should the matter not settle. The NCDEQ preliminarily approved Duke Energy’s permanent water solution plans on January 13, 2017, and as a result shortly thereafter, Duke Energy issued a press release, providing additional details regarding the homeowner compensation package. This package consists of three components: (i) a $5,000 goodwill payment to each eligible well owner to support the transition to a new water supply, (ii) where a public water supply is available and selected by the eligible well owner, a stipend to cover 25 years of water bills and (iii) the Property Value Protection Plan. The Property Value Protection Plan is a program offered by Duke Energy designed to guarantee eligible plant neighbors the fair market value of their residential property should they decide to sell their property during the time that the plan is offered. Duke Energy Carolinas and Duke Energy Progress have recognized reserves of $19 million and $4 million, respectively. On August 23, 2017, a class action suit was filed in Wake County Superior Court, North Carolina, against Duke Energy Carolinas and Duke Energy Progress on behalf of certain property owners living near coal ash impoundments at Allen, Asheville, Belews Creek, Buck, Cliffside, Lee, Marshall, Mayo and Roxboro. The class is defined as those who are “well-eligible” under the Coal Ash Act or those to whom Duke Energy has promised a permanent replacement water supply and seeks declaratory and injunctive relief, along with compensatory damages. Plaintiffs allege that Duke Energy’s improper maintenance of coal ash impoundments caused harm, particularly through groundwater contamination. Despite NCDEQ’s preliminary approval, Plaintiffs contend that Duke Energy’s proposed permanent water solutions plan fails to comply with the Coal Ash Act. On September 28, 2017, Duke Energy Carolinas and Duke Energy Progress filed a Motion to Dismiss and Motion to Strike the class designation.

On September 14, 2017, a complaint was filed against Duke Energy Progress in New Hanover County Superior Court by a group of homeowners residing approximately one mile from Duke Energy Progress' Sutton Steam Plant (Sutton). The homeowners allege that coal ash constituents have been migrating from ash impoundments at Sutton into their groundwater for decades and that in 2015, Duke Energy Progress discovered these releases of coal ash, but failed to notify any officials or neighbors and failed to take remedial action. The homeowners claim unspecified physical and mental injuries as a result of consuming their well water and seek actual damages for personal injury, medical monitoring and punitive damages.

~~It is not possible to estimate the maximum exposure of loss, if any, that may occur in connection with current claims or future claims, which might be made by these residents.~~

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 ~~September 30, 2017,~~March 31, 2020, there were ~~120~~118 asserted claims for non-malignant cases with cumulative relief sought of up to ~~$29~~$30 million, and 5751 asserted claims for malignant cases with cumulative relief sought of up to ~~$16~~$17 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.



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

Duke Energy Carolinas has recognized asbestos-related reserves of ~~$486~~$596 million at ~~September 30, 2017,~~March 31, 2020, and ~~$512~~$604 million at December 31, ~~2016.~~2019. These reserves are classified in Other within Other Noncurrent Liabilities and Other within Current Liabilities on the Condensed Consolidated Balance Sheets. These reserves are based upon ~~the minimum amount of the range of loss~~Duke Energy Carolinas' best estimate for current and future asbestos claims through ~~2036,~~2039 and are recorded on an undiscounted ~~basis and incorporate anticipated inflation.~~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 ~~2036~~2039 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~~self-insured 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 ~~$797~~$747 million in excess of the self-insured retention. Receivables for insurance recoveries were ~~$570~~$742 million at ~~September 30, 2017,~~March 31, 2020, and ~~$587~~$742 million at December 31, ~~2016.~~2019. These amounts are classified in Other within Other Noncurrent Assets and Receivables within Current Assets on the Condensed Consolidated Balance Sheets. 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.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

Duke Energy Progress and Duke Energy Florida

~~Class Action Lawsuit~~Spent Nuclear Fuel Matters

On ~~February 22, 2016, a lawsuit was filed~~June 18, 2018, Duke Energy Progress and Duke Energy Florida sued the U.S. in the U.S. ~~District~~ Court of Federal Claims for damages incurred for the ~~Southern District~~period 2014 through 2018. The lawsuit claimed the Department of Energy 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 $203 million for Duke Energy Progress and Duke Energy Florida, ~~on behalf~~respectively. Discovery is ongoing and a trial is expected to occur in early 2021.

Duke Energy Indiana

Coal Ash Basin Closure Plan Appeal

On January 27, 2020, Hoosier Environmental Council filed a Petition for Administrative Review with the Indiana Office of ~~a putative class~~Environmental Adjudication (the court) challenging the Indiana Department of Environmental Management’s December 10, 2019, partial approval of Duke Energy Florida and FP&L’s customers in Florida. The suit alleges the State of Florida’s nuclear power plant cost recovery statutes (NCRS) are unconstitutional and pre-empted by federal law. Plaintiffs claim they are entitled to repayment of all money paid by customers ofIndiana’s ash pond closure plan. On March 11, 2020, Duke Energy ~~Florida and FP&L as~~Indiana filed a ~~result of~~Motion to Dismiss. On May 5, 2020, the ~~NCRS, as well as~~court entered an ~~injunction against any~~order denying that motion. The court will schedule a trial on the merits for a future ~~charges under those statutes. The constitutionality of the NCRS has been challenged unsuccessfully in a number of prior cases on alternative grounds.~~date. Duke Energy Florida and FP&L filed motions to dismiss the complaint on May 5, 2016. On September 21, 2016, the Court granted the motions to dismiss with prejudice. Plaintiffs filed a motion for reconsideration, which was denied. On January 4, 2017, plaintiffs filed a notice of appeal to the Eleventh Circuit U.S. Court of Appeals. The appeal, which has been fully briefed, was heard on August 22, 2017, and a decision is pending. Duke Energy FloridaIndiana cannot predict the outcome of this ~~appeal.~~

~~Westinghouse Contract Litigation~~

On March 28, 2014, Duke Energy Florida filed a lawsuit against Westinghouse in the U.S. District Court for the Western District of North Carolina. The lawsuit seeks recovery of $54 million in milestone payments in excess of work performed under an EPC for Levy as well as a determination by the court of the amounts due to Westinghouse as a result of the termination of the EPC. Duke Energy Florida recognized an exit obligation as a result of the termination of the EPC.

On March 31, 2014, Westinghouse filed a lawsuit against Duke Energy Florida in U.S. District Court for the Western District of Pennsylvania. The Pennsylvania lawsuit alleged damages under the EPC in excess of $510 million for engineering and design work, costs to end supplier contracts and an alleged termination fee.

On June 9, 2014, the judge in the North Carolina case ruled that the litigation will proceed in the Western District of North Carolina. On July 11, 2016, Duke Energy Florida and Westinghouse filed separate Motions for Summary Judgment. On September 29, 2016, the court issued its ruling on the parties' respective Motions for Summary Judgment, ruling in favor of Westinghouse on a $30 million termination fee claim and dismissing Duke Energy Florida's $54 million refund claim, but stating that Duke Energy Florida could use the refund claim to offset any damages for termination costs. Westinghouse's claim for termination costs was unaffected by this ruling and continued to trial. At trial, Westinghouse reduced its claim for termination costs from $482 million to $424 million. Following a trial on the matter, the court issued its final order in December 2016 denying Westinghouse’s claim for termination costs and re-affirming its earlier ruling in favor of Westinghouse on the $30 million termination fee and Duke Energy Florida’s refund claim. Judgment was entered against Duke Energy Florida in the amount of approximately $34 million, which includes prejudgment interest. Westinghouse has appealed the trial court's order to the U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit Court) and Duke Energy Florida has cross-appealed. Duke Energy Florida cannot predict the ultimate outcome of the appeal of the trial court's order.

On March 29, 2017, Westinghouse filed Chapter 11 bankruptcy in the Southern District of New York, which automatically stayed the appeal. On May 23, 2017, the bankruptcy court entered an order lifting the stay with respect to the appeal. Briefing of the appeal concluded on October 20, 2017, and the parties await a decision form the Fourth Circuit Court on whether it will allow oral argument of the appeal.

Ultimate resolution of these matters could have a material effect on the results of operations, financial position or cash flows of Duke Energy Florida. See discussion of the 2017 Settlement and the Levy Nuclear Project in Note 4 for additional information regarding recovery of costs related to Westinghouse.

~~MGP Cost Recovery Action~~

On December 30, 2011, Duke Energy Florida filed a lawsuit against FirstEnergy Corp. (FirstEnergy) to recover investigation and remediation costs incurred by Duke Energy Florida in connection with the restoration of two former MGP sites in Florida. Duke Energy Florida alleged that FirstEnergy, as the successor to Associated Gas & Electric Co., owes past and future contribution and response costs of up to $43 million for the investigation and remediation of MGP sites. On December 6, 2016, the trial court entered judgment against Duke Energy Florida in the case. In January 2017, Duke Energy Florida appealed the decision to the U.S. Court of Appeals for the 6th Circuit and briefing has been completed. Duke Energy Florida cannot predict the outcome of this appeal.matter.

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.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

The table below presents recorded reserves based on management’s best estimate of probable loss for legal matters, excluding asbestos-related reserves ~~and the exit obligation~~ discussed ~~above related to the termination of an EPC contract.~~above. Reserves are classified on the Condensed Consolidated Balance Sheets in Other within Other Noncurrent Liabilities ~~and Accounts payable~~ and Other within Current Liabilities. The reasonably possible range of loss in excess of recorded reserves is not material, other than as described above.



(in millions)	March 31, 2020		December 31, 2019
Reserves for Legal Matters
Duke Energy	$	61	$	62
Duke Energy Carolinas	3		2
Progress Energy	52		55
Duke Energy Progress	9		12
Duke Energy Florida	23		22
Piedmont	1		1

(in millions) September 30, 2017
December 31, 2016
Reserves for Legal Matters
Duke Energy $ 83
$ 98
Duke Energy Carolinas 23
23
Progress Energy 56
59
Duke Energy Progress 13
14
Duke Energy Florida 28
28
Duke Energy Ohio —
4
Piedmont 2
2

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 Condensed Consolidated Balance Sheets and have ~~unlimited~~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.



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

In addition, the Duke Energy Registrants enter into various fixed-price, noncancelable commitments to purchase or sell power or natural gas, take-or-pay arrangements, transportation, or throughput agreements and other contracts that may or may not be recognized on their respective Condensed Consolidated Balance Sheets. Some of these arrangements may be recognized at fair value on their respective Condensed Consolidated Balance Sheets if such contracts meet the definition of a derivative and the ~~normal purchase/normal sale (NPNS)~~NPNS exception does not apply. In most cases, the Duke Energy Registrants’ purchase obligation contracts contain provisions for price adjustments, minimum purchase levels and other financial commitments.

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 based on adoption of the new standard is $15 million for Duke Energy and Duke Energy Carolinas. Insurance receivables are 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.

The reserve for credit losses for financial guarantees based on adoption of the new standard is $99 million for Duke Energy. 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.

6.5. DEBT AND CREDIT FACILITIES

SUMMARY OF SIGNIFICANT DEBT ISSUANCES

The following table summarizes significant debt issuances (in millions). ~~Refer to the "Available Credit Facilities" section below regarding amounts issued under the Three Year Revolver and the Piedmont Term Loan facilities.~~

Nine Months Ended September 30, 2017
Duke
Duke
Duke
Duke
Maturity Interest
Duke
Energy
Energy
Energy
Energy
Issuance Date Date Rate
Energy
(Parent)
Progress
Florida
Ohio
Unsecured Debt
April 2017^(a)
April 2025 3.364 % $ 420
$ 420
$ —
$ —
$ —
June 2017^(b)
June 2020 2.100 % 330
330
—
—
—
August 2017^(c)
August 2022 2.400 % 500
500
—
—
—
August 2017^(c)
August 2027 3.150 % 750
750
—
—
—
August 2017^(c)
August 2047 3.950 % 500
500
—
—
—
Secured Debt
February 2017^(d)
June 2034 4.120 % 587
—
—
—
—
August 2017^(e)
December 2036 4.110 % 233
—
—
—
—
First Mortgage Bonds
January 2017^(f)
January 2020 1.850 % 250
—
—
250
—
January 2017^(f)
January 2027 3.200 % 650
—
—
650
—
March 2017^(g)
June 2046 3.700 %
100

—
—
—
100
September 2017^(h)
September 2020 1.500 %
⁽ⁱ⁾
300

—
300
—
—
September 2017^(h)
September 2047 3.600 % 500
—
500
—
—
Total issuances $ 5,120
$ 2,500

$ 800
$ 900

$ 100

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~



					Three Months Ended March 31, 2020
							Duke		Duke		Duke
	Maturity	Interest			Duke		Energy		Energy		Energy
Issuance Date	Date	Rate			Energy		(Parent)		Carolinas		Indiana
Unsecured Debt
March 2020^(a)	March 2021	1.400	%	^(b)	$	1,688	$	1,688	$	—	$	—
First Mortgage Bonds
January 2020^(c)	February 2030	2.450	%		500		—		500		—
January 2020^(c)	August 2049	3.200	%		400		—		400		—
March 2020^(d)	April 2050	2.750	%		550		—		—		550
Total issuances					$	3,138	$	1,688	$	900	$	550


(a)	Debt issued in response to market volatility concerns related to the COVID-19 pandemic. Refer to Note 1 for additional information on the COVID-19 pandemic. Proceeds ~~were~~will be used to ~~refinance $400 million of unsecured debt at maturity and to repay a portion of~~reduce outstanding commercial ~~paper.~~paper and for general corporate purposes.


(b)	Debt ~~issued to repay~~issuance has a ~~portion of outstanding commercial paper.~~floating interest rate.


(c)	Debt issued to repay at maturity ~~$700~~$450 million ~~of unsecured debt, to repay outstanding commercial paper~~first mortgage bonds due June 2020 and for general corporate purposes.


(d)	Portfolio financing of four Texas and Oklahoma wind facilities. Secured by substantially all of the assets of these wind facilities and nonrecourse to Duke Energy. Proceeds were used to reimburse Duke Energy for a portion of previously funded construction expenditures.


~~(e)~~	Portfolio financing of eight solar facilities located in California, Colorado and New Mexico. Secured by substantially all of the assets of these solar facilities and nonrecourse to Duke Energy. Proceeds were used to reimburse Duke Energy for a portion of previously funded construction expenditures.


~~(f)~~	~~Debt issued to fund capital expenditures for ongoing construction and capital maintenance, to repay a $250 million aggregate principal amount of bonds at maturity and for general corporate purposes.~~


~~(g)~~	~~Proceeds were used to fund capital expenditures for ongoing construction, capital maintenance and for general corporate purposes.~~


~~(h)~~	Debt issued to repay at maturity ~~a $200~~$500 million ~~aggregate principal amount of~~first mortgage bonds due ~~November 2017,~~July 2020 and to pay down ~~intercompany~~ short-term ~~debt and for general corporate purposes, including capital expenditures.~~debt.

~~(i) Debt issuance has a floating interest rate.~~

CURRENT MATURITIES OF LONG-TERM DEBT

The following table shows the significant components of Current Maturities of Long-Term Debt on the Condensed Consolidated Balance Sheets. The Duke Energy Registrants currently anticipate satisfying these obligations with cash on hand and proceeds from additional borrowings.



(in millions)	Maturity Date	Interest Rate			March 31, 2020
Unsecured Debt
Duke Energy (Parent)	June 2020	2.100	%		$	330
Duke Energy Progress	December 2020	2.292	%	^(a)	700
Progress Energy, Inc	January 2021	4.400	%		500
Duke Energy (Parent)	March 2021	1.400	%	^(a)	1,688
First Mortgage Bonds
Duke Energy Florida	April 2020	4.550	%		250
Duke Energy Carolinas	June 2020	4.300	%		450
Duke Energy Indiana	July 2020	3.750	%		500
Duke Energy Progress	September 2020	1.076	%	^(a)	300
Other^(b)					359
Current maturities of long-term debt					$	5,077

(in millions) Maturity Date Interest Rate
September 30, 2017
Unsecured Debt
Duke Energy (Parent) June 2018 6.250 % $ 250
Duke Energy (Parent) June 2018 2.100 % 500
First Mortgage Bonds
Duke Energy Progress November 2017 1.516 %
^(b)
200
Duke Energy Carolinas January 2018 5.250 % 400
Duke Energy Carolinas April 2018 5.100 % 300
Duke Energy Florida June 2018 5.650 % 500
Other^(a)
335
Current maturities of long-term debt $ 2,485

(a) Debt issuance has a floating interest rate.

(b) Includes ~~capital~~finance lease obligations, amortizing debt and small bullet maturities.

~~(b) Debt issuance has a floating interest rate.~~

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~



FINANCIAL STATEMENTS	DEBT AND CREDIT FACILITIES

AVAILABLE CREDIT FACILITIES

Master Credit Facility

In March ~~2017,~~2020, Duke Energy amended its existing $8 billion Master Credit Facility ~~to increase its capacity from $7.5 billion to $8 billion, and~~ to extend the termination date ~~of the facility from January 30, 2020,~~ to March ~~16, 2022.~~2025. The ~~amendment also added Piedmont as a borrower within the Master Credit Facility. Piedmont's separate $850 million credit facility was terminated in connection with the amendment. With the amendment, the~~ Duke Energy Registrants, excluding Progress Energy, ~~(Parent),~~ 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. Duke Energy Carolinas and Duke Energy Progress are also required to each maintain $250 million of available capacity under the Master Credit Facility as security to meet obligations under plea agreements reached with the U.S. Department of Justice in 2015 related to violations at North Carolina facilities with ash basins. This requirement expires on May 15, 2020.

The table below includes the current borrowing sublimits and available capacity under ~~the Master Credit Facility.~~these credit facilities.

September 30, 2017

Duke
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Energy
Energy
Energy
Energy
Energy

(in millions) Energy
(Parent)
Carolinas
Progress
Florida
Ohio
Indiana
Piedmont
Facility size^(a)
$ 8,000
$ 2,850
$ 1,350
$ 1,250
$ 1,000
$ 450
$ 600
$ 500
Reduction to backstop issuances
Commercial paper^(b)
(1,569 ) (404 ) (636 ) (150 ) —
(25 ) (150 ) (204 )
Outstanding letters of credit (60 ) (51 ) (4 ) (2 ) (1 ) —
—
(2 )
Tax-exempt bonds (81 ) —
—
—
—
—
(81 ) —
Coal ash set-aside (500 ) —
(250 ) (250 ) —
—
—
—
Available capacity under the Master Credit Facility $ 5,790

$ 2,395

$ 460

$ 848

$ 999

$ 425

$ 369
$ 294



	March 31, 2020
				Duke			Duke			Duke			Duke			Duke			Duke
	Duke			Energy			Energy			Energy			Energy			Energy			Energy
(in millions)	Energy			(Parent)			Carolinas			Progress			Florida			Ohio			Indiana			Piedmont
Facility size^(a)	$	8,000		$	2,650		$	1,500		$	1,250		$	800		$	600		$	600		$	600
Reduction to backstop issuances
Commercial paper^(b)	(2,540		)	(1,140		)	(300		)	(275		)	(167		)	(243		)	(150		)	(265		)
Outstanding letters of credit	(49		)	(42		)	(4		)	(2		)	—			—			—			(1		)
Tax-exempt bonds	(81		)	—			—			—			—			—			(81		)	—
Coal ash set-aside	(500		)	—			(250		)	(250		)	—			—			—			—
Available capacity under the Master Credit Facility	$	4,830		$	1,468		$	946		$	723		$	633		$	357		$	369		$	334


(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 on the Condensed Consolidated Balance Sheets.

~~Three-Year Revolving~~Other Credit ~~Facility~~

In June 2017, Duke Energy (Parent) entered into a three-year $1.0 billion revolving credit facility (the Three Year Revolver). Borrowings under this facility will be used for general corporate purposes.

As of September 30, 2017, $270 million has been drawn under the Three Year Revolver. This balance is classified as Long-Term Debt on Duke Energy's Condensed Consolidated Balance Sheets. Any undrawn commitments can be drawn, and borrowings can be prepaid, at any time throughout the term of the facility. The terms and conditions of the Three Year Revolver are generally consistent with those governing Duke Energy's Master Credit Facility.

~~Piedmont Term Loan Facility~~

In June 2017, Piedmont entered into an 18-month term loan facility with commitments totaling $250 million (the Piedmont Term Loan). Borrowings under the facility will be used for general corporate purposes.

As of September 30, 2017, the entire $250 million has been drawn under the Piedmont Term Loan. This balance is classified as Long-Term Debt on Piedmont's Condensed Consolidated Balance Sheets. The terms and conditions of the Piedmont Term Loan are generally consistent with those governing Duke Energy's Master Credit Facility.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~7. ASSET RETIREMENT OBLIGATIONS~~

The Duke Energy Registrants record AROs when there is a legal obligation to incur retirement costs associated with the retirement of a long-lived asset and the obligation can be reasonably estimated. The following table presents the AROs recorded on the Condensed Consolidated Balance Sheets.Facilities

September 30, 2017
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Decommissioning of Nuclear Power Facilities^(a)
$ 5,337
$ 1,916
$ 3,235
$ 2,536
$ 699
$ —
$ —
$ —
Closure of Ash Impoundments 4,594
1,650
2,124
2,105
19
42
777
—
Other 274
35
80
35
45
39
16
15
Total ARO $ 10,205
$ 3,601
$ 5,439
$ 4,676
$ 763
$ 81
$ 793
$ 15
Less: current portion 619
304
250
250
—
6
58
—
Total noncurrent ARO $ 9,586

$ 3,297

$ 5,189

$ 4,426

$ 763

$ 75

$ 735
$ 15

~~(a) Duke Energy amount includes purchase accounting adjustments related to the merger with Progress Energy.~~

~~ARO Liability Rollforward~~

Actual closure costs incurred could be materially different from current estimates that form the basis of the recorded AROs. The following table presents the change in liability associated with AROs for the Duke Energy Registrants.

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, 2016^(a)
$ 10,611
$ 3,895
$ 5,475
$ 4,697
$ 778
$ 77
$ 866
$ 14
Accretion expense^(b)
329
140
172
147
25
3
25
1
Liabilities settled^(c)
(430 ) (201 ) (193 ) (152 ) (41 ) (4 ) (26 ) (7 )
Liabilities incurred in the current year 48
5
—
—
—
7
27
7
Revisions in estimates of cash flows^(d)
(353 ) (238 ) (15 ) (16 ) 1
(2 ) (99 ) —
Balance at September 30, 2017 $ 10,205
$ 3,601
$ 5,439
$ 4,676
$ 763
$ 81
$ 793
$ 15



	March 31, 2020
(in millions)	Facility size		Amount drawn
Duke Energy (Parent) Three-Year Revolving Credit Facility^(a)	$	1,000	$	1,000
Duke Energy Progress Term Loan Facility	700		700


(a)	Primarily relates to decommissioning nuclear power facilities, closure of ash impoundments, asbestos removal, closure of landfills at fossil generation facilities, retirement of natural gas mains and removal of renewable energy generation assets.In March 2020, Duke Energy (Parent) drew down the remaining $500 million.


~~(b)~~	For the nine months ended September 30, 2017, substantially all accretion expense relates to Duke Energy's regulated electric operations and has been deferred in accordance with regulatory accounting treatment.


~~(c)~~	~~Primarily relates to ash impoundment closures and nuclear decommissioning of Crystal River Unit 3.~~


~~(d)~~	~~Primarily relates to favorable contract prices for closure of ash impoundments compared to original estimates.~~

Asset retirement costs associated with the AROs for operating plants and retired plants are included in Net property, plant and equipment and Regulatory assets within Other Noncurrent Assets, respectively, on the Condensed Consolidated Balance Sheets.

~~8. GOODWILL AND INTANGIBLE ASSETS~~

6. GOODWILL

Duke Energy

The following table presents the goodwill by reportable ~~operating~~ segment included on Duke Energy's Condensed Consolidated Balance Sheets at ~~September 30, 2017,~~March 31, 2020, and December 31, ~~2016.~~2019.



	Electric Utilities		Gas Utilities		Commercial
(in millions)	and Infrastructure		and Infrastructure		Renewables			Total
Goodwill balance	$	17,379	$	1,924	$	122		$	19,425
Accumulated impairment charges	—		—		(122		)	(122		)
Goodwill, adjusted for accumulated impairment charges	$	17,379	$	1,924	$	—		$	19,303

Electric Utilities
Gas Utilities
Commercial

(in millions) and Infrastructure
and Infrastructure
Renewables
Total
Goodwill Balance at December 31, 2016 $ 17,379
$ 1,924
$ 122
$ 19,425
Accumulated impairment charges^(a)
—
—
(7 ) (7 )
Goodwill Balance at September 30, 2017 $ 17,379
$ 1,924
$ 115
$ 19,418

~~(a)~~

Duke Energy evaluated the recoverability of goodwill in the third quarter of 2017 and recorded an impairment of $7 million related to the Energy Management Solutions reporting unit within the Commercial Renewables segment. The fair value of the reporting unit was determined based on the market approach, which estimates fair value based on market comparables within the energy technologies industry.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

Duke Energy Ohio

Duke Energy Ohio's Goodwill balance of $920 million, allocated $596 million to Electric Utilities and Infrastructure and $324 million to Gas Utilities and Infrastructure, is presented net of accumulated impairment charges of $216 million on the Condensed Consolidated Balance Sheets at ~~September 30, 2017,~~March 31, 2020, and December 31, ~~2016.~~2019.



FINANCIAL STATEMENTS	GOODWILL

Progress Energy

Progress Energy's Goodwill is included in the Electric Utilities and Infrastructure ~~operating~~ segment and there are no0 accumulated impairment charges.

Piedmont

Piedmont's Goodwill is included in the Gas Utilities and Infrastructure ~~operating~~ segment and there are no0 accumulated impairment charges. Effective November 1, 2016, Piedmont's fiscal year was changed from October 31 to December 31. Effective with this change, Piedmont changed the date of its annual impairment testing of goodwill from October 31 to August 31 to align with the other Duke Energy Registrants.

~~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. Except for the Energy Management Solutions reporting unit, the fair value of all other reporting units for Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont exceeded their respective carrying values at the date of the annual impairment analysis. As such, no other impairment charges were recorded in the third quarter of 2017.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

9.7. RELATED PARTY TRANSACTIONS

The Subsidiary Registrants engage in related party transactions in accordance with applicable state and federal commission regulations. Refer to the Condensed 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 on the Condensed Consolidated Statements of Operations and Comprehensive Income are presented in the following table.


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(in millions)	2017		2016		2017		2016		2020		2019
Duke Energy Carolinas
Corporate governance and shared service expenses^(a)	$	205	$	204	$	645	$	620	$	134	$	212
Indemnification coverages^(b)	5		5		17		16		5		5
JDA revenue^(c)	9		10		42		21
Joint Dispatch Agreement (JDA) revenue^(c)									7		23
JDA expense^(c)	39		36		91		127		24		93
Intercompany natural gas purchases^(d)	3		—		5		—		6		4
Progress Energy
Corporate governance and shared service expenses^(a)	$	208	$	182	$	555	$	515	$	146	$	176
Indemnification coverages^(b)	10		9		29		25		9		9
JDA revenue^(c)	39		36		91		127		24		93
JDA expense^(c)	9		10		42		21		7		23
Intercompany natural gas purchases^(d)	19		—		57		—		19		19
Duke Energy Progress
Corporate governance and shared service expenses^(a)	$	114	$	103	$	321	$	292	$	75	$	106
Indemnification coverages^(b)	4		4		11		10		4		4
JDA revenue^(c)	39		36		91		127		24		93
JDA expense^(c)	9		10		42		21		7		23
Intercompany natural gas purchases^(d)	19		—		57		—		19		19
Duke Energy Florida
Corporate governance and shared service expenses^(a)	$	94	$	79	$	234	$	223	$	71	$	70
Indemnification coverages^(b)	6		5		18		15		5		5
Duke Energy Ohio
Corporate governance and shared service expenses^(a)	$	90	$	89	$	275	$	261	$	84	$	85
Indemnification coverages^(b)	1		1		3		4		1		1
Duke Energy Indiana
Corporate governance and shared service expenses^(a)	$	93	$	96	$	281	$	279	$	106	$	97
Indemnification coverages^(b)	2		2		6		6		2		2
Piedmont
Corporate governance and shared service expenses^(a)	$	10	$	—	$	25	$	—	$	34	$	32
Indemnification coverages^(b)	1		—		2		—		1		1
Intercompany natural gas sales^(d)	22		—		62		—		25		23
Natural gas storage and transportation costs^(e)									6		5



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 Condensed 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 Condensed Consolidated Statements of Operations and Comprehensive Income.

(c)

Duke Energy Carolinas and Duke Energy Progress participate in a ~~Joint Dispatch Agreement (JDA),~~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 Condensed 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 ~~Regulated natural gas~~Operating revenues, and Duke Energy Carolinas and Duke Energy Progress record the related purchases inas a component of Fuel used in electric generation and purchased power on their respective Condensed Consolidated Statements of Operations and Comprehensive Income. ~~The amounts~~

(e)

Piedmont has related party transactions as a customer of its equity method investments in Pine Needle LNG Company, LLC, Hardy Storage Company, LLC and Cardinal Pipeline Company, LLC natural gas storage and transportation facilities. These expenses are ~~not eliminated~~included in accordance with rate-based accounting regulations. For the three and nine months ended September 30, 2016, which was prior to the Piedmont acquisition, Piedmont recorded $19 million and $57 million, respectively,Cost of natural gas ~~sales with Duke Energy Progress~~on Piedmont's Condensed Consolidated Statements of Operations and ~~$1 million and $3 million, respectively, with Duke Energy Carolinas.~~Comprehensive Income.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

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, such as pipeline lease arrangements, and their proportionate share of certain charged expenses. ~~See Note 6 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2016, for more information regarding the money pool.~~ These transactions of the Subsidiary Registrants ~~were not material for~~are incurred in the ~~three~~ordinary course of business and ~~nine months ended September 30, 2017, and 2016.~~are eliminated in consolidation.

As discussed in Note 1311, 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 ~~also~~do include a subordinated note from ~~the affiliate~~CRC for a portion of the purchase price.

~~Equity Method Investments~~

Piedmont has related party transactions as a customer of its equity method investments in natural gas storage and transportation facilities. The following table presents expenses for the three and nine months ended September 30, 2017, and 2016, which are included in Cost of natural gas on Piedmont's Condensed Consolidated Statements of Operations and Comprehensive Income.

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) Type of expense 2017 2016 2017 2016
Cardinal Transportation Costs $ 2
$ 3
$ 6
$ 7
Pine Needle Natural Gas Storage Costs 2
3
6
8
Hardy Storage Natural Gas Storage Costs 2
2
7
7
Total $ 6
$ 8
$ 19
$ 22

Piedmont had accounts payable to its equity method investments of $2 million at September 30, 2017, and December 31, 2016, related to these transactions. These amounts are included in Accounts payable on the Condensed Consolidated Balance Sheets.

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		Duke
	Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
March 31, 2020
Intercompany income tax receivable	$	—	$	114	$	1	$	4	$	—	$	—	$	—
Intercompany income tax payable	44		—		—		—		—		6		10

December 31, 2019
Intercompany income tax receivable	$	—	$	125	$	28	$	—	$	9	$	28	$	13
Intercompany income tax payable	5		—		—		2		—		—		—

Duke
Duke
Duke
Duke
Duke

Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
September 30, 2017
Intercompany income tax receivable $ —
$ 170
$ —
$ 120
$ —
$ —
$ 89
Intercompany income tax payable 173
—
46
—
18
104
—

December 31, 2016
Intercompany income tax receivable $ 1
$ —
$ —
$ 37
$ —
$ —
$ —
Intercompany income tax payable —
37
90
—
1
3
38

~~10.~~8. DERIVATIVES AND HEDGING

The Duke Energy Registrants use commodity and interest rate contracts to manage commodity price risk and interest 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 ~~swaps~~derivatives are used to manage interest rate risk associated with borrowings.

All derivative instruments not identified as NPNS are recorded at fair value as assets or liabilities on the Condensed Consolidated Balance Sheets. Cash collateral related to derivative instruments executed under master netting arrangements is offset against the collateralized derivatives on the Condensed Consolidated Balance Sheets. The cash impacts of settled derivatives are recorded as operating activities on the Condensed 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.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~



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. Gains and losses reclassified out of ~~AOCI~~accumulated other comprehensive income (loss) for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, and 2019, 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 ~~business.~~business 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 ~~and~~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.~~

~~In August 2016,~~Expense on the Duke Energy unwound $1.4 billion of forward-starting interest rate swaps associated with the Piedmont acquisition financing. The swaps were considered undesignated as they did not qualify for hedge accounting. For the three and nine months ended September 30, 2016, losses on the swaps of $22 million and $190 million, respectively, were included within Interest Expense on Duke Energy'sRegistrant's Condensed Consolidated Statements of ~~Operations. See Note 2 for additional information related to the Piedmont acquisition.~~Operations and Comprehensive Income.

The following table shows notional amounts of outstanding derivatives related to interest rate risk.


	September 30, 2017												March 31, 2020
			Duke				Duke		Duke		Duke				Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Energy		Carolinas		Energy		Progress		Florida		Ohio
Cash flow hedges^(a)	$	703	$	—	$	—	$	—	$	—	$	—	$	991	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	927		400		500		250		250		27		2,027		400		1,600		1,050		550		27
Total notional amount(a)	$	1,630	$	400	$	500	$	250	$	250	$	27	$	3,018	$	400	$	1,600	$	1,050	$	550	$	27


	December 31, 2016												December 31, 2019
			Duke				Duke		Duke		Duke				Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Energy		Carolinas		Energy		Progress		Florida		Ohio
Cash flow hedges^(a)	$	750	$	—	$	—	$	—	$	—	$	—	$	993	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	927		400		500		250		250		27		1,277		450		800		250		550		27
Total notional amount(a)	$	1,677	$	400	$	500	$	250	$	250	$	27	$	2,270	$	450	$	800	$	250	$	550	$	27


(a)	Duke Energy includes amounts related to consolidated VIEs of ~~$703~~$691 million ~~and $750 million~~in cash flow hedges as of ~~September 30, 2017,~~March 31, 2020, and $693 million in cash flow hedges as of December 31, ~~2016, respectively.~~2019.

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 coal 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. For the Subsidiary Registrants, bulk power electricity and coal 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 costs volatility for customers.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

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.


	September 30, 2017							March 31, 2020
		Duke		Duke	Duke	Duke			Duke		Duke	Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy		Duke	Energy	Progress	Energy	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Florida	Indiana	Piedmont	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont
Electricity (gigawatt-hours)	112	—	—	—	—	112	—
Electricity (GWh)								6,737	—	—	—	—	977	5,760	—
Natural gas (millions of dekatherms)	786	103	193	124	69	1	489	709	145	158	158	—	—	4	402


	December 31, 2016							December 31, 2019
		Duke		Duke	Duke	Duke			Duke		Duke	Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy		Duke	Energy	Progress	Energy	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Florida	Indiana	Piedmont	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont
Electricity (gigawatt-hours)	147	—	—	—	—	147	—
Electricity (GWh)								15,858	—	—	—	—	1,887	13,971	—
Natural gas (millions of dekatherms)	890	91	269	118	151	1	529	704	130	160	160	—	—	3	411

U.S. EQUITY SECURITIES RISK

In May 2019, Duke Energy Florida entered into a Decommissioning Services Agreement for the accelerated decommissioning of Crystal River Unit 3 with ADP CR3, LLC and ADP SF1, LLC. See Note 3 for additional information on the accelerated decommissioning. Duke Energy Florida executed U.S. equity option collars within the NDTF in May 2019 to preserve the U.S. equity portfolio value in the Duke Energy Florida NDTF in the event the accelerated decommissioning is approved. These option collars were executed as a purchase of a put option and the sale of a call option on certain U.S. equity index funds. The put and call options create a collar to guarantee a minimum and maximum investment value for the Duke Energy Florida NDTF U.S. equity portfolio. The put and call options were entered into at zero-cost, with the price to purchase the puts offset entirely by the funds received to sell the calls. As of March 31, 2020, the aggregate notional amount of both the put and call options was 305,000 units in U.S. equity security index funds. The options are not designated as hedging instruments. Substantially all of Duke Energy Florida’s NDTF qualifies for regulatory accounting. With regulatory accounting, the mark-to-market gains or losses on the options are deferred as regulatory liabilities or regulatory assets, respectively. The Duke Energy Florida NDTF liquidated the options in April 2020, and received proceeds of approximately $7 million.



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

LOCATION AND FAIR VALUE OF DERIVATIVE ASSETS AND LIABILITIES RECOGNIZED ON THE CONDENSED 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 Condensed 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 September 30, 2017
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 $ 48
$ 6
$ 10
$ 5
$ 4
$ 2
$ 28
$ 2
Noncurrent 6
2
4
3
1
—
—
—
Total Derivative Assets – Commodity Contracts $ 54
$ 8
$ 14
$ 8
$ 5
$ 2
$ 28
$ 2
Interest Rate Contracts
Designated as Hedging Instruments
Noncurrent $ 14
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Not Designated as Hedging Instruments
Current 1
—
1
—
1
—
—
—
Total Derivative Assets – Interest Rate Contracts $ 15
$ —
$ 1
$ —
$ 1
$ —
$ —
$ —
Total Derivative Assets $ 69

$ 8

$ 15

$ 8

$ 6

$ 2

$ 28
$ 2

Derivative Liabilities September 30, 2017
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 $ 29
$ 1
$ 11
$ 2
$ 9
$ —
$ —
$ 18
Noncurrent 113
1
7
1
—
—
—
105
Total Derivative Liabilities – Commodity Contracts $ 142
$ 2
$ 18
$ 3
$ 9
$ —
$ —
$ 123
Interest Rate Contracts
Designated as Hedging Instruments
Current $ 7
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Noncurrent 9
—
—
—
—
—
—
—
Not Designated as Hedging Instruments
Current 24
23
—
—
—
1
—
—
Noncurrent 9
—
4
4
—
4
—
—
Total Derivative Liabilities – Interest Rate Contracts $ 49
$ 23
$ 4
$ 4
$ —
$ 5
$ —
$ —
Total Derivative Liabilities $ 191

$ 25

$ 22

$ 7

$ 9

$ 5

$ —
$ 123



Derivative Assets	March 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	$	6	$	—	$	—	$	—	$	—	$	—	$	2	$	3
Noncurrent	4		2		1		1		—		1		—		—
Total Derivative Assets – Commodity Contracts	$	10	$	2	$	1	$	1	$	—	$	1	$	2	$	3
Interest Rate Contracts
Not Designated as Hedging Instruments
Current	$	3	$	—	$	3	$	3	$	—	$	—	$	—	$	—
Noncurrent	1		—		1		1		—		—		—		—
Total Derivative Assets – Interest Rate Contracts	$	4	$	—	$	4	$	4	$	—	$	—	$	—	$	—
Equity Securities Contracts
Not Designated as Hedging Instruments
Noncurrent^(a)	20		—		20		—		20		—		—		—
Total Derivative Assets – Equity Securities Contracts	$	20	$	—	$	20	$	—	$	20	$	—	$	—	$	—
Total Derivative Assets	$	34	$	2	$	25	$	5	$	20	$	1	$	2	$	3


(a)	Equity security contracts are current since they were set to expire in May 2020 but are classified as noncurrent assets on the Condensed Consolidated Balance Sheet because the amount is presented within the NDTF.



Derivative Liabilities	March 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	$	79	$	40	$	31	$	31	$	—	$	—	$	—	$	8
Noncurrent	130		11		35		20		—		—		—		83
Total Derivative Liabilities – Commodity Contracts	$	209	$	51	$	66	$	51	$	—	$	—	$	—	$	91
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	69	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	54		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	30		—		29		—		29		1		—		—
Noncurrent	28		23		—		—		—		6		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	181	$	23	$	29	$	—	$	29	$	7	$	—	$	—
Total Derivative Liabilities	$	390	$	74	$	95	$	51	$	29	$	7	$	—	$	91

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING


Derivative Assets	December 31, 2016																December 31, 2019
			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)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	108	$	23	$	61	$	35	$	26	$	4	$	16	$	3	$	17	$	—	$	—	$	—	$	—	$	3	$	13	$	1
Noncurrent	32		10		21		10		11		1		—		—		1		—		—		—		—		1		—		—
Total Derivative Assets – Commodity Contracts	$	140	$	33	$	82	$	45	$	37	$	5	$	16	$	3	$	18	$	—	$	—	$	—	$	—	$	4	$	13	$	1
Interest Rate Contracts
Designated as Hedging Instruments
Noncurrent	$	19	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Not Designated as Hedging Instruments
Current	3		—		3		1		2		—		—		—		6		—		6		—		6		—		—		—
Total Derivative Assets – Interest Rate Contracts	$	22	$	—	$	3	$	1	$	2	$	—	$	—	$	—	$	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	$	162	$	33	$	85	$	46	$	39	$	5	$	16	$	3	$	25	$	—	$	7	$	—	$	7	$	4	$	13	$	1


Derivative Liabilities	December 31, 2016																December 31, 2019
			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)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	43	$	—	$	12	$	—	$	12	$	—	$	2	$	35	$	67	$	33	$	26	$	26	$	—	$	—	$	1	$	7
Noncurrent	166		1		7		1		—		—		—		152		156		10		37		22		—		—		—		110
Total Derivative Liabilities – Commodity Contracts	$	209	$	1	$	19	$	1	$	12	$	—	$	2	$	187	$	223	$	43	$	63	$	48	$	—	$	—	$	1	$	117
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	8	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	19	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	8		—		—		—		—		—		—		—		21		—		—		—		—		—		—		—
Not Designated as Hedging Instruments															—
Current	1		—		—		—		—		1		—		—		8		6		1		1		—		1		—		—
Noncurrent	26		15		6		6		—		5		—		—		5		—		—		—		—		5		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	43	$	15	$	6	$	6	$	—	$	6	$	—	$	—	$	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	$	252	$	16	$	25	$	7	$	12	$	6	$	2	$	187	$	300	$	49	$	88	$	49	$	24	$	6	$	1	$	117

OFFSETTING ASSETS AND LIABILITIES

The following tables present the line items on the Condensed 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~~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.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

Derivative Assets September 30, 2017
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 $ 49
$ 6
$ 11
$ 5
$ 5
$ 2
$ 28
$ 2
Gross amounts offset (3 ) —
(3 ) (1 ) (2 ) —
—
—
Net amounts presented in Current Assets: Other $ 46
$ 6
$ 8
$ 4
$ 3
$ 2
$ 28
$ 2
Noncurrent
Gross amounts recognized $ 20
$ 2
$ 4
$ 3
$ 1
$ —
$ —
$ —
Gross amounts offset (2 ) (1 ) (1 ) (1 ) —
—
—
—
Net amounts presented in Other Noncurrent Assets: Other $ 18
$ 1
$ 3
$ 2
$ 1
$ —
$ —
$ —

Derivative Liabilities September 30, 2017
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 $ 60
$ 24
$ 11
$ 2
$ 9
$ 1
$ —
$ 18
Gross amounts offset (4 ) (1 ) (3 ) (1 ) (2 ) —
—
—
Net amounts presented in Current Liabilities: Other $ 56
$ 23
$ 8
$ 1
$ 7
$ 1
$ —
$ 18
Noncurrent
Gross amounts recognized $ 131
$ 1
$ 11
$ 5
$ —
$ 4
$ —
$ 105
Gross amounts offset (2 ) (1 ) (1 ) (1 ) —
—
—
—
Net amounts presented in Other Noncurrent Liabilities: Other $ 129
$ —
$ 10
$ 4
$ —
$ 4
$ —
$ 105

Derivative Assets December 31, 2016
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 $ 111
$ 23
$ 64
$ 36
$ 28
$ 4
$ 16
$ 3
Gross amounts offset (11 ) —
(11 ) —
(11 ) —
—
—
Net amounts presented in Current Assets: Other $ 100
$ 23
$ 53
$ 36
$ 17
$ 4
$ 16
$ 3
Noncurrent
Gross amounts recognized $ 51
$ 10
$ 21
$ 10
$ 11
$ 1
$ —
$ —
Gross amounts offset (2 ) (1 ) (1 ) (1 ) —
—
—
—
Net amounts presented in Other Noncurrent Assets: Other $ 49
$ 9
$ 20
$ 9
$ 11
$ 1
$ —
$ —

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

Derivative Liabilities December 31, 2016
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 $ 52
$ —
$ 12
$ —
$ 12
$ 1
$ 2
$ 35
Gross amounts offset (11 ) —
(11 ) —
(11 ) —
—
—
Net amounts presented in Current Liabilities: Other $ 41
$ —
$ 1
$ —
$ 1
$ 1
$ 2
$ 35
Noncurrent
Gross amounts recognized $ 200
$ 16
$ 13
$ 7
$ —
$ 5
$ —
$ 152
Gross amounts offset (2 ) (1 ) (1 ) (1 ) —
—
—
—
Net amounts presented in Other Noncurrent Liabilities: Other $ 198
$ 15
$ 12
$ 6
$ —
$ 5
$ —
$ 152



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING



Derivative Assets	March 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	$	9		$	—		$	3		$	3		$	—	$	—	$	2	$	3
Gross amounts offset	—			—			—			—			—		—		—		—
Net amounts presented in Current Assets: Other	$	9		$	—		$	3		$	3		$	—	$	—	$	2	$	3
Noncurrent
Gross amounts recognized	$	25		$	2		$	22		$	2		$	20	$	1	$	—	$	—
Gross amounts offset	(3		)	(2		)	(1		)	(1		)	—		—		—		—
Net amounts presented in Other Noncurrent Assets: Other	$	2		$	—		$	1		$	1		$	—	$	1	$	—	$	—
Net amounts presented in NDTF	$	20		$	—		$	20		$	—		$	20	$	—	$	—	$	—



Derivative Liabilities	March 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	$	178		$	40		$	60		$	31		$	29	$	1	$	—	$	8
Gross amounts offset	—			—			—			—			—		—		—		—
Net amounts presented in Current Liabilities: Other	$	178		$	40		$	60		$	31		$	29	$	1	$	—	$	8
Noncurrent
Gross amounts recognized	$	212		$	34		$	35		$	20		$	—	$	6	$	—	$	83
Gross amounts offset	(3		)	(2		)	(1		)	(1		)	—		—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	$	209		$	32		$	34		$	19		$	—	$	6	$	—	$	83



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
Current
Gross amounts recognized	$	24		$	—	$	7		$	—	$	7		$	3	$	13	$	1
Gross amounts offset	(1		)	—		(1		)	—		(1		)	—		—		—
Net amounts presented in Current Assets: Other	$	23		$	—	$	6		$	—	$	6		$	3	$	13	$	1
Noncurrent
Gross amounts recognized	$	1		$	—	$	—		$	—	$	—		$	1	$	—	$	—
Gross amounts offset	—			—		—			—		—			—		—		—
Net amounts presented in Other Noncurrent Assets: Other	$	1		$	—	$	—		$	—	$	—		$	1	$	—	$	—



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING



Derivative Liabilities	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
Current
Gross amounts recognized	$	118		$	39	$	51		$	27	$	24		$	1	$	1	$	7
Gross amounts offset	(24		)	—		(24		)	—		(24		)	—		—		—
Net amounts presented in Current Liabilities: Other	$	94		$	39	$	27		$	27	$	—		$	1	$	1	$	7
Noncurrent
Gross amounts recognized	$	182		$	10	$	37		$	22	$	—		$	5	$	—	$	110
Gross amounts offset	—			—		—			—		—			—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	$	182		$	10	$	37		$	22	$	—		$	5	$	—	$	110

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 payment provisions.


	September 30, 2017										March 31, 2020
			Duke				Duke		Duke				Duke				Duke
	Duke		Energy		Progress		Energy		Energy		Duke		Energy		Progress		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Energy		Carolinas		Energy		Progress
Aggregate fair value of derivatives in a net liability position	$	40	$	25	$	15	$	6	$	9	$	96	$	45	$	51	$	51
Fair value of collateral already posted	—		—		—		—		—		—		—		—		—
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered	40		25		15		6		9		96		45		51		51


	December 31, 2016										December 31, 2019
			Duke				Duke		Duke				Duke				Duke
	Duke		Energy		Progress		Energy		Energy		Duke		Energy		Progress		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Energy		Carolinas		Energy		Progress
Aggregate fair value of derivatives in a net liability position	$	34	$	16	$	18	$	6	$	12	$	79	$	35	$	44	$	44
Fair value of collateral already posted	—		—		—		—		—		—		—		—		—
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered	34		16		18		6		12		79		35		44		44

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.

~~11.~~9.INVESTMENTS IN DEBT AND EQUITY SECURITIES

~~The~~ Duke ~~Energy Registrants classify their~~Energy’s investments in debt and equity ~~securities as either trading or available-for-sale.~~

~~TRADING SECURITIES~~

Piedmont's investments in debt and equity securities held in rabbi trusts associated with certain deferred compensation plans are classified as trading securities. The fair value of these investments was $1 million and $5 million as of September 30, 2017, and December 31, 2016, respectively.

~~AVAILABLE-FOR-SALE (AFS) SECURITIES~~

~~All other investments in debt and equity securities are classified as AFS.~~

~~Duke Energy’s available-for-sale~~ securities are primarily comprised of investments held in (i) the ~~nuclear decommissioning trust fund (NDTF)~~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 ~~Other Post-Retirement Benefit Obligations (OPEB)~~OPEB plans and (iii) Bison. The Duke Energy Registrants classify investments in debt securities as AFS and investments in equity securities as fair value through net income (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 ~~all other~~the majority of investments in debt and equity securities as long term, unless otherwise noted.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

Investment Trusts

The investments within the ~~NDTF investments and the Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana grantor trusts (Investment Trusts)~~Investment Trusts are managed by independent investment managers with discretion to buy, sell and invest pursuant to the objectives set forth by the 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 ~~and equity~~ securities within the Investment Trusts are ~~considered other-than-temporary impairments (OTTIs) and are recognized immediately.~~

~~Investments within the Investment Trusts generally qualify for regulatory accounting, and accordingly realized and unrealized gains and losses are deferred as a regulatory asset or liability.~~

Substantially all amounts of the Duke Energy Registrants' gross unrealized holding losses as of September 30, 2017, and December 31, 2016, are considered OTTIs on investments within Investment Trusts that have been recognized immediately ~~as a~~and deferred to regulatory ~~asset.~~accounts where appropriate.



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

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 ~~is other-than-temporarily impaired.~~has a credit loss. The Duke Energy Registrants analyze all investment holdings each reporting period to determine whether a decline in fair value ~~should be considered other-than-temporary.~~is related to a credit loss. If an ~~OTTI~~credit loss exists, the unrealized credit loss is included in earnings. There were no material credit losses as of ~~September 30, 2017,~~March 31, 2020, and December 31, ~~2016.~~2019.

Other Investments amounts are recorded in Other within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.

DUKE ENERGY

The following table presents the estimated fair value of investments in ~~AFS securities.~~debt and equity securities; equity investments are classified as FV-NI and debt investments are classified as AFS.



	March 31, 2020						December 31, 2019
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	119	$	—	$	—	$	101
Equity securities	2,499		170		4,488		3,523		55		5,661
Corporate debt securities	26		16		642		37		1		603
Municipal bonds	10		2		404		13		—		368
U.S. government bonds	70		—		1,212		33		1		1,256
NDTF equity security contracts	20		—		20		—		—		—
Other debt securities	4		3		163		3		—		141
Total NDTF Investments	$	2,629	$	191	$	7,048	$	3,609	$	57	$	8,130
Other Investments
Cash and cash equivalents	$	—	$	—	$	78	$	—	$	—	$	52
Equity securities	31		1		95		57		—		122
Corporate debt securities	—		—		89		3		—		67
Municipal bonds	6		1		98		4		—		94
U.S. government bonds	5		—		51		2		—		41
Other debt securities	—		—		52		—		—		56
Total Other Investments	$	42	$	2	$	463	$	66	$	—	$	432
Total Investments	$	2,671	$	193	$	7,511	$	3,675	$	57	$	8,562

September 30, 2017 December 31, 2016
Gross
Gross
Gross
Gross

Unrealized
Unrealized
Estimated
Unrealized
Unrealized
Estimated
Holding
Holding
Fair
Holding
Holding
Fair
(in millions) Gains
Losses
Value
Gains
Losses
Value
NDTF
Cash and cash equivalents $ —
$ —
$ 129
$ —
$ —
$ 111
Equity securities 2,549
28
4,627
2,092
54
4,106
Corporate debt securities 16
2
600
10
8
528
Municipal bonds 5
2
334
3
10
331
U.S. government bonds 10
4
984
10
8
984
Other debt securities —
1
120
—
3
124
Total NDTF $ 2,580
$ 37
$ 6,794
$ 2,115
$ 83
$ 6,184
Other Investments
Cash and cash equivalents $ —
$ —
$ 15
$ —
$ —
$ 25
Equity securities 52
—
115
38
—
104
Corporate debt securities 1
—
64
1
1
66
Municipal bonds 3
1
83
2
1
82
U.S. government bonds —
—
44
—
1
51
Other debt securities —
—
37
—
2
42
Total Other Investments $ 56
$ 1
$ 358
$ 41
$ 5
$ 370
Total Investments $ 2,636
$ 38
$ 7,152
$ 2,156
$ 88
$ 6,554

~~The table below summarizes the maturity date for debt securities.~~

(in millions) September 30, 2017
Due in one year or less $ 92
Due after one through five years 584
Due after five through 10 years 514
Due after 10 years 1,076
Total $ 2,266

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three months endedMarch 31, 2020, and 2019, were as follows.



	Three Months Ended
(in millions)	March 31, 2020		March 31, 2019
FV-NI:
Realized gains	$	23	$	35
Realized losses	65		30
AFS:
Realized gains	20		10
Realized losses	6		11

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2017
2016
2017
2016
Realized gains $ 37
$ 82
$ 170
$ 200
Realized losses 25
42
124
134



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

DUKE ENERGY CAROLINAS



	March 31, 2020						December 31, 2019
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	33	$	—	$	—	$	21
Equity securities	1,355		81		2,498		1,914		8		3,154
Corporate debt securities	15		12		392		21		1		361
Municipal bonds	3		1		128		3		—		96
U.S. government bonds	35		—		502		16		1		578
Other debt securities	3		3		159		3		—		137
Total NDTF Investments	$	1,411	$	97	$	3,712	$	1,957	$	10	$	4,347

September 30, 2017 December 31, 2016
Gross
Gross
Gross
Gross

Unrealized
Unrealized
Estimated
Unrealized
Unrealized
Estimated
Holding
Holding
Fair
Holding
Holding
Fair
(in millions) Gains
Losses
Value
Gains
Losses
Value
NDTF
Cash and cash equivalents $ —
$ —
$ 34
$ —
$ —
$ 18
Equity securities 1,395
14
2,553
1,157
28
2,245
Corporate debt securities 9
2
395
5
6
354
Municipal bonds 1
—
52
1
2
67
U.S. government bonds 3
3
466
2
5
458
Other debt securities —
1
113
—
3
116
Total NDTF $ 1,408
$ 20

$ 3,613
$ 1,165
$ 44
$ 3,258
Other Investments
Other debt securities —
—
—
—
1
3
Total Investments $ 1,408
$ 20
$ 3,613
$ 1,165
$ 45
$ 3,261

~~The table below summarizes the maturity date for debt securities.~~

(in millions) September 30, 2017
Due in one year or less $ 5
Due after one through five years 218
Due after five through 10 years 264
Due after 10 years 539
Total $ 1,026

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three months ended March 31, 2020, and 2019, were as follows.



	Three Months Ended
(in millions)	March 31, 2020		March 31, 2019
FV-NI:
Realized gains	$	9	$	23
Realized losses	45		21
AFS:
Realized gains	12		9
Realized losses	5		10

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2017
2016
2017
2016
Realized gains $ 20
$ 58
$ 110
$ 125
Realized losses 13
28
76
84

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

PROGRESS ENERGY



	March 31, 2020						December 31, 2019
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	86	$	—	$	—	$	80
Equity securities	1,144		89		1,990		1,609		47		2,507
Corporate debt securities	11		4		250		16		—		242
Municipal bonds	7		1		276		10		—		272
U.S. government bonds	35		—		710		17		—		678
NDTF equity security contracts	20		—		20		—		—		—
Other debt securities	1		—		4		—		—		4
Total NDTF Investments	$	1,218	$	94	$	3,336	$	1,652	$	47	$	3,783
Other Investments
Cash and cash equivalents	$	—	$	—	$	69	$	—	$	—	$	49
Municipal bonds	5		—		53		3		—		51
Total Other Investments	$	5	$	—	$	122	$	3	$	—	$	100
Total Investments	$	1,223	$	94	$	3,458	$	1,655	$	47	$	3,883

September 30, 2017 December 31, 2016
Gross
Gross
Gross
Gross

Unrealized
Unrealized
Estimated
Unrealized
Unrealized
Estimated
Holding
Holding
Fair
Holding
Holding
Fair
(in millions) Gains
Losses
Value
Gains
Losses
Value
NDTF
Cash and cash equivalents $ —
$ —
$ 95
$ —
$ —
$ 93
Equity securities 1,154
14
2,074
935
26
1,861
Corporate debt securities 7
—
205
5
2
174
Municipal bonds 4
2
282
2
8
264
U.S. government bonds 7
1
518
8
3
526
Other debt securities —
—
7
—
—
8
Total NDTF $ 1,172
$ 17
$ 3,181
$ 950
$ 39
$ 2,926
Other Investments
Cash and cash equivalents $ —
$ —
$ 11
$ —
$ —
$ 21
Municipal bonds 3
—
47
2
—
44
Total Other Investments $ 3
$ —
$ 58
$ 2
$ —
$ 65
Total Investments $ 1,175
$ 17
$ 3,239
$ 952
$ 39
$ 2,991



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

~~The table below summarizes the maturity date for debt securities.~~

(in millions) September 30, 2017
Due in one year or less $ 74
Due after one through five years 309
Due after five through 10 years 194
Due after 10 years 482
Total $ 1,059

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three months endedMarch 31, 2020, and 2019, were as follows.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,				Three Months Ended
(in millions)	2017		2016		2017		2016		March 31, 2020		March 31, 2019
FV-NI:
Realized gains	$	16	$	21	$	58	$	71	$	14	$	12
Realized losses	12		13		47		49		20		9
AFS:
Realized gains									5		1
Realized losses									1		1

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

DUKE ENERGY PROGRESS



	March 31, 2020						December 31, 2019
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	51	$	—	$	—	$	53
Equity securities	881		79		1,631		1,258		21		2,077
Corporate debt securities	11		4		250		16		—		242
Municipal bonds	7		1		276		10		—		272
U.S. government bonds	34		—		436		16		—		403
Other debt securities	1		—		4		—		—		4
Total NDTF Investments	$	934	$	84	$	2,648	$	1,300	$	21	$	3,051
Other Investments
Cash and cash equivalents	$	—	$	—	$	2	$	—	$	—	$	2
Total Other Investments	$	—	$	—	$	2	$	—	$	—	$	2
Total Investments	$	934	$	84	$	2,650	$	1,300	$	21	$	3,053

September 30, 2017 December 31, 2016
Gross
Gross
Gross
Gross

Unrealized
Unrealized
Estimated
Unrealized
Unrealized
Estimated
Holding
Holding
Fair
Holding
Holding
Fair
(in millions) Gains
Losses
Value
Gains
Losses
Value
NDTF
Cash and cash equivalents $ —
$ —
$ 46
$ —
$ —
$ 45
Equity securities 882
11
1,683
704
21
1,505
Corporate debt securities 5
—
144
4
1
120
Municipal bonds 4
2
281
2
8
263
U.S. government bonds 5
1
303
5
2
275
Other debt securities —
—
4
—
—
5
Total NDTF $ 896
$ 14
$ 2,461
$ 715
$ 32
$ 2,213
Other Investments
Cash and cash equivalents $ —
$ —
$ 1
$ —
$ —
$ 1
Total Investments $ 896
$ 14
$ 2,462
$ 715
$ 32
$ 2,214

~~The table below summarizes the maturity date for debt securities.~~

(in millions) September 30, 2017
Due in one year or less $ 16
Due after one through five years 209
Due after five through 10 years 136
Due after 10 years 371
Total $ 732

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three months endedMarch 31, 2020, and 2019, were as follows.



	Three Months Ended
(in millions)	March 31, 2020		March 31, 2019
FV-NI:
Realized gains	$	14	$	10
Realized losses	20		8
AFS:
Realized gains	5		1
Realized losses	1		1

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2017
2016
2017
2016
Realized gains $ 14
$ 18
$ 49
$ 60
Realized losses 11
11
41
42



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

DUKE ENERGY FLORIDA


	September 30, 2017						December 31, 2016						March 31, 2020						December 31, 2019
	Gross		Gross				Gross		Gross				Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair		Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value		Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	49	$	—	$	—	$	48	$	—	$	—	$	35	$	—	$	—	$	27
Equity securities	272		3		391		231		5		356		263		10		359		351		26		430
Corporate debt securities	2		—		61		1		1		54
Municipal bonds	—		—		1		—		—		1
U.S. government bonds	2		—		215		3		1		251		1		—		274		1		—		275
Other debt securities	—		—		3		—		—		3
Total NDTF^(a)	$	276	$	3	$	720	$	235	$	7	$	713
NDTF equity security contracts													20		—		20		—		—		—
Total NDTF Investments^(a)													$	284	$	10	$	688	$	352	$	26	$	732
Other Investments
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	—	$	4	$	—	$	—	$	3	$	—	$	—	$	4
Municipal bonds	3		—		47		2		—		44		5		—		53		3		—		51
Total Other Investments	$	3	$	—	$	47	$	2	$	—	$	48	$	5	$	—	$	56	$	3	$	—	$	55
Total Investments	$	279	$	3	$	767	$	237	$	7	$	761	$	289	$	10	$	744	$	355	$	26	$	787


(a)	During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, Duke Energy Florida continued to receive reimbursements from the NDTF for costs related to ongoing decommissioning activity of ~~the~~ Crystal River Unit ~~3 nuclear plant.~~3.

~~The table below summarizes the maturity date for debt securities.~~

(in millions) September 30, 2017
Due in one year or less $ 58
Due after one through five years 100
Due after five through 10 years 58
Due after 10 years 111
Total $ 327

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three months endedMarch 31, 2020, and 2019, were ~~as follows.~~immaterial.

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2017
2016
2017
2016
Realized gains $ 2
$ 3
$ 9
$ 11
Realized losses 1
2
6
7

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

DUKE ENERGY INDIANA

The following table presents the estimated fair value of investments in ~~AFS securities.~~

September 30, 2017 December 31, 2016
Gross
Gross
Gross
Gross

Unrealized
Unrealized
Estimated
Unrealized
Unrealized
Estimated
Holding
Holding
Fair
Holding
Holding
Fair
(in millions) Gains
Losses
Value
Gains
Losses
Value
Investments
Equity securities $ 44
$ —
$ 91
$ 33
$ —
$ 79
Corporate debt securities —
—
3
—
—
2
Municipal bonds —
1
28
—
1
28
U.S. government bonds —
—
—
—
—
1
Total Investments $ 44
$ 1
$ 122
$ 33
$ 1
$ 110

~~The table below summarizes the maturity date for~~ debt ~~securities.~~and equity securities; equity investments are measured at FV-NI and debt investments are classified as AFS.



	March 31, 2020						December 31, 2019
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
Investments
Equity securities	$	26	$	1	$	63	$	43	$	—	$	81
Corporate debt securities	—		—		4		—		—		6
Municipal bonds	1		1		36		1		—		36
U.S. government bonds	—		—		3		—		—		2
Total Investments	$	27	$	2	$	106	$	44	$	—	$	125

(in millions) September 30, 2017
Due in one year or less $ 4
Due after one through five years 12
Due after five through 10 years 8
Due after 10 years 7
Total $ 31

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities ~~were insignificant~~ for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, and ~~2016.~~2019, were immaterial.



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

DEBT SECURITY MATURITIES

The table below summarizes the maturity date for debt securities.



	March 31, 2020
			Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Indiana
Due in one year or less	$	333	$	25	$	302	$	26	$	276	$	3
Due after one through five years	538		234		236		227		9		17
Due after five through 10 years	465		188		214		207		7		7
Due after 10 years	1,375		734		541		506		35		16
Total	$	2,711	$	1,181	$	1,293	$	966	$	327	$	43

~~12.~~10. 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 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:~~

~~Level 1~~ – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. An active market is one in which transactions for an asset or liability occur with sufficient frequency and volume to provide ongoing pricing information.

~~Level 2~~ – A fair value measurement utilizing inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly, for an asset or liability. Inputs include (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in markets that are not active (iii) and inputs other than quoted market prices that are observable for the asset or liability, suchhierarchy as interest rate curves and yield curves observable at commonly quoted intervals, volatilities and credit spreads. A Level 2 measurement cannot have more than an insignificant portion of its valuation based on unobservable inputs. Instruments in this category include non-exchange-traded derivatives, such as over-the-counter forwards, swaps and options; certain marketable debt securities; and financial instruments traded in less-than-active markets.

~~Level 3~~ – Any fair value measurement that includes unobservable inputs for more than an insignificant portion of the valuation. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Level 3 measurements may include longer-term instruments that extend into periods in which observable inputs are not available.

~~Not Categorized~~ –defined by GAAP. Certain investments are not categorized within the ~~Fair Value~~fair value hierarchy. These investments are measured at fair value using the net asset value (NAV) per share practical expedient. The NAV is derived based on the ~~fair value~~investment cost, less any impairment, plus or minus changes resulting from observable price changes for an identical or similar investment of the ~~underlying investments but may not be readily redeemable at that fair value.~~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.

Transfers between levels represent assets or liabilities that were previously (i) categorized at a higher level for which the inputs to the estimate became less observable or (ii) classified at a lower level for which the inputs became more observable during the period. The Duke Energy Registrant’s policy is to recognize transfers between levels of the fair value hierarchy at the end of the period. There were no transfers between levels during the three and nine months ended September 30, 2017, and 2016.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

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 New York Stock Exchange ~~(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.

Commodity derivatives

Commodity derivatives with clearinghouses are classified as Level 1. Other commodity derivatives, including Piedmont's natural gas supply contracts, are primarily valued using internally developed discounted cash flow models that incorporate forward price, adjustments for liquidity (bid-ask spread) and credit or non-performance risk (after reflecting credit enhancements such as collateral), and are discounted to present value. Pricing inputs are derived from published exchange transaction prices and other observable data sources. In the absence of an active market, the last available price may be used. 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.

Other fair value considerations

See Note ~~2 related to the acquisition of Piedmont in 2016. See Note 11~~12 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2019, for a discussion of the valuation of goodwill and intangible assets.



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

DUKE ENERGY

The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets. Derivative amounts in the tables below for all Duke Energy Registrants exclude cash collateral, which is disclosed in Note ~~10.~~8. See Note 119 for additional information related to investments by major security type for the Duke Energy Registrants.


	September 30, 2017													March 31, 2020
(in millions)	Total Fair Value			Level 1		Level 2			Level 3			Not Categorized		Total Fair Value			Level 1			Level 2			Level 3			Not Categorized
NDTF equity securities	$	4,627		$	4,549	$	—		$	—		$	78	$	4,488		$	4,440		$	—		$	—		$	48
NDTF debt securities	2,167			617		1,550			—			—		2,540			767			1,773			—			—
Other trading and AFS equity securities	116			116		—			—			—
Other AFS debt securities	243			59		184			—			—
Other equity securities														95			95			—			—			—
Other debt securities														368			126			242			—			—
NDTF equity security contracts														20			—			20			—			—
Derivative assets	69			4		35			30			—		34			3			28			3			—
Total assets	7,222			5,345		1,769			30			78		7,545			5,431			2,063			3			48
Derivative liabilities	(191		)	—		(68		)	(123		)	—		(390		)	(49		)	(250		)	(91		)	—
Net assets (liabilities)	$	7,031		$	5,345	$	1,701		$	(93	)	$	78	$	7,155		$	5,382		$	1,813		$	(88	)	$	48



	December 31, 2019
(in millions)	Total Fair Value			Level 1			Level 2			Level 3			Not Categorized
NDTF equity securities	$	5,684		$	5,633		$	—		$	—		$	51
NDTF debt securities	2,469			826			1,643			—			—
Other equity securities	122			122			—			—			—
Other debt securities	310			91			219			—			—
Derivative assets	25			3			7			15			—
Total assets	8,610			6,675			1,869			15			51
NDTF equity security contracts	(23		)	—			(23		)	—			—
Derivative liabilities	(277		)	(15		)	(145		)	(117		)	—
Net assets (liabilities)	$	8,310		$	6,660		$	1,701		$	(102	)	$	51

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

December 31, 2016
(in millions) Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
NDTF equity securities $ 4,106
$ 4,029
$ —
$ —
$ 77
NDTF debt securities 2,078
632
1,446
—
—
Other trading and AFS equity securities 104
104
—
—
—
Other trading and AFS debt securities 266
75
186
5
—
Derivative assets 162
5
136
21
—
Total assets 6,716
4,845
1,768
26
77
Derivative liabilities (252 ) (2 ) (63 ) (187 ) —
Net assets (liabilities) $ 6,464
$ 4,843
$ 1,705
$ (161 ) $ 77

The following tables provide reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements. Amounts included in earnings for derivatives are primarily included in Cost of natural gas on the Duke Energy Registrants' Condensed Consolidated Statements of Operations and Comprehensive Income. Amounts included in changes of net assets on the Duke Energy Registrants' Condensed Consolidated Balance Sheets are included in regulatory assets or liabilities. All derivative assets and liabilities are presented on a net basis.


																	Derivatives (net)
	Three Months Ended September 30, 2017								Three Months Ended September 30, 2016									Three Months Ended March 31,
(in millions)	Investments		Derivatives (net)			Total			Investments		Derivatives (net)			Total				2020			2019
Balance at beginning of period	$	—	$	(91	)	$	(91	)	$	4	$	34		$	38			$	(102	)	$	(113	)
Purchases, sales, issuances and settlements:
Settlements	—		(12		)	(12		)	—		(9		)	(9		)		(9		)	(12		)
Total gains (losses) included on the Condensed Consolidated Balance Sheet	—		10			10			—		(2		)	(2		)
Total gains included on the Condensed Consolidated Balance Sheet																		23			10
Balance at end of period	$	—	$	(93	)	$	(93	)	$	4	$	23		$	27			$	(88	)	$	(115	)

Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
(in millions) Investments
Derivatives (net)
Total
Investments
Derivatives (net)
Total
Balance at beginning of period $ 5
$ (166 ) $ (161 ) $ 5
$ 10
$ 15
Total pretax realized or unrealized gains included in comprehensive income 1
—
1
—
—
—
Purchases, sales, issuances and settlements:
Purchases —
55
55
—
34
34
Sales (6 ) —
(6 ) (1 ) —
(1 )
Settlements —
(30 ) (30 ) —
(22 ) (22 )
Total gains included on the Condensed Consolidated Balance Sheet —
48
48
—
1
1
Balance at end of period $ —
$ (93 ) $ (93 ) $ 4
$ 23
$ 27



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

DUKE ENERGY CAROLINAS

The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.

September 30, 2017
(in millions) Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
NDTF equity securities $ 2,553
$ 2,475
$ —
$ —
$ 78
NDTF debt securities 1,060
178
882
—
—
Derivative assets 8
—
8
—
—
Total assets 3,621
2,653
890
—
78
Derivative liabilities (25 ) —
(25 ) —
—
Net assets $ 3,596
$ 2,653
$ 865
$ —
$ 78

December 31, 2016
(in millions) Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
NDTF equity securities $ 2,245
$ 2,168
$ —
$ —
$ 77
NDTF debt securities 1,013
178
835
—
—
Other AFS debt securities 3
—
—
3
—
Derivative assets 33
—
33
—
—
Total assets 3,294
2,346
868
3
77
Derivative liabilities (16 ) —
(16 ) —
—
Net assets $ 3,278
$ 2,346
$ 852
$ 3
$ 77

~~The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.~~

Investments
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017 2016 2017 2016
Balance at beginning of period $ —
$ 3
$ 3
$ 3
Total pretax realized or unrealized gains included in comprehensive income —
—
1
—
Purchases, sales, issuances and settlements:
Sales —
—
(4 ) —
Balance at end of period $ —
$ 3
$ —
$ 3



	March 31, 2020
(in millions)	Total Fair Value			Level 1		Level 2			Not Categorized
NDTF equity securities	$	2,498		$	2,450	$	—		$	48
NDTF debt securities	1,214			182		1,032			—
Derivative assets	2			—		2			—
Total assets	3,714			2,632		1,034			48
Derivative liabilities	(74		)	—		(74		)	—
Net assets	$	3,640		$	2,632	$	960		$	48



	December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Not Categorized
NDTF equity securities	$	3,154		$	3,103	$	—		$	51
NDTF debt securities	1,193			227		966			—
Total assets	4,347			3,330		966			51
Derivative liabilities	(49		)	—		(49		)	—
Net assets	$	4,298		$	3,330	$	917		$	51

PROGRESS ENERGY

The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.



	March 31, 2020								December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	1,990		$	1,990	$	—		$	2,530		$	2,530	$	—
NDTF debt securities	1,326			585		741			1,276			599		677
Other debt securities	122			69		53			100			49		51
NDTF equity security contracts	20			—		20			—			—		—
Derivative assets	25			—		25			7			—		7
Total assets	3,483			2,644		839			3,913			3,178		735
NDTF equity security contracts	—			—		—			(23		)	—		(23		)
Derivative liabilities	(95		)	—		(95		)	(65		)	—		(65		)
Net assets	$	3,388		$	2,644	$	744		$	3,825		$	3,178	$	647

September 30, 2017 December 31, 2016
(in millions) Total Fair Value
Level 1
Level 2
Total Fair Value
Level 1
Level 2
NDTF equity securities $ 2,074
$ 2,074
$ —
$ 1,861
$ 1,861
$ —
NDTF debt securities 1,107
439
668
1,065
454
611
Other AFS debt securities 58
11
47
65
21
44
Derivative assets 15
1
14
85
—
85
Total assets 3,254
2,525
729
3,076
2,336
740
Derivative liabilities (22 ) —
(22 ) (25 ) —
(25 )
Net assets $ 3,232
$ 2,525
$ 707
$ 3,051
$ 2,336
$ 715

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

DUKE ENERGY PROGRESS

The following ~~table provides~~tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.



	March 31, 2020								December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	1,631		$	1,631	$	—		$	2,077		$	2,077	$	—
NDTF debt securities	1,017			276		741			974			297		677
Other debt securities	2			2		—			2			2		—
Derivative assets	5			—		5			—			—		—
Total assets	2,655			1,909		746			3,053			2,376		677
Derivative liabilities	(51		)	—		(51		)	(49		)	—		(49		)
Net assets	$	2,604		$	1,909	$	695		$	3,004		$	2,376	$	628



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

September 30, 2017 December 31, 2016
(in millions) Total Fair Value
Level 1
Level 2
Total Fair Value
Level 1
Level 2
NDTF equity securities $ 1,683
$ 1,683
$ —
$ 1,505
$ 1,505
$ —
NDTF debt securities 778
231
547
708
207
501
Other AFS debt securities 1
1
—
1
1
—
Derivative assets 8
1
7
46
—
46
Total assets 2,470
1,916
554
2,260
1,713
547
Derivative liabilities (7 ) —
(7 ) (7 ) —
(7 )
Net assets $ 2,463
$ 1,916
$ 547
$ 2,253
$ 1,713
$ 540

DUKE ENERGY FLORIDA

The following ~~table provides~~tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.



	March 31, 2020								December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	359		$	359	$	—		$	453		$	453	$	—
NDTF debt securities	309			309		—			302			302		—
Other debt securities	56			3		53			55			4		51
NDTF equity security contracts	20			—		20			—			—		—
Derivative assets	—			—		—			7			—		7
Total assets	744			671		73			817			759		58
NDTF equity security contracts	—			—		—			(23		)	—		(23		)
Derivative liabilities	(29		)	—		(29		)	(1		)	—		(1		)
Net assets	$	715		$	671	$	44		$	793		$	759	$	34

September 30, 2017 December 31, 2016
(in millions) Total Fair Value
Level 1
Level 2
Total Fair Value
Level 1
Level 2
NDTF equity securities $ 391
$ 391
$ —
$ 356
$ 356
$ —
NDTF debt securities 329
208
121
357
247
110
Other AFS debt securities 47
—
47
48
4
44
Derivative assets 6
—
6
39
—
39
Total assets 773
599
174
800
607
193
Derivative liabilities (9 ) —
(9 ) (12 ) —
(12 )
Net assets $ 764
$ 599
$ 165
$ 788
$ 607
$ 181

DUKE ENERGY OHIO

The ~~following table provides~~ recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance ~~Sheets.~~

Sheets were not material at March 31, 2020, and December 31, 2019.

September 30, 2017 December 31, 2016
(in millions) Total Fair Value
Level 2
Level 3
Total Fair Value
Level 2
Level 3
Derivative assets $ 2
$ —
$ 2
$ 5
$ —
$ 5
Derivative liabilities (5 ) (5 ) —
(6 ) (6 ) —
Net (liabilities) assets $ (3 ) $ (5 ) $ 2
$ (1 ) $ (6 ) $ 5
DUKE ENERGY INDIANA

The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.



	March 31, 2020								December 31, 2019
(in millions)	Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value			Level 1			Level 2		Level 3
Other equity securities	$	63	$	63	$	—	$	—	$	81		$	81		$	—	$	—
Other debt securities	43		—		43		—		44			—			44		—
Derivative assets	2		—		—		2		13			2			—		11
Total assets	$	108	$	63	$	43	$	2	$	138		$	83		$	44	$	11
Derivative liabilities	—		—		—		—		(1		)	(1		)	—		—
Net assets	$	108	$	63	$	43	$	2	$	137		$	82		$	44	$	11

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)
	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2017			2016			2017			2016				2020			2019
Balance at beginning of period	$	3		$	5		$	5		$	3			$	11		$	22
Purchases, sales, issuances and settlements:
Purchases	—			—			3			5
Settlements	(1		)	(2		)	(3		)	(4		)		(6		)	(10		)
Total losses included on the Condensed Consolidated Balance Sheet	—			—			(3		)	(1		)		(3		)	(7		)
Balance at end of period	$	2		$	3		$	2		$	3			$	2		$	5

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~DUKE ENERGY INDIANA~~PIEDMONT

The following ~~table provides~~tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.



	March 31, 2020								December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 3			Total Fair Value			Level 1		Level 3
Derivative assets	$	3		$	3	$	—		$	1		$	1	$	—
Derivative liabilities	(91		)	—		(91		)	(117		)	—		(117		)
Net (liabilities) assets	$	(88	)	$	3	$	(91	)	$	(116	)	$	1	$	(117	)

September 30, 2017 December 31, 2016
(in millions) Total Fair Value
Level 1
Level 2
Level 3
Total Fair Value
Level 1
Level 2
Level 3
Other AFS equity securities $ 91
$ 91
$ —
$ —
$ 79
$ 79
$ —
$ —
Other AFS debt securities 31
—
31
—
31
—
31
—
Derivative assets 28
—
—
28
16
—
—
16
Total assets 150
91
31
28
126
79
31
16
Derivative liabilities —
—
—
—
(2 ) (2 ) —
—
Net assets $ 150
$ 91
$ 31
$ 28
$ 124
$ 77
$ 31
$ 16

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)
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017
2016
2017
2016
Balance at beginning of period $ 51
$ 29
$ 16
$ 7
Purchases, sales, issuances and settlements:

Purchases —
—
52
29
Settlements (11 ) (7 ) (27 ) (18 )
Total (losses) gains included on the Condensed Consolidated Balance Sheet (12 ) (2 ) (13 ) 2
Balance at end of period $ 28
$ 20
$ 28
$ 20



	Derivatives (net)
		Three Months Ended March 31,
(in millions)		2020			2019
Balance at beginning of period		$	(117	)	$	(141	)
Total gains and settlements		26			20
Balance at end of period		$	(91	)	$	(121	)

~~PIEDMONT~~

~~The following table provides recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.~~

September 30, 2017 December 31, 2016
(in millions) Total Fair Value
Level 1
Level 3
Total Fair Value
Level 1
Level 3
Other trading equity securities $ 1
$ 1
$ —
$ 4
$ 4
$ —
Other trading debt securities —
—
—
1
1
—
Derivative assets 2
2
—
3
3
—
Total assets 3
3
—
8
8
—
Derivative liabilities (123 ) —
(123 ) (187 ) —
(187 )
Net (liabilities) assets $ (120 ) $ 3
$ (123 ) $ (179 ) $ 8
$ (187 )

~~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)
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017
2016
2017
2016
Balance at beginning of period $ (145 ) $ (190 ) $ (187 ) $ (149 )
Total gains (losses) and settlements 22
(5 ) 64
(46 )
Balance at end of period $ (123 ) $ (195 ) $ (123 ) $ (195 )

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS

The following tables include quantitative information about the Duke Energy Registrants' derivatives classified as Level 3.


												March 31, 2020
	September 30, 2017																						Weighted
	Fair Value											Fair Value											Average
Investment Type	(in millions)			Valuation Technique	Unobservable Input	Range						(in millions)			Valuation Technique	Unobservable Input	Range						Range
Duke Energy Ohio
Financial Transmission Rights (FTRs)	$	2		RTO auction pricing	FTR price – per megawatt-hour (MWh)	$	—		-	$	1.08
FTRs												$	1		RTO auction pricing	FTR price – per MWh	$	0.04		-	$	3.29	$	1.03
Duke Energy Indiana
FTRs	28			RTO auction pricing	FTR price – per MWh	(0.82		)	-	6.19		2			RTO auction pricing	FTR price – per MWh	(0.37		)	-	6.06		0.54
Piedmont
Natural gas contracts	(123		)	Discounted cash flow	Forward natural gas curves – price per million British thermal unit (MMBtu)	2.12			-	3.36		(91		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.64			-	2.41		1.94
Duke Energy
Total Level 3 derivatives	$	(93	)									$	(88	)


												December 31, 2019
	December 31, 2016																						Weighted
	Fair Value											Fair Value											Average
Investment Type	(in millions)			Valuation Technique	Unobservable Input	Range						(in millions)			Valuation Technique	Unobservable Input	Range						Range
Duke Energy Ohio
FTRs	$	5		RTO auction pricing	FTR price – per MWh	$	0.77		-	$	3.52	$	4		RTO auction pricing	FTR price – per MWh	$	0.59		-	$	3.47	$	2.07
Duke Energy Indiana
FTRs	16			RTO auction pricing	FTR price – per MWh	(0.83		)	-	9.32		11			RTO auction pricing	FTR price – per MWh	(0.66		)	-	9.24		1.15
Piedmont
Natural gas contracts	(187		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	2.31			-	4.18		(117		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.59			-	2.46		1.91
Duke Energy
Total Level 3 derivatives	$	(166	)									$	(102	)



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. 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.



	March 31, 2020				December 31, 2019
(in millions)	Book Value		Fair Value		Book Value		Fair Value
Duke Energy^(a)	$	61,388	$	65,644	$	58,126	$	63,062
Duke Energy Carolinas	12,807		14,312		11,900		13,516
Progress Energy	19,355		21,802		19,634		22,291
Duke Energy Progress	9,059		9,798		9,058		9,934
Duke Energy Florida	7,706		8,831		7,987		9,131
Duke Energy Ohio	2,620		2,904		2,619		2,964
Duke Energy Indiana	4,603		5,433		4,057		4,800
Piedmont	2,385		2,551		2,384		2,642

September 30, 2017 December 31, 2016
(in millions) Book Value
Fair Value
Book Value
Fair Value
Duke Energy $ 51,414
$ 53,985
$ 47,895
$ 49,161
Duke Energy Carolinas 9,525
10,653
9,603
10,494
Progress Energy 17,637
19,615
17,541
19,107
Duke Energy Progress 7,557
8,075
7,011
7,357
Duke Energy Florida 6,696
7,475
6,125
6,728
Duke Energy Ohio 2,067
2,242
1,884
2,020
Duke Energy Indiana 3,785
4,407
3,786
4,260
Piedmont 2,036
2,193
1,821
1,933


(a)	Book value of long-term debt includes $1.4 billion at March 31, 2020, and $1.5 billion at December 31, 2019, of unamortized debt discount and premium, net of purchase accounting adjustments related to the mergers with Progress Energy and Piedmont that are excluded from fair value of long-term debt.

At both ~~September 30, 2017,~~March 31, 2020, and December 31, ~~2016,~~2019, 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.

~~13.~~11. 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 re-evaluation, 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.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

CONSOLIDATED VIEs

The obligations of the consolidated VIEs discussed in the following paragraphs are nonrecourse to the Duke Energy ~~registrants.~~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.

NoNaN financial support was provided to any of the consolidated VIEs during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, and the year ended December 31, ~~2016,~~2019, or is expected to be provided in the future that was not previously contractually required.

Receivables Financing – ~~DERF / DEPR /~~ DERF/DEPR/DEFR

~~Duke Energy Receivables Finance Company, LLC (DERF), Duke Energy Progress Receivables, LLC (DEPR)~~DERF, DEPR and ~~Duke Energy Florida Receivables, LLC (DEFR)~~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 ~~limited liability companies~~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. The sole source of funds to satisfy the related debt obligations is cash collections from the receivables. Amounts borrowed under the credit facilities are reflected on the Condensed Consolidated Balance Sheets as Long-Term Debt.

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. Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The impact of COVID-19 and the Duke Energy Registrant’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. See Note 3 for information about COVID-19 filings with state utility commissions.

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. 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 Condensed Consolidated Balance Sheets as Long-Term Debt.

The proceeds Duke Energy Ohio and Duke Energy Indiana receive from the sale of receivables to CRC are ~~typically 75 percent~~approximately 75% cash and ~~25 percent~~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.



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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 ~~are~~is not ~~performed~~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. Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The impact of COVID-19 and the Duke Energy Registrant’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. See Note 3 for information about COVID-19 filings with state utility commissions.

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	$	375	$	250
Amounts borrowed at March 31, 2020	350		475		325		250
Amounts borrowed at December 31, 2019	350		474		325		250
Restricted Receivables at March 31, 2020	467		616		410		331
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 December 2018
December 2018
February 2019
April 2019
Credit facility amount $ 325
$ 425
$ 300
$ 225
Amounts borrowed at September 30, 2017 325
425
300
225
Amounts borrowed at December 31, 2016 325
425
300
225

Nuclear Asset-Recovery Bonds – DEFPF

~~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 ~~June~~ 2016, DEFPF issued ~~$1,294 million of~~ 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.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

The following table summarizes the impact of DEFPF on Duke Energy Florida's Condensed Consolidated Balance Sheets.



(in millions)	March 31, 2020		December 31, 2019
Receivables of VIEs	$	4	$	5
Regulatory Assets: Current	53		52
Current Assets: Other	13		39
Other Noncurrent Assets: Regulatory assets	980		989
Current Liabilities: Other	2		10
Current maturities of long-term debt	54		54
Long-Term Debt	1,028		1,057

(in millions) September 30, 2017
December 31, 2016
Receivables of VIEs $ 6
$ 6
Current Assets: Regulatory assets 51
50
Current Assets: Other 20
53
Other Noncurrent Assets: Regulatory assets 1,101
1,142
Current Liabilities: Other 3
17
Current maturities of long-term debt 53
62
Long-Term Debt 1,164
1,217

Commercial Renewables

Certain of Duke Energy’s renewable energy facilities are VIEs due 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 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 ~~impact~~impacted the economic performance of these renewable energy facilities were decisions associated with siting, negotiating PPAs ~~engineering, procurement~~ and ~~construction~~Engineering, Procurement and Construction 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.



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

The table below presents material balances reported on Duke Energy's Condensed Consolidated Balance Sheets related to ~~renewables~~Commercial Renewables VIEs.



(in millions)	March 31, 2020			December 31, 2019
Current Assets: Other	$	287		$	203
Property, Plant and Equipment: Cost	6,106			5,747
Accumulated depreciation and amortization	(1,094		)	(1,041		)
Other Noncurrent Assets: Other	82			106
Current maturities of long-term debt	162			162
Long-Term Debt	1,538			1,541
Other Noncurrent Liabilities: AROs	129			127
Other Noncurrent Liabilities: Other	258			228

(in millions) September 30, 2017
December 31, 2016
Current Assets: Other $ 399
$ 223
Property, plant and equipment, cost 3,923
3,419
Accumulated depreciation and amortization (556 ) (453 )
Current maturities of long-term debt 162
198
Long-Term Debt 1,780
1,097
Deferred income taxes 223
275
Other Noncurrent Liabilities: Other 247
252

NON-CONSOLIDATED VIEs

The following tables summarize the impact of non-consolidated VIEs on the Condensed Consolidated Balance Sheets.



	March 31, 2020
	Duke Energy												Duke		Duke
	Pipeline			Commercial			Other						Energy		Energy
(in millions)	Investments			Renewables			VIEs			Total			Ohio		Indiana
Receivables from affiliated companies	$	—		$	(1	)	$	—		$	(1	)	$	39	$	48
Investments in equity method unconsolidated affiliates	1,243			371			—			1,614			—		—
Total assets	$	1,243		$	370		$	—		$	1,613		$	39	$	48
Taxes accrued	(1		)	—			—			(1		)	—		—
Other current liabilities	—			—			3			3			—		—
Deferred income taxes	69			—			—			69			—		—
Other noncurrent liabilities	105			—			11			116			—		—
Total liabilities	$	173		$	—		$	14		$	187		$	—	$	—
Net assets (liabilities)	$	1,070		$	370		$	(14	)	$	1,426		$	39	$	48

September 30, 2017
Duke Energy Duke
Duke
Pipeline
Commercial
Other
Energy
Energy
(in millions) Investments
Renewables

VIEs^(a)

Total
Ohio
Indiana
Receivables from affiliated companies $ —
$ —
$ —
$ —
$ 46
$ 75
Investments in equity method unconsolidated affiliates 895
172
39
1,106
—
—
Other noncurrent assets 18
—
—
18
—
—
Total assets $ 913
$ 172
$ 39
$ 1,124
$ 46
$ 75
Other current liabilities —
—
3
3
—
—
Deferred income taxes 29
—
—
29
—
—
Other noncurrent liabilities —
—
12
12
—
—
Total liabilities $ 29
$ —
$ 15
$ 44
$ —
$ —
Net assets $ 884
$ 172
$ 24
$ 1,080
$ 46
$ 75

~~(a)~~

Duke Energy holds a 50 percent equity interest in Duke-American Transmission Company, LLC (DATC). As of December 31, 2016, DATC was considered a VIE due to having insufficient equity to finance its own activities without subordinated financial support. However, DATC has sufficient equity to finance its own activities as of September 30, 2017, and, therefore, is no longer considered a VIE. Duke Energy's investment in DATC was $45 million at September 30, 2017.

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~



	December 31, 2019
	Duke Energy												Duke		Duke
	Pipeline			Commercial			Other						Energy		Energy
(in millions)	Investments			Renewables			VIEs			Total			Ohio		Indiana
Receivables from affiliated companies	$	—		$	(1	)	$	—		$	(1	)	$	64	$	77
Investments in equity method unconsolidated affiliates	1,179			300			—			1,479			—		—
Total assets	$	1,179		$	299		$	—		$	1,478		$	64	$	77
Taxes accrued	(1		)	—			—			(1		)	—		—
Other current liabilities	—			—			4			4			—		—
Deferred income taxes	59			—			—			59			—		—
Other noncurrent liabilities	—			—			11			11			—		—
Total liabilities	$	58		$	—		$	15		$	73		$	—	$	—
Net assets (liabilities)	$	1,121		$	299		$	(15	)	$	1,405		$	64	$	77

December 31, 2016
Duke Energy Duke
Duke

Pipeline
Commercial
Other
Energy
Energy

(in millions) Investments
Renewables
VIEs
Total
Ohio
Indiana

Piedmont^(a)

Receivables from affiliated companies $ —
$ —
$ —
$ —
$ 82
$ 101
$ —
Investments in equity method unconsolidated affiliates 487
174
90
751
—
—
139
Other noncurrent assets 12
—
—
12
—
—
—
Total assets $ 499
$ 174
$ 90
$ 763
$ 82
$ 101
$ 139
Other current liabilities —
—
3
3
—
—
—
Other noncurrent liabilities —
—
13
13
—
—
4
Total liabilities $ —
$ —
$ 16
$ 16
$ —
$ —
4
Net assets $ 499
$ 174
$ 74
$ 747
$ 82
$ 101
$ 135


~~(a)~~	~~In April 2017, Piedmont transferred its non-consolidated VIE investments to a wholly owned subsidiary of Duke Energy. See "Pipeline Investments" section below for additional detail.~~

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 ~~power purchase agreement~~PPA with OVEC, which is discussed below, and various guarantees, ~~some~~including Duke Energy's guarantee agreement to support its share of the ACP revolving credit facility. Duke Energy's maximum exposure to loss under the terms of the guarantee is $845 million, which ~~are reflected in~~represents 47% of the ~~table above~~outstanding borrowings under the credit facility as ~~Other noncurrent liabilities.~~of March 31, 2020. For more information on various guarantees, refer to Note 54.

Pipeline Investments

Duke Energy has investments in various joint ventures with pipeline projects currently under construction. 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.



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

The table below presents Duke Energy's ownership interest and investment balances in these joint ventures.



			VIE Investment Amount (in millions)
	Ownership		March 31,		December 31,
Entity Name	Interest		2020		2019
ACP^(a)	47	%	$	1,243	$	1,179
Constitution^(b)	24	%	—		—
Total			$	1,243	$	1,179

VIE Investment Amount (in millions)
Ownership September 30, December 31,
Entity Name Interest 2017 2016
ACP 47 % $ 595
$ 265
Sabal Trail 7.5 % 218
140
Constitution 24 % 82
82
Total $ 895
$ 487

At December 31, 2016, Piedmont had a 7 percent ownership interest in ACP and a 24 percent ownership interest in Constitution. In April 2017, Piedmont transferred its ownership interests in ACP and Constitution to a wholly owned subsidiary of Duke Energy at book value.

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. Duke Energy's maximum exposure to loss under the terms of the guarantee is limited to 47 percent of the outstanding borrowings under the credit facility. Through October 2017, ACP has borrowed $570 million against the revolving credit facility.


(a)	Duke Energy evaluated this investment for impairment as of March 31, 2020, and December 31, 2019, and determined that fair value approximated carrying value and therefore no impairment was necessary.


(b)	During the year ended December 31, 2019, Duke Energy recorded an OTTI related to Constitution. This charge resulted in the full write-down of Duke Energy's investment in Constitution.

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.

~~Other VIEs~~

In 2019, Duke Energy ~~holds~~acquired a ~~50 percent equity interest~~majority ownership in ~~Pioneer Transmission, LLC (Pioneer). Pioneer is considered~~ a VIE due to having insufficient equity to finance its own activities without subordinated financial support. The activities that most significantly impact Pioneer's economic performance are decisions related to the developmentportfolio of ~~new transmission facilities. The power to direct these activities is jointly and equally shared by~~distributed fuel cell projects from Bloom Energy Corporation. Duke Energy ~~and~~is not the ~~other joint venture partner, American Electric Power; therefore, Duke Energy~~primary beneficiary of the assets within the portfolio and does not consolidate ~~Pioneer.~~

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

the assets in the portfolio.

OVEC

Duke Energy Ohio’s ~~9 percent~~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~~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, including~~business. On March 31, 2018, FirstEnergy Solutions Corp (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 ~~associated with its 2,256 MW of coal-fired generation capacity. Deterioration~~allocated to the counterparties. On July 31, 2018, the bankruptcy court rejected the FES ICPA, which means OVEC is an unsecured creditor in the ~~credit quality or~~FES bankruptcy ~~of one or more parties to the ICPA could increase the costs of OVEC.~~proceeding. In addition, certain proposed environmental rulemaking could result in future increased OVEC cost allocations. 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 turn over 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 percent and a 20 percent 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 has occurred.

~~Key assumptions used in estimating fair value are detailed in the following table.~~

Duke Energy Ohio Duke Energy Indiana
2017
2016
2017
2016
Anticipated credit loss ratio 0.5 % 0.5 % 0.3 % 0.3 %
Discount rate 2.0 % 1.5 % 2.0 % 1.5 %
Receivable turnover rate 13.4 % 13.3 % 10.7 % 10.6 %

The following table shows the gross and net receivables sold.



	Duke Energy Ohio				Duke Energy Indiana
(in millions)	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Receivables sold	$	234	$	253	$	274	$	307
Less: Retained interests	39		64		48		77
Net receivables sold	$	195	$	189	$	226	$	230

Duke Energy Ohio Duke Energy Indiana
(in millions) September 30, 2017
December 31, 2016
September 30, 2017
December 31, 2016
Receivables sold $ 209
$ 267
$ 304
$ 306
Less: Retained interests 46
82
75
101
Net receivables sold $ 163
$ 185
$ 229
$ 205



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

The following table shows sales and cash flows related to receivables sold.



	Duke Energy Ohio				Duke Energy Indiana
	Three Months Ended				Three Months Ended
	March 31,				March 31,
(in millions)	2020		2019		2020		2019
Sales
Receivables sold	$	537	$	575	$	647	$	734
Loss recognized on sale	4		4		4		5
Cash flows
Cash proceeds from receivables sold	$	559	$	597	$	672	$	758
Return received on retained interests	2		2		2		3

Duke Energy Ohio Duke Energy Indiana
Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
(in millions) 2017
2016
2017
2016
2017
2016
2017
2016
Sales
Receivables sold $ 438
$ 481
$ 1,392
$ 1,442
$ 720
$ 722
$ 2,047
$ 1,980
Loss recognized on sale 2
2
7
7
3
3
9
8
Cash flows
Cash proceeds from receivables sold $ 434
$ 468
$ 1,421
$ 1,432
$ 713
$ 703
$ 2,064
$ 1,958
Collection fees received 1
1
1
1
—
—
1
1
Return received on retained interests —
1
2
2
2
2
5
4

Cash flows from sales of receivables are reflected within Cash Flows From Operating Activities on Duke Energy Ohio’s and Duke Energy Indiana’s Condensed Consolidated Statements of Cash Flows.

~~PART I~~12. REVENUE

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~Duke Energy earns substantially all of its revenues through its reportable segments, Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables.

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~Electric Utilities and Infrastructure

~~Combined Notes~~Electric Utilities and Infrastructure 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.

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
(in millions)	2020		2021		2022		2023		2024		Thereafter		Total
Progress Energy	$	84	$	92	$	87	$	44	$	45	$	58	$	410
Duke Energy Progress	6		8		8		8		8		—		38
Duke Energy Florida	78		84		79		36		37		58		372
Duke Energy Indiana	8		5		—		—		—		—		13

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 earns its revenues 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.

Fixed-capacity payments under long-term contracts for the Gas Utilities and Infrastructure 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)	2020		2021		2022		2023		2024		Thereafter		Total
Piedmont	$	51	$	65	$	64	$	61	$	58	$	376	$	675

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 Renewable Energy Certificates (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.



FINANCIAL STATEMENTS	REVENUE

Other

The remainder of Duke Energy’s operations is presented as Other, which does not include material revenues from contracts with customers.

Disaggregated Revenues

Disaggregated revenues are presented as follows:



	Three Months Ended March 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	$	2,261	$	756	$	1,064	$	502	$	562	$	176		$	265	$	—
General	1,492		549		648		319		329		114			181		—
Industrial	693		269		216		154		62		35			175		—
Wholesale	497		114		321		279		42		7			55		—
Other revenues	191		60		118		63		55		20			16		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	5,134	$	1,748	$	2,367	$	1,317	$	1,050	$	352		$	692	$	—

Gas Utilities and Infrastructure
Residential	$	362	$	—	$	—	$	—	$	—	$	97		$	—	$	264
Commercial	169		—		—		—		—		43			—		126
Industrial	41		—		—		—		—		6			—		36
Power Generation	—		—		—		—		—		—			—		11
Other revenues	30		—		—		—		—		6			—		24
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	602	$	—	$	—	$	—	$	—	$	152		$	—	$	461

Commercial Renewables
Revenue from contracts with customers	$	58	$	—	$	—	$	—	$	—	$	—		$	—	$	—

Other
Revenue from contracts with customers	$	6	$	—	$	—	$	—	$	—	$	—		$	—	$	—
Total revenue from contracts with customers	$	5,800	$	1,748	$	2,367	$	1,317	$	1,050	$	504		$	692	$	461

Other revenue sources^(a)	$	149	$	—	$	55	$	21	$	30	$	(6	)	$	—	$	51
Total revenues	$	5,949	$	1,748	$	2,422	$	1,338	$	1,080	$	498		$	692	$	512


(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.



FINANCIAL STATEMENTS	REVENUE



	Three Months Ended March 31, 2019
			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	$	2,370	$	760	$	1,114	$	536	$	578	$	189	$	306	$	—
General	1,427		496		632		306		326		103		197		—
Industrial	711		266		222		161		61		33		190		—
Wholesale	541		119		353		315		38		14		54		—
Other revenues	172		78		172		125		47		16		17		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	5,221	$	1,719	$	2,493	$	1,443	$	1,050	$	355	$	764	$	—

Gas Utilities and Infrastructure
Residential	$	414	$	—	$	—	$	—	$	—	$	112	$	—	$	302
Commercial	206		—		—		—		—		49		—		157
Industrial	48		—		—		—		—		7		—		42
Power Generation	—		—		—		—		—		—		—		13
Other revenues	63		—		—		—		—		8		—		56
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	731	$	—	$	—	$	—	$	—	$	176	$	—	$	570

Commercial Renewables
Revenue from contracts with customers	$	42	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other
Revenue from contracts with customers	$	4	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total revenue from contracts with customers	$	5,998	$	1,719	$	2,493	$	1,443	$	1,050	$	531	$	764	$	570

Other revenue sources^(a)	$	165	$	25	$	79	$	41	$	36	$	—	$	4	$	9
Total revenues	$	6,163	$	1,744	$	2,572	$	1,484	$	1,086	$	531	$	768	$	579


(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.



	March 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	(10		)	(3		)	(4		)	(2		)	(2		)	—		—		(1		)
Credit Loss Expense	18			3			6			2			5			1		—		3
Balance at March 31, 2020	$	89		$	11		$	20		$	9		$	11		$	5	$	3	$	9

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 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 annually for trade and other receivables. Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The specific actions taken by each Duke Energy Registrant are described in Note 3. 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.



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.



	March 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	$	716	$	285	$	195	$	85	$	110	$	1	$	16	$	32
0-30 days	1,584		448		585		321		262		45		24		134
30-60 days	216		69		67		44		23		9		1		18
60-90 days	65		18		20		14		6		2		1		5
90+ days	145		19		57		32		25		32		11		11
Trade and Other Receivables	$	2,726	$	839	$	924	$	496	$	426	$	89	$	53	$	200

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 bills and meter reading schedules and the impact of weather normalization or margin decoupling mechanisms.

Unbilled revenues are included within Receivables and Receivables of VIEs on the Condensed Consolidated ~~Financial Statements – (Unaudited) – (Continued)~~Balance Sheets as shown in the following table.



(in millions)	March 31, 2020		December 31, 2019
Duke Energy	$	716	$	843
Duke Energy Carolinas	285		298
Progress Energy	195		217
Duke Energy Progress	85		122
Duke Energy Florida	110		95
Duke Energy Ohio	1		1
Duke Energy Indiana	16		16
Piedmont	32		78

~~Collection fees received in connection with servicing transferred accounts receivable are included in Operation, maintenance and other on~~Additionally, Duke Energy ~~Ohio’s~~Ohio and Duke Energy ~~Indiana’s~~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 Condensed Consolidated ~~Statements~~Balance Sheets of ~~Operations~~Duke Energy Ohio and ~~Comprehensive Income. The loss recognized on sales of~~Duke Energy Indiana. See Note 11 for further information. These receivables ~~is calculated monthly by multiplying receivables sold during~~for unbilled revenues are shown in 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 plus a fixed rate of 1.00 percent.table below.



(in millions)	March 31, 2020		December 31, 2019
Duke Energy Ohio	$	61	$	82
Duke Energy Indiana	94		115

~~14. COMMON STOCK~~13. STOCKHOLDERS' EQUITY

Basic ~~Earnings Per Share (EPS)~~EPS is computed by dividing net income ~~attributable~~available to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income ~~attributable~~available to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities, 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 stock options and equity forward sale agreements, were exercised or settled. Duke Energy’s participating securities are restricted stock units that are entitled to dividends declared on Duke Energy common stock during the restricted stock unit’s vesting periods. Dividends declared on preferred stock are recorded on the Condensed 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.



FINANCIAL STATEMENTS	STOCKHOLDERS' EQUITY

The following table presents Duke Energy’s basic and diluted EPS calculations, ~~and reconciles~~ the weighted average number of common shares outstanding ~~to the diluted weighted average number of~~and common ~~shares outstanding.~~and preferred share dividends declared.

Three Months Ended September 30, Nine Months Ended September 30,
(in millions, except per-share amounts) 2017
2016
2017
2016
Income from continuing operations attributable to Duke Energy common stockholders excluding impact of participating securities $ 954
$ 998
$ 2,356
$ 2,194
Weighted average shares outstanding – basic 700
689
700
689
Equity Forwards —
2
—
1
Weighted average shares outstanding – diluted 700 691 700 690
Earnings per share from continuing operations attributable to Duke Energy common stockholders
Basic $ 1.36
$ 1.44
$ 3.37
$ 3.19
Diluted $ 1.36
$ 1.44
$ 3.37
$ 3.18
Potentially dilutive items excluded from the calculation^(a)
2
2
2 2
Dividends declared per common share $ 0.89
$ 0.855
$ 2.60
$ 2.505



	Three Months Ended March 31,
(in millions, except per share amounts)	2020		2019
Income from continuing operations available to Duke Energy common stockholders excluding impact of participating securities and including accumulated preferred stock dividends adjustment	$	911	$	898

Weighted average common shares outstanding – basic	734		727
Equity forwards	2		—
Weighted average common shares outstanding – diluted	736		727
EPS from continuing operations available to Duke Energy common stockholders
Basic and diluted	$	1.24	$	1.24
Potentially dilutive items excluded from the calculation^(a)	2		2
Dividends declared per common share	$	0.945	$	0.9275
Dividends declared on Series A preferred stock per depositary share^(b)	$	0.359	$	—
Dividends declared on Series B preferred stock per share^(c)	$	24.917	$	—


(a)	Performance stock awards were not included in the dilutive securities calculation because the performance measures related to the awards had not been met.


(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.


(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.

~~Equity Forwards~~Common Stock

In November 2019, Duke Energy filed a prospectus supplement and executed an Equity Distribution Agreement (EDA) under which it may sell up to $1.5 billion of its common stock through an at-the-market (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. In March ~~2016,~~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.

Separately, in November 2019, Duke Energy marketed an equity offering of ~~10.6~~28.75 million shares of common ~~stock.~~stock through an Underwriting Agreement. In ~~lieu of issuing equity at the time of~~connection with the offering, Duke Energy entered into an equity forward ~~sale~~sales agreement with an initial forward price of $85.99 per share.

The equity forward sales agreements ~~with Barclays (the Equity Forwards). The Equity Forwards required~~require Duke Energy to either physically settle the ~~transactions~~transaction by issuing ~~10.6 million~~ shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreement, or net settle in whole or in part through the delivery or receipt of cash or shares. AsThe settlement alternatives are at Duke Energy's election. Settlement of ~~September 30, 2016, share~~the forward sales agreements are expected to occur on or prior to December 31, 2020. Until settlement of the equity forwards, EPS dilution resulting from the agreements, ~~was~~if any, will be determined under the treasury stock method.

~~Duke Energy physically settled the Equity Forwards in full in October 2016 following the close of the Piedmont acquisition. See Note 2 for additional information related to the Piedmont acquisition.~~

~~15. STOCK-BASED COMPENSATION~~

For employee awards, equity classified stock-based compensation cost is measured at the service inception date or the grant date, based on the estimated achievement of certain performance metrics or the fair value of the award, and is recognized as expense or capitalized as a component of property, plant and equipment over the requisite service period.

~~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.~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2017
2016
2017
2016
Restricted stock unit awards $ 10
$ 8
$ 30
$ 25
Performance awards 7
4
20
14
Pretax stock-based compensation cost $ 17
$ 12
$ 50
$ 39
Tax benefit associated with stock-based compensation expense $ 6
$ 5
$ 18
$ 14
Stock-based compensation costs capitalized 1
—
2
2

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

Prior to Duke Energy acquiring Piedmont, Piedmont had an incentive compensation plan for eligible officers and other participants. Piedmont's total pretax stock-based compensation costs were approximately $2 million and $5 million for the three and nine months ended September 30, 2016, respectively. The tax benefit associated with Piedmont's stock-based compensation expense for the three and nine months ended September 30, 2016, was immaterial.

~~16.~~14. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT RETIREMENT PLANS

Duke Energy ~~maintains,~~and certain subsidiaries maintain, and the Subsidiary Registrants participate in, qualified and non-qualified, non-contributory defined benefit retirement plans. Duke ~~Energy’s~~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. ~~The following table includes information related to the Duke Energy Registrants' contributions to its U.S. qualified defined benefit pension plans.~~

Duke

Duke
Energy

(in millions) Energy
Ohio
Piedmont
Anticipated 2017 contributions $ 19
$ 4
$ 11
Contributions made during the nine months ended September 30, 2017 8
4
—
Remaining estimated contributions to be made in 2017 $ 11
$ —
$ 11



FINANCIAL STATEMENTS	EMPLOYEE BENEFIT PLANS

~~Duke Energy did not make any contributions to its U.S. qualified defined benefit pension plans during the nine months ended September 30, 2016.~~

Net periodic benefit costs disclosed in the tables below represent the cost of the respective benefit plan for the periods presented. However, portions of the net periodic benefit costs disclosed in the tables below have been capitalized as a component of property, plant and equipment. Amounts presented in the tables below for the Subsidiary Registrants represent the amounts of pension and other post-retirement benefit costs allocated by Duke Energy for employees of the Subsidiary Registrants. Additionally, the Subsidiary Registrants are allocated their proportionate share of pension and post-retirement benefit costs for employees of Duke Energy’s shared services affiliate that provides support to the Subsidiary Registrants. These allocated amounts are included in the governance and shared service costs discussed in Note 9~~. Duke Energy uses a December 31 measurement date for its defined benefit retirement plan assets and obligations.~~

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

QUALIFIED PENSION PLANS

The following tables include the components of net periodic pension costs for qualified pension plans.


	Three Months Ended September 30, 2017																								Three Months Ended March 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)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont			Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	40		$	12		$	12		$	6		$	5		$	1		$	2		$	3		$	41		$	12		$	12		$	6		$	5		$	1		$	2		$	1
Interest cost on projected benefit obligation	82			20			25			12			13			4			7			3			67			16			21			10			12			4			6			2
Expected return on plan assets	(136		)	(35		)	(43		)	(21		)	(21		)	(7		)	(11		)	(6		)	(143		)	(36		)	(48		)	(22		)	(25		)	(7		)	(11		)	(5		)
Amortization of actuarial loss	36			8			14			6			7			1			3			3			34			7			11			5			6			2			3			2
Amortization of prior service credit	(6		)	(2		)	(1		)	—			—			—			—			(1		)	(8		)	(2		)	(1		)	—			—			—			—			(2		)
Other	2			—			1			—			—			—			—			—
Amortization of settlement charges																									2			1			1			—			—			—			—			—
Net periodic pension costs	$	18		$	3		$	8		$	3		$	4		$	(1	)	$	1		$	2		$	(7	)	$	(2	)	$	(4	)	$	(1	)	$	(2	)	$	—		$	—		$	(2	)


	Three Months Ended September 30, 2016																								Three Months Ended March 31, 2019
				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)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont			Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	36		$	12		$	11		$	6		$	4		$	1		$	2		$	3		$	37		$	12		$	11		$	6		$	4		$	1		$	2		$	1
Interest cost on projected benefit obligation	83			21			27			12			14			5			7			2			83			20			26			12			14			5			6			3
Expected return on plan assets	(128		)	(35		)	(42		)	(21		)	(21		)	(6		)	(10		)	(6		)	(143		)	(38		)	(44		)	(23		)	(22		)	(8		)	(11		)	(5		)
Amortization of actuarial loss	33			8			14			6			7			1			3			2			24			6			9			3			6			1			2			2
Amortization of prior service credit	(4		)	(2		)	(1		)	—			(1		)	—			—			(1		)	(8		)	(2		)	(1		)	—			—			—			—			(3		)
Other	2			1			1			—			1			—			—			—
Net periodic pension costs	$	22		$	5		$	10		$	3		$	4		$	1		$	2		$	—		$	(7	)	$	(2	)	$	1		$	(2	)	$	2		$	(1	)	$	(1	)	$	(2	)

Nine Months Ended September 30, 2017
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 120
$ 36
$ 36
$ 18
$ 15
$ 3
$ 6
$ 9
Interest cost on projected benefit obligation 246
60
75
36
39
14
21
9
Expected return on plan assets (408 ) (106 ) (129 ) (63 ) (63 ) (21 ) (33 ) (18 )
Amortization of actuarial loss 108
24
42
18
21
3
9
9
Amortization of prior service credit (18 ) (6 ) (3 ) —
—
—
—
(3 )
Other 6
—
3
1
—
—
—
1
Net periodic pension costs $ 54
$ 8
$ 24
$ 10
$ 12
$ (1 ) $ 3
$ 7

Nine Months Ended September 30, 2016
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 109
$ 36
$ 32
$ 18
$ 14
$ 3
$ 6
$ 8
Interest cost on projected benefit obligation 249
64
80
37
42
15
21
7
Expected return on plan assets (386 ) (106 ) (126 ) (62 ) (63 ) (20 ) (31 ) (18 )
Amortization of actuarial loss 99
24
41
17
21
3
9
6
Amortization of prior service credit (12 ) (6 ) (3 ) (1 ) (1 ) —
—
(2 )
Other 6
2
2
1
1
—
—
—
Net periodic pension costs $ 65
$ 14
$ 26
$ 10
$ 14
$ 1
$ 5
$ 1

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

NON-QUALIFIED PENSION PLANS

~~The following tables include the components of net~~Net periodic pension costs for non-qualified pension plans were not material for ~~registrants with non-qualified pension costs.~~

Three Months Ended September 30, 2017
Duke
Duke
Duke
Duke
Energy
Progress
Energy
Energy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Service cost $ —
$ —
$ —
$ —
$ —
Interest cost on projected benefit obligation 4
—
1
1
1
Amortization of actuarial loss 2
—
1
—
—
Net periodic pension costs $ 6
$ —
$ 2
$ 1
$ 1

Three Months Ended September 30, 2016
Duke
Duke
Duke
Duke
Energy
Progress
Energy
Energy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Service cost $ 1
$ —
$ —
$ —
$ —
Interest cost on projected benefit obligation 4
—
2
—
—
Amortization of actuarial loss 2
—
1
1
1
Amortization of prior service credit (1 ) —
—
—
—
Net periodic pension costs $ 6

$ —

$ 3

$ 1

$ 1

Nine Months Ended September 30, 2017
Duke
Duke
Duke
Duke
Energy
Progress
Energy
Energy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Service cost $ —
$ —
$ —
$ —
$ —
Interest cost on projected benefit obligation 10
1
3
2
2
Amortization of actuarial loss 6
—
3
—
—
Net periodic pension costs $ 16
$ 1
$ 6
$ 2
$ 2

Nine Months Ended September 30, 2016
Duke
Duke
Duke
Duke
Energy
Progress
Energy
Energy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Service cost $ 2
$ —
$ —
$ —
$ —
Interest cost on projected benefit obligation 11
1
4
1
1
Amortization of actuarial loss 6
—
2
1
1
Amortization of prior service credit (1 ) —
—
—
—
Net periodic pension costs $ 18

$ 1

$ 6

$ 2

$ 2

the three months ended March 31, 2020, and 2019.

OTHER POST-RETIREMENT BENEFIT PLANS

~~Duke Energy provides, and the Subsidiary Registrants participate in, some health care and life insurance benefits~~Net periodic costs for ~~retired employees on a contributory and non-contributory basis.~~

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~The following tables include the components of net periodic~~ other post-retirement benefit ~~costs.~~

Three Months Ended September 30, 2017
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 1
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Interest cost on accumulated post-retirement benefit obligation 9
2
4
2
2
—
1
—
Expected return on plan assets (3 ) (2 ) —
—
—
—
—
—
Amortization of actuarial loss 2
—
5
3
2
—
—
—
Amortization of prior service credit (29 ) (2 ) (21 ) (14 ) (8 ) —
—
—
Net periodic other post-retirement benefit costs $ (20 ) $ (2 ) $ (12 ) $ (9 ) $ (4 ) $ —
$ 1
$ —

Three Months Ended September 30, 2016
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ —
$ —
$ 1
$ —
$ —
$ —
$ —
$ 1
Interest cost on accumulated post-retirement benefit obligation 9
2
4
2
3
—
1
—
Expected return on plan assets (2 ) (2 ) (1 ) —
—
—
—
—
Amortization of actuarial loss (gain) 2
—
5
3
2
(1 ) —
—
Amortization of prior service credit (35 ) (4 ) (26 ) (16 ) (8 ) —
(1 ) —
Net periodic other post-retirement benefit costs $ (26 ) $ (4 ) $ (17 ) $ (11 ) $ (3 ) $ (1 ) $ —
$ 1

Nine Months Ended September 30, 2017
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 3
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Interest cost on accumulated post-retirement benefit obligation 27
6
11
6
6
—
1
—
Expected return on plan assets (10 ) (6 ) —
—
—
—
—
—
Amortization of actuarial loss (gain) 6
(2 ) 15
9
6
(1 ) —
—
Amortization of prior service credit (87 ) (6 ) (63 ) (41 ) (23 ) —
—
—
Net periodic other post-retirement benefit costs $ (61 ) $ (8 ) $ (37 ) $ (26 ) $ (11 ) $ (1 ) $ 1
$ —

Nine Months Ended September 30, 2016
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 2
$ —
$ 1
$ —
$ —
$ —
$ —
$ 1
Interest cost on accumulated post-retirement benefit obligation 26
6
11
6
6
1
3
1
Expected return on plan assets (9 ) (6 ) (1 ) —
—
—
(1 ) (1 )
Amortization of actuarial loss (gain) 5
(2 ) 16
9
7
(2 ) (1 ) —
Amortization of prior service credit (106 ) (10 ) (77 ) (50 ) (26 ) —
(1 ) —
Net periodic other post-retirement benefit costs $ (82 ) $ (12 ) $ (50 ) $ (35 ) $ (13 ) $ (1 ) $ —
$ 1

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

~~DEFINED CONTRIBUTION RETIREMENT PLANS~~

~~EMPLOYEE SAVINGS PLANS~~

~~Duke Energy sponsors,~~plans were not material for the three months ended March 31, 2020, and the Subsidiary Registrants participate in, employee savings plans that cover substantially all U.S. employees. The following table presents employer contributions made by Duke Energy and expensed by the Subsidiary Registrants.

Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Three Months Ended September 30,
2017 $ 43
$ 14
$ 12
$ 9
$ 4
$ 1
$ 2
$ 2
2016 39
13
12
8
3
1
2
2
Nine Months Ended September 30,
2017 $ 147
$ 49
$ 42
$ 30
$ 13
$ 3
$ 7
$ 5
2016 130
44
39
27
11
3
6
5

~~MONEY PURCHASE PENSION PLAN~~

Duke Energy provides, and Piedmont participates in, the Money Purchase Pension (MPP) plan, which is a defined contribution pension plan that allows certain employees to direct investments and assume risk of investment returns. In January 2017, a $2 million contribution was made to the MPP plan.2019.

~~17.~~15. INCOME TAXES

EFFECTIVE TAX RATES

The ~~effective tax rates~~ETRs from continuing operations for each of the Duke Energy Registrants are included in the following table.



	Three Months Ended
	March 31,
	2020		2019
Duke Energy	13.3	%	9.6	%
Duke Energy Carolinas	16.1	%	17.7	%
Progress Energy	17.5	%	17.3	%
Duke Energy Progress	17.1	%	17.8	%
Duke Energy Florida	20.0	%	19.3	%
Duke Energy Ohio	17.7	%	16.9	%
Duke Energy Indiana	20.8	%	24.1	%
Piedmont	10.1	%	21.8	%

Three Months Ended Nine Months Ended
September 30, September 30,
2017
2016
2017
2016
Duke Energy 27.6 % 34.0 % 30.4 % 31.7 %
Duke Energy Carolinas 32.9 % 34.3 % 34.1 % 34.4 %
Progress Energy 29.1 % 32.8 % 31.9 % 34.7 %
Duke Energy Progress 31.7 % 31.4 % 32.4 % 33.5 %
Duke Energy Florida 34.8 % 36.0 % 36.1 % 37.0 %
Duke Energy Ohio 33.3 % 36.8 % 34.4 % 32.5 %
Duke Energy Indiana 38.3 % 35.2 % 39.0 % 34.0 %
Piedmont^(a)
47.6 % 40.0 % 36.1 % 37.7 %

~~(a) Piedmont is in a net loss position for the three months ended September 30, 2017, and 2016.~~

The ~~decrease~~increase in the ~~effective tax rate (ETR)~~ETR for Duke Energy for the three months ended ~~September 30, 2017, is~~March 31, 2020, was primarily due to ~~higher research credits,~~an adjustment related to the income tax ~~benefits of legal entity restructuring and prior year unfavorable impacts of finalizing federal tax audits. The decrease~~recognition for equity method investments recorded in the ~~ETR for Duke Energy for the nine months ended September 30, 2017, is primarily due to higher research credits, tax benefits~~first quarter of ~~legal entity restructuring and higher production tax credits related to wind projects placed in service;~~2019, partially offset by ~~lower~~an increase in the amortization of excess deferred taxes. The equity method investment ~~tax credits due~~adjustment was immaterial and relates to ~~lower solar investments.~~prior years.

The decrease in the ETR for Duke Energy Carolinas for the three months ended ~~September 30, 2017, is primarily due to the favorable impact of research credits, provision to return true ups, and lower North Carolina corporate tax rates.~~

The decrease in the ETR for Progress Energy for the three and nine months ended September 30, 2017, is primarily due to the favorable impact of research credits and lower North Carolina corporate tax rates.

The decrease in the ETR for Duke Energy Progress for the nine months ended September 30, 2017, is primarily due to the favorable impact of research credits and lower North Carolina corporate tax rates.

~~The decrease in the ETR for Duke Energy Florida for the three months ended September 30, 2017, is primarily due to the favorable impact of research credits.~~

The decrease in the ETR for Duke Energy Ohio for the three months ended September 30, 2017, is primarily due to the favorable impact of research credits. The increase in the ETR for Duke Energy Ohio for the nine months ended September 30, 2017, isMarch 31, 2020, was primarily due to an ~~immaterial out of period adjustment~~increase in the ~~prior year related to~~amortization of excess deferred ~~tax balances associated with property, plant and equipment.~~

~~PART I~~

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~

~~Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

taxes.

The ~~increase~~decrease in the ETR for Duke Energy Indiana for the three months ended ~~September 30, 2017, is primarily due to state tax credits recorded in the prior year. The increase in the ETR for Duke Energy Indiana for the nine months ended September 30, 2017, is~~March 31, 2020, was primarily due to an ~~immaterial out of period adjustment~~increase in the ~~prior year related to~~amortization of excess deferred ~~tax balances associated with property, plant and equipment.~~taxes.



FINANCIAL STATEMENTS	INCOME TAXES

The ~~increase~~decrease in the ETR for Piedmont for the three months ended ~~September 30, 2017, is~~March 31, 2020, was primarily due to ~~favorable tax return true ups and lower North Carolina corporate tax rates in relation to pretax losses. The decrease~~an increase in the ~~ETR for Piedmont for~~amortization of excess deferred taxes.

OTHER TAX MATTERS

On March 27, 2020, the ~~nine months ended September 30, 2017,~~CARES Act was enacted. The CARES Act is ~~primarily due to favorable tax return true ups and lower North Carolina corporate tax rates.~~

~~TAXES ON FOREIGN EARNINGS~~

As of December 31, 2015, Duke Energy's intention was to indefinitely reinvest any future undistributed foreign earnings earned after December 31, 2014. In February 2016, Duke Energy announced it had initiated a process to divest the International Disposal Group and, accordingly, no longer intended to indefinitely reinvest post-2014 undistributed foreign earnings. This changean emergency economic stimulus package in the company's intent, combined with the extension of bonus depreciation by Congress in late 2015, allowed Duke Energy to more efficiently utilize foreign tax credits and reduce U.S. deferred tax liabilities associated with historical unremitted foreign earnings by approximately $95 million for the nine months ended September 30, 2016. Dueresponse to the ~~classification of~~COVID-19 pandemic. Among other provisions, the ~~International Disposal Group as discontinued operations, income tax amounts related~~CARES Act accelerates the remaining AMT credit refund allowances resulting in taxpayers being able to immediately claim a refund in full for any AMT credit carryforwards. As a result, the ~~International Disposal Group's foreign earnings are presented~~remaining AMT credit carryforwards have been reclassified to a current receivable included in Other within ~~(Loss) Income from Discontinued Operations, net of tax~~Current Assets on the Condensed Consolidated ~~Statements~~Balance Sheets as of ~~Operations.~~March 31, 2020. The total income tax receivable related to AMT credit carryforwards is approximately $572 million. The other provisions within the CARES Act do not materially impact Duke Energy's income tax accounting. See Note 21 for ~~additional~~ information ~~related to the sale of the International Disposal Group.~~on COVID-19.

~~18.~~16. SUBSEQUENT EVENTS

For information on ~~additional~~ subsequent events related to ~~business segments,~~ regulatory matters, commitments and contingencies and ~~VIEs,~~derivatives and hedging, see Notes 3, 4 5 and ~~13.~~8.

~~PART I~~



MD&A	DUKE ENERGY

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following combined Management’s Discussion and Analysis of Financial Condition and Results of Operations is separately filed by Duke Energy ~~Corporation (collectively with its subsidiaries, Duke Energy)~~ and Duke Energy Carolinas, ~~LLC (Duke Energy Carolinas),~~ Progress Energy, ~~Inc. (Progress Energy),~~ Duke Energy Progress, ~~LLC (Duke Energy Progress),~~ Duke Energy Florida, ~~LLC (Duke Energy Florida),~~ Duke Energy Ohio, ~~Inc. (Duke Energy Ohio),~~ Duke Energy Indiana ~~LLC (Duke Energy Indiana)~~ and ~~Piedmont Natural Gas Company, Inc. (Piedmont) (collectively referred to as the Subsidiary Registrants).~~Piedmont. 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.

DUKE ENERGY

Duke Energy is an energy company headquartered in Charlotte, North Carolina. Duke Energy operates in the ~~United States (U.S.)~~U.S. primarily through its wholly owned 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. Piedmont's results of operations are included in Duke Energy's results for the three and nine months ended September 30, 2017, but not for the three and nine months ended September 30, 2016, as Piedmont's earnings are only included in Duke Energy's consolidated results subsequent to the acquisition date. See below for additional information regarding the acquisition.

Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, and with Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2016, Piedmont's Annual Report on Form 10-K for the year ended October 31, 2016, and the transition report filed by Piedmont on Form 10-Q (Form 10-QT) as of December 31, 2016, for the transition period from November 1, 2016, to December 31, 2016.2019.

Executive Overview

~~Hurricane Irma~~COVID-19

The COVID-19 pandemic is having a significant impact on global health and economic environments. In ~~September 2017, Hurricane Irma caused widespread damage across~~ the ~~Southeast region, at its peak leaving approximately 1.3 million~~first quarter of 2020, the World Health Organization (WHO) declared COVID-19 a global pandemic, and President Trump proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency. The Duke Energy ~~Florida~~Registrants are monitoring developments closely, have taken steps to mitigate the impacts to our business, and have a pandemic response plan in place to protect our employees, customers ~~without power.~~and communities. Financial impacts to Duke ~~Energy's restoration efforts~~Energy’s first quarter 2020 results were not material. Volumes are expected to decline in ~~response~~the second quarter and then begin a gradual rebound thereafter. The Duke Energy Registrants are developing cost containment plans to ~~this devastating storm utilized a team~~offset revenue declines.

Employees. The health of ~~over 12,000 line~~our employees is of paramount importance. Power plants and electricity and natural gas delivery facilities are staffed. Employees who are not involved with power generation, power delivery, customer service ~~crews~~or certain other functions have been performing their work duties remotely from home. Employees who need to interact with customers in-person are following the Centers for Disease Control and ~~hundreds~~Prevention’s safety guidelines, including social distancing and use of ~~employee volunteers. Storm restoration costs (including capital)~~face masks. Operating procedure changes include additional cleaning and disinfection procedures at our facilities.

•

Customers. The Duke Energy Subsidiary Registrants voluntarily announced, in the first quarter of 2020, a suspension of disconnections for nonpayment in order to give customers experiencing financial hardship extra time to make payments. This is expected to result in an increase in future charge-offs over historical levels. In addition, several Subsidiary Registrants are waiving late payment charges and other fees for credit cards and returned checks. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters" for additional information. The COVID-19 pandemic and stay-at-home orders have impacted commercial and industrial customers, and many of them have suspended operations which is impacting the Duke Energy Registrants’ volumes. Several large industrial customers have announced plans to restart their businesses in May.

Communities. The Duke Energy Foundation announced approximately $6 million in donations and grants as of April 30, 2020, to support hunger relief, local health and human services nonprofits, and education initiatives across the Duke Energy ~~Florida~~Registrants’ service territory are currently estimated at approximately $500 million. The vast majority of these costs have been deferred to the balance sheet for future recovery from customers in Florida, per existing state statute. Lost revenues associated with Hurricane Irma were approximately $20 million in the third quarter of 2017.territories.


•	Balance Sheet Strength and Liquidity Assurance. See Notes 5 and 13 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities" and "Stockholders Equity," respectively, for additional information.


◦	Duke Energy issued approximately $1.5 billion of debt during the first quarter of 2020.


◦	Duke Energy entered into and borrowed approximately $1.7 billion under a 364-day Term Loan Credit Agreement.


◦	Duke Energy drew down the remaining $500 million of availability under its existing $1 billion Three-Year Revolving Credit Facility.


◦	Duke Energy issued $85 million of common stock through a forward sales agreement which is expected to settle on or prior to December 31, 2020.



MD&A	DUKE ENERGY

Rate Case activity and delays. See Note 43 to the Condensed Consolidated Financial Statements, "Regulatory Matters" for additional information.

◦

Duke Energy Carolinas and Duke Energy Progress filed general rate cases with the NCUC on September 30, 2019, and October 30, 2019, respectively, requesting rate increases go into effect in the third quarter of 2020. On March 16, 2020, the NCUC issued an Order Postponing Hearing and Addressing Procedural Matters, which postponed the Duke Energy Carolinas evidentiary hearing until further order by the commission. On March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on the Duke Energy Progress case indefinitely. On April 7, 2020, the NCUC issued an order partially resuming the procedural schedule. 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. The joint motion suggests, health and safety permitting, that the commission consider the possibility of holding the consolidated hearing in July.


◦	Duke Energy Florida filed a petition with the FPSC on April 2, 2020, to accelerate a 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 Ohio filed an application on April 16, 2020, for a Reasonable Arrangement to temporarily lower the minimum bill for demand-metered commercial and industrial customers. The proposal is conditioned on full recovery via Duke Energy Ohio's existing Economic Competitiveness Fund Rider, which has been used by Duke Energy Ohio in the past for other reasonable arrangements with customers. On April 24, 2020, the Staff of the PUCO filed its recommendation finding Duke Energy Ohio’s application is reasonable and that the PUCO should approve it.


◦	Duke Energy Kentucky filed an electric rate case with the KPSC on September 3, 2019. On April 27, 2020, the KPSC issued its decision and new customer rates were effective on May 1, 2020.


◦	Duke Energy Indiana filed a general rate case with the IURC on July 2, 2019. Hearings concluded on February 7, 2020, with rates expected to be effective mid-2020. Duke Energy Indiana is awaiting an order from the IURC.

~~Regulatory Activity~~

~~In the third quarter of 2017,~~Policymaker actions. The CARES Act was signed by President Trump on March 27, 2020. Duke Energy ~~advanced regulatory activity underway in multiple jurisdictions, achieving several key milestones.~~

~~In August 2017, Duke Energy Carolinas filed a base rate case with~~Registrants will benefit from certain provisions such as the ~~North Carolina Utilities Commission. The rate request was driven by capital investments in new, highly efficient natural gas combined-cycle plants~~AMT acceleration and ~~other plant upgrades, coal ash basin closure activities and grid improvement projects. Hearings are scheduled to commence in February 2018.~~

In Florida, Duke Energy worked closely with stakeholders to build upon and extend the existing settlement agreement from 2013. In late August, Duke Energy Florida reached a favorable agreement with numerous parties in the state, including the consumer advocate, and that agreement was approved by the Florida Public Service Commission (FPSC) in late October. As outlined in the settlement, Duke Energy Florida agreed to no longer recover any remaining costs associated with the canceled Levy Nuclear Project and as a result incurred a pretax impairment chargedeferral of ~~$135 million during the third quarter.~~

certain payroll taxes. See Note 415 to the Condensed Consolidated Financial Statements, ~~"Regulatory Matters"~~“Income Taxes” for additional information.

~~2016 Acquisition~~ACP and other assets. At present, we have not experienced any delays in ACP construction activity related to COVID-19, but we are constantly monitoring that important project. We experienced no impairments of ~~Piedmont Natural Gas~~

On October 3, 2016, Duke Energy completed the acquisition of Piedmont for a total cash purchase price of $5.0 billion and assumed Piedmont's existing long-term debt, which had a fair value of approximately $2.0 billion at the time of the acquisition. The acquisition provides a foundation for Duke Energy to establish a broader, long-term strategic natural gas infrastructure growth platform to complement the existing natural gas pipeline investments and regulated natural gas businesslong-lived or intangible assets resulting from this pandemic in the ~~Midwest.~~

Duke Energy incurred pretax nonrecurring transaction and integration costs associated with the acquisition of $23 million and $69 million for the three and nine months ended September 30, 2017, respectively, and $65 million and $256 million for the three and nine months ended September 30, 2016, respectively. Acquisition-related costs in the prior year were principally due to losses on forward-starting interest rate swaps related to the acquisition financing of $22 million and $190 million for the three and nine months ended September 30, 2016, respectively. For additional information on the swaps see Note 10 to the Condensed Consolidated Financial Statements, "Derivatives and Hedging."

Duke Energy expects to incur system integration and other acquisition-related transition costs, primarily through 2018, that are necessary to achieve certain anticipated cost savings, efficiencies and other benefits. See Note 2 to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions," for additional information regarding the transaction.

~~PART I~~

~~2016 Sale of International Energy~~

In December 2016, Duke Energy sold its Latin American generation businesses (International Disposal Group) in two separate transactions for a combined enterprise value of $2.4 billion. The transactions generated cash proceeds of $1.9 billion, excluding transaction costs, which were primarily used to reduce Duke Energy holding company debt. Due to the transactions, results of the International Disposal Group are classified as discontinued operations. See Note 2 to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions" for additional information.first quarter 2020.

Results of Operations

Non-GAAP Measures

Management’s Discussion and Analysis includes financial information prepared in accordance with ~~generally accepted accounting principles (GAAP)~~GAAP in the U.S., as well as certain non-GAAP financial ~~measures.~~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. 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 presented may not be comparable to similarly titled measures used by other companies because other companies may not calculate the measures in the same manner.

Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted ~~diluted earnings per share (EPS).~~EPS. Adjusted earnings and adjusted ~~diluted~~ EPS represent income from continuing operations ~~attributable~~available to Duke Energy common stockholders in dollar and per share amounts, adjusted for the dollar and ~~per-share~~per share impact of special items. As discussed below, special items represent 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 diluted 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 Duke Energy Board of Directors, employees, stockholders, analysts and investors. Adjusted diluted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measures for adjusted earnings and adjusted ~~diluted~~ EPS are ~~Net Income Attributable to Duke Energy Corporation (GAAP~~GAAP Reported ~~Earnings)~~Earnings and ~~Diluted~~GAAP Reported EPS, ~~Attributable to Duke Energy Corporation common stockholders (GAAP Reported EPS),~~ respectively.

~~Special items included~~The special item in the periods presented ~~include the following items,~~below includes a reversal of 2018 severance costs which ~~management believes do not reflect ongoing costs:~~

~~Costs to Achieve Mergers represent charges that~~were deferred as a result ~~from strategic acquisitions.~~

Cost Savings Initiatives represent severance charges related to companywide initiatives, excluding merger integration, to standardize processes and systems, leverage technology and workforce optimization.

~~Commercial Renewables Impairments represents other-than-temporary and asset impairments.~~

~~Florida Settlement represents an impairment charge related to the Levy nuclear project based on a settlement agreement approved by regulators.~~

~~Adjusted earnings also include operating results~~ of the ~~International Disposal Group, which have been classified as discontinued operations. Management believes inclusion of~~partial settlement in the ~~operating results of the Disposal Group within adjusted earnings and adjusted diluted EPS results in a better reflection of~~ Duke ~~Energy's financial performance during the period.~~Energy Carolinas 2019 North Carolina rate case.

Three Months Ended ~~September 30, 2017,~~March 31, 2020, as compared to ~~September 30, 2016~~March 31, 2019

GAAP Reported EPS was ~~$1.36~~$1.24 for the ~~third~~first quarter of ~~2017 compared to $1.70 for~~2020 and the ~~third~~first quarter of ~~2016. The decrease in~~2019. GAAP ~~Reported EPS was primarily~~reported earnings increased due to ~~less favorable weather, an impairment at Duke Energy Florida~~positive rate case impacts and ~~prior year income from discontinued operations including International Energy which~~growth in Commercial Renewables. This was ~~sold in 2016; partially~~ offset by a lower ~~effective tax rate, lower costs associated with the Piedmont acquisition~~returns on corporate held investments and ~~growth from investments.~~unfavorable weather.

As discussed above, management also evaluates financial performance based on adjusted ~~diluted~~ EPS. Duke Energy’s ~~third~~first quarter ~~2017~~2020 adjusted ~~diluted~~ EPS was ~~$1.59~~$1.14 compared to ~~$1.68~~$1.24 for the ~~third~~first quarter of ~~2016.~~ 2019.



MD&A	DUKE ENERGY

The following table reconciles non-GAAP measures, including adjusted ~~diluted~~ EPS, to their most directly comparable GAAP measures.

Three Months Ended September 30,
2017 2016
(in millions, except per-share amounts) Earnings EPS Earnings EPS
GAAP Reported Earnings/GAAP Reported EPS $ 954
$ 1.36
$ 1,176
$ 1.70
Adjustments:
Costs to Achieve Mergers^(a)
14
0.03
52
0.07
Cost Savings Initiatives^(b)
—
—
12
0.02
Commercial Renewables Impairments ^(c)
56
0.08
45
0.07
Florida Settlement^(d)
84
0.12
—
—
Discontinued Operations^(e)
2
—
(122 ) (0.18 )
Adjusted Earnings/Adjusted Diluted EPS $ 1,110
$ 1.59
$ 1,163
$ 1.68



	Three Months Ended March 31,
	2020						2019
(in millions, except per share amounts)	Earnings			EPS			Earnings		EPS
GAAP Reported Earnings/GAAP Reported EPS	$	899		$	1.24		$	900	$	1.24
Adjustments:
Severance^(a)	(75		)	(0.10		)	—		—
Adjusted Earnings/Adjusted EPS	$	824		$	1.14		$	900	$	1.24

(a) Net of tax expense of $23 million.

~~PART I~~


~~(a)~~	~~Net of $9 million tax benefit in 2017 and $32 million tax benefit in 2016.~~


~~(b)~~	~~Net of $7 million tax benefit in 2016.~~


~~(c)~~	~~Net of $28 million tax benefit in 2017 and $26 million tax benefit in 2016.~~


~~(d)~~	~~Net of $51 million tax benefit in 2017.~~


~~(e)~~	~~The 2016 amount represents tax adjustments related to previously sold businesses not related to the International Disposal Group.~~

~~The decrease in adjusted earnings for the three months ended September 30, 2017, compared to the same period in 2016 was primarily due to:~~

~~Lower regulated electric revenues due to less favorable weather in the current year, including lost revenues related to Hurricane Irma;~~

~~The prior year operating results of the International Disposal Group, which was sold in December 2016; and~~

~~Higher financing costs, primarily due to the Piedmont acquisition.~~

~~Partially offset by:~~

Higher regulated electric revenues from increased pricing and riders driven by new rates in Duke Energy Progress South Carolina, base rate adjustments in Florida, and energy efficiency rider revenues in North Carolina;

~~Additional earnings from incremental investments in the Atlantic Coast Pipeline (ACP) natural gas pipeline; and~~

~~Lower income taxes due to prior year unfavorable tax adjustments and benefits in the current year from legal entity restructuring.~~

~~Nine Months Ended September 30, 2017, as compared to September 30, 2016~~

Duke Energy's GAAP Reported EPS was $3.36 for the nine months ended September 30, 2017, compared to $3.44 for the nine months ended September 30, 2016. The decrease in GAAP Reported EPS was driven by less favorable weather compared to the prior year, an impairment at Duke Energy Florida and prior year income from discontinued operations including International Energy which was sold in 2016; partially offset by lower costs associated with the Piedmont acquisition, lower severance charges, effective cost control and growth from investments.

As discussed above, management also evaluates financial performance based on adjusted diluted EPS. Duke Energy’s adjusted diluted EPS for the nine months ended September 30, 2017, was $3.63 compared to $3.88 for the nine months ended September 30, 2016. The following table reconciles non-GAAP measures, including adjusted diluted EPS, to their most directly comparable GAAP measures.

Nine Months Ended September 30,
2017 2016
(in millions, except per-share amounts) Earnings EPS Earnings EPS
GAAP Reported Earnings/GAAP Reported EPS $ 2,356
$ 3.36
$ 2,379
$ 3.44
Adjustments:
Costs to Achieve Mergers^(a)
43
0.06
195
0.28
Cost Savings Initiatives^(b)
—
—
39
0.06
Commercial Renewables Impairments ^(c)
56
0.08
45
0.07
Florida Settlement^(d)
84
0.12
—
—
Discontinued Operations^(e)
4
0.01
21
0.03
Adjusted Earnings/Adjusted Diluted EPS $ 2,543
$ 3.63
$ 2,679
$ 3.88


~~(a)~~	~~Net of $26 million tax benefit in 2017 and $120 million tax benefit in 2016.~~


~~(b)~~	~~Net of $24 million tax benefit in 2016.~~


~~(c)~~	~~Net of $28 million tax benefit in 2017 and $26 million tax benefit in 2016.~~


~~(d)~~	~~Net of $51 million tax benefit in 2017.~~


~~(e)~~	The 2016 amount includes an impairment charge related to certain assets in Central America that were sold in 2016, partially offset by a tax benefit related to previously sold businesses not related to the International Disposal Group.

~~The decrease in adjusted earnings for the nine months ended September 30, 2017, compared to the same period in 2016 was primarily due to:~~

~~Lower regulated electric revenues due to unfavorable weather compared to the prior year; and~~

The prior year operating results of the International Disposal Group, which was sold in December 2016. The 2016 operating results included a benefit from the revaluation of deferred income taxes. See Note 17 to the Condensed Consolidated Financial Statements, "Income Taxes," for additional information.

~~Partially offset by:~~

Higher regulated electric revenues from increased pricing and riders driven by new rates in Duke Energy Progress South Carolina, base rate adjustments in Florida and energy efficiency rider revenues in North Carolina, as well as growth in weather-normal retail volumes;

Lower operations, maintenance and other expense, net of amounts recoverable in rates, at Electric Utilities and Infrastructure resulting from ongoing cost efficiency efforts and lower year-to-date storm costs than the prior year;

~~Higher allowance for funds used during construction (AFUDC) equity due to capital investments at the electric utilities; and~~

~~Additional earnings from incremental investments in the ACP and Sabal Trail natural gas pipelines.~~

~~PART I~~

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.~~interests and preferred stock dividends. Segment income includes intercompany revenues and expenses that are eliminated onin the Condensed Consolidated Financial Statements.

~~Due to the Piedmont acquisition and the sale of International Energy in the fourth quarter of 2016,~~ Duke Energy's segment structure ~~was realigned to include~~includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The remainder of Duke Energy’s operations is presented as Other. ~~Prior period information has been recast to conform to the current segment structure.~~ See Note 2 to the Condensed Consolidated Financial Statements, ~~"Acquisitions and Dispositions," for further information on the Piedmont acquisition and International Energy sale and Note 3,~~ “Business Segments,” for additional information on Duke Energy’s ~~segments.~~segment structure.

Electric Utilities and Infrastructure


	Three Months Ended September 30,							Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2017		2016		Variance			2017		2016		Variance			2020		2019			Variance
Operating Revenues	$	6,129	$	6,340	$	(211	)	$	16,234	$	16,430	$	(196	)	$	5,183	$	5,329		$	(146	)
Operating Expenses
Fuel used in electric generation and purchased power	1,872		2,016		(144		)	4,875		5,102		(227		)	1,467		1,630			(163		)
Operation, maintenance and other	1,297		1,291		6			3,833		3,819		14			1,325		1,282			43
Depreciation and amortization	777		729		48			2,228		2,139		89			977		947			30
Property and other taxes	277		274		3			808		799		9			303		301			2
Impairment charges	132		9		123			134		12		122			2		—			2
Total operating expenses	4,355		4,319		36			11,878		11,871		7			4,074		4,160			(86		)
Gains on Sales of Other Assets and Other, net	—		1		(1		)	4		3		1
Gains (Losses) on Sales of Other Assets and Other, net															1		(3		)	4
Operating Income	1,774		2,022		(248		)	4,360		4,562		(202		)	1,110		1,166			(56		)
Other Income and Expenses	67		75		(8		)	222		215		7
Other Income and Expenses, net															85		91			(6		)
Interest Expense	305		287		18			925		829		96			339		338			1
Income Before Income Taxes	1,536		1,810		(274		)	3,657		3,948		(291		)	856		919			(63		)
Income Tax Expense	516		621		(105		)	1,273		1,391		(118		)	151		169			(18		)
Segment Income	$	1,020	$	1,189	$	(169	)	$	2,384	$	2,557	$	(173	)	$	705	$	750		$	(45	)

Duke Energy Carolinas gigawatt-hours (GWh) sales	24,135		25,508		(1,373		)	66,159		67,890		(1,731		)
Duke Energy Carolinas GWh sales															21,236		21,828			(592		)
Duke Energy Progress GWh sales	18,827		20,033		(1,206		)	50,026		54,011		(3,985		)	15,670		16,348			(678		)
Duke Energy Florida GWh sales	12,132		12,440		(308		)	31,177		31,542		(365		)	8,617		8,321			296
Duke Energy Ohio GWh sales	6,672		7,214		(542		)	18,632		19,117		(485		)	5,823		6,164			(341		)
Duke Energy Indiana GWh sales	8,795		9,073		(278		)	24,975		26,624		(1,649		)	7,606		8,033			(427		)
Total Electric Utilities and Infrastructure GWh sales	70,561		74,268		(3,707		)	190,969		199,184		(8,215		)	58,952		60,694			(1,742		)
Net proportional megawatt (MW) capacity in operation								48,909		49,411		(502		)
Net proportional MW capacity in operation															49,561		49,725			(164		)

Three Months Ended ~~September 30, 2017,~~March 31, 2020, as ~~Compared~~compared to ~~September 30, 2016~~March 31, 2019

Electric Utilities and Infrastructure’s results were ~~impacted~~driven by ~~less favorable~~unfavorable weather and ~~an impairment at~~lower wholesale revenues, partially offset by higher revenues resulting from the South Carolina retail rate cases and Duke Energy Florida ~~partially offset by growth from investments.~~base and solar rate adjustments. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:

a ~~$163~~$147 million decrease in fuel revenues primarily due to lower ~~retail sales volumes; and~~fuel cost recovery;

a ~~$160~~$45 million decrease in retail sales, net of fuel revenues, due to ~~less favorable~~unfavorable weather in the current year; and



MD&A	SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

a $17 million decrease in wholesale revenues, net of fuel, primarily due to coal ash cost recovery in the prior year ~~including lost revenues related to Hurricane Irma.~~at Duke Energy Progress.

Partially offset by:

a ~~$90~~$19 million increase due to higher pricing from South Carolina retail rate case, net of a return of EDIT to customers;

a $17 million increase in retail pricing due to Duke Energy Florida's base rate adjustments ~~for~~related to annual increases from the ~~Osprey acquisition and Hines Chillers~~2017 Settlement Agreement and the ~~Duke Energy Progress South Carolina rate case, as well as increased rider revenues related to energy efficiency programs, Duke Energy Florida's nuclear asset securitization,~~Solar Base Rate Adjustment; and ~~Midwest capital investments.~~

a $17 million increase in weather-normal retail sales volumes.

Operating Expenses. The variance was driven primarily by:

a ~~$123~~$163 million ~~increase~~decrease in ~~impairment charges~~fuel used in electric generation and purchased power primarily due to ~~write-off~~lower demand and changes in generation mix at Duke Energy Progress and lower coal and natural gas costs and lower amortization of ~~remaining unrecovered Levy Nuclear Project~~deferred fuel costs at Duke Energy ~~Florida~~Indiana.

Partially offset by:

a $43 million increase in ~~the current year;~~operation, maintenance and other expense primarily due to higher employee benefit costs and increased vegetation management costs; and

a ~~$48~~$30 million increase in depreciation and amortization expense primarily due to additional plant in ~~service.~~service and new depreciation rates associated with the South Carolina retail rate case.

~~PART I~~

~~Partially offset by:~~

~~a $144 million~~Income Tax Expense. The decrease in ~~fuel~~tax expense ~~including purchased power, driven by lower retail sales.~~

~~Interest Expense.~~ ~~The increase was primarily due to higher debt outstanding in the current year to fund growth.~~

~~Income Tax Expense.~~ ~~The variance~~ was primarily due to a decrease in pretax ~~income and higher research credits, partially offset by the North Carolina corporate tax rate reduction in the prior year.~~income. The ~~effective tax rates~~ETRs for the three months ended ~~September 30, 2017,~~March 31, 2020, and ~~2016~~2019, were ~~33.6 percent~~17.6% and ~~34.3 percent,~~18.4%, respectively.

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

Electric Utilities and Infrastructure’s results were impacted by less favorable weather compared to the prior year and an impairment at Duke Energy Florida, partially offset by growth from investments and higher weather-normal retail sales volumes. The following is a detailed discussion of the variance drivers by line item.

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

~~a $380 million decrease in retail sales, net of fuel revenues, due to unfavorable weather compared to the prior year, including lost revenues related to Hurricane Irma; and~~

~~a $256 million decrease in fuel revenues primarily due to lower retail sales volumes.~~

~~Partially offset by:~~

a $346 million increase in rider revenues related to energy efficiency programs, Duke Energy Florida's nuclear asset securitization, Midwest transmission and distribution capital investments, and Duke Energy Indiana's Edwardsport Integrated Gasification Combined Cycle (IGCC) plant, as well as an increase in retail pricing due to Duke Energy Florida's base rate adjustments for the Osprey acquisition and Hines Chillers and the Duke Energy Progress South Carolina rate case; and

~~a $59 million increase in weather-normal sales volumes to retail customers.~~

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

~~a $122 million increase in impairment charges primarily due to the write-off of remaining unrecovered Levy Nuclear Project costs in the current year at Duke Energy Florida; and~~

~~an $89 million increase in depreciation and amortization expense primarily due to additional plant in service;~~

~~Partially offset by:~~

~~a $227 million decrease in fuel expense, including purchased power, primarily due to lower retail sales and changes in generation mix.~~

~~Interest Expense.~~ ~~The increase was primarily due to higher debt outstanding in the current year and Duke Energy Florida's Crystal River 3 (CR3) regulatory asset debt return ending in June 2016 upon securitization.~~

~~Income Tax Expense.~~ The variance was primarily due to a decrease in pretax income and higher research credits, partially offset by the North Carolina corporate tax rate reduction. The effective tax rates for the nine months ended September 30, 2017, and 2016 were 34.8 percent and 35.2 percent, respectively.

Matters Impacting Future Electric Utilities and Infrastructure Results

The COVID-19 pandemic has not had a material impact on Electric Utilities and Infrastructure as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Electric Utilities and Infrastructure results of operations, financial position and cash flows in the future. Electric Utilities and Infrastructure will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Electric Utilities and Infrastructure customers, suppliers and partners and could cause Electric Utilities and Infrastructure to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Electric Utilities and Infrastructure also has various pending rate case proceedings that have been delayed. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See 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.

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 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. An order from regulatory authorities disallowing recovery of costs related to closure of these ash basins could have an adverse impact on Electric Utilities and Infrastructure's results of operations, financial position and cash flows.

On May 21, 2019, Duke Energy Carolinas and Duke Energy Progress received orders from the PSCSC granting the companies’ requests for retail rate increases but 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. Electric Utilities and Infrastructure's results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

In 2019, Duke Energy Indiana filed a general rate case with the IURC, and Duke Energy Carolinas and Duke Energy Progress filed general rate cases with the NCUC. The outcome of these rate cases could materially impact Electric Utilities and Infrastructure's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On June 22, 2018, Duke Energy Carolinas received an order from the NCUC, 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. Electric Utilities and Infrastructure's results of operations, financial position and cash flows could be adversely impacted if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida’s service territories were impacted by several named storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the service territories of Duke Energy Carolinas and Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 5 hurricane and 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. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Electric Utilities and Infrastructure's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.



MD&A	SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

On April 17, 2015, the EPA published in the Federal Register a rule to regulate the disposal of CCR from electric utilities as solid waste. Duke Energy Indiana has interpreted the 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. Duke Energy Indiana's interpretation of the requirements of the CCR rule is subject to potential legal challenges and further 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. An order from regulatory authorities disallowing recovery of costs related to closure of ash ~~impoundments~~basins could have an adverse impact on ~~Electric Utilities and Infrastructure's financial position,~~Duke Energy Indiana's results of operations, financial position and cash flows.

See ~~Note 4~~"Item 7. Management's Discussion and ~~Note 7 to the Condensed Consolidated~~Analysis of Financial ~~Statements, “Regulatory Matters”~~Condition and ~~"Asset Retirement Obligations," respectively, for additional information.~~

~~On May 18, 2016, the North Carolina Department~~Results of Environmental Quality (NCDEQ) issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the North Carolina Coal Ash Management Act of 2014 (Coal Ash Act) were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, may be reassessedOperations," in the future as low risk pursuant to legislation signed by the former North Carolina governor on July 14, 2016. Electric Utilities and Infrastructure's estimated asset retirement obligations (AROs) related to the closure of North Carolina ash impoundments are based upon the mandated closure method or a probability weighting of potential closure methods for the impoundments that may be reassessed to low risk. As the final risk ranking classifications in North Carolina are delineated, final closure plans and corrective action measures are developed and approved for each site, the closure work progresses and the closure method scope and remedial methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore, could materially impact Electric Utilities and Infrastructure's financial position. See Note 9 in Duke ~~Energy's~~Energy Registrants' Annual ~~Report~~Reports on Form 10-K for the year ended December 31, ~~2016, "Asset Retirement Obligations,"~~2019, for ~~additional information.~~

~~Duke Energy is a party to multiple lawsuits and could be subject to fines and other penalties related to operations at certain North Carolina facilities with ash basins. The outcome~~discussion of these lawsuits and potential fines and penalties could have an adverse impact on Electric Utilities and Infrastructure's financial position, results of operations and cash flows. See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for additional information.

~~PART I~~

In the fourth quarter of 2016, Hurricane Matthew caused historic flooding, extensive damage and widespread power outages within the Duke Energy Progress service territory. Duke Energy Progress filed a petition with the North Carolina Utilities Commission (NCUC) requesting an accounting order to defer incremental operation and maintenance and capital costs incurred in response to Hurricane Matthew and other significant 2016 storms. Current estimated incremental costs are approximately $116 million. The NCUC will address this request in Duke Energy Progress' currently pending rate case. A final order from the NCUC that disallows the deferral and future recovery of all or a significant portion of the incremental storm restoration costs incurred could result in an adverse impact on Electric Utilities and Infrastructure's financial position, results of operations and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

Duke Energy has several rate cases pending. Duke Energy Kentucky filed an electric rate case with the Kentucky Public Service Commission (KPSC) on September 1, 2017, to recover costs of capital investments in generation, transmission and distribution systems and to recover other incremental expenses since its previous rate case. Duke Energy Carolinas and Duke Energy Progress filed general rate cases with the NCUC on August 25, 2017, and June 1, 2017, respectively, to recover costs of complying with Coal Combustion Residuals (CCR) regulations and the Coal Ash Act, as well as costs of capital investments in generation, transmission and distribution systems and any increase in expenditures subsequent to previous rate cases. In March 2017, Duke Energy Ohio filed an electric distribution base rate case application and supporting testimony with the Public Utility Commission of Ohio (PUCO). Electric Utilities and Infrastructure's earnings could be impacted adversely if these rate increases are delayed or denied by the KPSC, NCUC or PUCO. See Note 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On August 29, 2017, Duke Energy Florida filed a 2017 Second Revised and Restated Settlement Agreement (2017 Settlement) with the FPSC. The 2017 Settlement was approved by the FPSC on October 25, 2017. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information about the 2017 Settlement. In accordance with the 2017 Settlement, Duke Energy Florida will not seek recovery of any costsrisks associated with the ongoing Westinghouse contract litigation, which is currently being appealed. See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies” for additional information about the litigation. An unfavorable appeals ruling on that matter could have an adverse impact on Electric Utilities and Infrastructure’s financial position, results of operations and cash flows.

In September 2017, Hurricane Irma caused extensive damage and widespread power outages within the Duke Energy Florida service territory. Duke Energy Florida has not completed the final accumulation of storm restoration costs incurred. Total storm restoration costs, including capital, are currently estimated at approximately $500 million. In accordance with a regulatory order with FPSC, certain incremental operation and maintenance storm restoration costs are classified as a regulatory asset recognizing the probable recoverability of these costs under FPSC's storm rule. The Company will make a petition by the end of 2017 to FPSC for recovery of costs. Duke Energy Florida's cash flows could be impacted by the timing of cost recovery. See Note 4, "Regulatory Matters," to the Condensed Consolidated Financial Statements for additional information.Tax Act.

Gas Utilities and Infrastructure

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017
2016
Variance
2017
2016
Variance
Operating Revenues $ 272
$ 89
$ 183
$ 1,243
$ 358
$ 885
Operating Expenses
Cost of natural gas 68
6
62
402
64
338
Operation, maintenance and other 93
30
63
291
90
201
Depreciation and amortization 57
19
38
171
59
112
Property and other taxes 25
12
13
81
44
37
Total operating expenses 243
67
176
945
257
688
Operating Income 29
22
7
298
101
197
Other Income and Expenses 22
7
15
60
13
47
Interest Expense 26
6
20
78
19
59
Income Before Income Taxes 25
23
2
280
95
185
Income Tax Expense 6
8
(2 ) 101
32
69
Segment Income $ 19
$ 15
$ 4
$ 179
$ 63
$ 116

Piedmont LDC throughput (dekatherms) ^(a)
107,490,775
—
107,490,775
334,781,316
—
334,781,316
Duke Energy Midwest LDC throughput (Mcf) 9,904,644
9,568,340
336,304
52,940,410
57,023,986
(4,083,576 )

~~(a) Includes throughput subsequent to Duke Energy's acquisition of Piedmont on October 3, 2016.~~



	Three Months Ended March 31,
(in millions)	2020		2019		Variance
Operating Revenues	$	664	$	756	$	(92	)
Operating Expenses
Cost of natural gas	199		327		(128		)
Operation, maintenance and other	110		110		—
Depreciation and amortization	66		65		1
Property and other taxes	30		33		(3		)
Total operating expenses	405		535		(130		)
Operating Income	259		221		38
Other Income and Expenses, net	49		40		9
Interest Expense	31		30		1
Income Before Income Taxes	277		231		46
Income Tax Expense	28		5		23
Segment Income	$	249	$	226	$	23

Piedmont LDC throughput (dekatherms)	148,503,995		151,662,741		(3,158,746		)
Duke Energy Midwest LDC throughput (Mcf)	33,785,834		38,538,272		(4,752,438		)

Three Months Ended ~~September 30, 2017,~~March 31, 2020, as ~~Compared~~compared to ~~September 30, 2016~~March 31, 2019

Gas Utilities and Infrastructure’s higher results were primarily due to increased investments in the ACP pipeline. Piedmont's losses included in Gas Utilities and Infrastructure's results were $5 million for the three months ended September 30, 2017. All variances are related to the inclusion of Piedmont's results of operations as a result of Duke Energy's acquisition of Piedmont on October 3, 2016, except for the following:

~~Other Income and Expenses.~~ ~~The variance was driven primarily by increased investments in the ACP pipeline.~~

~~PART I~~

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

Gas Utilities and Infrastructure’s higher results were due to the inclusion of Piedmont's earnings in the current year as a result of Duke Energy's acquisition of Piedmont on October 3, 2016, as well as growth from investments in ACP and Sabal Trail pipelines. Piedmont's earnings included in Gas Utilities and Infrastructure's results were $95 million for the nine months ended September 30, 2017. All variances are related to the inclusion of Piedmont's results of operations, except for the following:

~~Other Income and Expenses.~~ ~~The variance was driven primarily by increased investments in the ACP and Sabal Trail pipelines.~~

~~Matters Impacting Future Gas Utilities and Infrastructure Results~~

Gas Utilities and Infrastructure has a 24 percent ownership interest in Constitution Pipeline Company, LLC (Constitution), a natural gas pipeline project slated to transport natural gas supplies to major northeastern markets. On April 22, 2016, the New York State Department of Environmental Conservation denied Constitution’s application for a necessary water quality certification for the New York portion of the Constitution pipeline. Constitution has stopped construction and discontinued capitalization of future development costs until the project's uncertainty is resolved. To the extent the legal and regulatory proceedings have unfavorable outcomes, or if Constitution concludes that the project is not viable or does not go forward, an impairment charge of up to the recorded investment in the project, net of any cash and working capital returned, may be recorded. With the project on hold, funding of project costs has ceased until resolution of legal actions. At September 30, 2017, Duke Energy's investment in Constitution was $82 million.

Rapidly rising interest rates without timely or adequate updates to the regulated allowed return on equity or failure to achieve the anticipated benefits of the Piedmont merger, including cost savings and growth targets, could significantly impact the estimated fair value of reporting units in Gas Utilities and Infrastructure. In the event of a significant decline in the estimated fair value of the reporting units, goodwill impairment charges could be recorded. The carrying value of goodwill within Gas Utilities and Infrastructure was approximately $1,924 million at September 30, 2017.

~~Commercial Renewables~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017
2016
Variance
2017
2016
Variance
Operating Revenues $ 95
$ 139
$ (44 ) $ 333
$ 365
$ (32 )
Operating Expenses
Operation, maintenance and other 56
98
(42 ) 191
253
(62 )
Depreciation and amortization 39
34
5
116
96
20
Property and other taxes 9
8
1
26
20
6
Impairment charges 76
—
76
76
—
76
Total operating expenses 180
140
40
409
369
40
Gains on Sales of Other Assets and Other, net 1
2
(1 ) 5
4
1
Operating (Loss) Income (84 ) 1
(85 ) (71 ) —
(71 )
Other Income and Expenses (10 ) (76 ) 66
(12 ) (78 ) 66
Interest Expense 22
15
7
64
38
26
Loss Before Income Taxes (116 ) (90 ) (26 ) (147 ) (116 ) (31 )
Income Tax Benefit (65 ) (65 ) —
(146 ) (127 ) (19 )
Less: Loss Attributable to Noncontrolling Interests (2 ) (1 ) (1 ) (3 ) (2 ) (1 )
Segment (Loss) Income $ (49 )
$ (24 ) $ (25 ) $ 2
$ 13
$ (11 )

Renewable plant production, GWh 1,760
1,801
(41 ) 6,276
5,619
657
Net proportional MW capacity in operation

2,908
2,725
183

~~Three Months Ended September 30, 2017, as Compared to September 30, 2016~~

~~Commercial Renewables'~~ results were impacted by ~~lower investment~~an increase in operating income primarily due to the North Carolina base rate case and IMR, partially offset by prior year tax ~~credits (ITCs), higher interest expense on new debt financings and higher losses~~benefits related to AFUDC equity from ~~Duke Energy's REC Solar investment.~~ACP. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues.The variance was driven primarily by:

a $134 million decrease due to lower natural gas costs passed through to customers and lower volumes due to warmer weather;

a $20 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:

a $53 million increase due to North Carolina base rate case increases; and

a $12 million increase due to North Carolina IMR increases.

Operating Expenses.The variance was driven primarily by:

a $128 million decrease in cost of natural gas due to lower natural gas prices, lower volumes and decreased off-system sales natural gas costs.

Other Income and Expenses, net. The variance was driven primarily by higher equity earnings from ACP in the current year.

Income Tax Expense. The increase in tax expense was primarily due to ~~lower engineering, procurement~~an adjustment, recorded in the first quarter of 2019, related to the income tax recognition for equity method investments and ~~construction revenues from REC Solar.~~

~~Operating Expenses.~~ an increase in pretax income, partially offset by an increase in the amortization of excess deferred taxes. The ETRs for the three months ended March 31, 2020, and 2019, were 10.1% and 2.2%, respectively. The increase in the ETR was primarily due to ~~a $69 million pretax impairment charge~~an adjustment related to the income tax recognition for equity method investments recorded in the ~~current year related to a wholly owned non-contracted wind project,~~first quarter of 2019, partially offset by ~~lower~~an increase in the amortization of excess deferred taxes. The equity method investment adjustment was immaterial and relates to prior years.



MD&A	SEGMENT RESULTS — GAS UTILITIES AND INFRASTRUCTURE

Matters Impacting Future Gas Utilities and Infrastructure Results

The COVID-19 pandemic has not had a material impact on Gas Utilities and Infrastructure as of March 31, 2020; however we cannot predict the extent to which the COVID-19 pandemic will impact Gas Utilities and Infrastructure results of operations, financial position and ~~maintenance expense~~cash flows in the future. Gas Utilities and Infrastructure will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Gas Utilities and Infrastructure customers, suppliers and partners and could cause Gas Utilities and Infrastructure to experience an increase in certain costs, such as bad debt, or cause constructions delays with ACP. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See 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.

Gas Utilities and Infrastructure has a 47% ownership interest in ACP, which is building an approximately 600-mile interstate natural gas pipeline intended to transport diverse natural gas supplies into southeastern markets. Affected states (West Virginia, Virginia and North Carolina) have issued certain necessary permits; the project remains subject to other pending federal and state approvals, which will allow full construction activities to begin. In 2018, FERC issued a series of Notices to Proceed, which authorized the project to begin certain construction-related activities along the pipeline route. Given the legal challenges and ongoing discussions with customers, ACP expects the project to enter full in-service in the first half of 2022.The delays resulting from legal challenges have impacted the cost for the project. Project cost is approximately $8 billion, excluding financing costs. This estimate is based on the current facts available around construction costs and timelines, and is subject to future changes as those facts develop. Abnormal weather, work delays (including delays due to judicial or regulatory action or COVID-19 social distancing) and other conditions may result in cost or schedule modifications, a suspension of AFUDC for ACP and/or impairment charges potentially material to Duke Energy's cash flows, financial position and results of operations. ACP and Duke Energy will continue to consider their options with respect to the foregoing given their existing contractual and legal obligations. See Notes 3 and 11 to the Condensed Consolidated Financial Statements, "Regulatory Matters" and "Variable Interest Entities," respectively, for additional information.

On November 13, 2013, the PUCO issued an order authorizing recovery of MGP costs at ~~REC Solar. For additional information see~~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 on Gas Utilities and Infrastructure’s results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, ~~“Business Segments.~~“Regulatory Matters,” for additional information.

~~Other Income and Expenses.~~ The variance was primarily due to a $71 million pretax impairment charge in the prior year related to certain equity method investments. For additional information see Note 3 to the Condensed Consolidated Financial Statements, “Business Segments.”

~~Interest Expense.~~ ~~The increase was primarily due to new project financings.~~

Commercial Renewables

~~Income Tax Benefit. Lower ITCs due to lower solar investments in the current year were offset by higher production tax credits (PTCs) related to wind projects placed in service.~~

~~PART I~~



	Three Months Ended March 31,
(in millions)	2020			2019			Variance
Operating Revenues	$	129		$	106		$	23
Operating Expenses
Operation, maintenance and other	69			66			3
Depreciation and amortization	48			40			8
Property and other taxes	8			6			2
Total operating expenses	125			112			13
Operating Income (Loss)	4			(6		)	10
Other Income and Expenses, net	(1		)	(2		)	1
Interest Expense	18			21			(3		)
Loss Before Income Taxes	(15		)	(29		)	14
Income Tax Benefit	(24		)	(35		)	11
Less: Loss Attributable to Noncontrolling Interests	(48		)	(7		)	(41		)
Segment Income	$	57		$	13		$	44

Renewable plant production, GWh	2,437			2,068			369
Net proportional MW capacity in operation^(a)	3,502			2,996			506


(a)	Certain projects are included in tax equity structures where investors have differing interests in the project's economic attributes. One hundred percent of the tax equity project's capacity is included in the table above.

~~Nine~~Three Months Ended ~~September 30, 2017,~~March 31, 2020, as ~~Compared~~compared to ~~September 30, 2016~~March 31, 2019

Commercial Renewables' results were ~~impacted by lower ITCs, higher interest expense on~~favorable primarily due to new ~~debt financings~~tax equity structures and ~~higher losses from REC Solar, partially offset by increased PTCs.~~favorable wind revenue. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. ~~The decrease was primarily due to lower engineering, procurement and construction revenues from REC Solar.~~

~~Operating Expenses.~~ The increase was primarily due to favorable wind portfolio revenue as a ~~$69 million pretax impairment charge in the current year related to a wholly owned non-contracted~~result of favorable market pricing, favorable wind ~~project~~resource and ~~higher operating expenses related to~~ new ~~wind and~~ solar projects placed in ~~service, partially offset by lower operations and maintenance expense at REC Solar. For additional information see Note 3 to the Condensed Consolidated Financial Statements, “Business Segments.”~~service.

~~Other Income and~~Operating Expenses. The ~~variance~~increase was primarily due to higher depreciation expense as a ~~$71 million pretax impairment charge~~result of new projects placed in service.

Income Tax Benefit. The decrease in the ~~prior year related~~tax benefit was primarily driven by an increase in taxes associated with Duke Energy's interest in tax equity projects and a decrease in pretax losses.



MD&A	SEGMENT RESULTS — COMMERCIAL RENEWABLES

Loss Attributable to ~~certain equity method investments. For additional information see Note 3 to the Condensed Consolidated Financial Statements, “Business Segments.”~~

~~Interest Expense.~~Noncontrolling Interests The ~~variance~~increase was primarily due to new ~~project financings and less capitalized interest due to fewer projects under construction.~~tax equity structures.

~~Income Tax Benefit.The variance was primarily due to an increase in PTCs related to wind projects placed in service, partially offset by lower ITCs due to lower solar investments in the current year.~~

Matters Impacting Future Commercial Renewables Results

~~Changes or variability in assumptions used in calculating the fair value of the~~The COVID-19 pandemic has not had a material impact on Commercial Renewables ~~reporting units for goodwill testing purposes including but not limited~~as of March 31, 2020; however, we cannot predict the extent to ~~legislative actions related to tax credit extensions, long-term growth rates and discount rates could significantly~~which the COVID-19 pandemic will impact ~~the estimated fair value of the~~ Commercial Renewables ~~reporting units. In the event~~results of ~~a significant decline~~operations, financial position and cash flows in the ~~estimated fair value of the~~future. Commercial Renewables ~~reporting units, goodwill~~will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or ~~other asset impairment charges~~by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could ~~be recorded. The carrying value of goodwill within~~adversely affect Commercial Renewables ~~was approximately $115 million at September 30, 2017.~~customers, suppliers and partners and could cause Commercial Renewables to experience delays in project construction and availability of financing. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See 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.

~~Persistently low market pricing for wind resources, primarily~~Commercial Renewables continues to experience growth with tax equity structures; however, the future expiration of federal tax incentives could result in adverse impacts to future results of operations, financial position and cash flows.

Duke Energy continues to monitor recoverability of its renewable merchant plants principally in the Electric Reliability Council of Texas West market, due to declining market pricing and ~~the~~declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Although these assets were not impaired, a continued decline in energy market pricing would likely result in a future ~~expiration~~impairment. Impairment of ~~tax incentives including ITCs and PTCs~~these assets could result in adverse impacts to the future results of operations, financial position and cash flows of Commercial Renewables.

Other

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017
2016
Variance
2017
2016
Variance
Operating Revenues $ 35
$ 32
$ 3
$ 103
$ 91
$ 12
Operating Expenses
Fuel used in electric generation and purchased power 13
14
(1 ) 42
37
5
Operation, maintenance and other 21
70
(49 ) 47
145
(98 )
Depreciation and amortization 27
37
(10 ) 79
108
(29 )
Property and other taxes 3
8
(5 ) 10
25
(15 )
Impairment charges —
—
—
7
2
5
Total operating expenses 64
129
(65 ) 185
317
(132 )
Gains on Sales of Other Assets and Other, net 4
3
1
15
14
1
Operating Loss (25 ) (94 ) 69
(67 ) (212 ) 145
Other Income and Expenses 51
24
27
100
60
40
Interest Expense 150
157
(7 ) 423
553
(130 )
Loss Before Income Taxes (124 ) (227 ) 103
(390 ) (705 ) 315
Income Tax Benefit (93 ) (49 ) (44 ) (193 ) (276 ) 83
Less: Income Attributable to Noncontrolling Interests 3
3
—
8
7
1
Net Expense $ (34 ) $ (181 ) $ 147
$ (205 ) $ (436 ) $ 231



	Three Months Ended March 31,
(in millions)	2020			2019			Variance
Operating Revenues	$	23		$	21		$	2
Operating Expenses	(89		)	28			(117		)
Operating Income (Loss)	112			(7		)	119
Other Income and Expenses, net	(33		)	44			(77		)
Interest Expense	171			171			—
Loss Before Income Taxes	(92		)	(134		)	42
Income Tax Benefit	(19		)	(45		)	26
Less: Preferred Dividends	39			—			39
Net Loss	$	(112	)	$	(89	)	$	(23	)

Three Months Ended ~~September 30, 2017,~~March 31, 2020, as ~~Compared~~compared to ~~September 30, 2016~~March 31, 2019

~~Other's lower net expense~~The variance was driven by ~~tax benefits, insurance proceeds resulting from settlement~~lower returns on investments and the declaration of ~~the shareholder litigation related to the Progress Energy merger, prior year donations to the Duke Energy Foundation and lower~~preferred stock dividends, partially offset by a reversal of corporate allocated severance ~~expenses.~~costs. The following is a detailed discussion of the variance drivers by line item.

Operating Expenses.The decrease was primarily driven by the deferral of 2018 corporate allocated severance costs due to ~~prior year donations~~the partial settlement between Duke Energy Carolinas and the Public Staff of the NCUC related to the ~~Duke Energy Foundation, less captive insurance losses for Bison Insurance Company Limited and prior year severance expense related to cost savings initiatives.~~2019 North Carolina retail rate case.

Other Income and ~~Expenses.~~ The increase was driven by insurance proceeds resulting from settlement of the shareholder litigation related to the Progress Energy merger and higher earnings from the equity method investment in National Methanol Company (NMC).

~~Interest Expense.~~ The decrease was driven by prior year losses on forward-starting interest rate swaps related to Piedmont pre-acquisition financing, partially offset by additional long-term debt outstanding in the current year. For additional information see Notes 2 ~~and~~ 10 ~~to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions" and "Derivatives and Hedging," respectively.~~

~~PART I~~

~~Income Tax Benefit.~~Expenses, net. The variance was primarily due to higher tax benefits resulting from legal entity restructuring, the 2016 North Carolina corporate tax rate reduction and prior year unfavorable impacts of finalizing federal tax audits, partially offset by lower ~~pretax losses.~~returns on investments that fund certain employee benefit obligations as well as lower Bison investment income.

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

Other's lower net expense was driven by prior year losses on forward-starting interest rate swaps, prior year donations to the Duke Energy Foundation, insurance proceeds resulting from settlement of the shareholder litigation related to the Progress Energy merger and decreased severance expenses. The following is a detailed discussion of the variance drivers by line item.

~~Operating Expenses.~~Income Tax Benefit. The decrease in the tax benefit was primarily ~~due to prior year severance expenses related to cost savings initiatives, prior year donations to the Duke Energy Foundation and lower franchise taxes resulting from a North Carolina law change.~~

~~Other Income and Expenses.~~ ~~The increase was~~ driven by ~~insurance proceeds resulting from settlement of the shareholder litigation related to the Progress Energy merger and higher earnings from the equity method investment in NMC.~~

~~Interest Expense.~~ The decrease was primarily by prior year losses on forward-starting interest rate swaps related to Piedmont pre-acquisition financing, partially offset by higher interest costs on $3.75 billion of debt issued in August 2016 to fund the acquisition. For additional information see Notes 2 ~~and~~ 10 ~~to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions" and "Derivatives and Hedging," respectively.~~

~~Income Tax Benefit.~~ ~~The variance was primarily due to~~ a decrease in pretax ~~losses, partially offset~~losses.

Preferred Dividends. The variance was driven by ~~tax benefits resulting from legal entity restructuring and~~ the ~~net impact~~declaration of ~~North Carolina corporate tax rate reductions~~preferred stock dividends on preferred stock issued in ~~2017 and 2016.~~2019.

Matters Impacting Future Other Results

~~Included in Other is Duke Energy Ohio's 9 percent ownership interest in the Ohio Valley Electric Corporation (OVEC), which owns 2,256 MW of coal-fired generation capacity. As~~The COVID-19 pandemic has not had 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, including Duke Energy Ohio, based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuations in power prices and changes in OVEC’s costs of business. Deterioration in the credit quality or bankruptcy of one or more parties to the ICPA could increase the costs of OVEC. In addition, certain proposed environmental rulemaking costs could result in future increased cost allocations. For information on Duke Energy's regulatory filings related to OVEC, see Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters.”

The retired Beckjord generating station (Beckjord), a nonregulated facility retired during 2014, is not subject to the U.S. Environmental Protection Agency (EPA) rule related to the disposal of CCR from electric utilities. However, if costs are incurred as a result of environmental regulations or to mitigate risk associated with on-site storage of coal ash, the costs could have an adversematerial impact on ~~Other's financial position,~~Other as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Other results of operations, financial position and cash ~~flows.~~

Earnings from an equity method investment in NMC reflect sales of methanol and methyl tertiary butyl ether (MTBE), which generate margins that are directionally correlated with Brent crude oil prices. Weaknessflows in the ~~market price~~future. Other will continue to actively monitor the impacts of ~~Brent crude oil~~COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and ~~related commodities may result in~~governmental agencies. See Item 1A. Risk Factors for discussion of risks associated with COVID-19 and Liquidity and Capital Resources within this section for a ~~decline in earnings. In October 2017, Duke Energy's economic ownership interest in NMC decreased from 25 percent to 17.5 percent.~~discussion of liquidity impacts of COVID-19.

On November 2, 2017, the U.S. House of Representatives issued its proposal for comprehensive tax reform. The U.S. Senate has not yet issued its related proposal. There is uncertainty as to whether any form of tax reform will become law and, if so, what provisions may be included in the final tax reform. Any substantial revision to the U.S. tax code, including a loss of the ability to deduct interest expense, could adversely impact Duke Energy's future earnings, cash flows or financial position.

~~(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017
2016
Variance
2017
2016
Variance
(Loss) Income From Discontinued Operations, net of tax $ (2 ) $ 180
$ (182 ) $ (4 ) $ 190
$ (194 )



MD&A	DUKE ENERGY CAROLINAS

~~Three Months Ended September 30, 2017, as Compared to September 30, 2016~~

The variance was primarily driven by a $122 million income tax benefit in the prior year resulting from immaterial out of period deferred tax liability adjustments, as well as earnings from the International Disposal Group, which was sold in December 2016. For additional information see Note 2 to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions."

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

The variance was primarily driven by a $122 million income tax benefit in the prior year resulting from immaterial out of period deferred tax liability adjustments, as well as operating earnings from the International Disposal Group, partially offset by an impairment charged related to certain assets in Central America that were sold in 2016. For additional information see Note 2 to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions."

~~PART I~~

DUKE ENERGY CAROLINAS

Management’s Discussion and Analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes for the nine months ended September 30, 2017, and 2016 and the Annual Report on Form 10-K for the year ended December 31, 2016.

Results of Operations


	Nine Months Ended September 30,								Three Months Ended March 31,
(in millions)	2017		2016			Variance			2020		2019		Variance
Operating Revenues	$	5,581	$	5,641		$	(60	)	$	1,748	$	1,744	$	4
Operating Expenses
Fuel used in electric generation and purchased power	1,394		1,391			3			453		472		(19		)
Operation, maintenance and other	1,431		1,481			(50		)	386		440		(54		)
Depreciation and amortization	804		802			2			343		317		26
Property and other taxes	206		206			—			81		80		1
Impairment charges									2		—		2
Total operating expenses	3,835		3,880			(45		)	1,265		1,309		(44		)
Losses on Sales of Other Assets and Other, net	—		(1		)	1
Gains on Sales of Other Assets and Other, net									1		—		1
Operating Income	1,746		1,760			(14		)	484		435		49
Other Income and Expenses	99		121			(22		)
Other Income and Expenses, net									43		31		12
Interest Expense	314		316			(2		)	123		110		13
Income Before Income Taxes	1,531		1,565			(34		)	404		356		48
Income Tax Expense	522		539			(17		)	65		63		2
Net Income	$	1,009	$	1,026		$	(17	)	$	339	$	293	$	46

The following table shows the percent changes in GWh sales and average number of customers. The 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	~~2017~~2020
Residential sales	(~~6.7~~5.1	)%
General service sales	(~~2.1~~0.1	)%
Industrial sales	(~~0.5~~1.2	)%
Wholesale power sales	~~3.9~~(3.0	)%
Joint dispatch sales	~~87.6~~(54.0	)%
Total sales	(~~2.5~~2.7	)%
Average number of customers	~~1.5~~1.8	%

~~Nine~~Three Months Ended ~~September 30, 2017,~~March 31, 2020, as ~~Compared~~compared to ~~September 30, 2016~~March 31, 2019

Operating Revenues.The variance was driven primarily by:

a ~~$213~~$23 million increase in weather-normal retail sales volumes; and

an $11 million increase due to higher pricing from the South Carolina retail rate case, net of a return of EDIT to customers.

Partially offset by:

a $26 million decrease in retail sales ~~net of fuel revenues,~~ due to ~~less favorable~~unfavorable weather in the current year.

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

~~an $89 million increase in rider revenues and retail pricing primarily related to energy efficiency programs;~~


•	a $54 million decrease in operation, maintenance and other expense 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 Carolina retail rate case, partially offset by higher storm restoration costs; and

a ~~$30~~$19 million ~~increase in weather-normal sales volumes to retail customers, net of fuel revenues;~~

~~a $15 million increase in wholesale power revenues, net of sharing and fuel revenues, primarily due to additional volumes for customers served under long-term contracts; and~~

~~an $8 million increase~~decrease in fuel ~~revenues~~used in electric generation and purchased power primarily due to changes in the generation mix.

~~Operating Expenses.~~Partially offset by:

a $26 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.

Other Income and Expenses, net. The variance was primarily due to ~~a $50 million decrease~~higher AFUDC equity in operation, maintenance and other expense primarily due to lower expenses at generating plants, lower storm restoration costs and lower severance expenses, partially offset by higher energy efficiency program costs and higher distribution maintenance expenses.the current year.

~~Other Income and Expenses.~~Interest Expense. The variance was primarily due to ~~a decrease~~higher debt outstanding in ~~recognition of post in-service equity returns for projects that had been completed prior to being reflected in customer rates.~~the current year.

~~Income Tax Expense.~~ The variance was primarily due to a decrease in pretax income and the favorable impact of research credits. The effective tax rates for the nine months ended September 30, 2017, and 2016 were 34.1 percent and 34.4 percent, respectively.



MD&A	DUKE ENERGY CAROLINAS

Matters Impacting Future Results

The COVID-19 pandemic has not had a material impact on Duke Energy Carolinas as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Carolinas results of operations, financial position and cash flows in the future. Duke Energy Carolinas will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Carolinas customers, suppliers and partners and could cause Duke Energy Carolinas to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy Carolinas also has pending rate case proceedings that have been delayed. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See 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.

On December 31, 2019, Duke Energy Carolinas entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Carolinas agreed to excavate five of the six remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the one remaining basin, uncapped basin ash will be excavated and moved to lined landfills. An order from regulatory authorities disallowing recovery of costs related to closure of these ash ~~impoundments~~basins could have an adverse impact on Duke Energy Carolinas’ results of operations, financial position and cash flows.

Duke Energy Carolinas filed a general rate case with the NCUC on September 30, 2019. The outcome of this rate case could materially impact Duke Energy Carolina's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On June 22, 2018, Duke Energy Carolinas received an order from the NCUC, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas has petitioned for deferral of future grid improvement costs in its 2019 rate case. Duke Energy Carolinas' results of operations, financial position and cash flows could be adversely impacted if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.

Duke Energy Carolinas’ service territory was impacted by several named storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages in the service territory. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the future recovery of storm restoration costs could have an adverse impact on Duke Energy Carolinas' ~~financial position,~~ results of operations, financial position and cash flows. See Note 43 to the Condensed Consolidated Financial Statements, ~~“Regulatory Matters”~~"Regulatory Matters," for additional information.

On May 21, 2019, the PSCSC issued an order granting Duke Energy Carolinas request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Carolinas has appealed this decision to the South Carolina Supreme Court and that appeal is pending. Duke Energy Carolinas' results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 93 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Duke ~~Energy's~~Energy Registrants' Annual ~~Report~~Reports on Form 10-K for the year ended December 31, ~~2016, "Asset Retirement Obligations,"~~2019, for ~~additional information.~~discussion of risks associated with the Tax Act.

~~PART I~~

On May 18, 2016, the NCDEQ issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the Coal Ash Act were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, may be reassessed in the future as low risk pursuant to legislation signed by the former North Carolina governor on July 14, 2016. Duke Energy Carolinas' estimated AROs related to the closure of North Carolina ash impoundments are based upon the mandated closure method or a probability weighting of potential closure methods for the impoundments that may be reassessed to low risk. As the final risk ranking classifications in North Carolina are delineated, final closure plans and corrective action measures are developed and approved for each site, the closure work progresses, and the closure method scope and remedial action methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore, could materially impact Duke Energy Carolinas' financial position. See Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," for additional information.

Duke Energy Carolinas is a party to multiple lawsuits and subject to fines and other penalties related to operations at certain North Carolina facilities with ash basins. The outcome of these lawsuits, fines and penalties could have an adverse impact on Duke Energy Carolinas’ financial position, results of operations and cash flows. See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for additional information.

Duke Energy Carolinas filed a general rate case on August 25, 2017, to recover costs of complying with CCR regulations and the Coal Ash Act, as well as costs of capital investments in generation, transmission and distribution systems and any increase in expenditures subsequent to previous rate cases. Duke Energy Carolinas' earnings could be adversely impacted if the rate increase is delayed or denied by the NCUC.

~~PART I~~

PROGRESS ENERGY

Results of Operations


	Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2017		2016		Variance			2020			2019			Variance
Operating Revenues	$	7,435	$	7,645	$	(210	)	$	2,422		$	2,572		$	(150	)
Operating Expenses
Fuel used in electric generation and purchased power	2,588		2,832		(244		)	763			925			(162		)
Operation, maintenance and other	1,650		1,699		(49		)	554			567			(13		)
Depreciation and amortization	958		904		54			452			455			(3		)
Property and other taxes	386		375		11			135			137			(2		)
Impairment charges	137		4		133
Total operating expenses	5,719		5,814		(95		)	1,904			2,084			(180		)
Gains on Sales of Other Assets and Other, net	19		18		1
Losses on Sales of Other Assets and Other, net								(1		)	—			(1		)
Operating Income	1,735		1,849		(114		)	517			488			29
Other Income and Expenses	65		79		(14		)
Other Income and Expenses, net								32			31			1
Interest Expense	595		497		98			206			219			(13		)
Income Before Income Taxes	1,205		1,431		(226		)	343			300			43
Income Tax Expense	384		496		(112		)	60			52			8
Net Income	821		935		(114		)	283			248			35
Less: Net Income Attributable to Noncontrolling Interests	7		8		(1		)
Less: Net Loss Attributable to Noncontrolling Interests								—			(1		)	1
Net Income Attributable to Parent	$	814	$	927	$	(113	)	$	283		$	249		$	34

~~Nine~~



MD&A	PROGRESS ENERGY

Three Months Ended ~~September 30, 2017,~~March 31, 2020, as ~~Compared~~compared to ~~September 30, 2016~~March 31, 2019

Operating Revenues. The variance was driven primarily by:

a ~~$256~~$160 million decrease in fuel cost recovery driven by lower fuel prices and volumes as well as less Duke Energy Progress native load transfer sales in the current year;

a $16 million decrease in wholesale power revenues, net of fuel, primarily due to ~~lower retail sales and changes~~coal ash cost recovery in ~~generation mix~~the prior year at Duke Energy Progress, ~~as well as decreased capacity rates to retail customers~~partially offset by increased demand at Duke Energy ~~Florida, partially offset by an increase~~Florida;

a $15 million decrease in ~~fuel rates~~rider revenues primarily due to ~~retail customers;~~the Crystal River 3 Uprate regulatory asset being fully recovered in 2019 at Duke Energy Florida; and

a ~~$132~~$7 million decrease in retail sales, net of fuel revenues, due to ~~less~~unfavorable weather in the current year at Duke Energy Progress, partially offset by favorable weather in the current year ~~including lost revenues related to Hurricane Irma~~ at Duke Energy Florida.

Partially offset by:

~~an $81~~a $17 million increase in retail pricing due to ~~the~~ base rate ~~adjustment for~~adjustments related to annual increases from the ~~Osprey acquisition~~2017 Settlement Agreement and the ~~completion of the Hines Energy Complex Chiller Uprate Project, as well as the~~Solar Base Rate Adjustment at Duke Energy ~~Progress South Carolina rate case; and~~Florida;

a ~~$79~~$12 million increase in ~~rider~~storm revenues ~~related~~due to ~~energy efficiency programs~~Hurricane Dorian collections at Duke Energy ~~Progress, as well as nuclear asset securitization beginning~~Florida;

a $10 million increase in ~~July 2016 and extended uprate project~~other revenues ~~beginning in 2017~~primarily due to increased transmission revenues at Duke Energy ~~Florida.~~Florida; and

an $8 million increase due to higher pricing from the South Carolina retail rate case, net of a return of EDIT to customers at Duke Energy Progress.

Operating Expenses. The variance was driven primarily by:

a ~~$244~~$162 million decrease in fuel ~~expense~~used in electric generation and purchased power primarily due to lower ~~retail sales~~demand and changes in generation mix at Duke Energy Progress ~~as well as decreased purchased power~~ and lower ~~capacity~~fuel costs, ~~partially offset by higher generation and deferred fuel costs~~net of deferrals at Duke Energy Florida; and

a ~~$49~~$13 million decrease in operation, maintenance and other expense ~~due to lower storm restoration costs~~ at Duke Energy Progress ~~lower planned outage~~primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement between Duke Energy Carolinas and ~~lower severance expenses,~~the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, partially offset by ~~higher~~ storm ~~restoration costs~~cost amortizations and employee benefits at Duke Energy Florida.

~~Partially offset by:~~

~~a $133 million increase in impairment charges~~Interest Expense. The variance was driven primarily ~~due to the write-off of remaining unrecovered Levy Nuclear Project costs in the current year~~by lower interest rates on outstanding debt at Duke Energy ~~Florida; and~~Progress.

~~a $54 million~~Income Tax Expense. The increase in ~~depreciation and amortization~~tax expense ~~primarily due to nuclear regulatory asset amortization, as well as additional plant in service at Duke Energy Florida.~~

~~Interest Expense.~~ ~~The variance~~ was primarily due to higher debt outstanding, as well as interest charges on North Carolina fuel overcollections at Duke Energy Progress and lower debt returns driven by the CR3 regulatory asset debt return ending in June 2016 upon securitization at Duke Energy Florida.

~~PART I~~

~~Income Tax Expense.~~ ~~The variance was primarily due to a decrease~~an increase in pretax income. The effective tax rates for the nine months ended September 30, 2017, and 2016 were 31.9 percent and 34.7 percent, respectively. The decrease in the effective tax rate was primarily due to the favorable impact of research credits and lower North Carolina corporate tax rates.

Matters Impacting Future Results

The COVID-19 pandemic has not had a material impact on Progress Energy as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Progress Energy results of operations, financial position and cash flows in the future. Progress Energy will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Progress Energy customers, suppliers and partners and could cause Progress Energy to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Progress Energy also has various pending rate case proceedings that have been delayed. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See 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.

On December 31, 2019, Duke Energy Progress entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Progress agreed to excavate two of the three remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the one remaining basin, uncapped basin ash will be excavated and moved to lined landfills. An order from regulatory authorities disallowing recovery of costs related to closure of these ash ~~impoundments~~basins could have an adverse impact on ~~Progress Energy’s financial position,~~Duke Energy Progress’ results of operations, and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters” and Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," for additional information.

On May 18, 2016, the NCDEQ issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the Coal Ash Act were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, may be reassessed in the future as low risk pursuant to legislation signed by the former North Carolina governor on July 14, 2016. Progress Energy's estimated AROs related to the closure of North Carolina ash impoundments are based upon the mandated closure method or a probability weighting of potential closure methods for the impoundments that may be reassessed to low risk. As the final risk ranking classifications in North Carolina are delineated, final closure plans and corrective action measures are developed and approved for each site, the closure work progresses, and the closure method scope and remedial action methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore, could materially impact Progress Energy's financial position. See Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," for additional information.

Duke Energy Progress is a party to multiple lawsuits and subject to fines and other penalties related to operations at certain North Carolina facilities with ash basins. The outcome of these lawsuits, fines and penalties could have an adverse impact on Progress Energy’s financial position ~~results of operations and cash flows. See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for additional information.~~

In the fourth quarter of 2016, Hurricane Matthew caused historic flooding, extensive damage and widespread power outages within the Duke Energy Progress service territory. Duke Energy Progress filed a petition with the NCUC requesting an accounting order to defer incremental operation and maintenance and capital costs incurred in response to Hurricane Matthew and other significant 2016 storms. Current estimated incremental costs are approximately $116 million. The NCUC will address this request in Duke Energy Progress' currently pending rate case. A final order from the NCUC that disallows the deferral and future recovery of all or a significant portion of the incremental storm restoration costs incurred could result in an adverse impact on Progress Energy's financial position, results of operations and cash flows.

Duke Energy Progress filed a general rate case with the NCUC on ~~June 1, 2017. Duke Energy Progress will seek to recover costs~~October 30, 2019. The outcome of complying with CCR regulations and the Coal Ash Act, as well as costs of capital investments in generation, transmission and distribution systems and any increase in expenditures subsequent to previousthis rate ~~cases.~~case could materially impact Progress Energy's ~~earnings could be adversely impacted if the rate increase is delayed or denied by the NCUC.~~

~~On August 29, 2017, Duke Energy Florida filed the 2017 Settlement with the FPSC. The 2017 Settlement was approved by the FPSC on October 25, 2017.~~results of operations, financial position and cash flows. See Note 43 to the Condensed Consolidated Financial Statements, ~~“Regulatory~~"Regulatory Matters,”" for additional ~~information about the 2017 Settlement. In accordance with the 2017 Settlement,~~ information.

Duke Energy Progress has petitioned for deferral of future grid improvement costs in its 2019 rate case. Progress Energy's results of operations, financial position and cash flows could be adversely impacted if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.

Duke Energy Progress and Duke Energy Florida’s service territories were impacted by several named storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the service territory of Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 5 hurricane and the most powerful storm to hit the Florida ~~will not seek~~Panhandle in recorded history. In September 2019, Hurricane Dorian impacted Duke Energy Progress' and Duke Energy Florida's service territories. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the deferral and future recovery of ~~any~~storm restoration costs ~~associated with the ongoing Westinghouse contract litigation, which is currently being appealed.~~could have an adverse impact on Progress Energy's results of operations, financial position and cash flows. See Note 53 to the Condensed Consolidated Financial Statements, ~~“Commitments and Contingencies”~~"Regulatory Matters," for additional ~~information about~~information.

100



MD&A	PROGRESS ENERGY

On May 21, 2019, the ~~litigation. An unfavorable appeals ruling on that matter could have~~PSCSC issued an ~~adverse impact on~~order granting Duke Energy ~~Florida’s financial position,~~Progress' request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Progress has appealed this decision to the South Carolina Supreme Court and that appeal is pending. Progress Energy's results of operations, financial position and ~~cash flows.~~

In September 2017, Hurricane Irma caused extensive damage and widespread power outages within the Duke Energy Florida service territory. Duke Energy Florida has not completed the final accumulation of storm restoration costs incurred. Total storm restoration costs, including capital, are currently estimated at approximately $500 million. In accordance with a regulatory order with FPSC, certain incremental operation and maintenance storm restoration costs are classified as a regulatory asset recognizing the probable recoverability of these costs under FPSC's storm rule. The Company will make a petition by the end of 2017 to FPSC for recovery of costs. Duke Energy Florida's cash flows could be adversely impacted ~~by the timing of cost~~if coal ash costs are not ultimately approved for recovery. See Note ~~4, "Regulatory Matters,"~~3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

~~PART I~~

~~DUKE ENERGY PROGRESS~~

~~Management’s~~See "Item 7. Management's Discussion and Analysis ~~should be read~~of Financial Condition and Results of Operations," in ~~conjunction with~~ the ~~accompanying Condensed Consolidated Financial Statements and Notes for the nine months ended September 30, 2017, and 2016 and the~~Duke Energy Registrants' Annual ~~Report~~Reports on Form 10-K for the year ended December 31, ~~2016.~~2019, for discussion of risks associated with the Tax Act.

DUKE ENERGY PROGRESS

Results of Operations


	Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2017		2016		Variance			2020			2019		Variance
Operating Revenues	$	3,878	$	4,103	$	(225	)	$	1,338		$	1,484	$	(146	)
Operating Expenses
Fuel used in electric generation and purchased power	1,214		1,441		(227		)	405			515		(110		)
Operation, maintenance and other	1,032		1,067		(35		)	305			335		(30		)
Depreciation and amortization	536		526		10			287			290		(3		)
Property and other taxes	120		119		1			47			44		3
Impairment charges	—		1		(1		)
Total operating expenses	2,902		3,154		(252		)	1,044			1,184		(140		)
Gains on Sales of Other Assets and Other, net	3		2		1
Losses on Sales of Other Assets and Other, net								(1		)	—		(1		)
Operating Income	979		951		28			293			300		(7		)
Other Income and Expenses	47		47		—
Other Income and Expenses, net								22			24		(2		)
Interest Expense	217		188		29			69			77		(8		)
Income Before Income Taxes	809		810		(1		)	246			247		(1		)
Income Tax Expense	262		271		(9		)	42			44		(2		)
Net Income	$	547	$	539	$	8		$	204		$	203	$	1



Increase (Decrease) over prior period	~~2017~~2020
Residential sales	(~~4.6~~5.7	)%
General service sales	(~~2.0~~1.9	)%
Industrial sales	~~0.5~~(0.2	)%
Wholesale power sales	(~~5.6~~7.4	)%
Joint dispatch sales	(~~35.3~~0.5	)%
Total sales	(~~7.4~~4.1	)%
Average number of customers	~~1.3~~1.4	%

~~Nine~~Three Months Ended ~~September 30, 2017,~~March 31, 2020, as ~~Compared~~compared to ~~September 30, 2016~~March 31, 2019

Operating Revenues. The variance was driven primarily by:

a ~~$242~~$109 million decrease in fuel ~~revenues due to~~cost recovery driven by lower ~~retail~~fuel prices and volumes as well as less native load transfer sales ~~and changes~~ in ~~generation mix; and~~the current year;

a ~~$73~~$24 million decrease in retail sales ~~net of fuel revenues,~~ due to ~~less favorable~~unfavorable weather in the current ~~year.~~

~~Partially offset by:~~year; and

a ~~$41~~$23 million ~~increase in rider revenues primarily due to energy efficiency programs;~~

~~a $29 million increase in retail pricing due to the Duke Energy Progress South Carolina rate case;~~

~~a $21 million increase~~decrease in wholesale power revenues, net of fuel, primarily due to coal ash cost recovery in the prior year.

Partially Offset by:

an $8 million increase due to higher ~~peak demand.~~pricing from the South Carolina retail rate case, net of a return of EDIT to customers.

Operating Expenses. The variance was driven primarily by:

a ~~$227~~$110 million decrease in fuel ~~expense~~used in electric generation and purchased power primarily due to lower ~~retail sales~~demand and changes in generation mix; and

a ~~$35~~$30 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to ~~lower storm restoration costs.~~the partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case.

Interest Expense. ~~The increase was primarily due to higher debt outstanding, as well as interest charges on North Carolina fuel overcollections.~~

~~Income Tax Expense.~~ The variance was driven primarily ~~due to the favorable impact of research credits and~~by lower ~~North Carolina corporate tax~~interest rates. The effective tax rates for the nine months ended September 30, 2017, and 2016 were 32.4 percent and 33.5 percent, respectively. The decrease in the effective tax rate was primarily due to the favorable impact of research credits and lower North Carolina corporate tax rates. on outstanding debt.

101

~~PART I~~



MD&A	DUKE ENERGY PROGRESS

Matters Impacting Future Results

The COVID-19 pandemic has not had a material impact on Duke Energy Progress as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Progress results of operations, financial position and cash flows in the future. Duke Energy Progress will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Progress customers, suppliers and partners and could cause Duke Energy Progress to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy Progress also has pending rate case proceedings that have been delayed. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See 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.

On December 31, 2019, Duke Energy Progress entered into a settlement agreement with NCDEQ and certain community groups under which Duke Energy Progress agreed to excavate two of the three remaining coal ash basins in North Carolina with ash moved to on-site lined landfills. At the one remaining basin, uncapped basin ash will be excavated and moved to lined landfills. An order from regulatory authorities disallowing recovery of costs related to closure of these ash ~~impoundments~~basins could have an adverse impact on Duke Energy Progress’ ~~financial position,~~ results of operations, and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters” and Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," for additional information.

On May 18, 2016, the NCDEQ issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the Coal Ash Act were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, may be reassessed in the future as low risk pursuant to legislation signed by the former North Carolina governor on July 14, 2016. Duke Energy Progress' estimated AROs related to the closure of North Carolina ash impoundments are based upon the mandated closure method or a probability weighting of potential closure methods for the impoundments that may be reassessed to low risk. As the final risk ranking classifications in North Carolina are delineated, final closure plans and corrective action measures are developed and approved for each site, the closure work progresses, and the closure method scope and remedial action methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore, could materially impact Duke Energy Progress' financial position. See Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," for additional information.

Duke Energy Progress is a party to multiple lawsuits and subject to fines and other penalties related to operations at certain North Carolina facilities with ash basins. The outcome of these lawsuits, fines and penalties could have an adverse impact on Duke Energy Progress’ financial position ~~results of operations and cash flows. See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for additional information.~~

In the fourth quarter of 2016, Hurricane Matthew caused historic flooding, extensive damage and widespread power outages within the Duke Energy Progress service territory. Duke Energy Progress filed a petition with the NCUC requesting an accounting order to defer incremental operation and maintenance and capital costs incurred in response to Hurricane Matthew and other significant 2016 storms. Current estimated incremental costs are approximately $116 million. The NCUC will address this request in Duke Energy Progress' currently pending rate case. A final order from the NCUC that disallows the deferral and future recovery of all or a significant portion of the incremental storm restoration costs incurred could result in an adverse impact on Duke Energy Progress' financial position, results of operations and cash flows.

Duke Energy Progress filed a general rate case with the NCUC on ~~June 1, 2017.~~October 30, 2019. The outcome of this rate case could materially impact Duke Energy Progress' results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On May 21, 2019, the PSCSC issued an order granting Duke Energy Progress' request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Progress ~~will seek~~has appealed this decision to ~~recover costs of complying with CCR regulations~~the South Carolina Supreme Court and ~~the Coal Ash Act, as well as costs of capital investments in generation, transmission and distribution systems and any increase in expenditures subsequent to previous rate cases.~~that appeal is pending. Duke Energy Progress' ~~earnings~~results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the ~~rate increase is delayed or denied by the NCUC.~~

~~PART I~~

~~DUKE ENERGY FLORIDA~~

~~Management’s Discussion and Analysis should be read in conjunction with the accompanying~~ Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

Duke Energy Progress has petitioned for deferral of future grid improvement costs in its 2019 rate case. Duke Energy Progress' results of operations, financial position and ~~Notes~~cash flows could be adversely impacted if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.

Duke Energy Progress' service territory was impacted by several named storms in 2018. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages in the ~~nine months ended~~service territory. In September ~~30, 2017,~~2019, Hurricane Dorian reached the Carolinas bringing high winds, tornadoes and ~~2016~~heavy rain, impacting about 300,000 customers within the service territory. A significant portion of the incremental operation and maintenance expenses related to these storms has been deferred. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Duke Energy Progress' results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Duke Energy Registrants' Annual ~~Report~~Reports on Form 10-K for the year ended December 31, ~~2016.~~2019, for discussion of risks associated with the Tax Act.

DUKE ENERGY FLORIDA

Results of Operations


	Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2017		2016		Variance			2020		2019		Variance
Operating Revenues	$	3,551	$	3,538	$	13		$	1,080	$	1,086	$	(6	)
Operating Expenses
Fuel used in electric generation and purchased power	1,374		1,391		(17		)	358		410		(52		)
Operation, maintenance and other	610		623		(13		)	245		230		15
Depreciation and amortization	423		378		45			165		165		—
Property and other taxes	265		256		9			88		93		(5		)
Impairment charges	137		4		133
Total operating expenses	2,809		2,652		157			856		898		(42		)
Operating Income	742		886		(144		)	224		188		36
Other Income and Expenses	45		30		15
Other Income and Expenses, net								10		13		(3		)
Interest Expense	211		143		68			84		82		2
Income Before Income Taxes	576		773		(197		)	150		119		31
Income Tax Expense	208		286		(78		)	30		23		7
Net Income	$	368	$	487	$	(119	)	$	120	$	96	$	24

102



MD&A	DUKE ENERGY FLORIDA

The following table shows the percent changes in GWh sales and average number of customers. The 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 period	~~2017~~2020
Residential sales	(~~3.6~~3.7	)%
General service sales	~~(1.3~~0.4	)%
Industrial sales	~~(1.4~~13.6	)%
Wholesale and other	~~18.5~~(18.0	)%
Total sales	~~(1.2~~3.6	)%
Average number of customers	1.5	%

~~Nine~~Three Months Ended ~~September 30, 2017,~~March 31, 2020, as ~~Compared~~compared to ~~September 30, 2016~~March 31, 2019

Operating Revenues. The variance was driven primarily by:

a ~~$52~~$51 million decrease in fuel revenues primarily due to a decrease in fuel rates billed to retail customers; and

a $15 million decrease in rider revenue requirements primarily due to the Crystal River 3 Uprate regulatory asset being fully recovered in 2019.

Partially offset by:

a $17 million increase in retail pricing ~~primarily~~ due to ~~the~~ base rate ~~adjustment for~~adjustments related to annual increases from the ~~Osprey acquisition~~2017 Settlement Agreement and the ~~completion of the Hines Energy Complex Chiller Uprate Project;~~Solar Base Rate Adjustment;

a ~~$38~~$17 million increase ~~in rider revenues primarily due to nuclear asset securitization beginning in July 2016 and extended power uprate project revenues beginning in 2017; and~~

~~a $30 million increase in weather-normal sales volumes to retail customers in the current year.~~

~~Partially offset by:~~

~~a $59 million decrease~~ in retail sales, net of fuel revenues, due to ~~less~~ favorable weather in the current ~~year, including lost~~year;

a $12 million increase in storm revenues ~~related~~due to Hurricane ~~Irma;~~Dorian collections;

a ~~$31~~$10 million ~~decrease~~increase in other revenues primarily due to increased transmission revenues; and

a $7 million increase in wholesale power revenues, net of fuel, primarily due to ~~contracts that expired in the prior year; and~~increased demand.

~~a $14 million decrease in fuel and capacity revenues primarily due to a decrease in capacity rates to retail customers, partially offset by an increase in fuel rates to retail customers.~~

Operating Expenses. The variance was driven primarily by:

a ~~$133~~$52 million ~~increase~~decrease in ~~impairment charges~~fuel used in electric generation and purchased power primarily due to ~~the write-off~~lower fuel costs, net of ~~remaining unrecovered Levy Nuclear Project costs in the current year; and~~

~~a $45 million increase in depreciation and amortization expense primarily due to nuclear regulatory asset amortization, as well as additional plant in service.~~

~~PART I~~

deferrals.

Partially offset by:

a ~~$17~~$15 million ~~decrease in fuel expense primarily due to decreased purchased power and lower capacity costs, partially offset by higher generation and deferred fuel costs; and~~

~~a $13 million decrease~~increase in operation, maintenance and other expense primarily due to ~~lower planned outage costs~~storm cost amortizations and ~~lower severance expenses, partially offset by higher storm restoration costs~~employee benefits.

Income Tax Expense. The increase in ~~the current year.~~

~~Other Income and Expenses.~~ ~~The variance was driven by higher AFUDC equity.~~

~~Interest Expense.~~ ~~The variance~~tax expense was primarily due to ~~higher debt outstanding and lower debt returns driven by the CR3 regulatory asset debt return ending in June 2016 upon securitization.~~

~~Income Tax Expense.~~ ~~The variance was primarily due to a decrease~~an increase in pretax income. ~~The effective tax rates for the nine months ended September 30, 2017, and 2016 were 36.1 percent and 37.0 percent, respectively.~~

Matters Impacting Future Results

~~In September 2017, Hurricane Irma caused extensive damage and widespread power outages within the~~The COVID-19 pandemic has not had a material impact on Duke Energy Florida ~~service territory.~~as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Florida results of operations, financial position and cash flows in the future. Duke Energy Florida will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Florida customers, suppliers and partners and could cause Duke Energy Florida to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See 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.

On October 10, 2018, Hurricane Michael made landfall on Florida's Panhandle as a Category 5 hurricane, the most powerful storm to hit the Florida Panhandle in recorded history. The storm caused significant damage within the service territory of Duke Energy Florida, particularly from Panama City Beach to Mexico Beach. In September 2019, Duke Energy Florida’s service territory was threatened by Hurricane Dorian with landfall as a possible Category 5 hurricane and therefore Duke Energy Florida incurred costs to secure necessary resources to be prepared for that potential impact. A significant portion of the incremental operation and maintenance expenses related to these storms has ~~not completed~~been deferred. An order from regulatory authorities disallowing the ~~final accumulation~~future recovery of storm restoration costs incurred. Total storm restoration costs, including capital, are currently estimated at approximately $500 million. In accordance with a regulatory order with FPSC, certain incremental operation and maintenance storm restoration costs are classified as a regulatory asset recognizing the probable recoverability of these costs under FPSC's storm rule. The Company will make a petition by the end of 2017 to FPSC for recovery of costs.could have an adverse impact on Duke Energy Florida's financial position, results of operations and cash ~~flows could be impacted by the timing of cost recovery.~~flows. See Note ~~4, "Regulatory Matters," to the Condensed Consolidated Financial Statements for additional information.~~

~~On August 29, 2017, Duke Energy Florida filed the 2017 Settlement with the FPSC. The 2017 Settlement was approved by the FPSC on October 25, 2017. See Note 4~~3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional ~~information about~~information.

103



MD&A	DUKE ENERGY OHIO

DUKE ENERGY OHIO

Results of Operations



	Three Months Ended March 31,
(in millions)	2020		2019		Variance
Operating Revenues
Regulated electric	$	346	$	355	$	(9	)
Regulated natural gas	152		176		(24		)
Total operating revenues	498		531		(33		)
Operating Expenses
Fuel used in electric generation and purchased power	87		93		(6		)
Cost of natural gas	37		54		(17		)
Operation, maintenance and other	123		132		(9		)
Depreciation and amortization	68		64		4
Property and other taxes	83		84		(1		)
Total operating expenses	398		427		(29		)
Operating Income	100		104		(4		)
Other Income and Expenses, net	3		9		(6		)
Interest Expense	24		30		(6		)
Income Before Income Taxes	79		83		(4		)
Income Tax Expense	14		14		—
Net Income	$	65	$	69	$	(4	)

The following table shows the ~~2017 Settlement. In accordance with~~percent changes in GWh sales of electricity, dekatherms of natural gas delivered and average number of electric and natural gas customers. The 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
Increase (Decrease) over prior year	2020		2020
Residential sales	(9.2	)%	(16.1	)%
General service sales	(3.4	)%	(13.9	)%
Industrial sales	(2.1	)%	(2.5	)%
Wholesale electric power sales	(33.1	)%	n/a
Other natural gas sales	n/a		(1.9	)%
Total sales	(5.5	)%	(12.3	)%
Average number of customers	0.8	%	0.6	%

Three Months Ended March 31, 2020, as compared to March 31, 2019

Operating Revenues. The variance was driven primarily by:

a $28 million decrease in fuel related revenues primarily due to lower natural gas prices as well as decreased volumes;

a $10 million decrease due to unfavorable weather in the ~~2017 Settlement,~~current year; and

a $5 million decrease in other revenues due to lower OVEC sales into PJM.

Partially offset by:

a $5 million increase in retail pricing primarily due to gas rate case impacts in Kentucky; and

a $4 million increase in rider revenues primarily related to the Distribution Capital Investment rider as a result of additional investments and the new Legacy Generation Riders arising from Ohio HB6, which provide an alternative method of recovering OVEC losses, partially offset by decreased Energy Efficiency Rider Revenue.

104



MD&A	DUKE ENERGY OHIO

Operating Expenses. The variance was driven primarily by:

a $23 million decrease in fuel expense, primarily driven by lower natural gas prices; and

a $9 million decrease in operations, maintenance and other expense primarily due to the timing of training and inspection programs for Customer Delivery and Customer Solutions as well as lower storm costs.

Partially offset by:

a $4 million increase in depreciation and amortization primarily driven by an increase in distribution plant.

Other Income and Expenses, net. The variance was primarily due to lower intercompany interest income due to decreased borrowing and lower AFUDC equity.

Interest Expense. The variance was primarily driven by lower debt outstanding in the current year and lower post in-service carrying costs, partially offset by higher intercompany interest expense due to increased borrowing.

Matters Impacting Future Results

The COVID-19 pandemic has not had a material impact on Duke Energy ~~Florida~~Ohio as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will ~~not seek~~impact Duke Energy Ohio results of operations, financial position and cash flows in the future. Duke Energy Ohio will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Ohio customers, suppliers and partners and could cause Duke Energy Ohio to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See 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.

On November 13, 2013, the PUCO issued an order authorizing recovery of ~~any~~MGP costs ~~associated~~at certain sites in Ohio with a deadline to complete the ~~ongoing Westinghouse contract litigation, which is currently being appealed.~~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 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 on Duke Energy Ohio’s results of operations, financial position and cash flows. See Note 53 to the Condensed Consolidated Financial Statements, ~~“Commitments and Contingencies”~~“Regulatory Matters,” for additional ~~information about the litigation. An unfavorable appeals ruling on that matter could have an adverse impact on Duke Energy Florida’s financial position, results of operations and cash flows.~~ information.

~~PART I~~

DUKE ENERGY ~~OHIO~~INDIANA

Results of Operations

Nine Months Ended September 30,
(in millions) 2017
2016
Variance
Operating Revenues
Regulated electric $ 1,036
$ 1,053
$ (17 )
Regulated natural gas 360
358
2
Nonregulated electric and other 30
22
8
Total operating revenues 1,426
1,433
(7 )
Operating Expenses
Fuel used in electric generation and purchased power – regulated 283
340
(57 )
Fuel used in electric generation and purchased power – nonregulated 42
37
5
Cost of natural gas 69
64
5
Operation, maintenance and other 385
367
18
Depreciation and amortization 193
175
18
Property and other taxes 204
195
9
Impairment charges 1
—
1
Total operating expenses 1,177
1,178
(1 )
Gains on Sales of Other Assets and Other, net 1
2
(1 )
Operating Income 250
257
(7 )
Other Income and Expenses 12
6
6
Interest Expense 67
63
4
Income from Continuing Operations Before Income Taxes 195
200
(5 )
Income Tax Expense from Continuing Operations 67
65
2
Income from Continuing Operations 128
135
(7 )
(Loss) Income from Discontinued Operations, net of tax (1 ) 36
(37 )
Net Income $ 127
$ 171
$ (44 )



	Three Months Ended March 31,
(in millions)	2020		2019			Variance
Operating Revenues	$	692	$	768		$	(76	)
Operating Expenses
Fuel used in electric generation and purchased power	194		257			(63		)
Operation, maintenance and other	186		189			(3		)
Depreciation and amortization	132		131			1
Property and other taxes	22		19			3
Total operating expenses	534		596			(62		)
Losses on Sales of Other Assets and Other, net	—		(3		)	3
Operating Income	158		169			(11		)
Other Income and Expenses, net	10		19			(9		)
Interest Expense	43		43			—
Income Before Income Taxes	125		145			(20		)
Income Tax Expense	26		35			(9		)
Net Income	$	99	$	110		$	(11	)



Increase (Decrease) over prior year	~~2017~~2020
Residential sales	(~~5.8~~10.0	)%
General service sales	(~~3.2~~4.8	)%
Industrial sales	(~~1.3~~2.6	)%
Wholesale power sales	~~127.3~~1.8	%
Total sales	(~~2.5~~5.3	)%
Average number of customers	~~0.8~~1.1	%

~~Nine~~

105



MD&A	DUKE ENERGY INDIANA

Three Months Ended ~~September 30, 2017,~~March 31, 2020, as ~~Compared~~compared to ~~September 30, 2016~~March 31, 2019

Operating Revenues.The variance was driven primarily by:

a ~~$59~~$58 million decrease in fuel revenues primarily due to lower ~~electric~~cost of fuel ~~prices~~ and ~~sales volumes, partially offset by higher costs passed through to natural gas customers due to higher natural gas prices; and~~unseasonably milder weather;

a ~~$16~~$9 million decrease in ~~electric~~ retail sales ~~net of fuel revenues,~~ due to ~~less favorable~~unfavorable weather in the current ~~year.~~year; and

~~Partially offset by:~~

~~a $40~~an $8 million ~~increase~~decrease in rider revenues primarily due to energy efficiency programs and a rate increase for the distribution capital investment rider, partially offset by a decrease in the percentage of income payment plan rider due to a rate decrease;

~~a $17 million increase in PJM Interconnection, LLC (PJM) transmission revenues; and~~

~~a $9 million increase in other revenues~~ related to ~~OVEC.~~lower Edwardsport IGCC sales volumes.

~~PART I~~

Operating Expenses.The variance was driven primarily by:

~~an $18 million increase in operation, maintenance and other expense due to higher energy efficiency program costs and higher transmission and distribution operations costs;~~

~~an $18 million increase in depreciation and amortization expense due to additional plant in service and a true up related to Smart Grid assets in the prior year;~~

a ~~$9 million increase in property and other taxes primarily due to higher property taxes;~~

~~a $5 million increase in nonregulated fuel expenses related to OVEC; and~~

~~a $5 million increase in natural gas costs due to higher natural gas prices.~~

~~Partially offset by:~~

~~a $57~~$63 million decrease in fuel used in electric generation and purchased power expense ~~driven by~~primarily due to lower ~~sales volumes~~coal and natural gas costs and lower ~~electric~~amortization of deferred fuel ~~costs.~~costs, partially offset by higher purchased power expense.

Other Income and ~~Expenses.~~ Expenses, net. The ~~increase~~decrease was primarily ~~driven by higher AFUDC equity.~~due to life insurance proceeds received in the prior year.

~~Interest Expense.~~ Income Tax Expense.The ~~increase~~decrease in income tax expense was primarily ~~driven by interest related~~due to ~~new debt issued~~a decrease in ~~June 2016.~~pretax income and an increase in the amortization of excess deferred taxes.

~~Discontinued Operations, Net of Tax.~~ ~~The variance was driven by a prior year income tax benefit resulting from immaterial out of period deferred tax liability adjustments related to the Midwest Generation Disposal Group.~~

Matters Impacting Future Results

~~An order from regulatory authorities disallowing recovery of costs related to closure of ash basins could have an adverse~~The COVID-19 pandemic has not had a material impact on Duke Energy ~~Ohio's~~Indiana as of March 31, 2020; however, we cannot predict the extent to which the COVID-19 pandemic will impact Duke Energy Indiana results of operations, financial position and cash flows in the future. Duke Energy Indiana will continue to actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown could adversely affect Duke Energy Indiana customers, suppliers and partners and could cause Duke Energy Indiana to experience an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy Indiana also has a pending rate case proceeding that could be delayed. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See 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.

Duke Energy Indiana filed a general rate case with the IURC on July 2, 2019, its first general rate case in 16 years. The outcome of this rate case could materially impact Duke Energy Indiana's results of operations, financial position and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters” and Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," for additional information.

Duke Energy Ohio’s nonregulated Beckjord station, a facility retired during 2014, is not subject to the EPA rule related to the disposal of CCR from electric utilities. However, if costs are incurred as a result of environmental regulations or to mitigate risk associated with on-site storage of coal ash at the facility, the costs could have an adverse impact on Duke Energy Ohio's financial position, results of operations and cash flows.

Duke Energy Ohio has a 9 percent ownership interest in OVEC, which owns 2,256 MW of coal-fired generation capacity. As a counterparty to an 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, including Duke Energy Ohio, based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuations in power prices and changes in OVEC’s costs of business. Deterioration in the credit quality or bankruptcy of one or more parties to the ICPA could increase the costs of OVEC. In addition, certain proposed environmental rulemaking costs could result in future increased cost allocations.

On March 2, 2017, Duke Energy Ohio filed an electric distribution base rate application with the PUCO to address recovery of electric distribution system capital investments and any increase in expenditures subsequent to previous rate cases. The application also includes requests to continue certain current riders and establish new riders related to LED Outdoor Lighting Service and regulatory mandates. Duke Energy Ohio's earnings could be adversely impacted if the rate case and requested riders are delayed or denied by the PUCO. See Note 43 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On September 1, 2017, Duke Energy Kentucky filed a base rate case with the KPSC to recover costs of capital investments in generation, transmission and distribution systems and to recover other incremental expenses since its last rate case filed in 2006. Duke Energy Kentucky’s earnings could be adversely impacted if the rate increase is delayed or denied by the KPSC.

~~PART I~~

~~DUKE ENERGY INDIANA~~

~~Results of Operations~~

Nine Months Ended September 30,
(in millions) 2017
2016
Variance
Operating Revenues $ 2,302
$ 2,225
$ 77
Operating Expenses
Fuel used in electric generation and purchased power 744
690
54
Operation, maintenance and other 541
526
15
Depreciation and amortization 336
345
(9 )
Property and other taxes 56
67
(11 )
Impairment charges —
8
(8 )
Total operating expenses 1,677
1,636
41
Gains on Sales of Other Assets and Other, net 1
—
1
Operating Income 626
589
37
Other Income and Expenses 27
15
12
Interest Expense 132
136
(4 )
Income Before Income Taxes 521
468
53
Income Tax Expense 203
159
44
Net Income $ 318
$ 309
$ 9



~~Increase (Decrease) over prior year~~	~~2017~~
~~Residential sales~~	~~(5.5~~	)%
~~General service sales~~	~~(2.5~~	)%
~~Industrial sales~~	~~0.1~~	%
~~Wholesale power sales~~	~~(19.8~~	)%
~~Total sales~~	~~(6.2~~	)%
~~Average number of customers~~	~~0.8~~	%

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

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

~~a $64 million increase in rider revenues related to the Edwardsport IGCC plant and energy efficiency programs; and~~

~~a $47 million increase in fuel revenues primarily due to higher purchased power costs passed through to customers and higher financial transmission right (FTR) revenues.~~

~~Partially offset by:~~

~~an $18 million decrease in retail sales due to less favorable weather in the current year; and~~

~~a $15 million decrease in wholesale power revenues, net of fuel, primarily due to a decrease in demand rates and contracts that expired in the current year.~~

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

~~a $54 million increase in fuel and purchased power expense, primarily due to higher purchased power volumes and prices; and~~

~~a $15 million increase in operation, maintenance and other expense due to growth in energy efficiency programs and higher transmission costs.~~

~~Partially offset by:~~

~~an $11 million decrease in property and other taxes primarily due to utilization of ITCs;~~

a $9 million decrease in depreciation and amortization primarily due to the 2017 deferral of certain asset retirement obligations and the completion of the amortization of a regulated asset for costs associated with the termination of a gasification services agreement in 2000, partially offset by new IGCC rider rates that result in a lower deferral amount and higher depreciation due to additional plant in service; and

~~PART I~~

~~an $8 million decrease in impairments and other charges primarily due to the early retirement of certain metering equipment in the prior year~~.

~~Other Income and Expenses.~~ ~~The increase was primarily driven by higher AFUDC equity.~~

~~Income Tax Expense.~~ The variance was primarily due to an increase in pretax income. The effective tax rates for the nine months ended September 30, 2017, and 2016 were 39.0 percent and 34.0 percent, respectively. The increase in the effective tax rate was primarily due to an immaterial out of period adjustment in the prior year related to deferred tax balances associated with property, plant and equipment.

~~Matters Impacting Future Results~~

On April 17, 2015, the EPA published in the Federal Register a rule to regulate the disposal of CCR from electric utilities as solid waste. Duke Energy Indiana has interpreted the 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. Duke Energy Indiana's interpretation of the requirements of the CCR rule is subject to potential legal challenges and further 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. An order from regulatory authorities disallowing recovery of costs related to closure of ash basins could have an adverse impact on Duke Energy Indiana's ~~financial position,~~ results of operations, ~~and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.~~

The Indiana Utility Regulatory Commission (IURC) approved a settlement agreement between Duke Energy Indiana and multiple parties that resolves all disputes, claims and issues from the IURC proceedings related to post-commercial operating performance and recovery of ongoing operating and capital costs at the Edwardsport IGCC generating facility. The settlement agreement imposed a cost cap for retail recoverable operations and maintenance costs through 2017. An inability to manage operating costs in accordance with caps imposed pursuant to the agreement could have an adverse impact on Duke Energy Indiana's financial position ~~results of operations~~ and cash flows.

~~PART I~~

PIEDMONT

Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes for the nine months ended September 30, 2017, Piedmont's Annual Report on Form 10-K for the year ended October 31, 2016, and the Form 10‑QT as of December 31, 2016, for the transition period from November 1, 2016, to December 31, 2016.

Results of Operations


	Nine Months Ended September 30,									Three Months Ended March 31,
(in millions)	2017			2016			Variance			2020		2019		Variance
Operating Revenues										$	512	$	579	$	(67	)
Regulated natural gas	$	877		$	815		$	62
Nonregulated natural gas and other	7			8			(1		)
Total operating revenues	884			823			61
Operating Expenses
Cost of natural gas	333			289			44			162		273		(111		)
Operation, maintenance and other	226			221			5			80		80		—
Depreciation and amortization	109			103			6			45		42		3
Property and other taxes	38			33			5			12		12		—
Impairment charges	7			—			7
Total operating expenses	713			646			67			299		407		(108		)
Operating Income	171			177			(6		)	213		172		41
Equity in earnings of unconsolidated affiliates	8			25			(17		)
Other income and expenses, net	(1		)	(1		)	—
Total other income and expenses	7			24			(17		)
Other Income and Expenses, net										12		6		6
Interest Expense	59			50			9			27		22		5
Income Before Income Taxes	119			151			(32		)	198		156		42
Income Tax Expense	43			57			(14		)	20		34		(14		)
Net Income	$	76		$	94		$	(18	)	$	178	$	122	$	56

106



MD&A	PIEDMONT

The following table shows the percent changes in dekatherms 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	~~2017~~2020
Residential deliveries	(~~19.2~~13.1	)%
Commercial deliveries	(~~11.8~~12.4	)%
Industrial deliveries	(~~4.3~~2.1	)%
Power generation deliveries	~~(11.0~~5.8	)%
For resale	(~~6.9~~23.7	)%
Total throughput deliveries	(~~10.5~~2.1	)%
Secondary market volumes	~~6.2~~(26.3	)%
Average number of customers	~~1.6~~1.4	%

~~Piedmont's throughput was 334,781,316 dekatherms and 374,214,204 dekatherms for the nine months ended September 30, 2017, and 2016, respectively.~~ Due to the margin decoupling mechanism in North Carolina and the weather normalization adjustment (WNA) mechanisms in South Carolina and Tennessee and fixed-price contracts with most power generation customers, changes in throughput deliveries do not have a material impact on Piedmont's revenues or earnings. The margin decoupling mechanism adjusts for variations in residential and commercial use per customer, including those due to weather and conservation. The WNA 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.

~~Nine~~Three Months Ended ~~September 30, 2017,~~March 31, 2020, as ~~Compared~~compared to ~~September 30, 2016~~March 31, 2019

Operating Revenues.The variance was driven primarily by:

a ~~$44~~$111 million ~~increase~~decrease due to ~~higher~~lower natural gas costs passed through to ~~customers primarily~~customers;

a $20 million decrease due to ~~higher natural gas prices; and~~

~~a $17 million increase in revenues~~return of EDIT to residential and commercial customers, net of natural gas costs passed through to customers, primarily due to Integrity Management Rider (IMR) rate adjustments and customer growth, partially offset by wholesale marketing revenue.

~~PART I~~

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

~~a $44 million increase in costs of natural gas primarily due to higher natural gas prices;~~

~~an $11 million increase in depreciation expense and property and franchise taxes due to additional plant in service;~~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:

a $53 million increase due to ~~an impairment~~North Carolina base rate case increases; and

a $12 million increase due to North Carolina IMR increases.

Operating Expenses.The variance was driven primarily by:

a $111 million decrease in cost of ~~software resulting from planned accounting system and process integration~~natural gas due to lower natural gas prices.

Income Tax Expense. The decrease in ~~2018.~~

~~Equity in Earnings of Unconsolidated Affiliates.~~ ~~The decrease~~income tax expense was primarily due to ~~equity earnings from the investment in SouthStar Energy Services, LLC (SouthStar)~~an increase in the ~~prior year. Piedmont sold its 15 percent membership interest in SouthStar on October 3, 2016.~~

~~Income Tax Expense.~~ ~~The variance was primarily due to a decrease~~amortization of excess deferred taxes, partially offset by an increase in pretax income.

Matters Impacting Future Results

The ~~effective tax rates for~~COVID-19 pandemic has not had a material impact on Piedmont as of March 31, 2020; however, we cannot predict the ~~nine months ended September 30, 2017,~~extent to which the COVID-19 pandemic will impact Piedmont results of operations, financial position and ~~2016 were 36.1 percent and 37.7 percent, respectively. The decrease~~cash flows in the ~~effective tax rate was primarily due~~future. Piedmont will continue to ~~favorable tax return true ups~~actively monitor the impacts of COVID-19 including the potential economic slowdown caused by business closures or by reduced operations of businesses and ~~lower North Carolina corporate tax rates.~~governmental agencies. The pandemic and resultant economic slowdown could adversely affect Piedmont customers, suppliers and partners and could cause Piedmont to experience an increase in certain costs, such as bad debt. Furthermore, the actions of federal, state or local authorities may impact our business operations in ways that we currently cannot anticipate. See 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.

~~PART I~~

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. ~~See~~ Duke Energy’s Annual Report on Form 10-K for the year ended December 31, ~~2016, for~~2019, included a summary and detailed discussion of projected primary sources and uses of cash for ~~2017~~2020 to ~~2019.~~2022.

~~The Subsidiary Registrants generally maintain minimal~~In March 2020, capital markets experienced significant liquidity challenges as a result of the ongoing uncertainty around the economic impacts from COVID-19. Investor demand for liquidity and cash ~~balances~~holdings created substantial volatility, particularly in the short-term commercial paper market. As such, issuers of commercial paper experienced difficulties issuing commercial paper for longer duration at competitive interest rates. During March 2020 and ~~use short-term borrowings~~in response to ~~meet their working capital needs~~market volatility and ~~other cash requirements. The Subsidiary Registrants, excluding Progress Energy (Parent), support their short-term borrowing needs through participation with~~the ongoing economic uncertainty related to COVID-19, Duke Energy ~~and certain of its other subsidiaries in a money pool arrangement. The companies with short-term funds may provide short-term loans~~took several actions to ~~affiliates participating under this arrangement.~~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; and

Duke Energy entered into and borrowed the ~~Subsidiary Registrants, excluding Progress~~full amount under a $1.5 billion, 364-day Term Loan Credit Agreement. The Term Loan Credit Agreement contains a provision for additional borrowing capacity of $500 million. Duke Energy ~~(Parent), may also use short-term debt, including commercial paper~~exercised the provision and borrowed an additional $188 million, for a total borrowing of approximately $1.7 billion.

107



MD&A	LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2020, Duke Energy had approximately $1.5 billion of cash on hand and $4.8 billion available under its $8 billion Master Credit Facility. Duke Energy has additional liquidity available totaling approximately $2.6 billion under outstanding equity forward agreements. Duke Energy expects to have sufficient liquidity in the ~~money pool, as a bridge~~form of cash on hand, cash from operations and available credit capacity to ~~long-term debt financings. The levels of borrowing may vary significantly over the course of the year due~~support its funding needs. Duke Energy continues to monitor access to credit and equity markets.

In addition to the ~~timing~~$500 million draw under the Three-Year Revolving Credit Facility and $1.7 billion of ~~long-term~~incremental borrowings under the new 364-day Term Loan Credit Agreement, Duke Energy also issued approximately $1.5 billion of debt ~~financings~~ and raised $67 million of common equity through its dividend reinvestment program during the impact of fluctuations in cash flows from operations. From time to time, Duke Energy’s current liabilities may 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 business.

~~CREDIT FACILITIES AND REGISTRATION STATEMENTS~~

three months ended March 31, 2020. Refer to ~~Note 6~~Notes 5 and 13 to the Condensed Consolidated Financial Statements, "Debt and Credit ~~Facilities,~~Facilities" and "Stockholders' Equity," respectively, for ~~further~~ information regarding Duke Energy's debt and equity issuances, debt maturities and available credit facilities including the Master Credit Facility.

~~Shelf Registration~~

In ~~September 2016,~~light of the COVID-19 pandemic, Duke Energy filed a registration statement (Form S-3) with the U.S. Securities and Exchange Commission (SEC). Under this Form S-3, which is uncapped, the Duke Energy Registrants, excluding Progress Energy, may issue debt and other securities in the future at amounts, prices and with terms to be determined at the time of future offerings. The registration statement also allows for the issuance of common stock by Duke Energy.

In January 2017, Duke Energy amended its Form S-3 to add Piedmont as a registrant and included in the amendment a prospectus for Piedmont under which it may issue debt securities in the same manner as other Duke Energy Registrants.

~~DEBT MATURITIES~~

~~Refer to Note 6~~currently does not expect significant changes to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant components of Current Maturities of Long-Term Debt on the Condensed Consolidated Balance Sheets.

~~CASH FLOWS FROM OPERATING ACTIVITIES~~

Cash flows from operations of Electric Utilities and Infrastructure and Gas Utilities and Infrastructure 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, workingprojected 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. Duke Energy believes it has sufficient liquidity resources through the commercial paper markets, and ultimately the Master Credit and Revolving Facilities, to support these operations, including Hurricane Irma storm restoration costs. 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,”investment expenditures provided in the ~~Duke Energy Registrants’ Annual Reports on~~ Form 10-K for ~~additional information).~~

~~Restrictive Debt Covenants~~

~~The~~the year ended December 31, 2019. However, Duke Energy Registrants’ debt and credit agreements contain various financial and other covenants. The Master Credit Facility contains a covenant requiring the debt-to-total capitalization ratio not to exceed 65 percent for all borrowers except Piedmont. The debt-to-total capitalization ratio for Piedmont is not to exceed 70 percent. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements. As of September 30, 2017, each of the Duke Energy Registrants was in compliance with all covenants related to their debt agreements. 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.

~~Credit Ratings~~

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 deteriorate, credit ratings could be negatively impacted.

The Duke Energy Registrants each hold credit ratings by Moody’s Investors Service, Inc. (Moody’s) and Standard & Poor’s Rating Services (S&P). In April 2017, Fitch Ratings, Inc. (Fitch) withdrew credit ratings of the Subsidiary Registrants, with the exclusion of Piedmont, which was not previously rated by Fitch due to commercial reasons. Fitch will continue to ~~provide credit ratings for Duke Energy Corporation.~~reassess capital projects depending on the duration and severity of economic impacts caused by the pandemic.

In May 2017, Moody’s changed its rating outlook for Duke Energy Corporation to stable from negative and affirmed Duke Energy Corporation's credit ratings. In August 2017, Moody's changed its rating outlook for Duke Energy Ohio to positive from stable and affirmed Duke Energy Ohio's credit ratings.

~~PART I~~

Cash Flow Information

The following table summarizes Duke Energy’s cash flows.


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2017			2016			2020			2019
Cash flows provided by (used in):
Operating activities	$	5,011		$	5,611		$	1,554		$	1,239
Investing activities	(6,360		)	(5,555		)	(3,022		)	(2,713		)
Financing activities	1,239			5,266			2,593			1,433
Changes in cash and cash equivalents included in assets held for sale	—			11
Net (decrease) increase in cash and cash equivalents	(110		)	5,333
Cash and cash equivalents at beginning of period	392			383
Cash and cash equivalents at end of period	$	282		$	5,716
Net increase (decrease) in cash, cash equivalents and restricted cash							1,125			(41		)
Cash, cash equivalents and restricted cash at beginning of period							573			591
Cash, cash equivalents and restricted cash at end of period							$	1,698		$	550

OPERATING CASH FLOWS

The following table summarizes key components of Duke Energy’s operating cash flows.


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2017			2016			2020			2019			Variance
Net income	$	2,361		$	2,392		$	890		$	893		$	(3	)
Non-cash adjustments to net income	3,937			3,585			1,627			1,299			328
Contributions to qualified pension plans	(8		)	—
Payments for asset retirement obligations	(420		)	(443		)	(132		)	(152		)	20
Working capital	(859		)	77			(831		)	(801		)	(30		)
Net cash provided by operating activities	$	5,011		$	5,611		$	1,554		$	1,239		$	315

The variance was primarily due ~~to:~~

~~a $936 million decrease in cash flows from working capital due~~ to ~~the~~ timing of payments of property taxes, higher Nuclear Electric Insurance Limited (NEIL) refunds in the ~~payment of accruals, increased taxes accrued resulting from an increased effective tax rate, warmer winter weather~~current year and ~~the absence of the International Disposal Group's operating cash flows.~~

~~Partially offset by:~~

~~a $321 million increase in net income after non-cash adjustments, primarily due to~~ lower ~~operation, maintenance and other expense and the additional Piedmont earnings contribution~~storm costs in the current year.

INVESTING CASH FLOWS

The following table summarizes key components of Duke Energy’s investing cash flows.


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2017			2016			2020			2019			Variance
Capital, investment and acquisition expenditures	$	(6,211	)	$	(5,450	)	$	(2,909	)	$	(2,630	)	$	(279	)
Other investing items	(149		)	(105		)	(113		)	(83		)	(30		)
Net cash used in investing activities	$	(6,360	)	$	(5,555	)	$	(3,022	)	$	(2,713	)	$	(309	)

The variance ~~was primarily due to:~~

~~a $761 million~~relates to an increase in capital ~~investment and acquisition~~ expenditures due to ~~growth~~higher overall investments primarily in ~~regulated generation investments and natural gas infrastructure, partially offset by a reduction in~~the Commercial Renewables ~~capital expenditures.~~segment.

108

~~PART I~~



MD&A	LIQUIDITY AND CAPITAL RESOURCES

FINANCING CASH FLOWS

The following table summarizes key components of Duke Energy’s financing cash flows.


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(in millions)	2017			2016			2020			2019			Variance
Issuances of long-term debt, net	$	3,675		$	7,659		$	1,662		$	1,536		$	126
Notes payable and commercial paper	(619		)	(647		)
Issuances of common stock							40			13			27
Issuances of preferred stock							—			974			(974		)
Notes payable, commercial paper and other short-term borrowings							1,569			(408		)	1,977
Dividends paid	(1,825		)	(1,731		)	(707		)	(649		)	(58		)
Contributions from noncontrolling interests							103			6			97
Other financing items	8			(15		)	(74		)	(39		)	(35		)
Net cash provided by financing activities	$	1,239		$	5,266		$	2,593		$	1,433		$	1,160

The variance was primarily due to:

a $3,984 million net decrease in issuances of long-term debt driven principally by the prior year $3,750 million of senior unsecured notes used to fund a portion of the Piedmont acquisition, and prior year $1,294 million nuclear asset-recovery bonds, offset by a $1,047$1,977 million increase in ~~current year redemptions;~~net proceeds from issuances of notes payable and commercial paper primarily due to borrowings of $1.7 billion under the 364-day Term Loan Credit Agreement.

~~a $94 million current year increase in dividends paid.~~Partially offset by:

~~Summary of Significant Debt Issuances~~

~~Refer to Note 6 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant debt issuances.~~


•	a $974 million decrease in proceeds from the issuance of preferred stock.

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.

~~The following sections outline various proposed and recently enacted regulations that may impact the Duke Energy Registrants.~~ Refer to Note 43 to the Condensed 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, the 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 that are no longer receiving CCR but contain liquid located at stations currently generating electricity (regardless of fuel source). 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. As a result of the EPA rule, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Ohio and Duke Energy Indiana recorded additional ARO amounts during 2015. Various industry and environmental parties have appealed the EPA's CCR rule in the U.S. Court of Appeals for the District of Columbia (D.C. Circuit Court). On April 18, 2016, the EPA filed a motion with the federal court to settle five issues raised in litigation. On June 14, 2016, the court approved the motion with respect to all of those issues. Duke Energy does not expect a material impact from the settlement or that it will result in additional ARO adjustments. The Utility Solid Waste Activities Group filed a petition with the EPA seeking to have EPA reconsider certain provisions of the final rule, extend remaining compliance deadlines and ask the D.C. Circuit Court to hold the litigation in abeyance. While EPA has confirmed that it will reconsider certain provisions of the final rule, the D.C. Circuit Court denied EPA’s petition to hold the litigation in abeyance. Oral argument is scheduled for November 20, 2017.

In addition to the requirements of the federal CCR regulation, CCR landfills and surface impoundments will continue to be independently regulated by most 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 regulated operations. For more information, see Note 9, “Asset Retirement Obligations,” in Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2016.

~~PART I~~

~~Coal Ash Management Act of 2014~~

Asset retirement obligations recorded on the Duke Energy Carolinas and Duke Energy Progress Condensed Consolidated Balance Sheets at September 30, 2017, and December 31, 2016, 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. On July 14, 2016, the Coal Ash Act was amended, requiring Duke Energy to undertake dam improvement projects and to provide access to a permanent alternative drinking water source to certain residents within a half- mile of coal ash basin compliance boundaries and to certain other potentially impacted residents. The legislation ranked basins at the H.F. Lee, Cape Fear and Weatherspoon stations as intermediate risk, consistent with Duke Energy's previously announced plans to excavate those basins. These specific intermediate-risk basins require closure through excavation including a combination of transferring ash to an appropriate engineered landfill or conversion of the ash for beneficial use. Closure of these specific intermediate-risk basins is required to be completed no later than August 1, 2028. Upon satisfactory completion of the dam improvement projects and installation of alternative drinking water sources by October 15, 2018, the legislation requires the NCDEQ to reclassify all remaining sites, excluding H.F. Lee, Cape Fear and Weatherspoon, as low risk. In January 2017, NCDEQ issued preliminary approval of Duke Energy's plans for the alternative water sources.

Additionally, the July 2016 legislation requires the installation and operation of three large-scale coal ash beneficiation projects, which are expected to produce reprocessed ash for use in the concrete industry. Closure of basins at sites with these beneficiation projects is required to be completed no later than December 31, 2029. On October 5, 2016, Duke Energy announced Buck Steam Station as a first location for one of the beneficiation projects. On December 13, 2016, Duke Energy announced H.F. Lee as the second location. On June 30, 2017, Duke Energy announced the Cape Fear Plant as the third beneficiation location.

Provisions of the Coal Ash Act prohibit 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 has submitted comprehensive site assessments and groundwater corrective plans to NCDEQ and will submit to NCDEQ site-specific coal ash impoundment closure plans in advance of closure. These plans and all associated permits must be approved by NCDEQ before closure work can begin.

~~For more information, see Note 9, “Asset Retirement Obligations,” in Duke Energy’s Annual Report on Form 10-K for the year ended December 31, 2016.~~

~~Clean Water Act 316(b)~~

The EPA published the final 316(b) cooling water intake structure rule on August 15, 2014, with an effective date of October 14, 2014. The rule applies to 26 of the electric generating facilities the Duke Energy Registrants own and operate. The rule allows for several options to demonstrate compliance and provides flexibility to the state environmental permitting agencies to make determinations on controls, if any, that will be required for cooling water intake structures. Any required intake structure modifications and/or retrofits are expected to be installed in the 2019 to 2022 time frame. Petitions challenging the rule have been filed by several groups. Oral argument was held on September 14, 2017. It is unknown when the courts will rule on the petitions. The Duke Energy Registrants cannot predict the outcome of these matters.

~~Steam Electric Effluent Limitations Guidelines~~

On January 4, 2016, the final Steam Electric Effluent Limitations Guidelines (ELG) rule became effective. The rule establishes new requirements for wastewater streams associated with steam electric power generation and includes more stringent controls for any new coal plants that may be built in the future. As originally written, affected facilities were required to comply between 2018 and 2023, depending on timing of new Clean Water Act (CWA) permits and waste stream. Most of the steam electric generating facilities the Duke Energy Registrants own are affected sources. The Duke Energy Registrants are well-positioned to meet the majority of the requirements of the rule due to current efforts to convert to dry ash handling. Petitions challenging the rule have been filed by several groups. On March 16, 2015, Duke Energy Indiana filed its own legal challenge to the rule with the Seventh Circuit Court of Appeals specific to the ELG rule focused on the limits imposed on IGCC facilities (gasification wastewater). All challenges to the rule were consolidated in the Fifth Circuit Court of Appeals. The Fifth Circuit Court of Appeals granted EPA's request to stay the pending litigation on the ELG rule until August 12, 2017, and on August 22, 2017, the Fifth Circuit Court of Appeals granted EPA’s Motion to Govern Further Proceedings, thereby severing and suspending the claims related to flue gas desulfurization wastewater, bottom ash transport water and gasification wastewater. Claims regarding gasification wastewater were stayed, pending the issuance of the variance to Duke Energy Indiana. The litigation will continue as to claims related to other waste streams.

On August 7, 2017, EPA issued a public notice regarding its proposed decision to grant a variance to Duke Energy Indiana for mercury and total suspended solids for gasification wastewater at its Edwardsport facility. The public comment period has ended, but EPA has not finalized its decision. Separate from the litigation, EPA finalized a rule on September 12, 2017, postponing the initial applicability date for bottom ash transport water and flue gas desulfurization wastewater from 2018 to 2020 and retaining the end applicability date of 2023. Also, as part of the rule, EPA reiterated its intent to conduct a new rulemaking to revise limitation guidelines for bottom ash transport water and flue gas desulfurization wastewater.

~~The Duke Energy Registrants cannot predict the outcome of these matters.~~

~~PART I~~

~~Estimated Cost and Impacts of Rulemakings~~

Duke Energy will incur capital expenditures to comply with the environmental regulations and rules discussed above. The following table provides five-year estimated costs, excluding AFUDC, of new control equipment that may need to be installed on existing power plants primarily to comply with the Coal Ash Act requirements for conversion to dry disposal of bottom ash and fly ash, CWA 316(b) and ELGs through December 31, 2021. The table excludes ash basin closure costs recorded in Asset retirement obligations on the Condensed Consolidated Balance Sheets. For more information related to AROs, see Note 9, “Asset Retirement Obligations” in Duke Energy’s Annual Report on Form 10‑K for the year ended December 31, 2016.

(in millions) Estimated Cost
Duke Energy $ 1,340
Duke Energy Carolinas 580
Progress Energy 420
Duke Energy Progress 310
Duke Energy Florida 110
Duke Energy Ohio 90
Duke Energy Indiana 250

The Duke Energy Registrants also expect to incur increased fuel, purchased power, operation and maintenance and other expenses, in addition to costs for replacement generation for potential coal-fired power plant retirements, as a result of these regulations. Actual compliance costs incurred may be materially different from these estimates due to reasons such as the timing and requirements of EPA regulations and the resolution of legal challenges to the rules. The Duke Energy Registrants intend to seek rate recovery of necessary and prudently incurred costs associated with regulated operations to comply with these regulations.

~~Cross-State Air Pollution Rule~~

~~On December 3, 2015, the EPA proposed a rule to lower the Cross-State Air Pollution Rule (CSAPR) Phase 2 state ozone season nitrogen oxide (NO~~X~~) emission budgets for 23 eastern states, including North Carolina, Ohio, Kentucky and Indiana. The EPA also proposed to eliminate the CSAPR Phase 2 ozone season state NO~~X ~~budgets for Florida and South Carolina. On September 7, 2016, the EPA finalized the CSAPR Update Rule that reduces the CSAPR Phase 2 state ozone season NO~~X emission budgets for 22 eastern states, including Ohio, Kentucky and Indiana. In the final CSAPR Update Rule, the EPA removed Florida, South Carolina and North Carolina from the ozone season NOx program. Beginning in 2017, Duke Energy Registrants in these states will not be subject to any CSAPR ozone season NOx emission limitations. For the states that remain in the program, the reduced state ozone season NOx emission budgets took effect on May 1, 2017. In Kentucky and Indiana, where Duke Energy Registrants own and operate coal-fired electric generating units (EGUs) subject to the final rule requirements, near-term responses include changing unit dispatch to run certain generating units less frequently and/or purchasing NOx allowances from the trading market. Longer term, upgrading the performance of existing NOx controls is an option. The Indiana Utility Group and the Indiana Energy Association jointly filed a petition for reconsideration asking that the EPA correct errors it made in calculating the Indiana budget and increase the budget accordingly. EPA has yet to act on the petition. Numerous parties have filed petitions with the D.C. Circuit Court challenging various aspects of the CSAPR Update Rule. Briefing in the case began on August 21, 2017. The date for oral argument has not been established. The Duke Energy Registrants cannot predict the outcome of these matters.

~~Carbon Pollution Standards for New, Modified and Reconstructed Power Plants~~

~~On October 23, 2015, the EPA published a final rule in the Federal Register establishing carbon dioxide (CO~~2) emissions limits for new, modified and reconstructed power plants. The requirements for new plants apply to plants that commenced construction after January 8, 2014. The EPA set an emissions standard for coal units of 1,400 pounds of CO₂per gross MWh, which would require the application of partial carbon capture and storage (CCS) technology for a coal unit to be able to meet the limit. Utility-scale CCS is not currently a demonstrated and commercially available technology for coal-fired EGUs, and therefore the final standard effectively prevents the development of new coal-fired generation. The EPA set a final standard of 1,000 pounds of CO2 ~~per gross MWh for new natural gas combined-cycle units.~~

On March 28, 2017, President Trump signed an executive order directing EPA to review the rule and determine whether to suspend, revise or rescind it. On the same day, the Department of Justice (DOJ) filed a motion with the D.C. Circuit Court requesting that the court stay the litigation of the rule while it is reviewed by EPA. Subsequent to the DOJ motion, the D.C. Circuit Court canceled oral argument in the case, which had been scheduled for April 17, 2017. On August 10, 2017, the court ordered that the litigation be suspended indefinitely. The rule remains in effect pending the outcome of litigation and EPA’s review. EPA has not announced a schedule for completing its review. The Duke Energy Registrants cannot predict the outcome of these matters, but do not expect the impacts of the current final standards will be material to Duke Energy's financial position, results of operations or cash flows.

~~Clean Power Plan~~

~~On October 23, 2015, the EPA published in the Federal Register the final Clean Power Plan (CPP) rule to regulate CO~~₂ ~~emissions from existing fossil fuel-fired EGUs. The CPP established CO~~₂ emission rates and mass cap goals that apply to existing fossil fuel-fired EGUs. Petitions challenging the rule have been filed by several groups and on February 9, 2016, the Supreme Court issued a stay of the final CPP rule, halting implementation of the CPP until legal challenges are resolved. States in which the Duke Energy Registrants operate have suspended work on the CPP in response to the stay. Oral arguments before 10 of the 11 judges on D.C. Circuit Court were heard on September 27, 2016. The court has not issued its opinion in the case.

~~PART I~~

On March 28, 2017, President Trump signed an executive order directing EPA to review the CPP and determine whether to suspend, revise or rescind the rule. On the same day, the DOJ filed a motion with the D.C. Circuit Court requesting that the court stay the litigation of the rule while it is reviewed by EPA. On April 28, 2017, the court issued an order to suspend the litigation for 60 days. On August 8, 2017, the court, on its own motion, extended the suspension of the litigation for an additional 60 days. On October 10, 2017, EPA issued a Notice of Proposed Rulemaking to repeal the CPP based on a change to EPA’s legal interpretation of the section of the Clean Air Act (CAA) on which the CPP was based. In the proposal EPA indicates that it has not determined whether it will issue a rule to replace the CPP, and if it will do so, when and what form that rule will take. The comment period on EPA's proposal ends December 15, 2017. Litigation of the CPP remains on hold in the D.C. Circuit and the February 2016 U.S. Supreme Court stay of the CPP remains in effect. The Duke Energy Registrants cannot predict the outcome of these matters.

~~Global Climate Change~~

For other information on global climate change and the potential impacts on Duke Energy, see “Other Matters” in “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, 2016.

~~North Carolina Legislation~~

In July 2017, the North Carolina General Assembly passed House Bill 589 and it was subsequently enacted into law by the governor. The law includes, among other things, overall reform of the application of the Public Utility Regulatory Policies Act of 1978 (PURPA) for new solar projects in the state, a requirement for the utility to procure approximately 2,600 MW of renewable energy through a competitive bidding process and recovery of costs related to the competitive bidding process through the fuel clause and a competitive procurement rider. Duke Energy is evaluating the impact of this law.

~~Nuclear Matters~~

For other information on nuclear matters and the potential impacts on Duke Energy, see “Other Matters” in “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, 2016.

~~New Accounting Standards~~

~~See Note 1 to the Condensed Consolidated Financial Statements, “Organization and Basis of Presentation,” for a discussion of the impact of new accounting standards.~~

Off-Balance Sheet Arrangements

During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, there were no material changes to Duke Energy’s off-balance sheet arrangements. See Note 11 – Variable Interest Entities and Note 13 – Stockholders' Equity to the Condensed Consolidated Financial Statements ~~"Variable Interest Entities,"~~ for ~~a discussion of off-balance sheet arrangements~~information regarding ~~Atlantic Coast Pipeline.~~ACP and equity forward sales agreements. For additional information on Duke Energy’s off-balance sheet arrangements, see “Off-Balance Sheet Arrangements” in “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, ~~2016.~~2019.

Contractual Obligations

Duke Energy enters into contracts that require payment of cash at certain specified periods, based on certain specified minimum quantities and prices. During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, there were no material changes in Duke Energy's contractual obligations. For an in-depth discussion of Duke Energy’s contractual obligations, see “Contractual Obligations” and “Quantitative and Qualitative Disclosures about Market Risk” in “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, ~~2016.~~

~~Subsequent Events~~

~~See Note 18 to the Condensed Consolidated Financial Statements, “Subsequent Events,” for a discussion of subsequent events.~~2019.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~During the three and nine months ended September 30, 2017, there were no material changes to the Duke Energy Registrants' disclosures about market risk.~~ For an in-depth discussion of the Duke Energy Registrants' market risks, see “Quantitative and Qualitative Disclosures about Market Risk” in Item 7 of the Annual Report on Form 10-K for the Duke Energy Registrants. During the three months ended March 31, 2020, there were no material changes to the Duke Energy Registrants' disclosures about market risk, other than as described below.

Credit Risk

In response to the COVID-19 pandemic, in March 2020, the Duke Energy Subsidiary Registrants announced a suspension of disconnections for nonpayment to be effective throughout the national emergency. This is expected to result in an increase in charge-offs over historical levels. In addition, the Registrants are monitoring the effects of the resultant economic slowdown on counterparties’ abilities to perform under their contractual obligations.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the ~~Securities~~ Exchange Act ~~of 1934 (Exchange Act) are~~is recorded, processed, summarized and reported, within the time periods specified by the SEC rules and forms.

109



MD&A	OTHER MATTERS

Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the Exchange Act ~~are~~is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

~~PART I~~

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated the effectiveness of their disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September 30, 2017,~~March 31, 2020, and, based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective in providing reasonable assurance of compliance.

Changes in Internal Control over Financial Reporting

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated changes in internal control over financial reporting (as such term is defined in Rules ~~13a-15(f)~~13a-15 and ~~15d-15(f)~~15d-15 under the Exchange Act) that occurred during the fiscal quarter ended ~~September 30, 2017,~~March 31, 2020, and have concluded no change has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

110

~~PART II. OTHER INFORMATION~~



OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding material legal proceedings, including regulatory and environmental matters, see Note 4,3, "Regulatory Matters," and Note 5,4, "Commitments and Contingencies," to the Condensed Consolidated Financial Statements. For additional information, see Item 3, "Legal Proceedings," in Duke ~~Energy’s~~Energy's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, careful consideration should be given to the factors discussed in Part I, “Item 1A. Risk Factors” in the Duke Energy Registrants' Annual Report on Form 10-K for the year ended December 31, 2019, which could materially affect the Duke Energy Registrants’ financial condition or future results. As described in the Duke Energy Form 8-K Filing on May 8, 2020, the information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in the Annual Report on Form 10-K for the year ended December 31, 2019.

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 begun to impact 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; and

The health and availability of our critical personnel and their ability to perform business functions.

Furthermore, due to the unpredictability of the COVID-19 pandemic’s ongoing impact on global health and economic stability as of this filing date, 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 obtain labor or equipment necessary for the construction of generation projects or pipeline expansion;

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;

Impairment charges to certain assets, including goodwill; 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 gas services.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~ISSUERPURCHASES OF EQUITY SECURITIES~~None.

~~There were no issuer purchases of equity securities during the third quarter of 2017.~~

111

~~PART II~~



EXHIBITS

ITEM 6. EXHIBITS

Exhibits filed herein are designated by an asterisk (*). All exhibits not so designated are incorporated by reference to a prior filing, as indicated. Items constituting management contracts or compensatory plans or arrangements are designated by a double asterisk (**). The ~~Company~~company agrees to furnish upon request to the ~~Commission~~commission a copy of any omitted schedules or exhibits upon request on all items designated by a triple asterisk (***).

Duke

Exhibit

Duke

Energy

Progress

Energy

Number

Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

4.1

~~Seventeenth~~One-Hundred and Second Supplemental Indenture, dated as of August ~~10, 2017~~14, 2019 (incorporated by reference to Exhibit 4.1 to ~~Registrant's~~Registrant’s Current Report on Form 8-K filed on ~~August 10, 2017,~~January 8, 2020, File No. ~~1-32853)~~1-4928).

4.2

~~Eighty-Seventh~~One-Hundred and Third Supplemental Indenture, dated as of ~~September 1, 2017~~January 8, 2020 (incorporated by reference to Exhibit ~~4.1~~4.2 to ~~Registrant's~~Registrant’s Current Report on Form 8-K filed on ~~September~~January 8, ~~2017,~~2020, File No. ~~1-3382)~~1-4928).

*10.14.3

~~Amendment to Duke Energy Corporation Executive Savings Plan, effective~~One-Hundred and Fourth Supplemental Indenture, dated as of January ~~1, 2014.~~8, 2020 (incorporated by reference to Exhibit 4.3 to Registrant’s Current Report on Form 8-K filed on January 8, 2020, File No. 1-4928).

4.4

Seventieth Supplemental Indenture, dated as of March 12, 2020 (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed on March 12, 2020, File No. 1-3543).

10.1

Amendment No. 5 and Consent, dated as of March 16, 2020, among Registrants, the Lenders party thereto, the Issuing Lenders party thereto, and Wells Fargo Bank, N.A., as Administrative Agent, and Swingline Lender (incorporated by reference to Exhibit 10.1 to Registrants' Current Report on Form 8-K, filed on March 17, 2020, File Nos. 1-32853, 1-4928, 1-3382, 1-3274, 1-1232, 1-3543, 1-6196).

10.2

$1.5 billion 364-Day Term Loan Credit Agreement, dated as of March 19, 2020, among the Registrant, as Borrower, certain Lenders from time to time parties thereto, and PNC Bank, N.A., as Administrative Agent, and Registrant's borrowing of the remaining $500 million under Registrant's existing $1 billion revolving credit facility on March 17, 2020 (incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K filed on March 19, 2020, File No. 1-32853).

*1210.2.1

~~Computation~~Joinder Agreement, dated as of ~~Ratio~~March 27, 2020, by and among the Registrant, each of ~~Earnings to Fixed Charges – DUKE ENERGY CORPORATION.~~the Incremental Lenders listed therein, and PNC BANK, N.A., as Administrative Agent.

10.3

Duke Energy Carolinas Summary of Partial Settlement in North Carolina Rate Case (incorporated by reference to Exhibit 99.1 to Registrants’ Current Report on Form 8-K filed on March 26, 2020, File Nos. 1-32853, 1-4928, 1-3382).

*10.4**

Performance Award Agreement

112



EXHIBITS

*31.1.1

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.2

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.3

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.4

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.5

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.6

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.7

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.8

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.1

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.2

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.3

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.4

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.5

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.6

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~PART II~~

*31.2.7

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.8

Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*32.1.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.3

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.4

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.5

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.6

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

113



EXHIBITS

*32.1.7

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.8

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.3

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.4

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.5

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.6

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.7

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.8

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS

XBRL Instance ~~Document.~~Document (this does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

*101.SCH

XBRL Taxonomy Extension Schema Document.

~~PART II~~

*101.CAL

XBRL Taxonomy Calculation Linkbase Document.

*101.LAB

XBRL Taxonomy Label Linkbase Document.

*101.PRE

XBRL Taxonomy Presentation Linkbase Document.

*101.DEF

XBRL Taxonomy Definition Linkbase Document.

The total amount of securities of the registrant or its subsidiaries authorized under any instrument with respect to long-term debt not filed as an exhibit does not exceed ~~10 percent~~10% of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees, upon request of the SEC, to furnish copies of any or all of such instruments to it.

114

~~PART II~~



SIGNATURES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.



		DUKE ENERGY CORPORATION DUKE ENERGY CAROLINAS, LLC PROGRESS ENERGY, INC. DUKE ENERGY PROGRESS, LLC DUKE ENERGY FLORIDA, LLC DUKE ENERGY OHIO, INC. DUKE ENERGY INDIANA, LLC PIEDMONT NATURAL GAS COMPANY, INC.

Date:	~~November 3, 2017~~May 12, 2020	/s/ STEVEN K. YOUNG
		Steven K. Young Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date:	~~November 3, 2017~~May 12, 2020	/s/ ~~WILLIAM E. CURRENS JR.~~DWIGHT L. JACOBS
		~~William E. Currens Jr.~~ Dwight L. Jacobs Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)

~~132~~115



(in millions)
Current assets	$	497
Property, plant and equipment, net	4,714
Goodwill	3,353
Other long-term assets	804
Total assets	9,368
Current liabilities, including current maturities of long-term debt	576
Long-term liabilities	1,790
Long-term debt	2,002
Total liabilities	4,368
Total purchase price	$	5,000



	Nine Months Ended
(in millions)	September 30, 2016
Cash flows provided by (used in):
Operating activities	$	201
Investing activities	(35		)



	Nine Months Ended September 30, 2016
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	16,406	$	355	$	365	$	17,126	$	40		$	—		$	17,166
Intersegment revenues	24		3		—		27		51			(78		)	—
Total revenues	$	16,430	$	358	$	365	$	17,153	$	91		$	(78	)	$	17,166
Segment income (loss)^(a)(c)	$	2,557	$	63	$	13	$	2,633	$	(436	)	$	—		$	2,197
Add back noncontrolling interests															5
Income from discontinued operations, net of tax^(d)															190
Net income															$	2,392



(in millions)	Estimated Cost
Duke Energy	$	1,340
Duke Energy Carolinas	580
Progress Energy	420
Duke Energy Progress	310
Duke Energy Florida	110
Duke Energy Ohio	90
Duke Energy Indiana	250