0001326160 duk:ProgressEnergyMember duk:ElectricUtilitiesandInfrastructureMember 2019-12-31 0001326160 duk:DukeEnergyOhioMember duk:CommercialMember us-gaap:NaturalGasUsRegulatedMember duk:GasUtilitiesandInfrastructureMember 2019-04-01 2019-06-30




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 SeptemberJune 30, 20172020
OR
¨☐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
 
dukeenergylogo4ca65.jpg
 
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 numberRegistrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification NumberCommission file numberRegistrant, 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)
1-15929PROGRESS ENERGY, INC.56-2155481
(a North Carolina corporation)
410 South Wilmington Street
Raleigh, North Carolina27601-1748
704-382-3853
526 South Church
1-3382DUKE ENERGY PROGRESS, LLC56-0165465
(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 Commoncommon stock outstanding at September 30, 2017:July 31, 2020:
RegistrantDescriptionShares
Duke EnergyCommon stock, $0.001 par value699,975,614735,432,137
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
11
Progress Energy, Inc. Financial Statements
15
   
 
DukeProgress Energy, Progress, LLCInc. Financial Statements
19
   
 
Duke Energy Florida,Progress, LLC Financial Statements
23
   
 
Duke Energy Ohio, Inc.Florida, LLC Financial Statements
27
   
 
Duke Energy Ohio, Inc. Financial Statements
31
Duke Energy Indiana, LLC Financial Statements
3135
   
 Piedmont Natural Gas Company, Inc. Financial Statements
3539
   
 
Combined Notes to Condensed Consolidated Financial Statements
 
 Note 1 – Organization and Basis of Presentation
3943
 Note 2 – Acquisitions and Dispositions
44
Note 3 – Business Segments
46
 Note 43 – Regulatory Matters
4948
Note 4 – Commitments and Contingencies
60
 Note 5 – CommitmentsDebt and ContingenciesCredit Facilities
5763
 Note 6 – Debt and Credit Facilities
62
Note 7 – Asset Retirement ObligationsGoodwill
65
 Note 87 – Goodwill and Intangible AssetsRelated Party Transactions
6566
 Note 98 – Related Party TransactionsDerivatives and Hedging
67
 Note 10 – Derivatives and Hedging
68
Note 119 – Investments in Debt and Equity Securities
7472
Note 10 – Fair Value Measurements
77
Note 11 – Variable Interest Entities
83
 Note 12 – Fair Value MeasurementsRevenue
8087
 Note 13 – Variable Interest EntitiesStockholders' Equity
8693
 Note 14 – Common StockEmployee Benefit Plans
9194
 Note 15 – Stock-Based CompensationIncome Taxes
9195
 Note 16 – Employee Benefit Plans
92
Note 17 – Income TaxesSubsequent Events
96
 Note 18 – Subsequent Events
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
97
   
Item 2.3.
Management's DiscussionQuantitative and Analysis of Financial Condition and Results of OperationsQualitative Disclosures About Market Risk
98115
   
Item 3.4.
QuantitativeControls and Qualitative Disclosures About Market RiskProcedures
126
Item 4.
Controls and Procedures
126115
   
PART II. OTHER INFORMATION
Item 1.
Legal Proceedings
128117
   
Item 1A.
Risk Factors
128117
   
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
128117
   
Item 6.
Exhibits
129118
   
 
Signatures
132121






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, andoperational 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, acquisitionimpacts 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 AcronymDefinition
2013 SettlementRevised and Restated Stipulation and Settlement Agreement approved in November 2013 among Duke Energy Florida, the Florida OPC and other customer representatives
2017 SettlementSecond 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
ACPAtlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy, Inc. and Duke Energy
ACP pipelineThe approximately 600-mile canceled interstate natural gas pipeline
AFSAvailable for Sale
AFUDCAllowance for funds used during construction
AMTAlternative Minimum Tax
AROAsset retirement obligations
BisonBison Insurance Company Limited
CCCombined Cycle
CCRCoal Combustion Residuals
CARES ActCoronavirus Aid, Relief and Economic Security Act
Coal Ash ActNorth Carolina Coal Ash Management Act of 2014
the CompanyDuke Energy Corporation and its subsidiaries
ConstitutionConstitution Pipeline Company, LLC
COVID-19Coronavirus Disease 2019
CRCCinergy Receivables Company, LLC
Crystal River Unit 3Crystal River Unit 3 Nuclear Plant
DEFPFDuke Energy Florida Project Finance, LLC
DEFRDuke Energy Florida Receivables, LLC
DEPRDuke Energy Progress Receivables, LLC
DERFDuke Energy Receivables Finance Company, LLC
Duke EnergyDuke Energy Corporation (collectively with its subsidiaries)
Duke Energy OhioDuke Energy Ohio, Inc.
Duke Energy ProgressDuke Energy Progress, LLC
Duke Energy CarolinasDuke Energy Carolinas, LLC
Duke Energy FloridaDuke Energy Florida, LLC
Duke Energy IndianaDuke Energy Indiana, LLC
Duke Energy KentuckyDuke Energy Kentucky, Inc.
Duke Energy RegistrantsDuke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont
EDITExcess deferred income tax
EPAU.S. Environmental Protection Agency
EPSEarnings Per Share
ESPElectric Security Plan
ETREffective tax rate
Exchange ActSecurities Exchange Act of 1934


GLOSSARY OF TERMS


FERCFederal Energy Regulatory Commission
FPSCFlorida Public Service Commission
FTRFinancial transmission rights
GAAPGenerally accepted accounting principles in the U.S.
GAAP Reported Earnings (Loss)Net Income (Loss) Available to Duke Energy Corporation Common Stockholders
GAAP Reported Earnings (Loss) Per ShareBasic Earnings (Loss) Per Share Available to Duke Energy Corporation common stockholders
GWhGigawatt-hours
IGCCIntegrated Gasification Combined Cycle
IMRIntegrity Management Rider
IRSInternal Revenue Service
Investment TrustsNDTF investments and grantor trusts of Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana
IURCIndiana Utility Regulatory Commission
KPSCKentucky Public Service Commission
LLCLimited Liability Company
MGPManufactured gas plant
MMBtuMillion British Thermal Unit
MWMegawatt
MWhMegawatt-hour
NCUCNorth Carolina Utilities Commission
NDTFNuclear decommissioning trust funds
NPNSNormal purchase/normal sale
OPEBOther Post-Retirement Benefit Obligations
ORSSouth Carolina Office of Regulatory Staff
OVECOhio Valley Electric Corporation
PiedmontPiedmont Natural Gas Company, Inc.
PPAPurchase Power Agreement
Progress EnergyProgress Energy, Inc.
PSCSCPublic Service Commission of South Carolina
PUCOPublic Utilities Commission of Ohio
Subsidiary RegistrantsDuke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont
the Tax ActTax Cuts and Jobs Act
TPUCTennessee Public Utility Commission
U.S.United States
VIEVariable Interest Entity
WACCWeighted Average Cost of Capital



FINANCIAL STATEMENTS


ITEM 1. FINANCIAL STATEMENTS


DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
(in millions, except per-share amounts)2017
 2016
 2017
 2016
(in millions, except per share amounts)2020
 2019
 2020
 2019
Operating Revenues              
Regulated electric$6,091
 $6,303
 $16,122
 $16,321
$4,963
 $5,423
 $10,087
 $10,708
Regulated natural gas247
 89
 1,168
 355
263
 280
 901
 1,008
Nonregulated electric and other144
 184
 476
 490
195
 170
 382
 320
Total operating revenues6,482
 6,576
 17,766
 17,166
5,421
 5,873
 11,370
 12,036
Operating Expenses    
 
    
 
Fuel used in electric generation and purchased power1,863
 2,031
 4,853
 5,140
1,349
 1,641
 2,796
 3,250
Cost of natural gas68
 6
 402
 64
59
 76
 258
 403
Operation, maintenance and other1,442
 1,460
 4,282
 4,227
1,353
 1,434
 2,692
 2,853
Depreciation and amortization900
 819
 2,594
 2,402
1,150
 1,089
 2,280
 2,178
Property and other taxes313
 302
 924
 887
334
 334
 679
 677
Impairment charges207
 10
 216
 14
6
 4
 8
 4
Total operating expenses4,793
 4,628
 13,271
 12,734
4,251
 4,578
 8,713
 9,365
Gains on Sales of Other Assets and Other, net6
 6
 24
 21
7
 3
 8
 —
Operating Income1,695
 1,954
 4,519
 4,453
1,177
 1,298
 2,665
 2,671
Other Income and Expenses    

 

    

 

Equity in earnings (losses) of unconsolidated affiliates36
 (60) 101
 (37)
Equity in (losses) earnings of unconsolidated affiliates(1,968) 44
 (1,924) 87
Other income and expenses, net88
 86
 255
 237
137
 89
 183
 204
Total other income and expenses124
 26
 356
 200
(1,831) 133
 (1,741) 291
Interest Expense498
 464
 1,475
 1,431
554
 542
 1,105
 1,085
Income From Continuing Operations Before Income Taxes1,321
 1,516
 3,400
 3,222
Income Tax Expense from Continuing Operations364
 515
 1,035
 1,020
Income From Continuing Operations957
 1,001
 2,365
 2,202
(Loss) Income From Discontinued Operations, net of tax(2) 180
 (4) 190
Net Income955
 1,181
 2,361
 2,392
Less: Net Income Attributable to Noncontrolling Interests1
 5
 5
 13
Net Income Attributable to Duke Energy Corporation$954
 $1,176
 $2,356
 $2,379
(Loss) Income Before Income Taxes(1,208) 889
 (181) 1,877
Income Tax (Benefit) Expense(316) 141
 (179) 236
Net (Loss) Income(892) 748
 (2) 1,641
Add: Net Loss Attributable to Noncontrolling Interests90
 84
 138
 91
Net (Loss) Income Attributable to Duke Energy Corporation(802) 832
 136
 1,732
Less: Preferred Dividends15
 12
 54
 12
Net (Loss) Income Available to Duke Energy Corporation Common Stockholders$(817) $820
 $82
 $1,720
              
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
 $3.44
Earnings (Loss) Per Share – Basic and Diluted       
Net (loss) income available to Duke Energy Corporation common stockholders       
Basic and Diluted$(1.13) $1.12
 $0.11
 $2.36
Weighted average shares outstanding              
Basic700
 689
 700
 689
735
 728
 734
 728
Diluted700
 691
 700
 690
735
 728
 735
 728

See Notes to Condensed Consolidated Financial Statements
9


PART I
FINANCIAL STATEMENTS


DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
(in millions)2017
 2016
 2017
 2016
2020
 2019
 2020
 2019
Net Income$955
 $1,181
 $2,361
 $2,392
Other Comprehensive Income, net of tax       
Foreign currency translation adjustments—
 (12) —
 95
Net (Loss) Income$(892) $748
 $(2) $1,641
Other Comprehensive Loss, net of tax(a)
       
Pension and OPEB adjustments—
 —
 2
 2
(1) 3
 —
 3
Net unrealized gains (losses) on cash flow hedges2
 6
 (2) (19)5
 (29) (76) (46)
Reclassification into earnings from cash flow hedges(2) 1
 3
 3
2
 2
 4
 3
Unrealized gains on available-for-sale securities2
 —
 10
 7
6
 4
 7
 8
Other Comprehensive Income (Loss), net of tax2
 (5) 13
 88
12
 (20) (65) (32)
Comprehensive Income957
 1,176
 2,374
 2,480
Less: Comprehensive Income Attributable to Noncontrolling Interests1
 4
 5
 16
Comprehensive Income Attributable to Duke Energy Corporation$956
 $1,172
 $2,369
 $2,464
Comprehensive (Loss) Income(880) 728
 (67) 1,609
Add: Comprehensive Loss Attributable to Noncontrolling Interests88
 84
 150
 91
Comprehensive (Loss) Income Attributable to Duke Energy(792) 812
 83
 1,700
Less: Preferred Dividends15
 12
 54
 12
Comprehensive (Loss) Income Available to Duke Energy Corporation Common Stockholders$(807) $800
 $29
 $1,688


(a)Net of income tax impacts of approximately $20 million and $10 million for the six months ended June 30, 2020, and 2019, respectively. All other periods presented include immaterial income tax impacts.



See Notes to Condensed Consolidated Financial Statements
10


PART I
FINANCIAL STATEMENTS


DUKE ENERGY CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017 December 31, 2016June 30, 2020
 December 31, 2019
ASSETS      
Current Assets      
Cash and cash equivalents$282
 $392
$341
 $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 $23 at 2020 and $22 at 2019)753
 1,066
Receivables of VIEs (net of allowance for doubtful accounts of $79 at 2020 and $54 at 2019)2,049
 1,994
Inventory3,265
 3,522
3,289
 3,232
Regulatory assets (includes $51 at 2017 and $50 at 2016 related to VIEs)1,109
 1,023
Other433
 458
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)1,774
 1,796
Other (includes $260 at 2020 and $242 at 2019 related to VIEs)1,031
 764
Total current assets7,706
 8,039
9,237
 9,163
Property, Plant and Equipment      
Cost125,582
 121,397
151,592
 147,654
Accumulated depreciation and amortization(41,161) (39,406)(47,295) (45,773)
Generation facilities to be retired, net441
 529
28
 246
Net property, plant and equipment84,862
 82,520
104,325
 102,127
Other Noncurrent Assets      
Goodwill19,418
 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 $969 at 2020 and $989 at 2019 related to VIEs)13,285
 13,222
Nuclear decommissioning trust funds6,814
 6,205
8,000
 8,140
Operating lease right-of-use assets, net1,580
 1,658
Investments in equity method unconsolidated affiliates1,366
 925
861
 1,936
Other2,792
 2,769
Other (includes $85 at 2020 and $110 at 2019 related to VIEs)3,458
 3,289
Total other noncurrent assets43,757
 42,202
46,487
 47,548
Total Assets$136,325
 $132,761
$160,049
 $158,838
LIABILITIES AND EQUITY      
Current Liabilities      
Accounts payable$2,645
 $2,994
$2,398
 $3,487
Notes payable and commercial paper1,899
 2,487
4,785
 3,135
Taxes accrued627
 384
657
 392
Interest accrued538
 503
569
 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 $462 at 2020 and $216 at 2019 related to VIEs)3,756
 3,141
Asset retirement obligations619
 411
729
 881
Regulatory liabilities273
 409
898
 784
Other1,734
 2,044
2,898
 2,367
Total current liabilities10,820
 11,551
16,690
 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 $3,643 at 2020 and $3,997 at 2019 related to VIEs)56,143
 54,985
Other Noncurrent Liabilities      
Deferred income taxes15,058
 14,155
8,979
 8,878
Asset retirement obligations9,586
 10,200
12,539
 12,437
Regulatory liabilities7,027
 6,881
14,553
 15,264
Operating lease liabilities1,377
 1,432
Accrued pension and other post-retirement benefit costs1,105
 1,111
911
 934
Investment tax credits534
 493
683
 624
Other1,624
 1,753
Other (includes $251 at 2020 and $228 at 2019 related to VIEs)1,563
 1,581
Total other noncurrent liabilities34,934
 34,593
40,605
 41,150
Commitments and Contingencies

 



 


Equity      
Common stock, $0.001 par value, 2 billion shares authorized; 700 million shares outstanding at 2017 and 20161
 1
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2020 and 2019973
 973
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2020 and 2019989
 989
Common stock, $0.001 par value, 2 billion shares authorized; 735 million shares outstanding at 2020 and 733 million shares outstanding at 20191
 1
Additional paid-in capital38,774
 38,741
40,997
 40,881
Retained earnings2,936
 2,384
2,707
 4,108
Accumulated other comprehensive loss(80) (93)(183) (130)
Total Duke Energy Corporation stockholders' equity41,631
 41,033
45,484
 46,822
Noncontrolling interests11
 8
1,127
 1,129
Total equity41,642
 41,041
46,611
 47,951
Total Liabilities and Equity$136,325
 $132,761
$160,049
 $158,838

See Notes to Condensed Consolidated Financial Statements
11


PART I
FINANCIAL STATEMENTS


DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months EndedSix Months Ended
September 30,June 30,
(in millions)2017
 2016
2020
 2019
CASH FLOWS FROM OPERATING ACTIVITIES      
Net income$2,361
 $2,392
Adjustments to reconcile net income to net cash provided by operating activities:   
Net (loss) income$(2)��$1,641
Adjustments to reconcile net (loss) income to net cash provided by operating activities:   
Depreciation, amortization and accretion (including amortization of nuclear fuel)2,990
 2,847
2,651
 2,483
Equity in losses (earnings) of unconsolidated affiliates1,924
 (87)
Equity component of AFUDC(175) (140)(76) (67)
Gains on sales of other assets(28) (27)(8) —
Impairment charges216
 279
8
 4
Deferred income taxes1,016
 648
105
 527
Equity in earnings of unconsolidated affiliates(101) (34)
Accrued pension and other post-retirement benefit costs19
 12
Contributions to qualified pension plans(8) —
Payments for asset retirement obligations(420) (443)(287) (336)
Provision for rate refunds(12) 57
(Increase) decrease in      
Net realized and unrealized mark-to-market and hedging transactions4
 36
(24) (11)
Receivables80
 (276)281
 304
Inventory248
 455
(56) (110)
Other current assets(176) (163)(124) (265)
Increase (decrease) in      
Accounts payable(554) (207)(638) (700)
Taxes accrued233
 417
273
 (56)
Other current liabilities(532) (157)(344) (378)
Other assets(160) (64)(193) (1)
Other liabilities(2) 36
(121) 51
Net cash provided by operating activities5,011
 5,611
3,357
 3,056
CASH FLOWS FROM INVESTING ACTIVITIES      
Capital expenditures(5,841) (5,252)(5,103) (5,465)
Contributions to equity method investments(370) (198)(164) (162)
Purchases of available-for-sale securities(3,170) (4,048)
Proceeds from sales and maturities of available-for-sale securities3,199
 4,107
Change in restricted cash(29) (34)
Purchases of debt and equity securities(3,818) (2,316)
Proceeds from sales and maturities of debt and equity securities3,755
 2,302
Other(149) (130)(141) (147)
Net cash used in investing activities(6,360) (5,555)(5,471) (5,788)
CASH FLOWS FROM FINANCING ACTIVITIES      
Proceeds from the:      
Issuance of long-term debt5,710
 8,647
3,788
 4,622
Issuance of common stock related to employee benefit plans—
 7
Issuance of preferred stock—
 973
Issuance of common stock57
 27
Payments for the redemption of long-term debt(2,035) (988)(1,951) (2,155)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days265
 1,424
1,866
 240
Payments for the redemption of short-term debt with original maturities greater than 90 days(237) (492)(113) (299)
Notes payable and commercial paper(647) (1,579)(129) 383
Contributions from noncontrolling interests163
 193
Dividends paid(1,825) (1,731)(1,391) (1,312)
Other8
 (22)(108) (50)
Net cash provided by financing activities1,239
 5,266
2,182
 2,622
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 period392
 383
Cash and cash equivalents at end of period$282
 $5,716
Net increase (decrease) in cash, cash equivalents and restricted cash68
 (110)
Cash, cash equivalents and restricted cash at beginning of period573
 591
Cash, cash equivalents and restricted cash at end of period$641
 $481
Supplemental Disclosures:      
Significant non-cash transactions:      
Accrued capital expenditures$740
 $631
$945
 $917
Non-cash dividends54
 54

See Notes to Condensed Consolidated Financial Statements
12


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, 2015688
 $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 benefits1
 —
 29
 —
 —
 —
 —
 —
 29
 —
 29
Common stock dividends—
 —
 —
 (1,731) —
 —
 —
 —
 (1,731) —
 (1,731)
Distributions to noncontrolling interest in subsidiaries—
 —
 —
 —
 —
 —
 —
 —
 —
 (3) (3)
Balance at September 30, 2016689
 $1

$37,997

$3,212

$(600)
$(66)
$4

$(59)
$40,489

$57

$40,546
                      
Balance at December 31, 2016700
 $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, 2017700

$1

$38,774

$2,936

$—

$(19)
$9

$(70)
$41,631

$11

$41,642
 Three Months Ended June 30, 2019 and 2020
      Accumulated Other Comprehensive   
       (Loss) Income   
       Net Unrealized
 Total
  
      Net Gains
(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 March 31, 2019$974
728
$1
$40,823
$3,360
$(36)$—
$(92)$45,030
$15
$45,045
Net income (loss)—
—
—
—
820
—
—
—
820
(84)736
Other comprehensive (loss) income—
—
—
—
—
(27)4
3
(20)—
(20)
Preferred stock issuances, net of issuance costs(1)—
—
—
—
—
—
—
(1)—
(1)
Common stock issuances, including dividend reinvestment and employee benefits—
—
—
61
—
—
—
—
61
—
61
Common stock dividends—
—
—
—
(678)—
—
—
(678)—
(678)
Contribution from noncontrolling interest in subsidiaries(a)
—
—
—
—
—
—
—
—
—
193
193
Distributions to noncontrolling interest in subsidiaries—
—
—
—
—
—
—
—
—
(1)(1)
Other—
—
—
1
—
—
—
—
1
(4)(3)
Balance at June 30, 2019$973
728
$1
$40,885
$3,502
$(63)$4
$(89)$45,213
$119
$45,332
            
Balance at March 31, 2020$1,962
735
$1
$40,930
$4,221
$(116)$4
$(81)$46,921
$1,162
$48,083
Net income (loss)—
—
—
—
(817)—
—
—
(817)(90)(907)
Other comprehensive (loss) income—
—
—
—
—
5
6
(1)10
2
12
Common stock issuances, including dividend reinvestment and employee benefits—
—
—
66
—
—
—
—
66
—
66
Common stock dividends—
—
—
—
(696)—
—
—
(696)—
(696)
Contribution from noncontrolling interest in subsidiaries(a)
—
—
—
—
—
—
—
—
—
60
60
Distributions to noncontrolling interest in subsidiaries—
—
—
—
—
—
—
—
—
(7)(7)
Other—
—
—
1
(1)—
—
—
—
—
—
Balance at June 30, 2020$1,962
735
$1
$40,997
$2,707
$(111)$10
$(82)$45,484
$1,127
$46,611

See Notes to Condensed Consolidated Financial Statements
13

FINANCIAL STATEMENTS




 Six Months Ended June 30, 2019 and 2020
      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)—
—
—
—
1,720
—
—
—
1,720
(91)1,629
Other comprehensive (loss) income—
—
—
—
—
(43)8
3
(32)—
(32)
Preferred stock, Series A, issuances, net of issuance costs(b)
973
—
—
—
—
—
—
—
973
—
973
Common stock issuances, including dividend reinvestment and employee benefits—
1
—
89
—
—
—
—
89
—
89
Common stock dividends—
—
—
—
(1,354)—
—
—
(1,354)—
(1,354)
Contributions from noncontrolling interest in subsidiaries(a)
—
—
—
—
—
—
—
—
—
193
193
Distributions to noncontrolling interest in subsidiaries—
—
—
—
—
—
—
—
—
(1)(1)
Other(c)
—
—
—
1
23
(6)(1)(17)—
1
1
Balance at June 30, 2019$973
728
$1
$40,885
$3,502
$(63)$4
$(89)$45,213
$119
$45,332
            
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)—
—
—
—
82
—
—
—
82
(138)(56)
Other comprehensive (loss) income—
—
—
—
—
(60)7
—
(53)(12)(65)
Common stock issuances, including dividend reinvestment and employee benefits—
2
—
116
—
—
—
—
116
—
116
Common stock dividends—
—
—
—
(1,391)—
—
—
(1,391)—
(1,391)
Contributions from noncontrolling interest in subsidiaries(a)
—
—
—
—
—
—
—
—
—
163
163
Distributions to noncontrolling interest in subsidiaries—
—
—
—
—
—
—
—
—
(14)(14)
Other(d)
—
—
—
—
(92)—
—
—
(92)(1)(93)
Balance at June 30, 2020$1,962
735
$1
$40,997
$2,707
$(111)$10
$(82)$45,484
$1,127
$46,611

(a)Cumulative-effect adjustmentRelates to tax equity financing activity in the Commercial Renewables segment.
(b)Duke Energy issued 40 million depositary shares of preferred stock, Series A.
(c)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 Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.
(d)Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to stock-based compensation and the associated income taxes.Current Estimated Credit Losses. See Note 1 for more information.additional discussion.

See Notes to Condensed Consolidated Financial Statements
14


PART I
FINANCIAL STATEMENTS




DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
(in millions)2017
 2016
 2017
 2016
2020
 2019
 2020
 2019
Operating Revenues$2,136
 $2,226
 $5,581
 $5,641
$1,610
 $1,713
 $3,358
 $3,457
Operating Expenses              
Fuel used in electric generation and purchased power531
 581
 1,394
 1,391
376
 395
 829
 867
Operation, maintenance and other480
 493
 1,431
 1,481
430
 441
 816
 881
Depreciation and amortization281
 268
 804
 802
375
 346
 718
 663
Property and other taxes67
 68
 206
 206
75
 75
 156
 155
Impairment charges—
 5
 2
 5
Total operating expenses1,359
 1,410
 3,835
 3,880
1,256
 1,262
 2,521
 2,571
Loss on Sales of Other Assets and Other, net—
 (1) —
 (1)
Losses on Sales of Other Assets and Other, net(1) —
 —
 —
Operating Income777
 815
 1,746
 1,760
353
 451
 837
 886
Other Income and Expenses, net26
 39
 99
 121
43
 41
 86
 72
Interest Expense108
 102
 314
 316
125
 117
 248
 227
Income Before Income Taxes695
 752
 1,531
 1,565
271
 375
 675
 731
Income Tax Expense229
 258
 522
 539
37
 74
 102
 137
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$234
 $301
 $573
 $594

See Notes to Condensed Consolidated Financial Statements
15


PART I
FINANCIAL STATEMENTS


DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
June 30, 2020
 December 31, 2019
ASSETS      
Current Assets      
Cash and cash equivalents$18
 $14
$24
 $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 $1 at 2020 and $3 at 2019)255
 324
Receivables of VIEs (net of allowance for doubtful accounts of $13 at 2020 and $7 at 2019)675
 642
Receivables from affiliated companies146
 163
78
 114
Notes receivable from affiliated companies—
 66
Inventory1,000
 1,055
1,080
 996
Regulatory assets237
 238
490
 550
Other27
 37
19
 21
Total current assets2,299
 2,378
2,621
 2,665
Property, Plant and Equipment      
Cost42,321
 41,127
50,068
 48,922
Accumulated depreciation and amortization(14,969) (14,365)(17,098) (16,525)
Net property, plant and equipment27,352
 26,762
32,970
 32,397
Other Noncurrent Assets      
Regulatory assets3,077
 3,159
3,440
 3,360
Nuclear decommissioning trust funds3,621
 3,273
4,265
 4,359
Operating lease right-of-use assets, net125
 123
Other910
 943
1,158
 1,149
Total other noncurrent assets7,608
 7,375
8,988
 8,991
Total Assets$37,259
 $36,515
$44,579
 $44,053
LIABILITIES AND EQUITY      
Current Liabilities      
Accounts payable$726
 $833
$615
 $954
Accounts payable to affiliated companies159
 247
147
 210
Notes payable to affiliated companies468
 —
131
 29
Taxes accrued368
 143
166
 46
Interest accrued135
 102
127
 115
Current maturities of long-term debt705
 116
508
 458
Asset retirement obligations304
 222
194
 206
Regulatory liabilities105
 161
293
 255
Other435
 468
488
 611
Total current liabilities3,405

2,292
2,669

2,884
Long-Term Debt8,520
 9,187
11,713
 11,142
Long-Term Debt Payable to Affiliated Companies300
 300
300
 300
Other Noncurrent Liabilities      
Deferred income taxes6,796
 6,544
4,004
 3,921
Asset retirement obligations3,297
 3,673
5,566
 5,528
Regulatory liabilities2,884
 2,840
6,232
 6,423
Operating lease liabilities106
 102
Accrued pension and other post-retirement benefit costs108
 97
77
 84
Investment tax credits234
 203
229
 231
Other559
 607
611
 627
Total other noncurrent liabilities13,878
 13,964
16,825
 16,916
Commitments and Contingencies

 



 

Equity      
Member's equity11,164
 10,781
13,079
 12,818
Accumulated other comprehensive loss(8) (9)(7) (7)
Total equity11,156
 10,772
13,072
 12,811
Total Liabilities and Equity$37,259
 $36,515
$44,579
 $44,053

See Notes to Condensed Consolidated Financial Statements
16


PART I
FINANCIAL STATEMENTS


DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months EndedSix Months Ended
September 30,June 30,
(in millions)2017
 2016
2020
 2019
CASH FLOWS FROM OPERATING ACTIVITIES      
Net income$1,009
 $1,026
$573
 $594
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization (including amortization of nuclear fuel)1,051
 1,020
854
 804
Equity component of AFUDC(79) (75)(29) (21)
Losses on sales of other assets and other, net—
 1
Impairment charges2
 5
Deferred income taxes330
 382
31
 54
Accrued pension and other post-retirement benefit costs—
 3
Payments for asset retirement obligations(201) (204)(86) (131)
Provision for rate refunds2
 35
(Increase) decrease in      
Net realized and unrealized mark-to-market and hedging transactions1
 4
—
 (8)
Receivables(40) (191)40
 83
Receivables from affiliated companies17
 19
36
 81
Inventory50
 217
(84) (77)
Other current assets8
 81
170
 (133)
Increase (decrease) in      
Accounts payable(78) (179)(249) (282)
Accounts payable to affiliated companies(88) (100)(63) (41)
Taxes accrued225
 248
120
 38
Other current liabilities(149) 51
(134) (71)
Other assets(18) 57
(83) 87
Other liabilities(26) (15)(35) (18)
Net cash provided by operating activities2,012
 2,345
1,065
 999
CASH FLOWS FROM INVESTING ACTIVITIES      
Capital expenditures(1,747) (1,531)(1,271) (1,357)
Purchases of available-for-sale securities(1,660) (2,070)
Proceeds from sales and maturities of available-for-sale securities1,664
 2,070
Notes receivable from affiliated companies66
 131
Purchases of debt and equity securities(1,017) (1,114)
Proceeds from sales and maturities of debt and equity securities1,017
 1,114
Other(58) (65)(73) (46)
Net cash used in investing activities(1,735) (1,465)(1,344) (1,403)
CASH FLOWS FROM FINANCING ACTIVITIES      
Proceeds from the issuance of long-term debt—
 992
938
 25
Payments for the redemption of long-term debt(115) (3)(454) (3)
Notes payable to affiliated companies468
 —
102
 365
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 equivalents4
 69
Net cash provided by financing activities285
 386
Net increase (decrease) in cash and cash equivalents6
 (18)
Cash and cash equivalents at beginning of period14
 13
18
 33
Cash and cash equivalents at end of period$18
 $82
$24
 $15
Supplemental Disclosures:      
Significant non-cash transactions:      
Accrued capital expenditures$292
 $228
$256
 $252

See Notes to Condensed Consolidated Financial Statements
17


PART I
FINANCIAL STATEMENTS


DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
  Accumulated Other  Three Months Ended June 30, 2019 and 2020
  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 March 31, 2019$11,982
 $(7) $11,975
Net income1,026
 —
 1,026
301
 —
 301
Other comprehensive income—
 1
 1
Balance at June 30, 2019$12,283
 $(7) $12,276
     
Balance at March 31, 2020$12,844
 $(7) $12,837
Net income234
 —
 234
Other1
 —
 1
Balance at June 30, 2020$13,079
 $(7) $13,072
     
Six Months Ended June 30, 2019 and 2020
  Accumulated Other  
  Comprehensive  
  Loss  
Member's
 Net Losses on
 Total
(in millions)Equity
 Cash Flow Hedges
 Equity
Balance at December 31, 2018$11,689
 $(6) $11,683
Net income594
 —
 594
Other—
 (1) (1)
Balance at June 30, 2019$12,283
 $(7) $12,276
     
Balance at December 31, 2019$12,818
 $(7) $12,811
Net income573
 —
 573
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 income1,009
 —
 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)
(12) —
 (12)
Balance at June 30, 2020$13,079
 $(7) $13,072

(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
18


PART I
FINANCIAL STATEMENTS




PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
(in millions)2017
 2016
 2017
 2016
2020
 2019
 2020
 2019
Operating Revenues$2,864
 $2,965
 $7,435
 $7,645
$2,498
 $2,744
 $4,920
 $5,316
Operating Expenses              
Fuel used in electric generation and purchased power1,031
 1,120
 2,588
 2,832
777
 988
 1,540
 1,913
Operation, maintenance and other572
 582
 1,650
 1,699
589
 606
 1,143
 1,173
Depreciation and amortization334
 318
 958
 904
432
 426
 884
 881
Property and other taxes140
 136
 386
 375
137
 143
 272
 280
Impairment charges135
 1
 137
 4
Total operating expenses2,212
 2,157
 5,719
 5,814
1,935
 2,163
 3,839
 4,247
Gains on Sales of Other Assets and Other, net5
 6
 19
 18
Gains (Losses) on Sales of Other Assets and Other, net7
 (1) 6
 (1)
Operating Income657
 814
 1,735
 1,849
570
 580
 1,087
 1,068
Other Income and Expenses, net20
 31
 65
 79
33
 34
 65
 65
Interest Expense193
 177
 595
 497
199
 219
 405
 438
Income Before Income Taxes484
 668
 1,205
 1,431
404
 395
 747
 695
Income Tax Expense141
 219
 384
 496
60
 66
 120
 118
Net Income343
 449
 821
 935
344
 329
 627
 577
Less: Net Income Attributable to Noncontrolling Interests2
 3
 7
 8
—
 1
 —
 —
Net Income Attributable to Parent$341
 $446
 $814
 $927
$344
 $328
 $627
 $577
              
Net Income$343
 $449
 $821
 $935
$344
 $329
 $627
 $577
Other Comprehensive Income, net of tax              
Pension and OPEB adjustments3
 —
 5
 2
1
 1
 1
 2
Net unrealized (loss) gain on cash flow hedges(2) —
 4
 —
Reclassification into earnings from cash flow hedges—
 1
 —
 4
Unrealized gains on available-for-sale securities1
 1
 3
 2
Net unrealized gains on cash flow hedges1
 1
 2
 3
Unrealized (losses) gains on available-for-sale securities(1) 1
 —
 1
Other Comprehensive Income, net of tax2

2

12

8
1

3

3

6
Comprehensive Income345
 451
 833
 943
345
 332
 630
 583
Less: Comprehensive Income Attributable to Noncontrolling Interests2
 3
 7
 8
—
 1
 —
 —
Comprehensive Income Attributable to Parent$343

$448

$826

$935
$345

$331

$630

$583



See Notes to Condensed Consolidated Financial Statements
19


PART I
FINANCIAL STATEMENTS


PROGRESS ENERGY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
June 30, 2020
 December 31, 2019
ASSETS      
Current Assets      
Cash and cash equivalents$30
 $46
$78
 $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 $9 at 2020 and $7 at 2019)153
 220
Receivables of VIEs (net of allowance for doubtful accounts of $20 at 2020 and $9 at 2019)920
 830
Receivables from affiliated companies—
 106
42
 76
Notes receivable from affiliated companies170
 80
—
 164
Inventory1,584
 1,717
1,466
 1,423
Regulatory assets (includes $51 at 2017 and $50 at 2016 related to VIEs)440
 401
Other243
 148
Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs)957
 946
Other (includes $32 at 2020 and $39 at 2019 related to VIEs)145
 210
Total current assets3,460
 3,304
3,761
 3,917
Property, Plant and Equipment      
Cost46,659
 44,864
56,420
 55,070
Accumulated depreciation and amortization(15,760) (15,212)(17,704) (17,159)
Generation facilities to be retired, net441
 529
28
 246
Net property, plant and equipment31,340
 30,181
38,744
 38,157
Other Noncurrent Assets      
Goodwill3,655
 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 $969 at 2020 and $989 at 2019 related to VIEs)6,308
 6,346
Nuclear decommissioning trust funds3,194
 2,932
3,734
 3,782
Operating lease right-of-use assets, net737
 788
Other909
 856
1,164
 1,049
Total other noncurrent assets14,196
 13,165
15,598
 15,620
Total Assets$48,996
 $46,650
$58,103
 $57,694
LIABILITIES AND EQUITY      
Current Liabilities      
Accounts payable$1,015
 $1,003
$675
 $1,104
Accounts payable to affiliated companies289
 348
222
 310
Notes payable to affiliated companies576
 729
2,373
 1,821
Taxes accrued227
 83
201
 46
Interest accrued216
 201
213
 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 $304 at 2020 and $54 at 2019 related to VIEs)1,829
 1,577
Asset retirement obligations250
 189
357
 485
Regulatory liabilities121
 189
388
 330
Other652
 745
847
 902
Total current liabilities4,116
 4,265
7,105
 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 $1,361 at 2020 and $1,632 at 2019 related to VIEs)17,625
 17,907
Long-Term Debt Payable to Affiliated Companies150
 1,173
150
 150
Other Noncurrent Liabilities      
Deferred income taxes6,463
 5,246
4,560
 4,462
Asset retirement obligations5,189
 5,286
6,038
 5,986
Regulatory liabilities2,511
 2,395
4,813
 5,225
Operating lease liabilities662
 697
Accrued pension and other post-retirement benefit costs535
 547
480
 488
Other298
 341
449
 383
Total other noncurrent liabilities14,996
 13,815
17,002
 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 capital9,143
 8,094
9,143
 9,143
Retained earnings3,906
 3,764
7,090
 6,465
Accumulated other comprehensive loss(26) (38)(15) (18)
Total Progress Energy, Inc. stockholders' equity13,023
 11,820
16,218
 15,590
Noncontrolling interests(6) (13)3
 3
Total equity13,017
 11,807
16,221
 15,593
Total Liabilities and Equity$48,996
 $46,650
$58,103
 $57,694

See Notes to Condensed Consolidated Financial Statements
20


PART I
FINANCIAL STATEMENTS


PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months EndedSix Months Ended
September 30,June 30,
(in millions)2017
 2016
2020
 2019
CASH FLOWS FROM OPERATING ACTIVITIES      
Net income$821
 $935
$627
 $577
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
1,118
 1,061
Equity component of AFUDC(68) (51)(24) (31)
Gains on sales of other assets(20) (23)
Impairment charges137
 4
(Gains) Losses on sales of other assets(6) 1
Deferred income taxes651
 425
94
 126
Accrued pension and other post-retirement benefit costs(9) (19)
Payments for asset retirement obligations(190) (203)(173) (183)
Provision for rate refunds2
 10
(Increase) decrease in      
Net realized and unrealized mark-to-market and hedging transactions1
 33
(22) (1)
Receivables(182) (155)(15) (42)
Receivables from affiliated companies102
 329
34
 119
Inventory126
 99
(42) (26)
Other current assets(279) (30)102
 114
Increase (decrease) in      
Accounts payable(281) (24)(238) (196)
Accounts payable to affiliated companies(59) (109)(88) (125)
Taxes accrued143
 159
155
 82
Other current liabilities(184) (156)(64) (162)
Other assets(100) (90)(51) (82)
Other liabilities(85) (4)(97) 24
Net cash provided by operating activities1,654
 2,191
1,312
 1,266
CASH FLOWS FROM INVESTING ACTIVITIES      
Capital expenditures(2,419) (2,286)(1,812) (1,988)
Purchases of available-for-sale securities(1,393) (1,849)
Proceeds from sales and maturities of available-for-sale securities1,411
 1,899
Proceeds from insurance4
 58
Purchases of debt and equity securities(2,602) (1,094)
Proceeds from sales and maturities of debt and equity securities2,588
 1,089
Notes receivable from affiliated companies(90) (43)164
 —
Change in restricted cash5
 (6)
Other(40) (17)(81) (59)
Net cash used in investing activities(2,522) (2,244)(1,743) (2,052)
CASH FLOWS FROM FINANCING ACTIVITIES      
Proceeds from the issuance of long-term debt1,720
 2,375
514
 1,295
Payments for the redemption of long-term debt(611) (327)(550) (1,188)
Notes payable to affiliated companies(129) (798)552
 685
Dividends to parent(125) (1,075)
Other(3) (1)—
 2
Net cash provided by financing activities852
 174
516
 794
Net (decrease) increase in cash and cash equivalents(16) 121
Cash and cash equivalents at beginning of period46
 44
Cash and cash equivalents at end of period$30
 $165
Net increase in cash, cash equivalents and restricted cash85
 8
Cash, cash equivalents and restricted cash at beginning of period126
 112
Cash, cash equivalents and restricted cash at end of period$211
 $120
Supplemental Disclosures:      
Significant non-cash transactions:      
Accrued capital expenditures$174
 $228
$287
 $278
Equitization of certain notes payable to affiliates1,047
 —
Dividend to parent related to a legal entity restructuring547
 —

See Notes to Condensed Consolidated Financial Statements
21


PART I

FINANCIAL STATEMENTS




PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
 Three Months Ended June 30, 2019 and 2020
     Accumulated Other Comprehensive (Loss) Income      
     Net Gains
 Net Unrealized
   Total Progress
    
 Additional
   (Losses) on
 Gains (Losses) 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 March 31, 2019$9,143
 $5,386
 $(14) $(1) $(8) $14,506
 $2
 $14,508
Net income—
 328
 —
 —
 —
 328
 1
 329
Other comprehensive income—
 —
 1
 1
 1
 3
 —
 3
Other—
 1
 —
 —
 (1) —
 (1) (1)
Balance at June 30, 2019$9,143
 $5,715
 $(13) $—
 $(8) $14,837
 $2
 $14,839
                
Balance at March 31, 2020$9,143
 $6,747
 $(9) $—
 $(7) $15,874
 $3
 $15,877
Net income—
 344
 —
 —
 —
 344
 —
 344
Other comprehensive income—
 —
 1
 (1) 1
 1
 —
 1
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (1) (1)
Other—
 (1) —
 —
 —
 (1) 1
 —
Balance at June 30, 2020$9,143
 $7,090
 $(8) $(1) $(6) $16,218
 $3
 $16,221
                
 Six Months Ended June 30, 2019 and 2020
     Accumulated Other Comprehensive Loss      
     Net Gains
 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—
 577
 —
 —
 —
 577
 —
 577
Other comprehensive income—
 —
 3
 1
 2
 6
 —
 6
Other(a)
—
 7
 (4) —
 (3) —
 (1) (1)
Balance at June 30, 2019$9,143

$5,715

$(13)
$—

$(8) $14,837

$2

$14,839
                
Balance at December 31, 2019$9,143
 $6,465
 $(10) $(1) $(7) $15,590
 $3
 $15,593
Net income—
 627
 —
 —
 —
 627
 —
 627
Other comprehensive income—
 —
 2
 —
 1
 3
 —
 3
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (1) (1)
Other—
 (2) —
 —
 —
 (2) 1
 (1)
Balance at June 30, 2020$9,143

$7,090

$(8)
$(1)
$(6) $16,218

$3

$16,221
     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)
Other4
 —
 —
 —
 —
 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 affiliates1,047
 —
 —
 —
 —
 1,047
 —
 1,047
Other2
 —
 —
 —
 —
 2
 —
 2
Balance at September 30, 2017$9,143

$3,906

$(19)
$4

$(11)
$13,023

$(6)
$13,017

(a)IncludesAmounts in Retained Earnings and Accumulated Other Comprehensive (Loss) Income primarily represent impacts to accumulated other comprehensive income due to implementation of a $547 million non-cash dividendnew 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
22


PART I
FINANCIAL STATEMENTS




DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
(in millions)2017
 2016
 2017
 2016
2020
 2019
 2020
 2019
Operating Revenues$1,460
 $1,583
 $3,878
 $4,103
$1,243
 $1,387
 $2,581
 $2,871
Operating Expenses              
Fuel used in electric generation and purchased power475
 569
 1,214
 1,441
395
 479
 800
 994
Operation, maintenance and other352
 360
 1,032
 1,067
317
 357
 622
 692
Depreciation and amortization182
 176
 536
 526
257
 251
 544
 541
Property and other taxes40
 40
 120
 119
44
 41
 91
 85
Impairment charges—
 1
 —
 1
Total operating expenses1,049
 1,146
 2,902
 3,154
1,013
 1,128
 2,057
 2,312
Gains on Sales of Other Assets and Other, net—
 1
 3
 2
6
 —
 5
 —
Operating Income411
 438
 979
 951
236
 259
 529
 559
Other Income and Expenses, net14
 18
 47
 47
19
 24
 41
 48
Interest Expense65
 61
 217
 188
68
 81
 137
 158
Income Before Income Taxes360
 395
 809
 810
187
 202
 433
 449
Income Tax Expense114
 124
 262
 271
26
 33
 68
 77
Net Income and Comprehensive Income$246
 $271
 $547
 $539
$161
 $169
 $365
 $372



See Notes to Condensed Consolidated Financial Statements
23


PART I
FINANCIAL STATEMENTS


DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
June 30, 2020
 December 31, 2019
ASSETS      
Current Assets   ��  
Cash and cash equivalents$15
 $11
$51
 $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 $4 at 2020 and $3 at 2019)77
 123
Receivables of VIEs (net of allowance for doubtful accounts of $10 at 2020 and $5 at 2019)451
 489
Receivables from affiliated companies8
 5
42
 52
Notes receivable from affiliated companies101
 165
Inventory1,018
 1,076
980
 934
Regulatory assets230
 188
526
 526
Other40
 57
37
 60
Total current assets1,913
 1,957
2,164
 2,206
Property, Plant and Equipment      
Cost29,104
 28,419
35,120
 34,603
Accumulated depreciation and amortization(10,793) (10,561)(12,303) (11,915)
Generation facilities to be retired, net441
 529
28
 246
Net property, plant and equipment18,752
 18,387
22,845
 22,934
Other Noncurrent Assets      
Regulatory assets3,588
 3,243
4,448
 4,152
Nuclear decommissioning trust funds2,463
 2,217
3,023
 3,047
Operating lease right-of-use assets, net367
 387
Other565
 525
688
 651
Total other noncurrent assets6,616
 5,985
8,526
 8,237
Total Assets$27,281
 $26,329
$33,535
 $33,377
LIABILITIES AND EQUITY      
Current Liabilities      
Accounts payable$271
 $589
$287
 $629
Accounts payable to affiliated companies207
 227
153
 203
Notes payable to affiliated companies257
 66
Taxes accrued137
 104
88
 17
Interest accrued91
 102
102
 110
Current maturities of long-term debt203
 452
1,006
 1,006
Asset retirement obligations250
 189
357
 485
Regulatory liabilities107
 158
306
 236
Other318
 365
468
 478
Total current liabilities1,584
 2,186
3,024
 3,230
Long-Term Debt7,204
 6,409
7,907
 7,902
Long-Term Debt Payable to Affiliated Companies150
 150
150
 150
Other Noncurrent Liabilities      
Deferred income taxes3,606
 3,323
2,485
 2,388
Asset retirement obligations4,426
 4,508
5,457
 5,408
Regulatory liabilities2,097
 1,946
4,087
 4,232
Operating lease liabilities339
 354
Accrued pension and other post-retirement benefit costs246
 252
237
 238
Investment tax credits144
 146
134
 137
Other44
 51
105
 92
Total other noncurrent liabilities10,563
 10,226
12,844
 12,849
Commitments and Contingencies
 

 
Equity      
Member's Equity7,780
 7,358
9,610
 9,246
Total Liabilities and Equity$27,281
 $26,329
$33,535
 $33,377

See Notes to Condensed Consolidated Financial Statements
24


PART I
FINANCIAL STATEMENTS


DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months EndedSix Months Ended
September 30,June 30,
(in millions)2017
 2016
2020
 2019
CASH FLOWS FROM OPERATING ACTIVITIES      
Net income$547
 $539
$365
 $372
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization (including amortization of nuclear fuel)691
 679
635
 634
Equity component of AFUDC(35) (34)(19) (28)
Gains on sales of other assets(4) (4)(6) —
Impairment charges—
 1
Deferred income taxes287
 325
60
 26
Accrued pension and other post-retirement benefit costs(15) (24)
Payments for asset retirement obligations(149) (163)(164) (166)
Provision for rate refunds2
 10
(Increase) decrease in      
Net realized and unrealized mark-to-market and hedging transactions(2) —
(5) (5)
Receivables(47) (78)96
 58
Receivables from affiliated companies(3) 11
10
 (17)
Inventory52
 91
(46) (26)
Other current assets(34) 37
87
 115
Increase (decrease) in      
Accounts payable(286) (44)(260) (223)
Accounts payable to affiliated companies(20) (47)(50) (96)
Taxes accrued33
 76
71
 53
Other current liabilities(139) 37
(16) (74)
Other assets(49) (32)(86) (3)
Other liabilities(9) (10)(5) 25
Net cash provided by operating activities818
 1,360
669
 655
CASH FLOWS FROM INVESTING ACTIVITIES      
Capital expenditures(1,247) (1,106)(795) (1,115)
Purchases of available-for-sale securities(995) (1,470)
Proceeds from sales and maturities of available-for-sale securities974
 1,448
Notes receivable from affiliated companies64
 (65)
Purchases of debt and equity securities(569) (473)
Proceeds from sales and maturities of debt and equity securities548
 458
Other(26) (27)(21) (20)
Net cash used in investing activities(1,230) (1,220)(837) (1,150)
CASH FLOWS FROM FINANCING ACTIVITIES      
Proceeds from the issuance of long-term debt812
 505
20
 1,270
Payments for the redemption of long-term debt(270) (15)(13) (602)
Notes payable to affiliated companies—
 (209)191
 (167)
Distributions to parent(125) (301)
Other(1) 1
(1) (1)
Net cash provided by (used in) financing activities416
 (19)
Net cash provided by financing activities197
 500
Net increase in cash and cash equivalents4
 121
29
 5
Cash and cash equivalents at beginning of period11
 15
22
 23
Cash and cash equivalents at end of period$15
 $136
$51
 $28
Supplemental Disclosures:      
Significant non-cash transactions:      
Accrued capital expenditures$116
 $66
$95
 $112

See Notes to Condensed Consolidated Financial Statements
25


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 income539
Distributions to parent(301)
Balance at September 30, 2016$7,297
  
Balance at December 31, 2016$7,358
Net income547
Distributions to parent(125)
Balance at September 30, 2017$7,780
 Three Months Ended
 June 30, 2019 and 2020
 Member's
(in millions)Equity
Balance at March 31, 2019$8,644
Net income169
Balance at June 30, 2019$8,813
  
Balance at March 31, 2020$9,450
Net income161
Other(1)
Balance at June 30, 2020$9,610
  
 Six Months Ended
 June 30, 2019 and 2020
 Member's
(in millions)Equity
Balance at December 31, 2018$8,441
Net income372
Balance at June 30, 2019$8,813
  
Balance at December 31, 2019$9,246
Net income365
Other(1)
Balance at June 30, 2020$9,610



See Notes to Condensed Consolidated Financial Statements
26


PART I
FINANCIAL STATEMENTS




DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
(in millions)2017
 2016
 2017
 2016
2020
 2019
 2020
 2019
Operating Revenues$1,401
 $1,381
 $3,551
 $3,538
$1,250
 $1,353
 $2,330
 $2,439
Operating Expenses              
Fuel used in electric generation and purchased power557
 550
 1,374
 1,391
382
 509
 740
 919
Operation, maintenance and other216
 219
 610
 623
269
 244
 514
 474
Depreciation and amortization154
 142
 423
 378
175
 175
 340
 340
Property and other taxes99
 96
 265
 256
92
 103
 180
 196
Impairment charges135
 1
 137
 4
Total operating expenses1,161
 1,008
 2,809
 2,652
918
 1,031
 1,774
 1,929
Losses on Sales of Other Assets and Other, net—
 (1) —
 (1)
Operating Income240
 373
 742
 886
332
 321
 556
 509
Other Income and Expenses, net15
 11
 45
 30
15
 12
 25
 25
Interest Expense71
 62
 211
 143
80
 83
 164
 165
Income Before Income Taxes184
 322
 576
 773
267
 250
 417
 369
Income Tax Expense64
 116
 208
 286
51
 49
 81
 72
Net Income$120
 $206
 $368
 $487
$216
 $201
 $336
 $297
Other Comprehensive Income, net of tax
 
 

 


 
 

 

Unrealized gains on available-for-sale securities1
 1
 3
 2
Unrealized (losses) gains on available-for-sale securities(1) —
 —
 1
Comprehensive Income$121
 $207
 $371

$489
$215
 $201
 $336

$298



See Notes to Condensed Consolidated Financial Statements
27


PART I
FINANCIAL STATEMENTS


DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
June 30, 2020
 December 31, 2019
ASSETS      
Current Assets      
Cash and cash equivalents$8
 $16
$20
 $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 (net of allowance for doubtful accounts of $5 at 2020 and $3 at 2019)72
 96
Receivables of VIEs (net of allowance for doubtful accounts of $9 at 2020 and $4 at 2019)469
 341
Receivables from affiliated companies—
 5
2
 —
Notes receivable from affiliated companies70
 —
—
 173
Inventory566
 641
486
 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)432
 419
Other (includes $32 at 2020 and $39 at 2019 related to VIEs)44
 58
Total current assets1,498
 1,349
1,525
 1,593
Property, Plant and Equipment      
Cost17,546
 16,434
21,290
 20,457
Accumulated depreciation and amortization(4,960) (4,644)(5,394) (5,236)
Net property, plant and equipment12,586
 11,790
15,896
 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 $969 at 2020 and $989 at 2019 related to VIEs)1,860
 2,194
Nuclear decommissioning trust funds731
 715
711
 734
Operating lease right-of-use assets, net370
 401
Other293
 278
327
 311
Total other noncurrent assets3,874
 3,473
3,268
 3,640
Total Assets$17,958
 $16,612
$20,689
 $20,454
LIABILITIES AND EQUITY      
Current Liabilities      
Accounts payable$744
 $413
$388
 $474
Accounts payable to affiliated companies90
 125
80
 131
Notes payable to affiliated companies—
 297
232
 —
Taxes accrued143
 33
177
 43
Interest accrued71
 49
67
 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 $304 at 2020 and $54 at 2019 related to VIEs)323
 571
Regulatory liabilities14
 31
82
 94
Other310
 352
372
 415
Total current liabilities1,939
 1,626
1,721
 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 $1,028 at 2020 and $1,307 at 2019 related to VIEs)7,628
 7,416
Other Noncurrent Liabilities      
Deferred income taxes3,076
 2,694
2,181
 2,179
Asset retirement obligations763
 778
581
 578
Regulatory liabilities414
 448
726
 993
Operating lease liabilities323
 343
Accrued pension and other post-retirement benefit costs257
 262
211
 218
Other106
 105
194
 136
Total other noncurrent liabilities4,616
 4,287
4,216
 4,447
Commitments and Contingencies
 

 
Equity      
Member's equity5,270
 4,899
7,125
 6,789
Accumulated other comprehensive income4
 1
Accumulated other comprehensive loss(1) (1)
Total equity5,274
 4,900
7,124
 6,788
Total Liabilities and Equity$17,958
 $16,612
$20,689
 $20,454

See Notes to Condensed Consolidated Financial Statements
28


PART I
FINANCIAL STATEMENTS


DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months EndedSix Months Ended
September 30,June 30,
(in millions)2017
 2016
2020
 2019
CASH FLOWS FROM OPERATING ACTIVITIES      
Net income$368
 $487
$336
 $297
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation, amortization and accretion431
 383
478
 423
Equity component of AFUDC(33) (16)(6) (2)
Impairment charges137
 4
Losses on sales of other assets—
 1
Deferred income taxes366
 136
37
 82
Accrued pension and other post-retirement benefit costs3
 2
Payments for asset retirement obligations(41) (41)(9) (17)
(Increase) decrease in      
Net realized and unrealized mark-to-market and hedging transactions3
 34
(20) 2
Receivables(140) (78)(110) (101)
Receivables from affiliated companies1
 41
(2) 10
Inventory74
 8
4
 1
Other current assets(162) (32)(11) 8
Increase (decrease) in      
Accounts payable6
 20
23
 27
Accounts payable to affiliated companies(35) (55)(51) (29)
Taxes accrued109
 61
134
 74
Other current liabilities(45) (183)(50) (80)
Other assets(35) (56)37
 (77)
Other liabilities(71) 1
(91) (8)
Net cash provided by operating activities936
 716
699
 611
CASH FLOWS FROM INVESTING ACTIVITIES      
Capital expenditures(1,172) (1,179)(1,016) (873)
Purchases of available-for-sale securities(398) (379)
Proceeds from sales and maturities of available-for-sale securities437
 450
Proceeds from insurance4
 58
Purchases of debt and equity securities(2,033) (621)
Proceeds from sales and maturities of debt and equity securities2,040
 631
Notes receivable from affiliated companies(70) —
173
 —
Change in restricted cash—
 (6)
Other(14) 10
(60) (37)
Net cash used in investing activities(1,213) (1,046)(896) (900)
CASH FLOWS FROM FINANCING ACTIVITIES      
Proceeds from the issuance of long-term debt908
 1,870
495
 25
Payments for the redemption of long-term debt(341) (12)(537) (136)
Notes payable to affiliated companies(297) (750)232
 369
Distributions to parent—
 (774)
Other(1) (2)2
 3
Net cash provided by financing activities269
 332
192
 261
Net (decrease) increase in cash and cash equivalents(8) 2
Cash and cash equivalents at beginning of period16
 8
Cash and cash equivalents at end of period$8
 $10
Net decrease in cash, cash equivalents and restricted cash(5) (28)
Cash, cash equivalents and restricted cash at beginning of period56
 75
Cash, cash equivalents and restricted cash at end of period$51
 $47
Supplemental Disclosures:      
Significant non-cash transactions:      
Accrued capital expenditures$102
 $162
$192
 $166

See Notes to Condensed Consolidated Financial Statements
29


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 income487
 —
 487
Other comprehensive income—
 2
 2
Distributions to parent(774) —
 (774)
Other3
 —
 3
Balance at September 30, 2016$4,837
 $2
 $4,839
      
Balance at December 31, 2016$4,899
 $1
 $4,900
Net income368
 —
 368
Other comprehensive income—
 3
 3
Other3
 —
 3
Balance at September 30, 2017$5,270
 $4
 $5,274
 Three Months Ended June 30, 2019 and 2020
   Accumulated  
   Other  
   Comprehensive  
   Income (Loss)  
   Net Unrealized
  
   Gains (Losses) on
  
 Member's
 Available-for-Sale
 Total
(in millions)Equity
 Securities
 Equity
Balance at March 31, 2019$6,193
 $(1) $6,192
Net income201
 —
 201
Balance at June 30, 2019$6,394
 $(1) $6,393
      
Balance at March 31, 2020$6,909
 $—
 $6,909
Net income216
 —
 216
Other comprehensive income—
 (1) (1)
Balance at June 30, 2020$7,125
 $(1) $7,124
      
 Six Months Ended June 30, 2019 and 2020
   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 income297
 —
 297
Other comprehensive income—
 1
 1
Balance at June 30, 2019$6,394
 $(1) $6,393
      
Balance at December 31, 2019$6,789
 $(1) $6,788
Net income336
 —
 336
Balance at June 30, 2020$7,125
 $(1) $7,124



See Notes to Condensed Consolidated Financial Statements
30


PART I
FINANCIAL STATEMENTS




DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
Three Months Ended Nine Months EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
(in millions)2017
 2016
 2017

2016
2020
 2019
 2020

2019
Operating Revenues              
Regulated electric$371
 $390
 $1,036
 $1,053
$330
 $336
 $676
 $691
Regulated natural gas90
 89
 360
 358
93
 97
 245
 273
Nonregulated electric and other10
 10
 30
 22
Total operating revenues471
 489
 1,426
 1,433
423
 433
 921
 964
Operating Expenses              
Fuel used in electric generation and purchased power – regulated100
 129
 283
 340
Fuel used in electric generation and purchased power – nonregulated13
 14
 42
 37
Fuel used in electric generation and purchased power77
 86
 164
 179
Cost of natural gas5
 6
 69
 64
6
 10
 43
 64
Operation, maintenance and other124
 126
 385
 367
95
 123
 218
 255
Depreciation and amortization63
 50
 193
 175
68
 66
 136
 130
Property and other taxes65
 59
 204
 195
78
 74
 161
 158
Impairment charges—
 —
 1
 —
Total operating expenses370
 384
 1,177
 1,178
324
 359
 722
 786
Gains on Sales of Other Assets and Other, net1
 1
 1
 2
Operating Income102
 106
 250
 257
99
 74
 199
 178
Other Income and Expenses, net4
 3
 12
 6
4
 6
 7
 15
Interest Expense22
 22
 67
 63
25
 24
 49
 54
Income From Continuing Operations Before Income Taxes84
 87
 195
 200
Income Tax Expense From Continuing Operations28
 32
 67
 65
Income From Continuing Operations56
 55
 128
 135
(Loss) Income From Discontinued Operations, net of tax(1) 34
 (1) 36
Income Before Income Taxes78
 56
 157
 139
Income Tax Expense12
 9
 26
 23
Net Income and Comprehensive Income$55
 $89
 $127
 $171
$66
 $47
 $131
 $116



See Notes to Condensed Consolidated Financial Statements
31


PART I
FINANCIAL STATEMENTS


DUKE ENERGY OHIO, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
June 30, 2020
 December 31, 2019
ASSETS      
Current Assets      
Cash and cash equivalents$7
 $13
$8
 $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)83
 84
Receivables from affiliated companies81
 129
47
 92
Notes receivable from affiliated companies87
 94
35
 —
Inventory139
 137
129
 135
Regulatory assets57
 37
32
 49
Other18
 37
14
 21
Total current assets457
 518
348
 398
Property, Plant and Equipment      
Cost8,509
 8,126
10,591
 10,241
Accumulated depreciation and amortization(2,658) (2,579)(2,923) (2,843)
Net property, plant and equipment5,851
 5,547
7,668
 7,398
Other Noncurrent Assets      
Goodwill920
 920
920
 920
Regulatory assets510
 520
593
 549
Operating lease right-of-use assets, net21
 21
Other27
 23
59
 52
Total other noncurrent assets1,457
 1,463
1,593
 1,542
Total Assets$7,765
 $7,528
$9,609
 $9,338
LIABILITIES AND EQUITY      
Current Liabilities      
Accounts payable$251
 $282
$249
 $288
Accounts payable to affiliated companies59
 63
58
 68
Notes payable to affiliated companies—
 16
79
 312
Taxes accrued157
 178
210
 219
Interest accrued33
 19
31
 30
Current maturities of long-term debt—
 1
Asset retirement obligations6
 —
5
 1
Regulatory liabilities15
 21
69
 64
Other74
 91
71
 75
Total current liabilities595
 671
772
 1,057
Long-Term Debt2,042
 1,858
2,994
 2,594
Long-Term Debt Payable to Affiliated Companies25
 25
25
 25
Other Noncurrent Liabilities      
Deferred income taxes1,512
 1,443
958
 922
Asset retirement obligations75
 77
77
 79
Regulatory liabilities232
 236
751
 763
Operating lease liabilities20
 21
Accrued pension and other post-retirement benefit costs52
 56
102
 100
Other134
 166
96
 94
Total other noncurrent liabilities2,005
 1,978
2,004
 1,979
Commitments and Contingencies
 
   
Equity      
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2017 and 2016762
 762
Common Stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2020 and 2019762
 762
Additional paid-in capital2,670
 2,695
2,776
 2,776
Accumulated deficit(334) (461)
Retained earnings276
 145
Total equity3,098
 2,996
3,814
 3,683
Total Liabilities and Equity$7,765
 $7,528
$9,609
 $9,338

See Notes to Condensed Consolidated Financial Statements
32


PART I
FINANCIAL STATEMENTS


DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months EndedSix Months Ended
September 30,June 30,
(in millions)2017
 2016
2020
 2019
CASH FLOWS FROM OPERATING ACTIVITIES      
Net income$127
 $171
$131
 $116
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization196
 178
138
 132
Equity component of AFUDC(8) (4)(2) (7)
Gains on sales of other assets(1) (2)
Impairment charges1
 —
Deferred income taxes70
 36
24
 45
Accrued pension and other post-retirement benefit costs3
 4
Contributions to qualified pension plans(4) —
Payments for asset retirement obligations(4) (4)—
 (5)
Provision for rate refunds6
 3
(Increase) decrease in      
Net realized and unrealized mark-to-market and hedging transactions1
 —
Receivables3
 (1)2
 24
Receivables from affiliated companies48
 (3)45
 64
Inventory1
 (5)6
 2
Other current assets(8) 50
8
 (13)
Increase (decrease) in      
Accounts payable(48) 13
(22) (44)
Accounts payable to affiliated companies(4) (4)(10) —
Taxes accrued(21) (13)(9) (67)
Other current liabilities(6) (53)2
 2
Other assets(13) (8)(24) (18)
Other liabilities(2) (28)(3) (15)
Net cash provided by operating activities331
 327
292
 219
CASH FLOWS FROM INVESTING ACTIVITIES      
Capital expenditures(457) (334)(403) (473)
Notes receivable from affiliated companies7
 (47)(35) —
Other(25) (21)(27) (31)
Net cash used in investing activities(475) (402)(465) (504)
CASH FLOWS FROM FINANCING ACTIVITIES      
Proceeds from the issuance of long-term debt182
 341
397
 794
Payments for the redemption of long-term debt(2) (53)—
 (451)
Notes payable to affiliated companies(16) (103)(233) (71)
Dividends to parent(25) (25)
Other(1) —
Net cash provided by financing activities138
 160
164
 272
Net (decrease) increase in cash and cash equivalents(6) 85
Net decrease in cash and cash equivalents(9) (13)
Cash and cash equivalents at beginning of period13
 14
17
 21
Cash and cash equivalents at end of period$7
 $99
$8
 $8
Supplemental Disclosures:      
Significant non-cash transactions:      
Accrued capital expenditures$65
 $56
$94
 $93

See Notes to Condensed Consolidated Financial Statements
33


PART I
FINANCIAL STATEMENTS


DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
 Three Months Ended June 30, 2019 and 2020
   Additional
 Retained
  
 Common
 Paid-in
 Earnings
 Total
(in millions)Stock
 Capital
 (Deficit)
 Equity
Balance at March 31, 2019$762
 $2,776
 $(24) $3,514
Net income—
 —
 47
 47
Balance at June 30, 2019$762
 $2,776
 $23
 $3,561
        
Balance at March 31, 2020$762
 $2,776
 $210
 $3,748
Net income—
 —
 66
 66
Balance at June 30, 2020$762
 $2,776
 $276
 $3,814
        
 Six Months Ended June 30, 2019 and 2020
   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—
 —
 116
 116
Balance at June 30, 2019$762
 $2,776
 $23
 $3,561
        
Balance at December 31, 2019$762
 $2,776
 $145
 $3,683
Net income—
 —
 131
 131
Balance at June 30, 2020$762

$2,776

$276

$3,814



See Notes to Condensed Consolidated Financial Statements
34


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 EndedThree Months Ended Six Months Ended
September 30, September 30,June 30, June 30,
(in millions)2017
 2016
 2017
 2016
2020
 2019
 2020
 2019
Operating Revenues$802
 $809
 $2,302
 $2,225
$617
 $714
 $1,309
 $1,482
Operating Expenses              
Fuel used in electric generation and purchased power259
 242
 744
 690
161
 229
 355
 486
Operation, maintenance and other175
 175
 541
 526
171
 188
 357
 377
Depreciation and amortization120
 123
 336
 345
134
 132
 266
 263
Property and other taxes19
 22
 56
 67
20
 20
 42
 39
Impairment charges—
 8
 —
 8
Total operating expenses573
 570
 1,677
 1,636
486
 569
 1,020
 1,165
Gain on Sale of Other Assets and Other, net1

—
 1
 —
Gains on Sales of Other Assets and Other, net—

3
 —
 —
Operating Income230
 239

626

589
131
 148

289

317
Other Income and Expenses, net10
 5
 27
 15
9
 8
 19
 27
Interest Expense44
 45
 132
 136
42
 28
 85
 71
Income Before Income Taxes196
 199

521

468
98
 128

223

273
Income Tax Expense75
 70
 203
 159
17
 31
 43
 66
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$81
 $97

$180

$207



See Notes to Condensed Consolidated Financial Statements
35


PART I
FINANCIAL STATEMENTS


DUKE ENERGY INDIANA, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
June 30, 2020
 December 31, 2019
ASSETS      
Current Assets      
Cash and cash equivalents$22
 $17
$16
 $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)44
 60
Receivables from affiliated companies83
 114
59
 79
Notes receivable from affiliated companies29
 86
425
 —
Inventory450
 504
489
 517
Regulatory assets158
 149
90
 90
Other34
 45
45
 60
Total current assets850
 1,020
1,168
 831
Property, Plant and Equipment      
Cost14,716
 14,241
16,736
 16,305
Accumulated depreciation and amortization(4,592) (4,317)(5,472) (5,233)
Net property, plant and equipment10,124
 9,924
11,264
 11,072
Other Noncurrent Assets      
Regulatory assets1,123
 1,073
1,113
 1,082
Operating lease right-of-use assets, net56
 57
Other170
 147
251
 234
Total other noncurrent assets1,293
 1,220
1,420
 1,373
Total Assets$12,267
 $12,164
$13,852
 $13,276
LIABILITIES AND EQUITY      
Current Liabilities      
Accounts payable$188
 $263
$204
 $201
Accounts payable to affiliated companies73
 74
74
 87
Notes payable to affiliated companies—
 30
Taxes accrued146
 31
46
 49
Interest accrued54
 61
64
 58
Current maturities of long-term debt3
 3
503
 503
Asset retirement obligations58
 —
172
 189
Regulatory liabilities28
 40
51
 55
Other111
 93
104
 112
Total current liabilities661
 565
1,218
 1,284
Long-Term Debt3,632
 3,633
3,950
 3,404
Long-Term Debt Payable to Affiliated Companies150
 150
150
 150
Other Noncurrent Liabilities      
Deferred income taxes1,979
 1,900
1,195
 1,150
Asset retirement obligations735
 866
643
 643
Regulatory liabilities735
 748
1,655
 1,685
Operating lease liabilities54
 55
Accrued pension and other post-retirement benefit costs78
 71
150
 148
Investment tax credits147
 137
170
 164
Other65
 27
12
 18
Total other noncurrent liabilities3,739
 3,749
3,879
 3,863
Commitments and Contingencies
 
   
Equity      
Member's Equity4,085
 4,067
4,655
 4,575
Total Liabilities and Equity$12,267
 $12,164
$13,852
 $13,276

See Notes to Condensed Consolidated Financial Statements
36


PART I
FINANCIAL STATEMENTS


DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months EndedSix Months Ended
September 30,June 30,
(in millions)2017
 2016
2020
 2019
CASH FLOWS FROM OPERATING ACTIVITIES      
Net income$318
 $309
$180
 $207
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation, amortization and accretion339
 347
267
 265
Equity component of AFUDC(20) (11)(12) (9)
Gain on sale of other assets and other, net(1) —
Impairment charges—
 8
Deferred income taxes101
 122
38
 60
Accrued pension and other post-retirement benefit costs4
 6
Payments for asset retirement obligations(26) (31)(28) (17)
(Increase) decrease in      
Receivables53
 16
19
 5
Receivables from affiliated companies31
 (3)20
 39
Inventory54
 146
28
 (41)
Other current assets18
 (105)13
 48
Increase (decrease) in      
Accounts payable(71) (14)22
 26
Accounts payable to affiliated companies(1) (1)(13) (17)
Taxes accrued115
 12
4
 (18)
Other current liabilities(18) (85)(22) (13)
Other assets(24) (38)(29) (33)
Other liabilities32
 64
(6) 15
Net cash provided by operating activities904
 742
481
 517
CASH FLOWS FROM INVESTING ACTIVITIES      
Capital expenditures(603) (540)(456) (443)
Purchases of available-for-sale securities(15) (12)
Proceeds from sales and maturities of available-for-sale securities6
 9
Purchases of debt and equity securities(14) (14)
Proceeds from sales and maturities of debt and equity securities7
 11
Notes receivable from affiliated companies57
 45
(425) —
Other(40) (28)(16) (21)
Net cash used in investing activities(595) (526)(904) (467)
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)
Notes payable to affiliated companies(30) (2)
Distributions to parent(300) (149)(100) —
Other(1) (1)
Net cash used in financing activities(304) (131)
Net increase in cash and cash equivalents5

85
Net cash provided by (used in) financing activities414
 (62)
Net decrease in cash and cash equivalents(9)
(12)
Cash and cash equivalents at beginning of period17
 9
25
 24
Cash and cash equivalents at end of period$22
 $94
$16
 $12
Supplemental Disclosures:      
Significant non-cash transactions:      
Accrued capital expenditures$101
 $56
$83
 $84

See Notes to Condensed Consolidated Financial Statements
37


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
  Three Months Ended
  June 30, 2019 and 2020
  Member's
(in millions) Equity
Balance at March 31, 2019 $4,449
Net income 97
Balance at June 30, 2019 $4,546
   
Balance at March 31, 2020 $4,674
Net income 81
Distributions to parent (100)
Balance at June 30, 2020 $4,655
   
  Six Months Ended
  June 30, 2019 and 2020
  Member's
(in millions) Equity
Balance at December 31, 2018 $4,339
Net income 207
Balance at June 30, 2019 $4,546
   
Balance at December 31, 2019 $4,575
Net income 180
Distributions to parent (100)
Balance at June 30, 2020 $4,655



See Notes to Condensed Consolidated Financial Statements
38


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
 $815
Nonregulated natural gas and other2
 3
 7
 8
Total operating revenues183
 158
 884
 823
Operating Expenses       
Cost of natural gas63
 42
 333
 289
Operation, maintenance and other73
 74
 226
 221
Depreciation and amortization38
 35
 109
 103
Property and other taxes13
 11
 38
 33
Impairment charges—
 —
 7
 —
Total operating expenses187
 162
 713
 646
Operating (Loss) Income(4) (4) 171
 177
Equity in earnings of unconsolidated affiliates3
 2
 8
 25
Other income and expenses, net—
 (1) (1) (1)
Total other income and expenses3
 1
 7
 24
Interest Expense20
 17
 59
 50
(Loss) Income Before Income Taxes(21) (20) 119
 151
Income Tax (Benefit) Expense(10) (8) 43
 57
Net (Loss) Income$(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 Six Months Ended
 June 30, June 30,
(in millions)2020
 2019
 2020
 2019
Operating Revenues$197
 $209
 $709
 $788
Operating Expenses       
Cost of natural gas53
 65
 215
 338
Operation, maintenance and other79
 83
 159
 163
Depreciation and amortization43
 42
 88
 84
Property and other taxes12
 13
 24
 25
Total operating expenses187
 203
 486
 610
Operating Income10
 6
 223
 178
Other Income and Expenses, net16
 6
 28
 12
Interest Expense33
 21
 60
 43
(Loss) Income Before Income Taxes(7) (9) 191
 147
Income Tax (Benefit) Expense(9) (2) 11
 32
Net Income (Loss) and Comprehensive Income (Loss)$2
 $(7) $180
 $115

See Notes to Condensed Consolidated Financial Statements
39


PART I
FINANCIAL STATEMENTS


PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)September 30, 2017
 December 31, 2016
June 30, 2020
 December 31, 2019
ASSETS      
Current Assets      
Cash and cash equivalents$12
 $25
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 $6 at 2020 and 2019)$102
 $241
Receivables from affiliated companies8
 7
14
 10
Inventory53
 66
29
 72
Regulatory assets133
 124
118
 73
Income taxes receivable99
 9
Other31
 12
54
 28
Total current assets413
 475
317
 424
Property, Plant and Equipment      
Cost6,579
 6,174
8,701
 8,446
Accumulated depreciation and amortization(1,454) (1,360)(1,715) (1,681)
Net property, plant and equipment5,125
 4,814
6,986
 6,765
Other Noncurrent Assets      
Goodwill49
 49
49
 49
Regulatory assets322
 373
280
 290
Operating lease right-of-use assets, net22
 24
Investments in equity method unconsolidated affiliates76
 212
85
 83
Other11
 21
278
 121
Total other noncurrent assets458
 655
714
 567
Total Assets$5,996
 $5,944
$8,017
 $7,756
LIABILITIES AND EQUITY      
Current Liabilities      
Accounts payable$98
 $155
$138
 $215
Accounts payable to affiliated companies7
 8
36
 3
Notes payable and commercial paper—
 330
Notes payable to affiliated companies284
 —
200
 476
Taxes accrued30
 67
28
 24
Interest accrued24
 33
34
 33
Current maturities of long-term debt—
 35
160
 —
Regulatory liabilities3
 —
97
 81
Other72
 102
56
 67
Total current liabilities518
 730
749
 899
Long-Term Debt2,036
 1,786
2,619
 2,384
Other Noncurrent Liabilities      
Deferred income taxes1,046
 931
763
 708
Asset retirement obligations15
 14
17
 17
Regulatory liabilities627
 608
1,078
 1,131
Operating lease liabilities21
 23
Accrued pension and other post-retirement benefit costs14
 14
7
 3
Other141
 189
141
 148
Total other noncurrent liabilities1,843
 1,756
2,027
 2,030
Commitments and Contingencies
 

 
Equity      
Common stock, no par value: 100 shares authorized and outstanding at 2017 and 2016860
 860
Common stock, no par value: 100 shares authorized and outstanding at 2020 and 20191,310
 1,310
Retained earnings739
 812
1,312
 1,133
Total equity1,599
 1,672
2,622
 2,443
Total Liabilities and Equity$5,996
 $5,944
$8,017
 $7,756

See Notes to Condensed Consolidated Financial Statements
40


PART I
FINANCIAL STATEMENTS


PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months EndedSix Months Ended
September 30,June 30,
(in millions)2017
 2016
2020
 2019
CASH FLOWS FROM OPERATING ACTIVITIES      
Net income$76
 $94
$180
 $115
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization112
 111
89
 85
Impairment charges7
 —
Equity component of AFUDC(9) —
Deferred income taxes127
 50
17
 40
Equity in earnings from unconsolidated affiliates(8) (25)(4) (4)
Accrued pension and other post-retirement benefit costs9
 2
Contributions to qualified pension plans—
 (1)
Payments for asset retirement obligations—
 (5)
Provision for rate refunds(24) 9
(Increase) decrease in      
Receivables157
 88
154
 168
Receivables from affiliated companies(1) —
(4) 5
Inventory13
 33
42
 37
Other current assets(129) (50)(69) (17)
Increase (decrease) in      
Accounts payable(52) 11
(68) (70)
Accounts payable to affiliated companies(1) —
33
 14
Taxes accrued(37) 12
5
 (61)
Other current liabilities(21) (11)(4) 10
Other assets(9) 55
(13) (9)
Other liabilities(7) 17
7
 (2)
Net cash provided by operating activities236
 381
332
 320
CASH FLOWS FROM INVESTING ACTIVITIES      
Capital expenditures(407) (416)(438) (480)
Contributions to equity method investments(12) (40)—
 (16)
Notes receivable from affiliated companies—
 (16)
Other2
 (2)(11) (6)
Net cash used in investing activities(417) (458)(449) (518)
CASH FLOWS FROM FINANCING ACTIVITIES      
Proceeds from the:   
Issuance of long-term debt250
 296
Issuance of common stock—
 121
Proceeds from the issuance of long-term debt394
 596
Payments for the redemption of long-term debt(35) (40)—
 (350)
Notes payable and commercial paper(330) (210)
Notes payable to affiliated companies284
 —
(277) (198)
Dividends paid—
 (82)
Other(1) —
Capital contributions from parent—
 150
Net cash provided by financing activities168
 85
117
 198
Net (decrease) increase in cash and cash equivalents(13) 8
Net increase in cash and cash equivalents—
 —
Cash and cash equivalents at beginning of period25
 33
—
 —
Cash and cash equivalents at end of period$12
 $41
$—
 $—
Supplemental Disclosures:      
Significant non-cash transactions:      
Accrued capital expenditures$47
 $30
$98
 $115
Transfer of ownership interest of certain equity method investees to parent149
 —

See Notes to Condensed Consolidated Financial Statements
41


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 benefits121
 —
 —
 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
 Three Months Ended June 30, 2019 and 2020
 Common
 Retained
 Total
(in millions)Stock
 Earnings
 Equity
Balance at March 31, 2019$1,160
 $1,053
 $2,213
Net loss—
 (7) (7)
Contribution from parent150
 —
 150
Balance at June 30, 2019$1,310
 $1,046
 $2,356
      
Balance at March 31, 2020$1,310
 $1,310
 $2,620
Net income—
 2
 2
Balance at June 30, 2020$1,310
 $1,312
 $2,622
      
 Six Months Ended June 30, 2019 and 2020
 Common
 Retained
 Total
(in millions)Stock
 Earnings
 Equity
Balance at December 31, 2018$1,160
 $931
 $2,091
Net income—
 115
 115
Contribution from parent150
 —
 150
Balance at June 30, 2019$1,310
 $1,046
 $2,356
      
Balance at December 31, 2019$1,310
 $1,133
 $2,443
Net income—
 180
 180
Other—
 (1) (1)
Balance at June 30, 2020$1,310
 $1,312
 $2,622




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.
CombinedSee Notes to Condensed Consolidated Financial Statements– (Unaudited)

42




FINANCIAL STATEMENTSORGANIZATION AND BASIS OF PRESENTATION


Index to Combined Notes to Condensed Consolidated Financial Statements
The unaudited notes to the condensed consolidated financial statementsCondensed Consolidated Financial Statements that follow are a combined presentation. The following list indicates the registrants to which the footnotes apply.
 Applicable Notes
Registrant1 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
Registrant1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
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 amountsBASIS 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 reclassifiedcontrol. 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 declared COVID-19 a global pandemic, and President Trump proclaimed that the COVID-19 outbreak in the United States constitutes a national emergency. The extent to conformwhich the COVID-19 pandemic will impact the Duke Energy Registrants during 2020 and beyond is uncertain, and the Duke Energy Registrants are monitoring developments closely. The company incurred approximately $34 million and $40 million of incremental COVID-19 costs for the three and six months ended June 30, 2020, respectively, included in Operation, maintenance and other on the Condensed Consolidated Statements of Operations. These costs were primarily bad debt expense, personal protective equipment and cleaning supplies. Further the company experienced approximately another $25 million of waived late payment fees for the three and six months ended June 30, 2020. See Notes 3, 5, 11, 12 and 15 for additional information as well as steps taken to mitigate the impacts to our business and customers from the COVID-19 pandemic.
OTHER CURRENT ASSETS
Included in Other within Current Assets on the Piedmont Condensed Consolidated Balance Sheets are income taxes receivable of $22 million and $14 million as of June 30, 2020, and December 31, 2019, respectively, and prepaid assets of $19 million and $3 million as of June 30, 2020, and December 31, 2019, respectively. The income taxes receivable relates to increases of net operating losses for Piedmont and intercompany tax settlements. The prepaid assets relate to natural gas storage injections and inventory transfers classified as prepaid assets until winter season when the gas is moved to Inventory on the Piedmont Condensed Consolidated Balance Sheets under certain agreements.

43



FINANCIAL STATEMENTSORGANIZATION AND BASIS OF PRESENTATION


OTHER CURRENT LIABILITIES
During the second quarter of 2020, Duke Energy recorded a current liability related to the abandonment of ACP within Current Liabilities in the Gas Utilities and Infrastructure segment. The liability represents Duke Energy's obligation to fund ACP's obligations of outstanding debt and satisfy ARO requirements to restore construction sites. As a result, Liabilities associated with unconsolidated affiliates is $920 million, and exceeds 5% of Total current year presentation.liabilities on the Duke Energy Condensed Consolidated Balance Sheets as of June 30, 2020. See Notes 3, 4 and 11 for further information.
UNBILLED REVENUENONCONTROLLING INTEREST
Revenues on salesDuke 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 electricityDuke Energy's net income (loss), net assets and natural gas are recognized when servicecomprehensive 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 resultcomponent 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 shownSheet.
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 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 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 over the IRS recapture period, upon a hypothetical liquidation of the subsidiary at the net book value of its underlying assets. The change in the amount that each owner would hypothetically receive at the reporting date compared to the amount it would have received on the previous reporting date represents the amount of income or loss allocated to each owner for the reporting period. The following table.table presents cash received for the sale of noncontrolling interest to tax equity members and allocated losses to noncontrolling tax equity members utilizing the HLBV method for the three and six months ended June 30, 2020, and 2019.
 Three Months Ended Six Months Ended
(in millions)June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Cash received for the sale of noncontrolling interest to tax equity members$60
 $187
 $163
 $193
Allocated losses to noncontrolling tax equity members utilizing the HLBV method79
 83
 128
 90

(in millions)September 30, 2017
 December 31, 2016
Duke Energy$771
 $831
Duke Energy Carolinas307
 313
Progress Energy216
 161
Duke Energy Progress113
 102
Duke Energy Florida103
 59
Duke Energy Ohio2
 2
Duke Energy Indiana29
 32
Piedmont4
 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 to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)





Additionally,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 Ohioallocates 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 receivableFlorida have restricted cash balances related primarily to an affiliate, Cinergy Receivables Company, LLC (CRC), on a revolving basis. These transfers of receivablescollateral assets, escrow deposits and VIEs. See Notes 9 and 11 for additional information. Restricted cash amounts are accounted for as salesincluded in Other within Current Assets and include receivables for unbilled revenues. Accordingly, the receivables sold are not reflectedOther 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 Indiana119
 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 operationsthe components of cash, cash equivalents and discontinued operations forrestricted cash included in the three and nine months ended September 30, 2016.Condensed Consolidated Balance Sheets.
 June 30, 2020 December 31, 2019
   Duke
   Duke
 Duke
Progress
Energy
 Duke
Progress
Energy
 Energy
Energy
Florida
 Energy
Energy
Florida
Current Assets       
Cash and cash equivalents$341
$78
$20
 $311
$48
$17
Other193
31
31
 222
39
39
Other Noncurrent Assets       
Other107
102
—
 40
39
—
Total cash, cash equivalents and restricted cash$641
$211
$51
 $573
$126
$56


44



 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 Interests2
 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 tax3
 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 Interests5
 13
Net Income Attributable to Duke Energy Corporation$1,176
 $2,379
FINANCIAL STATEMENTSORGANIZATION AND BASIS OF PRESENTATION


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 SeptemberJune 30, 2017,2020, and December 31, 2016.2019. The components of inventory are presented in the tables below.
September 30, 2017June 30, 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
$2,220
 $769
 $1,014
 $682
 $333
 $83
 $254
 $5
Coal581
 197
 231
 130
 101
 17
 136
 —
776
 271
 257
 189
 68
 13
 234
 —
Natural gas, oil and other fuel349
 36
 221
 108
 114
 39
 2
 51
293
 40
 195
 109
 85
 33
 1
 24
Total inventory$3,265
 $1,000
 $1,584
 $1,018
 $566
 $139
 $450
 $53
$3,289
 $1,080
 $1,466
 $980
 $486
 $129
 $489
 $29
December 31, 2016December 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
Coal774
 251
 314
 148
 166
 19
 190
 —
586
 187
 186
 138
 48
 15
 198
 —
Natural gas, oil and other fuel374
 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 Carolinas9
 6
 27
 21
Progress Energy67
 65
 168
 161
Duke Energy Progress5
 4
 14
 13
Duke Energy Florida62
 61
 154
 148
Duke Energy Ohio24
 26
 75
 77
Duke Energy Indiana6
 10
 16
 26
Piedmont1
 1
 3
 2

NEW ACCOUNTING STANDARDS
The following new accounting standardsstandard was adopted for 2017 and 2016 had no material impact on the presentation or results of operations, cash flows or financial position ofby the Duke Energy Registrants. While immaterial, adoption ofRegistrants in 2020.
Current Expected Credit Losses. In June 2016, the following accounting standards had the most significant impact on the Duke Energy results of operations, cash flows and financial position for the nine months ended September 30, 2017.
Stock-Based Compensation and Income Taxes. In first quarter 2017, 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.
Forcredit losses. Duke Energy this guidance is effective for interim and annual periods beginning January 1, 2018. Duke Energy currently presentsadopted 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 revisednew 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 usecredit losses effective January 1, 2020, using the modified retrospective method of adoption, effective January 1, 2018. Under the modified retrospective methodwhich 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 certaindid not adopt any practical expedients including applying this guidance to open contracts at the dateexpedients.
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 recognitionlosses expected to be consistent with invoicedincurred 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 considerationincluded in the Condensed Consolidated Balance Sheets in Receivables, Receivables of whetherVIEs, 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 providedcumulative effect of a change in accounting principle due to customers. While the adoption of this standard on January 1, 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 following new accounting standard has been issued but not yet adopted by the Duke Energy Registrants as of June 30, 2020.
Reference Rate Reform. In March 2020, the FASB issued new accounting guidance for reference rate reform. This guidance is elective and provides expedients to facilitate financial reporting for the anticipated transition away from the London Inter-bank Offered Rate (LIBOR) and other interbank reference rates by the end of 2021. The optional expedients are effective for modification of existing contracts or new arrangements executed between March 12, 2020, through December 31, 2022.

45



FINANCIAL STATEMENTSORGANIZATION AND BASIS OF PRESENTATION


Duke Energy has variable-rate debt and manages interest rate risk by entering into financial contracts including interest rate swaps that are generally indexed to LIBOR. Impacted financial arrangements extending beyond 2021 may require contractual amendment or termination to fully adapt to a post-LIBOR environment. Duke Energy is assessing these financial arrangements and is evaluating the cumulative-effect adjustment,use of optional expedients outlined in the new accounting guidance. Alternative index provisions are also being assessed and incorporated into new financial arrangements that extend beyond 2021. The full outcome of the transition away from LIBOR cannot be determined at this time, but is not expected to have a material impact 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. 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 the new standard has 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 adoption 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 Statement of Cash Flows.
Financial Instruments Classification and Measurement. In January 2016, the FASB issued revised 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. This guidance is expected to have minimal impact on 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, net4,714
Goodwill3,353
Other long-term assets804
Total assets9,368
Current liabilities, including current maturities of long-term debt576
Long-term liabilities1,790
Long-term debt2,002
Total liabilities4,368
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 resulting from the combined entities.
Under Securities and Exchange Commission (SEC) regulations, Duke Energy elected not to apply push down accounting to the stand-alone Piedmont financial statements.
Other Acquisition-Related Matters
Duke Energy recorded realized 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. See Note 10 for additional information.
During the nine months ended September 30, 2017, Piedmont recorded 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 Duke Energy and Piedmont as if the merger had occurred as of January 1, 2016. The pro forma 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 and is not necessarily indicative of the consolidated results of operations 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 Corporation1,180
 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 power60
 177
Cost of natural gas11
 34
Operation, maintenance and other85
 240
Depreciation and amortization18
 62
Property and other taxes1
 6
Impairment charges (a)
—
 194
Loss on Sales of Other Assets and Other, net(3) (2)
Other Income and Expenses, net14
 35
Interest Expense19
 63
Income before income taxes62
 18
Income tax expense (benefit) (b)
4
 (48)
Income from discontinued operations of the International Disposal Group58
 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.
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
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 includeincludes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. Prior period information has been recast to conform to the current segment structure. See Note 2 for further information on the Piedmont and International Energy transactions.
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 scaleutility-scale wind and solar generation assets located throughout the U.S. In 2020, Duke Energy evaluated recoverability of a renewable merchant plant located in the Electric Reliability Council of Texas West market due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Duke Energy determined that the asset was not impaired because the carrying value of $155 million approximates the aggregate estimated future cash flows and therefore further testing was not required. A continued decline in energy market pricing would likely result in a future impairment. Duke Energy retained 51% ownership interest in this facility following the 2019 transaction to sell a minority interest in certain renewable assets.
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 includesand 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.
Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.
 Three Months Ended June 30, 2020
 Electric
 Gas
   Total
      
 Utilities and
 Utilities and
 Commercial
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Total
Unaffiliated revenues$5,026
 $265
 $123
 $5,414
 $7
 $—
 $5,421
Intersegment revenues8
 24
 —
 32
 19
 (51) —
Total revenues$5,034
 $289
 $123
 $5,446
 $26
 $(51) $5,421
Segment income (loss)(a)
$753
 $(1,576) $90
 $(733) $(84) $—
 $(817)
Less: Noncontrolling interests(c)
            90
Add: Preferred stock dividend            15
Net Loss            $(892)
Segment assets$136,724
 $13,072
 $6,386
 $156,182
 $3,874
 $(7) $160,049
 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 revenues7
 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 June 30, 2019
 Electric
 Gas
   Total
      
 Utilities and
 Utilities and
 Commercial
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Total
Unaffiliated revenues$5,467
 $282
 $118
 $5,867
 $6
 $—
 $5,873
Intersegment revenues8
 24
 —
 32
 19
 (51) —
Total revenues$5,475
 $306
 $118
 $5,899
 $25
 $(51) $5,873
Segment income (loss)$809
 $40
 $86
 $935
 $(115) $—
 $820
Less: Noncontrolling interests(c)
            84
Add: Preferred stock dividend            12
Net Income            $748

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.
46
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 revenues8
 —
 —
 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
FINANCIAL STATEMENTSBUSINESS SEGMENTS


Nine Months Ended September 30, 2017Six Months Ended June 30, 2020
Electric
 Gas
   Total
      Electric
 Gas
   Total
      
Utilities and
 Utilities and
 Commercial
 Reportable
      Utilities and
 Utilities and
 Commercial
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Consolidated
Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Total
Unaffiliated revenues$16,211
 $1,175
 $333
 $17,719
 $47
 $—
 $17,766
$10,200
 $905
 $252
 $11,357
 $13
 $—
 $11,370
Intersegment revenues23
 68
 —
 91
 56
 (147) —
17
 48
 —
 65
 36
 (101) —
Total revenues$16,234
 $1,243
 $333
 $17,810
 $103
 $(147) $17,766
$10,217
 $953
 $252
 $11,422
 $49
 $(101) $11,370
Segment income (loss)(c)(b)
$2,384
 $179
 $2
 $2,565
 $(205) $—
 $2,360
$1,458
 $(1,327) $147
 $278
 $(196) $—
 $82
Add back noncontrolling interests            5
Loss from discontinued operations, net of tax            (4)
Net income            $2,361
Less: Noncontrolling interests(c)
            138
Add: Preferred stock dividend            54
Net Loss            $(2)
Nine Months Ended September 30, 2016Six Months Ended June 30, 2019
Electric
 Gas
   Total
      Electric
 Gas
   Total
      
Utilities and
 Utilities and
 Commercial
 Reportable
      Utilities and
 Utilities and
 Commercial
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Consolidated
Infrastructure
 Infrastructure
 Renewables
 Segments
 Other
 Eliminations
 Total
Unaffiliated revenues$16,406
 $355
 $365
 $17,126
 $40
 $—
 $17,166
$10,788
 $1,014
 $224
 $12,026
 $10
 $—
 $12,036
Intersegment revenues24
 3
 —
 27
 51
 (78) —
16
 48
 —
 64
 36
 (100) —
Total revenues$16,430
 $358
 $365
 $17,153
 $91
 $(78) $17,166
$10,804
 $1,062
 $224
 $12,090
 $46
 $(100) $12,036
Segment income (loss)(c)
$2,557
 $63
 $13
 $2,633
 $(436) $—
 $2,197
$1,559
 $266
 $99
 $1,924
 $(204) $—
 $1,720
Add back noncontrolling interests            5
Income from discontinued operations, net of tax(d)
            190
Net income            $2,392
Less: Noncontrolling interests(c)
            91
Add: Preferred stock dividend            12
Net Income            $1,641
(a)OtherGas Utilities and Infrastructure includes $2.0 billion of pretax costs related to achieve the Piedmont acquisition.abandonment of its ACP investment recorded within Equity in (losses) earnings of unconsolidated affiliates on the Condensed Consolidated Statements of Operations. See Notes 21, 3 and 10Note 11 for additional information.
(b)ForOther includes a $98 million reversal, included in Operations, maintenance and other on the three and nine months ended September 30, 2017, Electric Utilities and Infrastructure includes an impairment charge relatedCondensed Consolidated Statements of Operations, of 2018 severance costs due to the Floridapartial settlement agreement.of the Duke Energy Carolina's 2019 North Carolina rate case. See Note 43 for additional information.
(c)Commercial Renewables includes impairment charges relatedIncludes the allocation of losses to certain wind projects. See discussion below.
(d)For the three and nine months ended September 30, 2016, Income from Discontinued Operations includes an incomenoncontrolling tax benefit resulting from immaterial out of period deferred tax liability adjustments.equity members. See Note 21 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 two2 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
 Three Months Ended June 30, 2020
 Electric
 Gas
 Total
      
 Utilities and
 Utilities and
 Reportable
      
(in millions)Infrastructure
 Infrastructure
 Segments
 Other
 Eliminations
 Total
Total revenues$330
 $93
 $423
 $—
 $—
 $423
Segment income/Net (loss) income$44
 $23
 $67
 $(1) $—
 $66
Segment assets$6,378
 $3,213
 $9,591
 $26
 $(8) $9,609
 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
 Three Months Ended June 30, 2019
 Electric
 Gas
 Total
    
 Utilities and
 Utilities and
 Reportable
    
(in millions)Infrastructure
 Infrastructure
 Segments
 Other
 Total
Total revenues$336
 $97
 $433
 $—
 $433
Segment income/Net (loss) income$31
 $17
 $48
 $(1) $47



47



(a)FINANCIAL STATEMENTSFor 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.BUSINESS SEGMENTS
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 $166 million for the three and nine months ended September 30, 2016, respectively. The following table summarizes the net (loss) income of Other for each of these entities.
 Three Months EndedNine Months Ended
 September 30,September 30,
(in millions)2017
 2016
2017
 2016
Duke Energy Carolinas$(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
 Six Months Ended June 30, 2020
 Electric
 Gas
 Total
    
 Utilities and
 Utilities and
 Reportable
    
(in millions)Infrastructure
 Infrastructure
 Segments
 Other
 Total
Total revenues$676
 $245
 $921
 $—
 $921
Segment income/Net (loss) income$74
 $59
 $133
 $(2) $131
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.
 Six Months Ended June 30, 2019
 Electric
 Gas
 Total
    
 Utilities and
 Utilities and
 Reportable
    
(in millions)Infrastructure
 Infrastructure
 Segments
 Other
 Total
Total revenues$691
 $273
 $964
 $—
 $964
Segment income/Net (loss) income$67
 $52
 $119
 $(3) $116

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.
Duke Energy Carolinas and Duke Energy Progress
Ash Basin Closure Costs DeferralCOVID-19 Filings
North Carolina
On DecemberMarch 10, 2020, Governor Roy Cooper issued Executive Order No. 116 declaring a state of emergency due to the COVID-19 pandemic. On March 19, 2020, the NCUC issued an order directing that utilities under its jurisdiction suspend disconnections for nonpayment of utility bills during the state of emergency (as defined by Executive Order No. 116) and allow for customers to enter into payment arrangements to pay off arrearages accumulated during the state of emergency after the end of the state of emergency. Additionally, to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 19, 2020, Duke Energy Carolinas and Duke Energy Progress filed a request with the NCUC seeking authorization to waive: (1) any late payment charges incurred by a residential or nonresidential customer, effective March 21, 2020; (2) the application of fees for checks returned for insufficient funds for residential and nonresidential customers; (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit; and (4) the fees and charges associated with the use of credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted the companies’ request on March 20, 2020.
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 May 30, 2016, 2020, the governor issued Executive Order No. 142, which extended effective period for Executive Order No. 124 to July 29, 2020. Executive Order No. 142 was not extended.
On July 10, 2020, Duke Energy Carolinas and Duke Energy Progress filed a petition with the NCUC for clarification regarding when they may begin working with customers on establishing payment arrangements for arrears accumulated since March 13, 2020. On July 29, 2020, the NCUC issued its Order Lifting Disconnection Moratorium and Allowing Collection of Arrearages Pursuant to Special Repayment Plans. The order contained the following: 1) public utilities may resume customer disconnections due to nonpayment for bills first rendered on or after September 1, 2020, after appropriate notice; 2) the late fee moratorium will continue through the end of the state of emergency or until further order of the commission; 3) Duke Energy utilities may reinstate fees for checks returned for insufficient funds as well as transaction fees for use of credit cards or debit cards for bills first rendered on or after September 1, 2020; and 4) no sooner than September 1, 2020, the collection of past-due or delinquent accounts accrued up to and including August 31, 2020, may proceed subject to conditions.
Duke Energy Carolinas and Duke Energy Progress filed a joint petition on August 7, 2020, with the NCUC seeking an accounting order authorizingfor deferral treatment of certainincremental costs incurred in connection with federal and state environmental remediation requirements relatedwaived customer fees due 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, and reply comments were filed on April 19, 2017. The NCUC has consolidated Duke Energy Carolinas' 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.COVID-19 pandemic. 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 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.

48



FINANCIAL STATEMENTSREGULATORY MATTERS


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 six 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.
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 on a quarterly basis; and (4) include any other matters that the PSCSC believes should be addressed. On May 14, 2020, the PSCSC adopted the ORS' motion.
On May 13, 2020, the ORS filed a letter with the PSCSC that included a request from Governor McMaster that utilities proceed with developing and implementing plans for phasing in normal business operations. On May 14, 2020, the PSCSC conditionally vacated the regulation waivers regarding termination of service and suspension of disconnect fees. Prior to termination, utilities are to refer past-due customers to local organizations for assistance and/or deferred payment arrangements. Duke Energy Carolinas and Duke Energy Progress filed a report on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. Duke Energy Carolinas and Duke Energy Progress are evaluating a filing with the PSCSC for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
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 an approximate 13.6 percent increase in annual base revenues. The rate increase is driven by capital investments subsequent to the previous base rate case, including grid improvement projects, investments in customer service technologies, costs of complying with coal combustion residuals (CCR) regulationsmillion. On February 28, 2018, Duke Energy Carolinas and the North Carolina Coal Ash Management ActPublic Staff (Public Staff) filed an Agreement and Stipulation of 2014 (Coal Ash Act) and recovery of costs related to licensing and developmentPartial Settlement resolving certain portions of the William States Lee III Nuclear Station (Lee Nuclear Station) discussed below. An evidentiary hearing is scheduledproceeding. 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.
The North Carolina Attorney General and other parties separately filed Notices of Appeal to beginthe North Carolina Supreme Court. On August 8, 2018, the Public Staff filed a Notice of Cross Appeal to the North Carolina Supreme Court. 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 Addition2019 North Carolina Rate Case
On June 12, 2017,September 30, 2019, Duke Energy Carolinas filed an application with the NCUC for a Certificatenet rate increase for retail customers of Public Convenienceapproximately $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 transmissionfor a rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and natural gas pipeline interconnection facilities. If approved, construction would begin indeferred 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 heldto begin on March 23, 2020. On March 16, 2020, in consideration of public health and safety as a result of the COVID-19 pandemic, Duke Energy Carolinas filed a motion with the NCUC seeking a suspension of the procedural schedule in the rate case, including issuing discovery requests, and postponement of the evidentiary hearing for 60 days. Also on March 16, 2020, the NCUC issued an Order Postponing Hearing and Addressing Procedural Matters, which postponed the evidentiary hearing until further order by the commission.
On March 25, 2020, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. Major components of the settlement included:
Removal of deferred storm costs from the rate case;
Filing a petition seeking to securitize the deferred storm costs within 120 days of a commission order in this rate case regarding the reasonableness and prudency of the storm costs;
Agreement of certain assumptions to demonstrate the quantifiable benefits to customers of a securitization financing; and
Agreement on certain accounting matters, including recovery of employee incentives, severance, aviation costs and executive compensation.

49



FINANCIAL STATEMENTSREGULATORY MATTERS


On May 6, 2020, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. On June 17, 2020, the NCUC issued an order adopting procedures for the expert witness hearings to take place in three phases: 1) a hearing on issues common to both rate cases conducted remotely; 2) a hearing on Duke Energy Carolinas specific rate case issues conducted in person, followed immediately by; 3) a hearing on Duke Energy Progress specific rate case issues conducted in person. On July 24, 2020, Duke Energy Carolinas filed its request for approval of its notice to customers required to implement temporary rates. On July 27, 2020, Duke Energy Carolinas filed a joint motion with Duke Energy Progress and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff and requesting a postponement of the evidentiary hearing until August 2017. Briefs24, 2020. The NCUC granted the joint motion on July 27, 2020. Also on July 27, 2020, Duke Energy Carolinas filed a letter stating that it intended to update its temporary rates calculation to reflect the terms of the partial settlement.
On July 31, 2020, Duke Energy Carolinas and proposed orders werethe Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), which is subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. Major components of the Second Partial Settlement included:
A return on October 9, 2017. A decisionequity of 9.6% and a capital structure of 52% equity and 48% debt;
Agreement on amortization over a five-year period for unprotected federal EDIT flowbacks to customers;
Agreement on the inclusion of plant in service and other revenue requirement updates through May 31, 2020, subject to Public Staff review. Annual revenue requirement associated with the May 31 update is expectedestimated at $45 million; and
Settlement on certain grid deferral projects of $0.8 billion and agreement to withdraw Duke Energy Carolinas' request for deferral of remaining grid projects of $0.5 billion.
The remaining items to be litigated at hearing include recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting, implementation of new depreciation rates and amortization of the hydro station sale. As a result of the additional settlement terms, the NCUC ordered the Duke Energy Carolinas and Duke Energy Progress remote, consolidated evidentiary hearing to be delayed until August 24, 2020.
On August 4, 2020, Duke Energy Carolinas, filed an amended motion for approval of its amended notice to customers, seeking to exercise its statutory right to implement temporary rates subject to refund on or after August 24, 2020. The revenue requirement to be recovered, subject to refund, through the temporary rates is based on and consistent with the base rate component of the Second Partial Settlement with the Public Staff and excludes the items to be litigated noted above. Duke Energy Carolinas will not begin the amortization or implementation of these items until a final order is issued in the rate case and new base rates are implemented. These items will also be excluded when determining whether a refund of amounts collected through these temporary rates is needed. In addition, Duke Energy Carolinas also seeks authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Carolinas on a permanent basis. The NCUC approved the August 4, 2020 amended temporary rates motion on August 6, 2020.
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 Facility2018 South Carolina Rate Case
On April 9, 2014, the PSCSC grantedNovember 8, 2018, Duke Energy Carolinas filed an application with the PSCSC for a rate increase for retail customers of approximately $168 million.
After hearings in March 2019, the PSCSC issued an order on May 21, 2019, which included a return on equity of 9.5% and Northa 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 Electric Membership Corporation (NCEMC)retail portion) of Lee Nuclear Project development costs (including AFUDC through December 2017) over a Certificate of Environmental Compatibility and Public Convenience and Necessity (CECPCN) for the construction and operation12-year period, but denial of a 750-MW combined-cycle natural gas-fired generating plantreturn 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' existing William States Lee Generating StationWACC;
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 Anderson, South Carolina.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.

50



FINANCIAL STATEMENTSREGULATORY MATTERS


As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Carolinas began constructionfiled 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 July 2015the 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 estimatesdisposal costs, return on equity and the recovery of a cost to buildreturn 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 $600 million for its shareappeal on November 15, 2019, with the Supreme Court of the facility, including allowance for funds used during construction (AFUDC). The project is expected to be commercially available in late 2017. NCEMC will own approximately 13 percent of the project.South Carolina. On July 3, 2014,November 20, 2019, the South Carolina Coastal Conservation League (SCCL) and Southern Alliance for Clean Energy (SACE) jointlyUsers Committee filed a Notice of Appeal and the ORS filed a Notice of Cross Appeal with the Supreme Court of AppealsSouth 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 (S.C.on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of 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 decisionSouth Carolina on February 10, 2016, andApril 30, 2020. Initial briefs were filed on March 24, 2016, denied a request for rehearing filed by SCCL and SACE. On April 21, 2016, SCCL and SACE petitioned2020, which included the South Carolina Supreme Court for reviewEnergy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to the Lee Nuclear Station. Response briefs were filed on July 6, 2020, and reply briefs are due on August 11, 2020. Based on legal analysis and the filing 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.
Lee Nuclear Station
In December 2007,appeal, Duke Energy Carolinas applied to the NRChas not recorded an adjustment for combined operating licenses (COLs) for two Westinghouse Electric Company (Westinghouse) AP1000 reactors for the proposed Lee Nuclear Station to be located at a site in Cherokee County, South Carolina. The NCUC and PSCSC concurred with the prudency of Duke Energy Carolinas decisions to incur certain project development and preconstruction 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 as a result of the COLs being issued.
On March 29, 2017, Westinghouse filed for voluntary Chapter 11 bankruptcy 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 the development of the Lee Nuclear Station project due to the Westinghouse bankruptcy filing and other market activity and is requesting recovery of incurred licensing and developmentdeferred coal ash costs. Duke Energy Carolinas will maintain the license issued by the NRC in December 2016. 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 representswas subsequently adjusted to $420 million. On November 22, 2017, Duke Energy Progress and the Public Staff filed an approximate 14.9 percent increase in annual base revenues.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. The rate increase is driven by capital investments subsequentPublic Staff, the North Carolina Attorney General and the Sierra Club filed notes of appeal to the previous base rate case, costs of complyingNorth Carolina Supreme Court.
On November 29, 2018, the North Carolina Attorney General's Office filed a motion 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 inNorth Carolina Supreme Court requesting the case filed testimony in October 2017court 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 Filing2019 North Carolina Rate Case
On December 16, 2016,October 30, 2019, Duke Energy Progress filed an application with the NCUC for a net rate increase for retail customers of approximately $464 million, which represented an approximate 12.3% increase in annual base revenues. The gross rate case revenue increase request was $586 million, which was offset by riders of $122 million, primarily an EDIT rider of $120 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Progress seeks to defer and recover incremental Hurricane Dorian storm costs in this proceeding and requests rates be effective no later than September 1, 2020. As a result of the COVID-19 pandemic, on March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on this matter indefinitely. On April 7, 2020, the NCUC issued an order partially resuming the procedural schedule requiring intervenors to file direct testimony on April 13, 2020. Public Staff filed supplemental direct testimony on April 23, 2020. Duke Energy Progress filed rebuttal testimony on May 4, 2020.
On June 2, 2020, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. Major components of the settlement included:
Removal of deferred storm costs from the rate case;
Filing a petition seeking to securitize the deferred storm costs within 120 days of a commission order in this rate case regarding the reasonableness and prudency of the storm costs;
Agreement of certain assumptions to demonstrate the quantifiable benefits to customers of a securitization financing;
Agreement that the Asheville CC project is complete and in service and agreement on the amount to be included in rate base; and
Agreement on certain accounting matters, including recovery of employee incentives, severance, aviation costs and executive compensation.
On May 6, 2020, Duke Energy Progress, Duke Energy Carolinas and the Public Staff filed a joint motion requesting that the NCUC issue an order scheduling one consolidated evidentiary hearing to consider the companies’ applications for net rate increases. On June 17, 2020, the NCUC issued an order adopting procedures for the expert witness hearings to take place in three phases: 1) a hearing on issues common to both rate cases conducted remotely; 2) a hearing on Duke Energy Carolinas specific rate case issues conducted in person, followed immediately by; 3) a hearing on Duke Energy Progress specific rate case issues conducted in person. On July 27, 2020, Duke Energy Progress filed a petitionjoint motion with Duke Energy Carolinas and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff and requesting a postponement of the evidentiary hearing until August 24, 2020. The NCUC requestinggranted the joint motion on July 27, 2020.

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FINANCIAL STATEMENTSREGULATORY MATTERS


On July 31, 2020, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), which is subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. Major components of the Second Partial Settlement included:
A return on equity of 9.6% and a capital structure of 52% equity and 48% debt;
Agreement on amortization over a five-year period for unprotected federal EDIT flowbacks to customers;
Agreement on the inclusion of plant in service and other revenue requirement updates through May 31, 2020, subject to Public Staff review. Annual revenue requirement associated with the May 31 update is estimated at $25 million; and
Settlement on certain grid deferral projects of $0.5 billion and agreement to withdraw Duke Energy Progress' request for deferral of remaining grid projects of $0.5 billion.
The remaining items to be litigated at hearing include recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting and implementation of new depreciation rates. As a result of the additional settlement terms, the NCUC ordered the Duke Energy Progress and Duke Energy Carolinas remote, consolidated evidentiary hearing to be delayed until August 24, 2020.
On August 7, 2020, Duke Energy Progress filed a motion for approval of notice required to implement temporary rates, seeking to exercise its statutory right to implement temporary rates subject to refund on or after September 1, 2020. The revenue requirement to be recovered subject to refund through the temporary rates is based on and consistent with the terms of the base rate component of the settlement agreements with the Public Staff and excludes items to be litigated noted above. Duke Energy Progress will not begin the amortization or implementation of these items until a final determination is issued in the rate case and new base rates are implemented. These items will also be excluded when determining whether a refund of amounts collected through these temporary rates is needed. In addition, Duke Energy Progress also seeks authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Progress on a permanent basis.
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. Total estimated incremental operation and maintenance expenses incurred to repair and restore the system are approximately $165 million with an additional $4 million in capital investments made for restoration efforts. Approximately $139 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 June 30, 2020, and December 31, 2019, respectively. A request for an accounting order to defer certainincremental storm costs incurredassociated with Hurricane Dorian was included in connectionDuke Energy Progress' October 30, 2019, general rate case filing with responsethe NCUC. Terms of the June 2, 2020, Agreement and Stipulation of Partial Settlement removed incremental storm costs from the general rate case. A petition seeking to Hurricane Matthew and other significant stormssecuritize these costs will be filed within 120 days of an NCUC order in 2016. The final estimatethe general rate case. Duke Energy Progress cannot predict the outcome of incremental operation and maintenance and capital costs of $116 millionthis matter.
On February 7, 2020, a petition was filed with the NCUCPSCSC in September 2017. On March 15, 2017, the NCUC Public Staff filed comments supporting2019 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 portion of Duke Energy Progress’ requested amount.final order on April 7, 2020. On July 1, 2020, Duke Energy Progress filed reply commentsa supplemental true up reducing the actual costs to $17 million.
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.
After hearings in April 2019, the PSCSC issued an order on April 12, 2017. On July 10, 2017,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 NCUC consolidatedfollowing material components:
Approval of recovery of $4 million of coal ash costs over a five-year period with a return at Duke Energy Progress' storm deferral request intoWACC;
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%.

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FINANCIAL STATEMENTSREGULATORY MATTERS


As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress rate case docketfiled a Petition for decision. See "2017 NorthRehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress 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 Progress' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, return on equity and the recovery of a return on deferred operation and maintenance expenses, but allowing additional litigation-related costs. As a result of the Directive allowing litigation-related costs, customer rates were revised effective July 1, 2019. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Progress filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. The ORS filed a Notice of Cross Appeal on November 20, 2019. On February 12, 2020, Duke Energy Progress and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina Rate Case"on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs are due on August 11, 2020. Based on legal analysis and the filing of the appeal, Duke Energy Progress has not recorded an adjustment 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 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 the local natural gas distribution company to upgrade an existing natural gas pipeline to serve the natural gas plant.
On March 28, 2016, the NCUC issued an order approving a CPCN for the new combined-cycle natural gas plants, but denying the CPCN for the contingent simple cycle unit without prejudice to Duke Energy Progress to refile for approval in the future. On March 28, 2017, Duke Energy Progress filed an annual progress report for the construction of the combined-cycle plants with the NCUC, with an estimated cost of $893 million. Site preparation activities for the combined-cycle plants are underway and construction of these plants is scheduled to begin in 2017, with an expected in-service date in late 2019. Duke Energy Progress plans to file for future approvals related to the proposed solar generation and pilot battery storage project.
The carrying value ofretired the 376-MW Asheville coal-fired plant on January 29, 2020, at which time the net book value, including associated ash basin closure costs, of $405$214 million and $492 million is included inwas transferred from Generation facilities to be retired, net on Duke Energy Progress' Condensed Consolidated Balance Sheets as of September 30, 2017, and December 31, 2016, 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)





Duke Energy Florida
Hurricane Irma Storm Damage
In September 2017, all of Duke Energy Florida’s service territory was impacted by Hurricane Irma, which caused 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 as Duke Energy Florida receives additional information on actual costs. After depleting any existing storm reserves, which were approximately $60 million before Hurricane Irma, Duke Energy Florida is permitted 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 rule in Regulatory assets within Current Assets and 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
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 in 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.
On December 27, 2019, Asheville Combined Cycle Unit 5 Combustion Turbine and Unit 6 Steam Turbine Generator and the common systems that serve combined cycle units went into commercial operation. Duke Energy Progress placed the Unit 7 Combustion Turbine into commercial operation in simple-cycle mode on January 15, 2020. The Unit 8 Steam Turbine Generator went into commercial operation on April 5, 2020. On June 2, 2020, Duke Energy Progress filed a request with the PSCSC for an accounting order for the deferral of post-in-service costs incurred in connection with the addition of the Asheville combined cycle generating plant. The petition requested the PSCSC issue an accounting order authorizing Duke Energy Progress to defer post-in-service costs including the Asheville combined cycle’s depreciation expense, property taxes, incremental O&M and carrying costs at WACC of approximately $8 million annually. On June 17, 2020, the PSCSC voted to approve the petition and issued its final order on July 6, 2020.
On October 8, 2018, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Hot Springs Microgrid Solar and Battery Storage Facility, which was approved with certain conditions on May 10, 2019. A hearing to update the NCUC on the status of the project was held on March 5, 2020. Construction began in May 2020 with commercial operation expected to begin in December 2020.
FERC Return on Equity Complaint
On October 11, 2019, North Carolina Eastern Municipal Power Agency (NCEMPA) filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the Federal Power Act (FPA). Duke Energy Progress provides NCEMPA with service under the Full Requirements Power Purchase Agreement (FRPPA). The complaint alleges that the 11% stated return on equity (ROE) component contained in the FRPPA’s demand formula rate is unjust and unreasonable. On July 16, 2020, the FERC set this matter for hearing and settlement judge procedures and established a refund effective date of October 11, 2019. In its order setting the matter for settlement, the FERC allowed for variation to the base transmission-related ROE methodology developed in Order No. 569-A, through the introduction of “specific facts and circumstances” involving the parties to this case. It is Duke Energy Progress’ view that, in consideration of the specific facts and circumstances of risks under the provisions of the FRPPA, the stated 11% ROE applied to NCEMPA’s metered billing demand is just and reasonable. Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Florida
COVID-19 Filings
On March 1, 2020, Governor Ron DeSantis issued Executive Order No. 20-51 directing the State Health Officer of Florida is allowed to recover reasonabledeclare a public health emergency in Florida related to the 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 prudent EPC cancellation costs from its retail customers.directed the Director of the 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 May 1, 2017,March 19, 2020, Duke Energy Florida filed a request with the FPSC to recover approximately $82 million of Levy Nuclear Project costs from retailmodify its tariff to allow it to waive late fees for 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 to include in base rates the revenue requirement for a Chiller Uprate Project (Uprate Project) at the Hines Energy Complex. The Uprate Project was placed into service in March 2017 at a cost of approximately $150 million. The annual retail revenue requirement is approximately $19 million. On March 28, 2017,on April 6, 2020, the FPSC issued an order approving the revenue requirement, whichrequest. 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.

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FINANCIAL STATEMENTSREGULATORY MATTERS


Storm Restoration Cost Recovery
Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover $223 million of estimated retail incremental storm restoration costs for Hurricane Michael, consistent with the provisions in the 2017 Settlement, and the FPSC approved the petition on June 11, 2019. The FPSC also approved allowing Duke Energy Florida to use the tax savings resulting from the Tax Act to recover these storm costs in lieu of implementing a storm surcharge. Approved storm costs are currently expected to be fully recovered by approximately year-end 2021. On November 22, 2019, Duke Energy Florida filed a petition for approval of actual retail recoverable storm restoration costs related to Hurricane Michael in the amount of $191 million plus interest. On May 19, 2020, Duke Energy Florida filed a supplemental true up reducing the actual retail recoverable storm restoration costs related to Hurricane Michael by approximately $3 million, resulting in a total request to recover $188 million actual retail recoverable storm restoration costs, plus interest. An Order Establishing Procedure was issued on January 30, 2020, and hearings are scheduled to begin September 15, 2020. Approximately $163 million and $204 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of June 30, 2020, and December 31, 2019, respectively. Duke Energy Florida cannot predict the outcome of this matter.
Duke Energy Florida filed a petition with the FPSC on December 19, 2019, to recover $169 million of estimated retail incremental storm restoration costs for Hurricane Dorian, consistent with the provisions in the 2017 Settlement and the FPSC approved the petition on February 24, 2020. Approved storm costs are currently expected to be recovered 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. Approximately $95 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 June 30, 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 cannot predict the outcome of this matter.
Clean Energy Connection
On July 1, 2020, Duke Energy Florida petitioned the FPSC for approval of a voluntary solar program. The program consists of 10 new solar generating facilities with combined capacity of approximately 750 MW. The program allows participants to support cost effective solar development in Florida. Participants will pay a subscription fee based on per kilowatt-subscriptions and receive a credit on their bill based on the generation associated with their portion of the solar portfolio. The estimated cost of the 10 new solar generation facilities is approximately $1 billion over the next four years, and this investment will be included in base rates offset by the revenue from the subscription fees. The credits will be included for recovery in the fuel cost recovery clause. Duke Energy Florida cannot predict the outcome of this matter.
Crystal River Unit 3 Accelerated Decommissioning Filing
On May 29, 2019, Duke Energy Florida entered into a Decommissioning Services Agreement for the first billing cycleaccelerated 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), which was received on April 2017.1, 2020, 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. The FPSC held the hearing on July 7-9, 2020, and is expected to vote on the petition at its August 18 Agenda Conference. Duke Energy Florida cannot predict the outcome of this matter.
Storm Protection Plan
On April 10, 2020, Duke Energy Florida filed its initial Storm Protection Plan (SPP) with the FPSC. The SPP outlines storm protection programs over a 10-year planning period intended to enhance the existing infrastructure for the purpose of reducing restoration costs and reducing outage times associated with extreme weather conditions therefore improving overall service reliability. The FPSC will hold a hearing to determine whether to approve, deny, or approve the SPP with modifications beginning on August 10, 2020. On July 31, 2020, Duke Energy Florida entered into a settlement with certain intervenors in support of this filing. Duke Energy Florida cannot predict the outcome of this matter.
Duke Energy Ohio
Duke Energy Kentucky Rate CaseOhio COVID-19 Filing
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 Ohio has ceased all disconnections except for safety-related concerns and is waiving late payment and reconnection fees. On September 1, 2017, March 19, 2020, Duke Energy Ohio filed its compliance plan with the PUCO and sought waiver of several regulations to minimize direct customer contact. On May 4, 2020, Duke Energy Ohio filed a motion to suspend payment rules to enable proactive outreach to residential customers offering additional options for managing their utility bills. PUCO found the proposal to address the state of emergency and the accompanying waivers reasonable and directed Duke Energy Ohio to work with the PUCO Staff on a comprehensive plan for resumption of activities and operations, to be filed 45 days before resumption of activities. The transition plan was filed on June 26, 2020, and approved by the PUCO on July 29, 2020.
On April 16, 2020, Duke Energy Ohio filed an application for a Reasonable Arrangement to temporarily lower the minimum bill for demand-metered commercial and industrial customers. On June 17, 2020, the PUCO denied Duke Energy Ohio's application for a reasonable arrangement and ordered the Duke Energy Ohio to work with the PUCO Staff on payment arrangements for impacted nonresidential customers.

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FINANCIAL STATEMENTSREGULATORY MATTERS


On May 11, 2020, Duke Energy Ohio filed with the PUCO a request seeking deferral of incremental costs incurred, as well as specific miscellaneous lost revenues using existing 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. On June 17, 2020, the PUCO approved Duke Energy Ohio’s deferral application. The commission denied the accrual of carrying costs and ordered Duke Energy Ohio to also track potential savings experienced as a result of COVID-19.
Duke Energy Kentucky filed a rate case with the KPSC requesting an increase 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 implementation 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 modificationCOVID-19
In response to the Profit Sharing MechanismCOVID-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 increase customers' share of proceeds from the benefits of owning generationcease disconnections for nonpayment and waive late payment. The KPSC also directed utilities to maintain flexible payment plans and tariff interpretations to assist customers during this crisis 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.seek any regulatory waivers if necessary. In response, Duke Energy Kentucky anticipates that rates will go into effect in mid-April 2018.has ceased all disconnections except for safety-related concerns and is waiving late payment and reconnection fees. On June 23, 2020, the KPSC issued data requests to all jurisdictional utilities seeking information on customer bill impacts, arrearages, bad debt and incremental costs and savings due to COVID-19. Responses were filed on July 21, 2020. Duke Energy Kentucky 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)





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 byESP. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation and Recommendation (Stipulation) with the PUCO resolving that the term of the ESP would be from June 1, 2018, to May 31, 2024. Terms of the ESP include2025, and included continuation of market-based customer rates through competitive procurement processes for generation, continuation and expansion of existing rider mechanisms and proposedapproved 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 were heldOn September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the Ohio Consumers' Counsel (OCC), respectively, filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in October 2017 and an evidentiary hearing scheduled to begin on Novembererror. On March 13, 2017,2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the stipulation. The case has been continued to November 28,resolved.
Electric Base Rate Case
Duke Energy Ohio filed with the PUCO an electric distribution base rate case application and supporting testimony in March 2017. Duke Energy Ohio cannot predictrequested an estimated annual increase of approximately $15 million and a return on equity of 10.4%. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed the outcomeStipulation with the PUCO including a $19 million decrease in annual base distribution revenue with a return on equity unchanged from the current rate of this matter.
Woodsdale Station Fuel System Filing
9.84% based upon a capital structure of 50.75% equity and 49.25% debt. Upon approval of new rates, Duke Energy Ohio's rider for recovering its initial SmartGrid implementation ended as these costs would be recovered through base rates. The Stipulation also renewed 14 existing riders, some of which were included in the company's ESP, and added two new riders including the Enhanced Service Reliability Rider to recover vegetation management costs not included in base rates, up to $10 million per year (operation and maintenance only) and the Power Future Initiatives Rider (formerly PowerForward Rider) to recover costs incurred to enhance the customer experience and further transform the grid (operation and maintenance and capital). In addition to the changes in revenue attributable to the Stipulation, Duke Energy Ohio’s capital-related riders, including the Distribution Capital Investments Rider, began to reflect the lower federal income tax rate associated with the Tax Act with updates to customers’ bills beginning April 1, 2018. This change reduced electric revenue by approximately $20 million on an annualized basis. On June 9, 2015,December 19, 2018, the FERC ruledPUCO approved the Stipulation without material modification. New base rates were implemented effective January 2, 2019. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC, respectively, filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in favorerror. On March 13, 2020, the Supreme Court of PJM Interconnection, LLC (PJM) on a revised Tariff and Reliability Assurance Agreement including implementationOhio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of a Capacity Performance (CP) proposal and to amend sectionsOhio dismissed all remaining appeals of the Operating Agreement related to generation non-performance.PUCO's December 19, 2018 order approving the stipulation. The CP proposal includes performance-based penalties for non-compliance. Duke Energy Kentucky is a Fixed Resource Requirement (FRR) entity, and therefore is subject to the compliance standards through its FRR plans. A partial CP obligation will apply to Duke Energy Kentucky in the delivery year beginning June 1, 2019, with full compliance beginning June 1, 2020. Duke Energy Kentuckycase has developed strategies for CP compliance investments. On May 31, 2017, Duke Energy Kentucky filed an application with the KPSC requesting authority to construct an ultra-low sulfur diesel backup fuel system for the Woodsdale Station. The back-up fuel system is projected to cost approximately $55 million and, if approved, is anticipated to be in service prior to the CP compliance deadline of April 2019. Duke Energy Kentucky cannot predict the outcome of this matter.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 seekingsought deferral authority for net costs incurred from April 1, 2017, until the new rates under Rider PSR arewere put into effect. Various intervenors have filed motions to dismiss or stay the proceeding andOn April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation with the PUCO resolving numerous issues including those related to Rider PSR. The Stipulation activated Rider PSR for recovery of net costs incurred from January 1, 2018, through May 2025. On December 19, 2018, the PUCO approved the Stipulation without material modification. The PSR rider became effective April 1, 2019. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the stipulation. The case has opposed these filings.been resolved.
On July 23, 2019, House Bill 6 (HB6) was signed into law that became effective January 1, 2020. Among other things, the bill allows for funding of two nuclear generating facilities located in Northern Ohio through a charge on utility bills owned by Energy Harbor (f/k/a FirstEnergy Solutions), repeal of energy efficiency mandates, and recovery of prudently incurred costs, net of any revenues, for Ohio investor-owned utilities that are participants under the OVEC power agreement. The recovery 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. In July 2020, legislation to repeal HB 6 has been proposed in both the Ohio House and Senate. 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.

55

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 STATEMENTSREGULATORY 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 requestedOn 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 filed an Application for Rehearing seeking clarification on the final true up and reconciliation process after 2020. On April 22, 2020, the PUCO granted rehearing for further consideration.
On June 8, 2020, Duke Energy Ohio filed an application to implement a voluntary energy efficiency program portfolio to commence on January 1, 2021. The application proposes a mechanism for recovery of program costs, lost margins and a shared savings incentive mechanism similar to those previously approved by the PUCO. On June 17, 2020, the PUCO, on its own motion, struck Duke Energy Ohio’s proposal to include a shared savings mechanism in its plan finding such incentives are not permissible or supportable under Ohio law. On June 26, 2020, Duke Energy Ohio withdrew its application.
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) and that construction of the pipeline extension is expected to be completed before the 2021/2022 winter season. An evidentiary hearing for a Certificate of Environmental Compatibility and Public Need concluded on April 11, 2019. 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. On February 20, 2020, the OPSB denied the rehearing requests. On April 15, 2020, Joint Appellants filed a notice of appeal at the Supreme Court of Ohio of the OPSB’s decision approving Duke Energy Ohio’s Central Corridor application. On June 4, 2020, the OPSB filed a motion to dismiss claims raised by one of the Joint Appellants and to suspend the briefing schedule while the court considers the motion to dismiss. On August 5, 2020, the Supreme Court of Ohio dismissed one of the Joint Appellants from the appeal and established a new briefing schedule, with appellants' briefs due in 20 days. Duke Energy Ohio cannot predict the outcome of this matter.
MGP Cost Recovery
As part of its 2012 natural gas base rate case, Duke Energy Ohio has approval to defer and recover costs related to environmental remediation at 2 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 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 decision. In December 2016,issued a report recommending a disallowance of approximately $12 million of the PUCO granted a rehearing$26 million in MGP remediation costs incurred between 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 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. On March 29, 2019, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the purposecalendar year 2018 seeking recovery of further review.approximately $20 million in remediation costs. On July 12, 2019, the staff recommended a disallowance of approximately $11 million for work that staff believes occurred in areas not authorized for recovery. Additionally, staff recommended that any discussion pertaining to Duke Energy Ohio's recovery of ongoing MGP costs should be directly tied to or netted against insurance proceeds collected by Duke Energy Ohio. An evidentiary hearing concluded on November 21, 2019. Initial 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.
On June 15, 2016,March 31, 2020, Duke Energy Ohio filed anits annual application to recover incremental remediation expense for approvalthe calendar year 2019 seeking recovery of approximately $39 million in remediation costs incurred during 2019. On July 23, 2020, the staff recommended a three-year energy efficiency and peak demand reduction portfoliodisallowance of programs. A stipulation and modified stipulation were filed on December 22, 2016, and January 27, 2017, respectively. Underapproximately $4 million for work the termsstaff believes occurred in areas not authorized for recovery. Additionally, the staff recommended insurance proceeds, net of the stipulations, which included support for deferral authority of alllitigation costs and a cap on shared savings incentives,attorney fees, should be reimbursed to customers and not be held by Duke Energy Ohio has offered its energy efficiencyuntil all investigation 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. On October 12, 2017, Duke Energy Ohio filed a motion for a waiver for recovery of costs incurred in 2017 above the annual cap.remediation is complete. Duke Energy Ohio cannot predict the outcome of this matter.
The 2012 Natural Gas Rate Case/Manufactured Gas Plant Cost Recovery
On November 13, 2013, the PUCO issued an order approving a settlement of Duke Energy Ohio’s natural gas base rate case and authorizing the recovery of costs incurred between 2008 and 2012 for environmental investigation and remediation of two former manufactured gas plant (MGP) sites. The 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 the deferral of remediation costs at the MGP sites. ForSubsequent to the property known asorder, 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 that2, 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 forcannot predict the costoutcome of the MVP projects constructed after this matter.

56



FINANCIAL STATEMENTSREGULATORY MATTERS


Duke Energy Ohio's withdrawal from MISO. MISO did not file further petitionsKentucky Electric Base Rate Case
On September 3, 2019, Duke Energy Kentucky filed a rate case with the KPSC requesting an increase in electric base rates of approximately $46 million. On January 31, 2020, Duke Energy Kentucky filed rebuttal testimony updating its rate increase calculations to approximately $44 million. Hearings concluded on February 20, 2020, and briefing was completed March 20, 2020. On April 27, 2020, the KPSC issued its decision approving a $24 million increase for reviewDuke Energy Kentucky with a 9.25% return on equity. The KPSC denied Duke Energy Kentucky’s major storm deferral mechanism and EV and battery storage pilots. The KPSC approved Duke Energy Kentucky’s Green Source Advantage tariff. New customer rates were effective on May 1, 2020. On May 18, 2020, Duke Energy Kentucky filed its motion for rehearing and on June 4, 2020, the motion was granted in part and denied in part by the KPSC. On August 6, 2020, Duke Energy Kentucky submitted a letter to the commission submitting the case for decision without hearing. On August 6, 2020, the Kentucky Attorney General also filed a letter requesting to submit the rehearing case for decision without hearing. The Attorney General’s letter also stated that the commission’s reduction to the company’s forecasted capital in its initial order was overstated and should be corrected, resulting in an approximate $5 million increase in the company’s revenue requirement. Duke Energy Kentucky cannot predict the outcome of this matter is now final.matter.
Duke Energy Indiana
Coal Combustion Residual PlanCOVID-19
OnIn response to the COVID-19 pandemic, on March 17, 2016,6, 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. Subsequently, the governor issued Executive Orders Nos. 20-17, 20-25, 20-30 and 20-34, each renewing the public health disaster emergency declaration for an additional 30 days, which is currently extended through September 2, 2020. All other Executive Orders issued since March 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 complydeferral treatment for costs and revenue reductions associated with the EPA's CCR rule.COVID-19 pandemic. The projectsutilities requested initial deferral approval in this Phase I filing are CCR compliance projects, including the conversion of Cayuga and Gibson stations to dry bottom ash handling and related water treatment. Duke Energy Indiana has requested timely recovery of approximately $380 million in retail capital costs, including AFUDC, and recovery of incremental operating and maintenance costs under a federal mandate tracker that providesJuly 2020, with individual subdockets 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. 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 areeach utility to be capped at $365 million, plus actual AFUDC. Costs above the cap would be consideredestablished for consideration of utility-specific cost and revenue impacts, cost recovery in the next rate case. Terms of the settlement agreement also require Duke Energy Indiana to perform certain reportingtiming and groundwater monitoring. An evidentiary hearing was held on February 23, 2017, and Duke Energy Indiana filed a proposed order 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 and its transmission-owning members, including Duke Energy Indiana, alleging, among other things, that the current base rate of return on equity earned by MISO transmission owners of 12.38 percent is unjust 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 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.customer payment plans. 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 2016,29, 2020, the IURC issued an order approving a settlement agreement among Duke Energy Indianain Phase 1 wherein it extended the disconnection moratorium for jurisdictional utilities until August 14, 2020, along with requiring six month payment arrangements, waiver of late fees, reconnection fees, convenience fees and certain parties relateddeposits. The IURC permitted jurisdictional utilities to a proposed grid infrastructure improvement plan. The settlement agreement included the removal of an AMI project and also provided for deferraluse regulatory 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 savingsimpacts associated with future AMI installation until the next retail base rate case, which is requiredprohibition on utility disconnections, waiver or exclusion of certain utility fees (i.e., late fees, convenience fees, deposits, and reconnection fees), the use of expanded payment arrangements to be filed prioraid customers, and for COVID-19 related uncollectible and incremental bad debt expense. The IURC did not permit recovery of lost revenues due to the endload reduction or carrying costs. In Phase 2 filings, individual utilities may choose to request regulatory accounting for other COVID-19 related operation and maintenance costs wherein evidence of the plan. During the third quarterimpact of 2016, Duke Energy Indiana decided to implement the AMI project. This decision resultedany costs or offsetting savings can be presented and considered 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.evidentiary hearing. Duke Energy Indiana cannot predict the outcome of this matter.
Piedmont2019 Indiana Rate Case
South Carolina Rate Stabilization Adjustment Filing
In June 2017, PiedmontOn July 2, 2019, Duke Energy Indiana filed a general rate case with the PSCSC underIURC for a rate increase for retail customers of approximately $395 million. The rebuttal case, filed on December 4, 2019, updated the South Carolina Rate Stabilization Act its quarterly monitoring report forrequested revenue requirement to result in a 15.6% or $396 million average retail rate increase, including the 12-month period ending March 31, 2017. The filing includedimpacts of the Utility Receipts Tax. Hearings concluded on February 7, 2020. On June 29, 2020, the IURC issued the order in the rate case approving a revenue deficiency calculationincrease of $146 million before certain adjustments and tariff rates inratemaking refinements. The order to permit Piedmont the opportunity to earn the rateprovided for an overall cost of capital of 5.7% based on a 9.7% return on equity of 12.6 percent established in its last general rate case. On October 4, 2017, the PSCSC approvedand a settlement agreement between Piedmont and the PSCSC Office of Regulatory Staff. Terms53% equity component of the settlement included implementationcapital structure, and approved Duke Energy Indiana’s requested forecasted rate base of rates$10.2 billion as of December 31, 2020, including the Edwardsport IGCC Plant. The IURC reduced Duke Energy Indiana’s request by slightly more than $200 million, when accounting for the 12-month period beginning November 2017 withutility receipts tax and other adjustments. Approximately 50% of the reduction is due to a prospective change in depreciation and use of regulatory asset for the end-of-life inventory at retired generating plants, approximately 20% is due to the approved 9.7% return on equity versus requested 10.4% and approximately 20% is related to miscellaneous earnings neutral adjustments. The rates were effective July 30, 2020. Several groups filed notices of 10.2 percent.appeal of the IURC order on July 29, 2020. Duke Energy Indiana cannot predict the outcome of this matter.
2020 Indiana Coal Ash Recovery Case
In Duke Energy Indiana’s rate case, the IURC approved coal ash basin closure costs expended through 2018 including financing costs as a regulatory asset and included in rate base. The IURC opened a subdocket to deal with the post-2018 coal ash related expenditures. Duke Energy Indiana filed testimony on April 15, 2020, in the coal ash subdocket requesting recovery for the post-2018 coal ash basin closure costs for plans that have been approved by the Indiana Department of Environmental Management as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing is scheduled to begin on September 14, 2020, and an order is expected in the first quarter of 2021. Duke Energy Indiana cannot predict the outcome of this matter.

57



FINANCIAL STATEMENTSREGULATORY MATTERS


Piedmont
COVID-19 Filings
North Carolina Integrity Management Rider Filings
In October 2017,On March 10, 2020, Governor Roy Cooper issued Executive Order No. 116 declaring a state of emergency due to the COVID-19 pandemic. On March 19, 2020, the NCUC issued on order directing that utilities under its jurisdiction suspend disconnections for nonpayment of utility bills during the state of emergency (as defined by Executive Order No. 116) and allow for customers to enter into payment arrangements to pay off arrearages accumulated during the state of emergency after the end of the state of emergency. Additionally, to help mitigate the financial impacts of the COVID-19 pandemic on their customers, on March 19, 2020, 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.
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 May 30, 2020, the governor issued Executive Order No. 142, which extended effective period for Executive Order No. 124 to July 29, 2020. Executive Order No. 142 was not extended.
On July 10, 2020, Piedmont filed a petition underwith the Integrity Management Rider (IMR) mechanismNCUC for clarification regarding when they may begin working with customers on establishing payment arrangements for arrears accumulated since March 13, 2020. On July 29, 2020, the NCUC issued its Order Lifting Disconnection Moratorium and Allowing Collection of Arrearages Pursuant to collect an additional $8.9 million in annual revenues, effective December 2017, basedSpecial Repayment Plans. The order contained the following: 1) public utilities may resume customer disconnections due to nonpayment for bills first rendered on or after September 1, 2020, after appropriate notice; 2) the eligible capital investments closedlate fee moratorium will continue through the end of the state of emergency or until further order of the commission; 3) Duke Energy utilities may reinstate fees for checks returned for insufficient funds as well as transaction fees for use of credit cards or debit cards for bills first rendered on or after September 1, 2020; and 4) no sooner than September 1, 2020, the collection of past due or delinquent accounts accrued up to integrity and safety projects over the six-month period ending September 30, 2017.including August 31, 2020, may proceed subject to conditions. Piedmont cannot predict the outcome of this matter.
InSouth 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 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 six months for past-due amounts. On May 2017,5, 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 NCUC approved,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 petitionmotion 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 on a quarterly basis; and (4) include any other matters that the PSCSC believes should be addressed. On May 14, 2020, the PSCSC adopted the ORS' motion.
On May 13, 2020, the ORS filed a letter with the PSCSC that included a request from Governor McMaster that utilities proceed with developing and implementing plans for phasing in normal business operations. On May 14, 2020, the PSCSC conditionally vacated the regulation waivers regarding termination of service and suspension of disconnect fees. Prior to termination, utilities are to refer past-due customers to local organizations for assistance and/or deferred payment arrangements. Piedmont filed a report on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. Piedmont cannot predict the outcome of this matter.

58



FINANCIAL STATEMENTSREGULATORY MATTERS


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 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.
2020 Tennessee Rate Case
On July 2, 2020, Piedmont filed an application with the TPUC, its first general rate case in Tennessee in nine years, for a rate increase for retail customers of approximately $30 million, which represents an approximate 15% increase in annual revenues. The rate increase is driven by significant infrastructure upgrade investments since its previous rate case. Approximately half of the plant additions being added to rate base are categories of capital investment not covered under the IMR mechanism, which was approved in 2013. An evidentiary hearing is expected to collect an additional $11.6 million in annual revenues,be scheduled for fall 2020, and a decision and revised customer rates are expected to become effective June 2017, based onJanuary 1, 2021. Piedmont cannot predict the eligible capital investments closed to integrity and safety projects over the six-month period ending March 31, 2017.outcome of this matter.
OTHER REGULATORY MATTERS
Atlantic Coast Pipeline, LLC
On September 2, 2014, Duke Energy, Dominion ResourcesEnergy, 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 iswas 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 buildwould have been responsible for building and operateoperating 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 percent47% 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 13
On April 15, 2020, the United States District Court for additional information related to Duke Energy's ownership interest.
Duke Energy Carolinas, Duke Energy Progress and Piedmont, among others, will be customersthe District of Montana granted partial summary judgment in favor of the pipeline. Purchases will be madeplaintiffs in Northern Plains Resource Council v. U.S. Army Corps of Engineers (USACE) (Northern Plains), vacating USACE’s Nationwide Permit 12 (NWP 12) and remanding it to USACE for consultation under several 20-year supply contracts, subject to state regulatory approval. On September 18, 2015, ACP filed an applicationthe 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 FERC requesting a CPCN authorizing ACPU.S. Fish and Wildlife Service and/or National Marine Fisheries Service prior to constructNWP 12’s reissuance in 2017. Because NWP 12 has been vacated and its application enjoined, USACE currently has suspended verification of any new or pending applications under NWP 12 until further court action clarifies the pipeline. ACP executed a construction agreement in September 2016. ACP also requested approvalsituation.
On May 28, 2020, the U.S. Court of an open access tariff andAppeals for the precedent agreements it entered into with future pipeline customers. In December 2016, FERCNinth Circuit issued a draft Environmental Impact Statement (EIS) indicatingruling that limited the proposed pipeline would not cause significant harmNWP 12 vacatur to energy infrastructure projects. In July 2020, the environment or protected populations. The FERC issuedSupreme Court of the final EIS in July 2017. On October 13, 2017, FERCUnited States issued an order approving the CPCN, subject to conditions. On October 16, 2017, ACP accepted the FERC order subject to reserving its right to file a request for rehearing or clarification on a timely basis. Construction is projected to begin in the fourth quarter of 2017, with a targeted in-service date in late 2019. The project remains subject toallowing other pending federalnew oil 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)projects 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 ofuse 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 information 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 to construct and operate the pipeline. On September 7, 2016, FERC denied the intervenors' rehearing requests. On September 21, 2016, intervenors filed anNWP 12 process pending appeal of FERC's CPCN orders to the U.S. Court of Appeals for the DistrictNinth Circuit; however, that did not decrease the uncertainty associated with an eventual ruling. Together, these rulings indicated that the timeline to reinstate the necessary water crossing permits for ACP would likely cause further delays and cost increases.
On July 5, 2020, Dominion announced a sale of Columbia Circuit. On August 22, 2017,substantially all of its gas transmission and storage segment assets, operations core to the appeals court ruled against FERCACP pipeline project.
As a result of the uncertainty created by the NWP 12 rulings, the potential impact on the cost and schedule for the project, the ongoing legal challenges and the risk of additional legal challenges and delays through the construction period and Dominion’s decision to sell substantially all of its gas transmission and storage segment assets, Duke Energy's Board of Directors and management decided that it was not prudent to continue to invest in the caseproject. On July 5, 2020, Duke Energy and Dominion announced the cancellation of the ACP pipeline.
As a result, Duke Energy recorded a pretax charge to earnings of approximately $2.0 billion for failing to include enough informationthe three months and six months ended June 30, 2020, within Equity in (losses) earnings of unconsolidated affiliates on the impactDuke Energy Condensed Consolidated Statements of greenhouse-gas emissions carried byOperations. The tax benefit associated with this abandonment was $374 million and is recorded in Income Tax (Benefit) Expense on the pipeline and vacatedDuke Energy Condensed Consolidated Statements of Operations. Additional charges of less than $100 million are expected to be recorded within the CPCN order. In responsenext 12 months as ACP incurs obligations to exit operations.
As part of the pretax charge to earnings of approximately $2.0 billion, Duke Energy established a $920 million current liability related to the August 2017 court decision,abandonment of ACP within Current Liabilities in the FERC issued a draft Supplemental Environmental Impact Statement (SEIS) on September 27, 2017. Comments on the SEIS are 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 TrailGas Utilities and other natural gas shippers, including 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 this matter will impact the project going forward.Infrastructure segment. The Sabal Trail pipeline has received other required regulatory approvals and the phase one mainline 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 Duke Energy Florida's Citrus County Combined Cycle facility.
Constitution Pipeline Company, LLC
Duke Energy has a 24 percent ownership interest in Constitution Pipeline Company, LLC (Constitution). Constitution is 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 be constructed and operated by Williams Partners L.P., which has a 41 percent ownership share. The remaining interest is held by Cabot Oil and Gas Corporation and WGL Holdings, Inc.liability represents Duke Energy's total anticipated contributions areobligation of 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 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$860 million to fund ACP's outstanding debt 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 unrelatedapproximately $60 million 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 with the FERC requesting FERCsatisfy ARO requirements to issue an order finding 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 April 2016, with the actions of the NYSDEC, Constitution stoppedrestore 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.sites.
See Note 13Notes 1, 4 and 11 for additional information related to ownership interest and carrying value of the investment.regarding this transaction.

59



FINANCIAL STATEMENTSREGULATORY MATTERS


Potential Coal Plant Retirements
The Subsidiary Registrants periodically file Integrated Resource Plans (IRP)integrated resource plans (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 doand 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 SeptemberJune 30, 2017,2020, 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
 $145
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
 116
Gibson Units 1-5(c)
3,132
 1,690
Cayuga Units 1-2(c)
1,005
 953
Total Duke Energy1,738
 $405
5,002
 $2,904
(a)Duke Energy Carolinas will retire Allen Steam Station Unitsunits 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 Unitsunits 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, included proposed depreciation rates reflecting retirement dates from 2026 to 2038. These updated retirement dates were approved by the IURC as part of the rate case order issued on June 29, 2020.
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 toDuke Energy Carolinas and Duke Energy Progress are evaluating the potential for coal-fired generating unit retirements with a net carrying value of approximately $693 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 June 30, 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.
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.

60



FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES


The following tables containtable 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
   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$98
 $10
 $18
 $3
 $14
 $59
 $10
 $1
Provisions/adjustments(1) 2
 1
 —
 1
 (3) (2) 1
Cash reductions(13) (2) (3) —
 (3) (7) (1) —
Balance at end of period$84
 $10
 $16
 $3
 $12
 $49
 $7
 $2
(in millions)June 30, 2020December 31, 2019
Reserves for Environmental Remediation  
Duke Energy$55
$58
Duke Energy Carolinas10
11
Progress Energy14
16
Duke Energy Progress5
4
Duke Energy Florida8
9
Duke Energy Ohio19
19
Duke Energy Indiana5
4
Piedmont7
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/adjustments34
 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$59
Duke Energy Carolinas11
Duke Energy Ohio42
(in millions) 
Duke Energy$58
Duke Energy Carolinas20
Duke Energy Ohio30
Duke Energy Indiana3
Piedmont2
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 SuperiorBusiness 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. 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. On June 5, 2020, the court issued four rulings in favor of Duke Energy's legal positions in the coal ash recovery litigation proceedings. Due to COVID-19, the court has issued a new scheduling order and the trial is now scheduled for January 2022. 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 SeptemberJune 30, 2017,2020, there were 120118 asserted claims for non-malignant cases with cumulative relief sought of up to $29$27 million, and 5759 asserted claims for malignant cases with cumulative relief sought of up to $16$20 million. Based on Duke Energy Carolinas’ experience, it is expected that the ultimate resolution of most of these claims likely will be less than the amount claimed.
Duke Energy Carolinas has recognized asbestos-related reserves of $486$590 million at SeptemberJune 30, 2017,2020, 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 lossDuke 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 20362039 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-insuranceself-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 SeptemberJune 30, 2017,2020, and $587 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
61

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 STATEMENTSCOMMITMENTS AND CONTINGENCIES


Duke Energy Progress and Duke Energy Florida
Spent Nuclear Fuel Matters
On June 18, 2018, Duke Energy Progress and Duke Energy Florida sued the U.S. in the U.S. Court of Federal Claims for damages incurred for the period 2014 through 2018. The lawsuit claimed the Department of Energy 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, respectively. Discovery is ongoing and a trial is expected to occur in 2021.
Duke Energy Florida
Class Action LawsuitPower Purchase Dispute Arbitration
On February 22, 2016, a lawsuit was filed in the U.S. District Court for the Southern District ofDuke Energy Florida, on behalf of its customers, entered into a putative classpower purchase contract for the purchase of firm capacity and energy from a qualified facility. Duke Energy Florida and FP&L’s customersdetermined the qualified facility did not perform in Florida. The suit allegesaccordance with the State of Florida’s nuclear power plant cost recovery statutes (NCRS) are unconstitutionalpurchase contract, and pre-empted by federal law. Plaintiffs claim they are entitled to repayment of all money paid by customers of Duke Energy Florida and FP&L asterminated the power purchase contract. The qualified facility counterparty filed a resultconfidential American Arbitration Association (AAA) arbitration demand, challenging the termination of the NCRS, as well as an injunction against any future charges under those statutes. The constitutionality of the NCRS has been challenged unsuccessfully in a number of prior cases on alternative grounds.power purchase contract and seeking damages. Duke Energy Florida denies liability and FP&L filed motions to dismissis vigorously defending the complaint on May 5, 2016. On September 21, 2016, the Court granted the motions to dismiss with prejudice. Plaintiffs filed a motionarbitration claim. The final arbitration hearing is scheduled 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.December 2020. Duke Energy Florida cannot predict the outcome of this appeal.matter.
Westinghouse Contract LitigationDuke Energy Indiana
Coal Ash Basin Closure Plan Appeal
On March 28, 2014,January 27, 2020, Hoosier Environmental Council filed a Petition for Administrative Review with the Indiana Office of Environmental Adjudication (the court) challenging the Indiana Department of Environmental Management’s December 10, 2019, partial approval of Duke Energy FloridaIndiana’s ash pond closure plan. On March 11, 2020, Duke Energy Indiana 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 dueMotion 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.Dismiss. On May 23, 2017,5, 2020, the bankruptcy court entered an order lifting the stay with respect to the appeal. Briefing of the appeal concluded on October 20, 2017,denying that motion. The parties are engaged in discovery 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 ofhearing is scheduled for February 22, 2021. 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 FloridaIndiana 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)June 30, 2020
 December 31, 2019
Reserves for Legal Matters   
Duke Energy$60
 $62
Duke Energy Carolinas3
 2
Progress Energy52
 55
Duke Energy Progress9
 12
Duke Energy Florida23
 22
Piedmont1
 1
(in millions)September 30, 2017
 December 31, 2016
Reserves for Legal Matters   
Duke Energy$83
 $98
Duke Energy Carolinas23
 23
Progress Energy56
 59
Duke Energy Progress13
 14
Duke Energy Florida28
 28
Duke Energy Ohio—
 4
Piedmont2
 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 unlimiteduncapped 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.
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.

62



FINANCIAL STATEMENTSCOMMITMENTS AND CONTINGENCIES


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 as of June 30, 2020. 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.
As of June 30, 2020, Duke Energy recognized $860 million related to the guarantees of ACP's outstanding debt of which $95 million was previously recognized due the adoption of new guidance for credit losses effective January 1, 2020. This reserve is included within Other current liabilities on the Condensed Consolidated Balance Sheets. See Notes 1, 3 and 11 for more information. The remaining reserve for credit losses for financial guarantees of $4 million as of June 30, 2020, is included within Other noncurrent liabilities on the Duke Energy's Condensed Consolidated Balance Sheets. Management considers financial guarantees for evaluation under this standard based on the anticipated amount outstanding at the time of default. The reserve for credit losses is based on the evaluation of the contingent components of financial guarantees. Management evaluates the risk of default, exposure and length of time remaining in the period for each contract.
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.
     Six Months Ended June 30, 2020
       Duke
 Duke
 Duke
 Duke
 Duke
  
 Maturity Interest
 Duke
 Energy
 Energy
 Energy
 Energy
 Energy
  
Issuance DateDate Rate
 Energy
 (Parent)
 Carolinas
 Florida
 Ohio
 Indiana
 Piedmont
Unsecured Debt                 
May 2020(a)
Jun 2030 2.450% $500
 $500
 $—
 $—
 $—
 $—
 $—
May 2020(b)
Jun 2050 3.350% 400
 —
 —
 —
 —
 —
 400
First Mortgage Bonds                
January 2020(c)
Feb 2030 2.450% 500
 —
 500
 —
 —
 —
 —
January 2020(c)
Aug 2049 3.200% 400
 —
 400
 —
 —
 —
 —
March 2020(d)
Apr 2050 2.750% 550
 —
 —
 —
 —
 550
 —
May 2020(b)
Jun 2030 2.125% 400
 —
 —
 —
 400
 —
 —
June 2020(b)
Jun 2030 1.750% 500
 —
 —
 500
 —
 —
 —
Total issuances    $3,250
 $500

$900

$500

$400

$550
 $400
    Nine Months Ended September 30, 2017
      Duke
 Duke
 Duke
 Duke
 MaturityInterest
 Duke
 Energy
 Energy
 Energy
 Energy
Issuance DateDateRate
 Energy
 (Parent)
 Progress
 Florida
 Ohio
Unsecured Debt            
April 2017(a)
April 20253.364% $420
 $420
 $—
 $—
 $—
June 2017(b)
June 20202.100% 330
 330
 —
 —
 —
August 2017(c)
August 20222.400% 500
 500
 —
 —
 —
August 2017(c)
August 20273.150% 750
 750
 —
 —
 —
August 2017(c)
August 20473.950% 500
 500
 —
 —
 —
Secured Debt            
February 2017(d)
June 20344.120% 587
 —
 —
 —
 —
August 2017(e)
December 20364.110% 233
 —
 —
 —
 —
First Mortgage Bonds            
January 2017(f)
January 20201.850% 250
 —
 —
 250
 —
January 2017(f)
January 20273.200% 650
 —
 —
 650
 —
March 2017(g)
June 20463.700%
100

—
 —
 —
 100
September 2017(h)
September 20201.500%
(i) 
300

—
 300
 —
 —
September 2017(h)
September 20473.600% 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)






(a)Proceeds were used to refinance $400 million of unsecured debt at maturity andDebt issued to repay a portion of outstanding commercial paper.$500 million borrowing made under Duke Energy (Parent) revolving credit facility in March 2020, and for general corporate purposes.
(b)Debt issued to repay a portion of outstanding commercial paper.short-term debt and for general corporate purposes.
(c)Debt issued to repay at maturity $700$450 million of unsecured debt, to repay outstanding commercial paperfirst 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 offirst 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.
63



FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES


CURRENT MATURITIES OF LONG-TERM DEBT
The following table shows the significant components of Current Maturities of Long-Term Debt on the 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
 June 30, 2020
Unsecured Debt     
Duke Energy ProgressDecember 2020 0.986%
(a) 
$700
Progress Energy, IncJanuary 2021 4.400% 500
Duke Energy (Parent)May 2021 0.924%
(a) 
500
PiedmontJune 2021 4.240% 160
Secured Debt     
Duke Energy FloridaApril 2021 1.384%
(a) 
250
First Mortgage Bonds     
Duke Energy IndianaJuly 2020 3.750% 500
Duke Energy ProgressSeptember 2020 0.498%
(a) 
300
Duke Energy CarolinasJune 2021 3.900% 500
Other(b)
    346
Current maturities of long-term debt    $3,756
(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 ProgressNovember 2017 1.516%
(b) 
200
Duke Energy CarolinasJanuary 2018 5.250% 400
Duke Energy CarolinasApril 2018 5.100% 300
Duke Energy FloridaJune 2018 5.650% 500
Other(a)
    335
Current maturities of long-term debt    $2,485

(a)    Debt has a floating interest rate.
(b)    Includes capitalfinance 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)





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.
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
 June 30, 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)
(2,480) (1,248) (389) (323) (156) (79) (150) (135)
Outstanding letters of credit(47) (40) (3) (2) —
 —
 —
 (2)
Tax-exempt bonds(81) —
 —
 —
 —
 —
 (81) —
Available capacity under the Master Credit Facility$5,392

$1,362

$1,108

$925

$644

$521

$369
 $463
(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 CreditTerm Loan Facility
In June 2017,response to market volatility and ongoing liquidity impacts from COVID-19, in March 2020, Duke Energy (Parent) entered into a three-year $1.0$1.5 billion revolving credit facility (the Three Year Revolver), 364-day Term Loan Credit Agreement, borrowing the full $1.5 billion available on March 19, 2020. The term loan contains a provision for increasing the amount available for borrowing by up to $500 million. Borrowings underDuke Energy (Parent) exercised this facility will beprovision on March 27, 2020, borrowing an additional $188 million. Proceeds were used to reduce outstanding commercial paper and 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 Refer to Note 1 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 recordedadditional information on the Condensed Consolidated Balance Sheets.COVID-19 pandemic.

64



 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 Impoundments4,594
 1,650
 2,124
 2,105
 19
 42
 777
 —
Other274
 35
 80
 35
 45
 39
 16
 15
Total ARO$10,205
 $3,601
 $5,439
 $4,676
 $763
 $81
 $793
 $15
Less: current portion619
 304
 250
 250
 —
 6
 58
 —
Total noncurrent ARO$9,586

$3,297

$5,189

$4,426

$763

$75

$735
 $15
FINANCIAL STATEMENTSDEBT AND CREDIT FACILITIES
(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.Other Credit Facilities
   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 year48
 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
 June 30, 2020
(in millions)Facility size
 Amount drawn
Duke Energy (Parent) Three-Year Revolving Credit Facility(a)
$1,000
 $500
Duke Energy Progress Term Loan Facility700
 700
(a)Primarily relates to decommissioning nuclear power facilities, closureIn March 2020, Duke Energy (Parent) drew down the remaining $500 million. In May 2020, Duke Energy (Parent) repaid $500 million with proceeds of ash impoundments, asbestos removal, closure of landfills at fossil generation facilities, retirement of natural gas mains and removal of renewable energy generation assets.May 2020 unsecured debt issuance.
(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 SeptemberJune 30, 2017,2020, 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 SeptemberJune 30, 2017,2020, and December 31, 2016.2019.
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.
65


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 STATEMENTSRELATED PARTY TRANSACTIONS
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 June 30, Six Months Ended June 30,
(in millions)2017
 2016
 2017
 2016
2020
 2019
 2020
 2019
Duke Energy Carolinas              
Corporate governance and shared service expenses(a)
$205
 $204
 $645
 $620
$196
 $197
 $330
 $409
Indemnification coverages(b)
5
 5
 17
 16
5
 5
 10
 10
JDA revenue(c)
9
 10
 42
 21
Joint Dispatch Agreement (JDA) revenue(c)
3
 17
 10
 40
JDA expense(c)
39
 36
 91
 127
20
 20
 44
 113
Intercompany natural gas purchases(d)
3
 —
 5
 —
10
 3
 16
 7
Progress Energy              
Corporate governance and shared service expenses(a)
$208
 $182
 $555
 $515
$189
 $183
 $335
 $359
Indemnification coverages(b)
10
 9
 29
 25
9
 10
 18
 19
JDA revenue(c)
39
 36
 91
 127
20
 20
 44
 113
JDA expense(c)
9
 10
 42
 21
3
 17
 10
 40
Intercompany natural gas purchases(d)
19
 —
 57
 —
19
 19
 38
 38
Duke Energy Progress              
Corporate governance and shared service expenses(a)
$114
 $103
 $321
 $292
$113
 $108
 $188
 $214
Indemnification coverages(b)
4
 4
 11
 10
5
 4
 9
 8
JDA revenue(c)
39
 36
 91
 127
20
 20
 44
 113
JDA expense(c)
9
 10
 42
 21
3
 17
 10
 40
Intercompany natural gas purchases(d)
19
 —
 57
 —
19
 19
 38
 38
Duke Energy Florida              
Corporate governance and shared service expenses(a)
$94
 $79
 $234
 $223
$76
 $75
 $147
 $145
Indemnification coverages(b)
6
 5
 18
 15
4
 6
 9
 11
Duke Energy Ohio              
Corporate governance and shared service expenses(a)
$90
 $89
 $275
 $261
$77
 $83
 $161
 $168
Indemnification coverages(b)
1
 1
 3
 4
1
 1
 2
 2
Duke Energy Indiana              
Corporate governance and shared service expenses(a)
$93
 $96
 $281
 $279
$92
 $93
 $198
 $190
Indemnification coverages(b)
2
 2
 6
 6
2
 1
 4
 3
Piedmont              
Corporate governance and shared service expenses(a)
$10
 $—
 $25
 $—
$37
 $37
 $71
 $69
Indemnification coverages(b)
1
 —
 2
 —
—
 —
 1
 1
Intercompany natural gas sales(d)
22
 —
 62
 —
29
 22
 54
 45
Natural gas storage and transportation costs(e)
6
 6
 12
 11
(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 gasOperating 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 eliminatedincluded 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 Progresson Piedmont's Condensed Consolidated Statements of Operations and $1 million and $3 million, respectively, with Duke Energy Carolinas.Comprehensive Income.


PART I
66

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 STATEMENTSRELATED PARTY TRANSACTIONS


In addition to the amounts presented above, the Subsidiary Registrants have other affiliate transactions, including rental of office space, participation in a money pool arrangement, other operational transactions, 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 forare incurred in the threeordinary 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 alsodo include a subordinated note from the affiliateCRC 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 expense20172016 20172016
CardinalTransportation Costs$2
$3
 $6
$7
Pine NeedleNatural Gas Storage Costs2
3
 6
8
Hardy StorageNatural Gas Storage Costs2
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
June 30, 2020       
Intercompany income tax receivable$—
$63
$—
$—
$—
$10
$23
Intercompany income tax payable19
—
7
51
1
—
—
        
December 31, 2019       
Intercompany income tax receivable$—
$125
$28
$—
$9
$28
$13
Intercompany income tax payable5
—
—
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 payable173
—
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 swapsderivatives 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)





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 AOCIaccumulated other comprehensive income (loss) for the three and ninesix months ended SeptemberJune 30, 2017,2020, 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 andor 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.

67



FINANCIAL STATEMENTSDERIVATIVES AND HEDGING


The following table shows notional amounts of outstanding derivatives related to interest rate risk.
September 30, 2017June 30, 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
 $—
 $—
 $—
 $—
 $—
$650
 $—
 $—
 $—
 $—
 $—
Undesignated contracts927
 400
 500
 250
 250
 27
1,477
 400
 1,050
 1,050
 —
 27
Total notional amount(a)$1,630

$400

$500

$250

$250

$27
$2,127

$400

$1,050

$1,050

$—

$27
December 31, 2016December 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 contracts927
 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$650 million and $750 millionin cash flow hedges as of SeptemberJune 30, 2017,2020, 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)





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, 2017June 30, 2020
  Duke
   Duke
 Duke
 Duke
    Duke
   Duke
 Duke
 Duke
  
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
  Duke
 Energy
 Progress
 Energy
 Energy
 Energy
  
Energy
 Carolinas
 Energy
 Progress
 Florida
 Indiana
 Piedmont
Energy
 Carolinas
 Energy
 Progress
 Ohio
 Indiana
 Piedmont
Electricity (gigawatt-hours)112
 —
 —
 —
 —
 112
 —
Electricity (GWh)28,179
 —
 —
 —
 4,405
 23,774
 —
Natural gas (millions of dekatherms)786
 103
 193
 124
 69
 1
 489
707
 147
 165
 165
 —
 4
 391
December 31, 2016December 31, 2019
  Duke
   Duke
 Duke
 Duke
    Duke
   Duke
 Duke
 Duke
  
Duke
 Energy
 Progress
 Energy
 Energy
 Energy
  Duke
 Energy
 Progress
 Energy
 Energy
 Energy
  
Energy
 Carolinas
 Energy
 Progress
 Florida
 Indiana
 Piedmont
Energy
 Carolinas
 Energy
 Progress
 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. The Duke Energy Florida NDTF liquidated the options in April 2020, and received proceeds of approximately $7 million.

68




FINANCIAL STATEMENTSDERIVATIVES 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 June 30, 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 $20
 $2
 $1
 $1
 $—
 $3
 $10
 $4
Noncurrent 7
 5
 2
 2
 —
 —
 —
 —
Total Derivative Assets – Commodity Contracts $27
 $7
 $3
 $3
 $—
 $3
 $10
 $4
Interest Rate Contracts                
Not Designated as Hedging Instruments                
Current $3
 $—
 $3
 $3
 $—
 $—
 $—
 $—
Noncurrent 2
 —
 2
 2
 —
 —
 —
 —
Total Derivative Assets – Interest Rate Contracts $5
 $—
 $5
 $5
 $—
 $—
 $—
 $—
Total Derivative Assets $32

$7

$8

$8

$—

$3

$10
 $4
PART I
Derivative Liabilities June 30, 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 $55
 $29
 $17
 $17
 $—
 $—
 $1
 $7
Noncurrent 138
 8
 32
 16
 —
 —
 —
 98
Total Derivative Liabilities – Commodity Contracts $193
 $37
 $49
 $33
 $—
 $—
 $1
 $105
Interest Rate Contracts                
Designated as Hedging Instruments                
Current $14
 $—
 $—
 $—
 $—
 $—
 $—
 $—
Noncurrent 56
 —
 —
 —
 —
 —
 —
 —
Not Designated as Hedging Instruments                
Current 68
 20
 48
 48
 —
 1
 —
 —
Noncurrent 30
 —
 24
 24
 —
 6
 —
 —
Total Derivative Liabilities – Interest Rate Contracts $168
 $20
 $72
 $72
 $—
 $7
 $—
 $—
Total Derivative Liabilities $361

$57

$121

$105

$—

$7

$1
 $105

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.
69

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






FINANCIAL STATEMENTSDERIVATIVES 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 Grossgross 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.


70

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 STATEMENTSDERIVATIVES AND HEDGING


Derivative Assets June 30, 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 $23
 $2
 $4
 $4
 $—
 $3
 $10
 $4
Gross amounts offset (3) (2) (1) (1) —
 —
 —
 —
Net amounts presented in Current Assets: Other $20
 $—
 $3
 $3
 $—
 $3
 $10
 $4
Noncurrent                
Gross amounts recognized $9
 $5
 $4
 $4
 $—
 $—
 $—
 $—
Gross amounts offset (4) (2) (2) (2) —
 —
 —
 —
Net amounts presented in Other Noncurrent Assets: Other $5
 $3
 $2
 $2
 $—
 $—
 $—
 $—
Derivative Liabilities June 30, 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 $137
 $49
 $65
 $65
 $—
 $1
 $1
 $7
Gross amounts offset (3) (2) (1) (1) —
 —
 —
 —
Net amounts presented in Current Liabilities: Other $134
 $47
 $64
 $64
 $—
 $1
 $1
 $7
Noncurrent                
Gross amounts recognized $224
 $8
 $56
 $40
 $—
 $6
 $—
 $98
Gross amounts offset (4) (2) (2) (2) —
 —
 —
 —
Net amounts presented in Other Noncurrent Liabilities: Other $220
 $6
 $54
 $38
 $—
 $6
 $—
 $98
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
 $—
 $—


71



FINANCIAL STATEMENTSDERIVATIVES 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, 2017June 30, 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
$63
 $29
 $34
 $34
Fair value of collateral already posted—
 —
 —
 —
 —
—
 —
 —
 —
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered40
 25
 15
 6
 9
63
 29
 34
 34
December 31, 2016December 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 triggered34
 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 theirEnergy’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 otherthe 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 investment manager agreements and trust agreements. The Duke Energy Registrants have limited oversight of the day-to-day management of these investments. As a result, the ability to hold investments in unrealized loss positions is outside the control of the Duke Energy Registrants. Accordingly, all unrealized losses associated with debt 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 aand deferred to regulatory asset.accounts where appropriate.

72



FINANCIAL STATEMENTSINVESTMENTS 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 OTTIa credit loss exists, the unrealized credit loss is included in earnings. There were no material credit losses as of SeptemberJune 30, 2017,2020, 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.
 June 30, 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$—
 $—
 $731
 $—
 $—
 $101
Equity securities3,034
 92
 5,039
 3,523
 55
 5,661
Corporate debt securities66
 2
 806
 37
 1
 603
Municipal bonds18
 1
 417
 13
 —
 368
U.S. government bonds62
 —
 813
 33
 1
 1,256
Other debt securities9
 1
 194
 3
 —
 141
Total NDTF Investments$3,189
 $96
 $8,000
 $3,609
 $57
 $8,130
Other Investments           
Cash and cash equivalents$—
 $—
 $113
 $—
 $—
 $52
Equity securities51
 —
 116
 57
 —
 122
Corporate debt securities8
 —
 125
 3
 —
 67
Municipal bonds5
 1
 103
 4
 —
 94
U.S. government bonds3
 —
 40
 2
 —
 41
Other debt securities1
 1
 34
 —
 —
 56
Total Other Investments$68
 $2
 $531
 $66
 $—
 $432
Total Investments$3,257
 $98
 $8,531
 $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 securities2,549
 28
 4,627
 2,092
 54
 4,106
Corporate debt securities16
 2
 600
 10
 8
 528
Municipal bonds5
 2
 334
 3
 10
 331
U.S. government bonds10
 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 securities52
 —
 115
 38
 —
 104
Corporate debt securities1
 —
 64
 1
 1
 66
Municipal bonds3
 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 years584
Due after five through 10 years514
Due after 10 years1,076
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 and six months endedJune 30, 2020, and 2019, were as follows.
 Three Months Ended Six Months Ended
(in millions)June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
FV-NI:       
 Realized gains$302
 $66
 $325
 $101
 Realized losses67
 63
 132
 93
AFS:       
 Realized gains27
 47
 47
 57
 Realized losses13
 36
 19
 47


73



 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017
 2016
 2017
 2016
Realized gains$37
 $82
 $170
 $200
Realized losses25
 42
 124
 134
FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES


DUKE ENERGY CAROLINAS
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.
 June 30, 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$—
 $—
 $30
 $—
 $—
 $21
Equity securities1,796
 47
 2,989
 1,914
 8
 3,154
Corporate debt securities41
 2
 519
 21
 1
 361
Municipal bonds6
 —
 133
 3
 —
 96
U.S. government bonds30
 —
 399
 16
 1
 578
Other debt securities7
 1
 188
 3
 —
 137
Total NDTF Investments$1,880
 $50

$4,258
 $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 securities1,395
 14
 2,553
 1,157
 28
 2,245
Corporate debt securities9
 2
 395
 5
 6
 354
Municipal bonds1
 —
 52
 1
 2
 67
U.S. government bonds3
 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 years218
Due after five through 10 years264
Due after 10 years539
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 and six months ended June 30, 2020, and 2019, were as follows.
 Three Months Ended Six Months Ended
(in millions)June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
FV-NI:       
 Realized gains$27
 $44
 $36
 $67
 Realized losses25
 48
 70
 69
AFS:       
 Realized gains18
 16
 30
 25
 Realized losses8
 11
 13
 21

 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017
 2016
 2017
 2016
Realized gains$20
 $58
 $110
 $125
Realized losses13
 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
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.
 June 30, 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$—
 $—
 $701
 $—
 $—
 $80
Equity securities1,238
 45
 2,050
 1,609
 47
 2,507
Corporate debt securities25
 —
 287
 16
 —
 242
Municipal bonds12
 1
 284
 10
 —
 272
U.S. government bonds32
 —
 414
 17
 —
 678
Other debt securities2
 —
 6
 —
 —
 4
Total NDTF Investments$1,309
 $46
 $3,742
 $1,652
 $47
 $3,783
Other Investments           
Cash and cash equivalents$—
 $—
 $108
 $—
 $—
 $49
Municipal bonds4
 —
 52
 3
 —
 51
Total Other Investments$4
 $—
 $160
 $3
 $—
 $100
Total Investments$1,313
 $46
 $3,902
 $1,655
 $47
 $3,883


74



 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 securities1,154
 14
 2,074
 935
 26
 1,861
Corporate debt securities7
 —
 205
 5
 2
 174
Municipal bonds4
 2
 282
 2
 8
 264
U.S. government bonds7
 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 bonds3
 —
 47
 2
 —
 44
Total Other Investments$3
 $—
 $58
 $2
 $—
 $65
Total Investments$1,175
 $17
 $3,239
 $952
 $39
 $2,991
FINANCIAL STATEMENTSINVESTMENTS 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 years309
Due after five through 10 years194
Due after 10 years482
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 and six months endedJune 30, 2020, and 2019, were as follows.
Three Months Ended Nine Months Ended
September 30, September 30,Three Months EndedSix Months Ended
(in millions)2017
 2016
 2017
 2016
June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
FV-NI:       
Realized gains$16
 $21
 $58
 $71
$275
 $22
 $289
 $34
Realized losses12
 13
 47
 49
42
 15
 62
 24
AFS:       
Realized gains6
 30
 11
 31
Realized losses4
 25
 5
 26

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 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.
 June 30, 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$—
 $—
 $63
 $—
 $—
 $53
Equity securities1,176
 45
 1,977
 1,258
 21
 2,077
Corporate debt securities25
 —
 287
 16
 —
 242
Municipal bonds12
 1
 284
 10
 —
 272
U.S. government bonds32
 —
 414
 16
 —
 403
Other debt securities2
 —
 6
 —
 —
 4
Total NDTF Investments$1,247
 $46
 $3,031
 $1,300
 $21
 $3,051
Other Investments           
Cash and cash equivalents$—
 $—
 $1
 $—
 $—
 $2
Total Other Investments$—
 $—
 $1
 $—
 $—
 $2
Total Investments$1,247
 $46
 $3,032
 $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 securities882
 11
 1,683
 704
 21
 1,505
Corporate debt securities5
 —
 144
 4
 1
 120
Municipal bonds4
 2
 281
 2
 8
 263
U.S. government bonds5
 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 years209
Due after five through 10 years136
Due after 10 years371
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 and six months endedJune 30, 2020, and 2019, were as follows.
 Three Months EndedSix Months Ended
(in millions)June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
FV-NI:       
Realized gains$26
 $7
 $40
 $17
Realized losses27
 7
 47
 15
AFS:       
 Realized gains6
 1
 11
 2
 Realized losses4
 1
 5
 2


75



 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017
 2016
 2017
 2016
Realized gains$14
 $18
 $49
 $60
Realized losses11
 11
 41
 42
FINANCIAL STATEMENTSINVESTMENTS 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
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.
September 30, 2017 December 31, 2016June 30, 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
$—
 $—
 $638
 $—
 $—
 $27
Equity securities272
 3
 391
 231
 5
 356
62
 —
 73
 351
 26
 430
Corporate debt securities2
 —
 61
 1
 1
 54
Municipal bonds—
 —
 1
 —
 —
 1
U.S. government bonds2
 —
 215
 3
 1
 251
—
 —
 —
 1
 —
 275
Other debt securities—
 —
 3
 —
 —
 3
Total NDTF(a)
$276
 $3
 $720
 $235
 $7
 $713
Total NDTF Investments(a)
$62
 $—
 $711
 $352
 $26
 $732
Other Investments                      
Cash and cash equivalents$—
 $—
 $—
 $—
 $—
 $4
$—
 $—
 $2
 $—
 $—
 $4
Municipal bonds3
 —
 47
 2
 —
 44
4
 —
 52
 3
 —
 51
Total Other Investments$3
 $—
 $47
 $2
 $—
 $48
$4
 $—
 $54
 $3
 $—
 $55
Total Investments$279
 $3
 $767
 $237
 $7
 $761
$66
 $—
 $765
 $355
 $26
 $787
(a)During the ninesix months ended SeptemberJune 30, 2017,2020, 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 years100
Due after five through 10 years58
Due after 10 years111
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 and six months endedJune 30, 2020, and 2019, were as follows.
 Three Months EndedSix Months Ended
(in millions)June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
FV-NI:       
Realized gains$249
 $15
 $249
 $17
Realized losses15
 8
 15
 9
AFS:       
 Realized gains—
 29
 —
 29
 Realized losses—
 24
 —
 24
 Three Months Ended Nine Months Ended
 September 30, September 30,
(in millions)2017
 2016
 2017
 2016
Realized gains$2
 $3
 $9
 $11
Realized losses1
 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.
 June 30, 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$39
 $—
 $77
 $43
 $—
 $81
Corporate debt securities—
 —
 3
 —
 —
 6
Municipal bonds1
 1
 39
 1
 —
 36
U.S. government bonds—
 —
 3
 —
 —
 2
Total Investments$40
 $1
 $122
 $44
 $—
 $125
(in millions)September 30, 2017
Due in one year or less$4
Due after one through five years12
Due after five through 10 years8
Due after 10 years7
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 ninesix months ended SeptemberJune 30, 2017,2020, and 2016.2019, were immaterial.

76



FINANCIAL STATEMENTSINVESTMENTS IN DEBT AND EQUITY SECURITIES


DEBT SECURITY MATURITIES
The table below summarizes the maturity date for debt securities.
 June 30, 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$63
 $19
 $30
 $28
 $2
 $3
Due after one through five years563
 254
 244
 235
 9
 15
Due after five through 10 years587
 270
 226
 219
 7
 9
Due after 10 years1,319
 696
 543
 509
 34
 18
Total$2,532

$1,239

$1,043

$991

$52

$45

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 Valuefair 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 valueinvestment 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 1112 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.

77



FINANCIAL STATEMENTSFAIR 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, 2017June 30, 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 cash and cash equivalents$731
$731
$—
$—
$—
NDTF equity securities$4,627
$4,549
$—
$—
$78
5,039
4,991
—
—
48
NDTF debt securities2,167
617
1,550
—
—
2,230
336
1,894
—
—
Other trading and AFS equity securities116
116
—
—
—
Other AFS debt securities243
59
184
—
—
Other equity securities116
116
—
—
—
Other debt securities302
36
266
—
—
Other cash and cash equivalents113
113
—
—
—
Derivative assets69
4
35
30
—
32
4
15
13
—
Total assets7,222
5,345
1,769
30
78
8,563
6,327
2,175
13
48
Derivative liabilities(191)—
(68)(123)—
(361)(1)(255)(105)—
Net assets (liabilities)$7,031
$5,345
$1,701
$(93)$78
$8,202
$6,326
$1,920
$(92)$48

 December 31, 2019
(in millions)Total Fair Value
Level 1
Level 2
Level 3
Not Categorized
NDTF cash and cash equivalents$101
$101
$—
$—
$—
NDTF equity securities5,684
5,633
—
—
51
NDTF debt securities2,368
725
1,643
—
—
Other equity securities122
122
—
—
—
Other debt securities258
39
219
—
—
Other cash and cash equivalents52
52
—
—
—
Derivative assets25
3
7
15
—
Total assets8,610
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 securities2,078
632
1,446
—
—
Other trading and AFS equity securities104
104
—
—
—
Other trading and AFS debt securities266
75
186
5
—
Derivative assets162
5
136
21
—
Total assets6,716
4,845
1,768
26
77
Derivative liabilities(252)(2)(63)(187)—
Net assets (liabilities)$6,464
$4,843
$1,705
$(161)$77
The following tables provide reconciliations of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements. Amounts included in earnings for derivatives are primarily included in Cost of natural gas on the Duke Energy Registrants' Condensed Consolidated Statements of Operations and Comprehensive Income. Amounts included in changes of net assets on the Duke Energy Registrants' Condensed Consolidated Balance Sheets are included in regulatory assets or liabilities. All derivative assets and liabilities are presented on a net basis.
Derivatives (net)
Three Months Ended September 30, 2017 Three Months Ended September 30, 2016Three Months Ended June 30, Six Months Ended June 30,
(in millions)Investments
 Derivatives (net)
 Total
 Investments
 Derivatives (net)
 Total
2020
 2019
 2020
 2019
Balance at beginning of period$—
 $(91) $(91) $4
 $34
 $38
$(88) $(115) $(102) $(113)
Purchases, sales, issuances and settlements:    

             
Purchases14
 38
 14
 38
Settlements—
 (12) (12) —
 (9) (9)(6) (11) (15) (23)
Total gains (losses) included on the Condensed Consolidated Balance Sheet—
 10
 10
 —
 (2) (2)
Total (losses) gains included on the Condensed Consolidated Balance Sheet(12) 9
 11
 19
Balance at end of period$—
 $(93) $(93) $4
 $23
 $27
$(92) $(79) $(92) $(79)

 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
 $15
Total pretax realized or unrealized gains included in comprehensive income1
 —
 1
 —
 —
 —
Purchases, sales, issuances and settlements:           
Purchases—
 55
 55
 —
 34
 34
Sales(6) —
 (6) (1) —
 (1)
Settlements—
 (30) (30) —
 (22) (22)
Total gains included on the Condensed Consolidated Balance Sheet—
 48
 48
 —
 1
 1
Balance at end of period$—
 $(93) $(93) $4
 $23
 $27

78



FINANCIAL STATEMENTSFAIR 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 securities1,060
178
882
—
—
Derivative assets8
—
8
—
—
Total assets3,621
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 securities1,013
178
835
—
—
Other AFS debt securities3
—
—
3
—
Derivative assets33
—
33
—
—
Total assets3,294
2,346
868
3
77
Derivative liabilities(16)—
(16)—
—
Net assets$3,278
$2,346
$852
$3
$77
The following table provides a reconciliation of beginning and ending balances of assets and liabilities measured at fair value using Level 3 measurements.
 Investments
 Three Months Ended September 30, Nine Months Ended September 30,
(in millions)20172016 20172016
Balance at beginning of period$—
$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
 June 30, 2020
(in millions)Total Fair Value
Level 1
Level 2
Not Categorized
NDTF cash and cash equivalents$30
$30
$—
$—
NDTF equity securities2,989
2,941
—
48
NDTF debt securities1,239
125
1,114
—
Derivative assets7
—
7
—
Total assets4,265
3,096
1,121
48
Derivative liabilities(57)—
(57)—
Net assets$4,208
$3,096
$1,064
$48
 December 31, 2019
(in millions)Total Fair Value
Level 1
Level 2
Not Categorized
NDTF cash and cash equivalents$21
$21
$—
$—
NDTF equity securities3,154
3,103
—
51
NDTF debt securities1,172
206
966
—
Total assets4,347
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.
 June 30, 2020 December 31, 2019
(in millions)Total Fair Value
Level 1
Level 2
 Total Fair Value
Level 1
Level 2
NDTF cash and cash equivalents$701
$701
$—
 $80
$80
$—
NDTF equity securities2,050
2,050
—
 2,530
2,530
—
NDTF debt securities991
211
780
 1,196
519
677
Other debt securities52
—
52
 51
—
51
Other cash and cash equivalents108
108
—
 49
49
—
Derivative assets8
—
8
 7
—
7
Total assets3,910
3,070
840
 3,913
3,178
735
NDTF equity security contracts—
—
—
 (23)—
(23)
Derivative liabilities(121)—
(121) (65)—
(65)
Net assets$3,789
$3,070
$719
 $3,825
$3,178
$647


79



FINANCIAL STATEMENTSFAIR 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$2,074
$2,074
$—
 $1,861
$1,861
$—
NDTF debt securities1,107
439
668
 1,065
454
611
Other AFS debt securities58
11
47
 65
21
44
Derivative assets15
1
14
 85
—
85
Total assets3,254
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 providestables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
 June 30, 2020 December 31, 2019
(in millions)Total Fair Value
Level 1
Level 2
 Total Fair Value
Level 1
Level 2
NTDF cash and cash equivalents$63
$63
$—
 $53
$53
$—
NDTF equity securities1,977
1,977
—
 2,077
2,077
—
NDTF debt securities991
211
780
 921
244
677
Other cash and cash equivalents1
1
—
 2
2
—
Derivative assets8
—
8
 —
—
—
Total assets3,040
2,252
788
 3,053
2,376
677
Derivative liabilities(105)—
(105) (49)—
(49)
Net assets$2,935
$2,252
$683
 $3,004
$2,376
$628
 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 securities778
231
547
 708
207
501
Other AFS debt securities1
1
—
 1
1
—
Derivative assets8
1
7
 46
—
46
Total assets2,470
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 providestables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
 June 30, 2020 December 31, 2019
(in millions)Total Fair Value
Level 1
Level 2
 Total Fair Value
Level 1
Level 2
NDTF cash and cash equivalents$638
$638
$—
 $27
$27
$—
NDTF equity securities73
73
—
 453
453
—
NDTF debt securities—
—
—
 275
275
—
Other debt securities52
—
52
 51
—
51
Other cash and cash equivalents2
2
—
 4
4
—
Derivative assets—
—
—
 7
—
7
Total assets765
713
52
 817
759
58
NDTF equity security contracts—
—
—
 (23)—
(23)
Derivative liabilities—
—
—
 (1)—
(1)
Net assets$765
$713
$52
 $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 securities329
208
121
 357
247
110
Other AFS debt securities47
—
47
 48
4
44
Derivative assets6
—
6
 39
—
39
Total assets773
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 were not material at June 30, 2020, and December 31, 2019.
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.
 June 30, 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$77
$77
$—
$—
 $81
$81
$—
$—
Other debt securities45
—
45
—
 44
—
44
—
Derivative assets10
—
—
10
 13
2
—
11
Total assets$132
$77
$45
$10
 $138
$83
$44
$11
Derivative liabilities(1)(1)—
—
 (1)(1)—
—
Net assets$131
$76
$45
$10
 $137
$82
$44
$11


80



FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS
 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

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 June 30, Six Months Ended June 30,
(in millions)2017
 2016
 2017
 2016
2020
 2019
 2020
 2019
Balance at beginning of period$3
 $5
 $5
 $3
$2
 $5
 $11
 $22
Purchases, sales, issuances and settlements:       
      
Purchases—
 —
 3
 5
10
 29
 10
 29
Settlements(1) (2) (3) (4)(4) (9) (10) (19)
Total losses included on the Condensed Consolidated Balance Sheet—
 —
 (3) (1)
Total gains (losses) included on the Condensed Consolidated Balance Sheet2
 3
 (1) (4)
Balance at end of period$2
 $3
 $2
 $3
$10
 $28
 $10
 $28

PIEDMONT
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 providestables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets.
 June 30, 2020 December 31, 2019
(in millions)Total Fair Value
Level 1
Level 3
 Total Fair Value
Level 1
Level 3
Derivative assets$4
$4
$—
 $1
$1
$—
Derivative liabilities(105)—
(105) (117)—
(117)
Net (liabilities) assets$(101)$4
$(105) $(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 securities31
—
31
—
 31
—
31
—
Derivative assets28
—
—
28
 16
—
—
16
Total assets150
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
 $20
 Derivatives (net)
 Three Months Ended June 30, Six Months Ended June 30,
(in millions)2020
 2019
 2020
 2019
Balance at beginning of period$(91) $(121) $(117) $(141)
Total gains and settlements(14) 7
 12
 27
Balance at end of period$(105) $(114) $(105) $(114)
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.
81



FINANCIAL STATEMENTSFAIR VALUE MEASUREMENTS
 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
$—
Other trading debt securities—
—
—
 1
1
—
Derivative assets2
2
—
 3
3
—
Total assets3
3
—
 8
8
—
Derivative liabilities(123)—
(123) (187)—
(187)
Net (liabilities) assets$(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) $(149)
Total gains (losses) and settlements22
 (5) 64
 (46)
Balance at end of period$(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.
June 30, 2020
September 30, 2017     Weighted
Fair Value    Fair Value    Average
Investment Type(in millions)Valuation TechniqueUnobservable InputRange(in millions)Valuation TechniqueUnobservable InputRangeRange
Duke Energy Ohio 
     
    
Financial Transmission Rights (FTRs)$2
RTO auction pricingFTR price – per megawatt-hour (MWh)$—
-$1.08
FTRs$3
RTO auction pricingFTR price – per MWh$0.23
-$1.45
$0.69
Duke Energy Indiana 
     
    
FTRs28
RTO auction pricingFTR price – per MWh(0.82)-6.19
10
RTO auction pricingFTR price – per MWh(1.03)-6.19
0.71
Piedmont          
Natural gas contracts(123)Discounted cash flowForward natural gas curves – price per million British thermal unit (MMBtu)2.12
-3.36
(105)Discounted cash flowForward natural gas curves – price per MMBtu1.73
-2.39
2.01
Duke Energy          
Total Level 3 derivatives$(93)    $(92)    
December 31, 2019
December 31, 2016     Weighted
Fair Value    Fair Value    Average
Investment Type(in millions)Valuation TechniqueUnobservable InputRange(in millions)Valuation TechniqueUnobservable InputRangeRange
Duke Energy Ohio 
     
    
FTRs$5
RTO auction pricingFTR price – per MWh$0.77
-$3.52
$4
RTO auction pricingFTR price – per MWh$0.59
-$3.47
$2.07
Duke Energy Indiana 
     
    
FTRs16
RTO auction pricingFTR price – per MWh(0.83)-9.32
11
RTO auction pricingFTR price – per MWh(0.66)-9.24
1.15
Piedmont          
Natural gas contracts(187)Discounted cash flowForward natural gas curves – price per MMBtu2.31
-4.18
(117)Discounted cash flowForward natural gas curves – price per MMBtu1.59
-2.46
1.91
Duke Energy          
Total Level 3 derivatives$(166)    $(102)    

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.
 June 30, 2020 December 31, 2019
(in millions)Book Value
 Fair Value
 Book Value
 Fair Value
Duke Energy(a)
$59,899
 $68,428
 $58,126
 $63,062
Duke Energy Carolinas12,521
 15,046
 11,900
 13,516
Progress Energy19,604
 23,476
 19,634
 22,291
Duke Energy Progress9,063
 10,506
 9,058
 9,934
Duke Energy Florida7,951
 9,655
 7,987
 9,131
Duke Energy Ohio3,019
 3,551
 2,619
 2,964
Duke Energy Indiana4,603
 5,617
 4,057
 4,800
Piedmont2,779
 3,289
 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 Carolinas9,525
 10,653
 9,603
 10,494
Progress Energy17,637
 19,615
 17,541
 19,107
Duke Energy Progress7,557
 8,075
 7,011
 7,357
Duke Energy Florida6,696
 7,475
 6,125
 6,728
Duke Energy Ohio2,067
 2,242
 1,884
 2,020
Duke Energy Indiana3,785
 4,407
 3,786
 4,260
Piedmont2,036
 2,193
 1,821
 1,933
(a)Book value of long-term debt includes $1.4 billion at June 30, 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 SeptemberJune 30, 2017,2020, 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.

82
13.



FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES


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 ninesix months ended SeptemberJune 30, 2017,2020, 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 companiesLLCs 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.purchased which generally exclude receivables past due more than a predetermined number of days and reserves for expected past-due balances. The sole source of funds to satisfy the related debt obligations is cash collections from the receivables. Amounts borrowed under the credit facilities for DERF and DEPR are reflected on the Condensed Consolidated Balance Sheets as Long-Term Debt. Amounts borrowed under the credit facilities for DEFR are reflected on the Condensed Consolidated Balance Sheets as Current maturities of long-term debt.
Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The full impact of COVID-19 and the Duke Energy Registrant’s related response on customers’ ability to pay for service is uncertain. However, the level of past-due receivables at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida have increased significantly during the COVID-19 pandemic, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates. In the second quarter of 2020, DERF, DEPR and DEFR executed amendments to their credit facilities to manage the impact of past-due receivables resulting from the suspension of customer disconnections from COVID-19. See Note 3 for information about COVID-19 filings with state utility commissions.
The most significant activity that impacts the economic performance of DERF, DEPR and DEFR are the decisions made to manage delinquent receivables. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are considered the primary beneficiaries and consolidate DERF, DEPR and DEFR, respectively, as they make those decisions.
Receivables Financing – CRC
CRC is a bankruptcy remote, special purpose entity indirectly owned by Duke Energy. On a revolving basis, CRC buys certain accounts receivable arising from the sale of electricity, natural gas and related services from Duke Energy Ohio and Duke Energy Indiana. CRC borrows amounts under a credit facility to buy the receivables from Duke Energy Ohio and Duke Energy Indiana. Borrowing availability from the credit facility is limited to the amount of qualified receivables sold to CRC.CRC which generally exclude receivables past due more than a predetermined number of days and reserves for expected past-due balances. The sole source of funds to satisfy the related debt obligation is cash collections from the receivables. Amounts borrowed under the credit facility are reflected on Duke Energy's 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 percentapproximately 75% cash and 25 percent25% in the form of a subordinated note from CRC. The subordinated note is a retained interest in the receivables sold. Depending on collection experience, additional equity infusions to CRC may be required by Duke Energy to maintain a minimum equity balance of $3 million.
Due to the COVID-19 pandemic, as described in Note 1, the Duke Energy Registrants suspended customer disconnections for nonpayment. The full impact of COVID-19 and the Duke Energy Registrant’s related response on customers’ ability to pay for service is uncertain. However, the level of past-due receivables at Duke Energy Ohio and Duke Energy Indiana have increased significantly during the COVID-19 pandemic, and it is reasonably possible eventual write-offs of customer receivables may increase over current estimates. In July of 2020, CRC executed an amendment to its credit facility to manage the impact of past-due receivables resulting from the suspension of customer disconnections from COVID-19. See Note 3 for information about COVID-19 filings with state utility commissions.
CRC is considered a VIE because (i) equity capitalization is insufficient to support its operations, (ii) power to direct the activities that most significantly impact the economic performance of the entity areis not performedheld 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.

83



FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES


Receivables Financing – Credit Facilities
The following table summarizes the amounts and expiration dates of the credit facilities and associated restricted receivables described above.
 Duke Energy
   Duke Energy
 Duke Energy
 Duke Energy
   Carolinas
 Progress
 Florida
(in millions)CRC
 DERF
 DEPR
 DEFR
Expiration dateFebruary 2023
 December 2022
 April 2023
 April 2021
Credit facility amount$350
 $475
 $350
 $250
Amounts borrowed at June 30, 2020350
 475
 333
 250
Amounts borrowed at December 31, 2019350
 474
 325
 250
Restricted Receivables at June 30, 2020454
 675
 451
 463
Restricted Receivables at December 31, 2019522
 642
 489
 336
 Duke Energy
   Duke Energy
 Duke Energy
 Duke Energy
   Carolinas
 Progress
 Florida
(in millions)CRC
 DERF
 DEPR
 DEFR
Expiration dateDecember 2018
 December 2018
 February 2019
 April 2019
Credit facility amount$325
 $425
 $300
 $225
Amounts borrowed at September 30, 2017325
 425
 300
 225
Amounts borrowed at December 31, 2016325
 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)June 30, 2020
December 31, 2019
Receivables of VIEs$6
$5
Regulatory Assets: Current53
52
Current Assets: Other32
39
Other Noncurrent Assets: Regulatory assets969
989
Current Liabilities: Other10
10
Current maturities of long-term debt54
54
Long-Term Debt1,028
1,057
(in millions)September 30, 2017
December 31, 2016
Receivables of VIEs$6
$6
Current Assets: Regulatory assets51
50
Current Assets: Other20
53
Other Noncurrent Assets: Regulatory assets1,101
1,142
Current Liabilities: Other3
17
Current maturities of long-term debt53
62
Long-Term Debt1,164
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 impactimpacted the economic performance of these renewable energy facilities were decisions associated with siting, negotiating PPAs engineering, procurement and constructionEngineering, 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.
The table below presents material balances reported on Duke Energy's Condensed Consolidated Balance Sheets related to renewablesCommercial Renewables VIEs.
(in millions)June 30, 2020
December 31, 2019
Current Assets: Other$228
$203
Property, Plant and Equipment: Cost6,198
5,747
Accumulated depreciation and amortization(1,145)(1,041)
Other Noncurrent Assets: Other75
106
Current maturities of long-term debt158
162
Long-Term Debt1,457
1,541
Other Noncurrent Liabilities: AROs144
127
Other Noncurrent Liabilities: Other251
228


84



(in millions)September 30, 2017
December 31, 2016
Current Assets: Other$399
$223
Property, plant and equipment, cost3,923
3,419
Accumulated depreciation and amortization(556)(453)
Current maturities of long-term debt162
198
Long-Term Debt1,780
1,097
Deferred income taxes223
275
Other Noncurrent Liabilities: Other247
252
FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES


NON-CONSOLIDATED VIEs
The following tables summarize the impact of non-consolidated VIEs on the Condensed Consolidated Balance Sheets.
 June 30, 2020
 Duke Energy Duke
 Duke
 Pipeline
 Commercial
 Other
   Energy
 Energy
(in millions)Investments
 Renewables
 
VIEs 

 Total
 Ohio
 Indiana
Receivables from affiliated companies$—
 $(1) $—
 $(1) $34
 $49
Investments in equity method unconsolidated affiliates—
 413
 1
 414
 —
 —
Deferred tax asset439
 —
 —
 439
 —
 —
Total assets$439
 $412
 $1
 $852
 $34
 $49
Taxes accrued9
 —
 —
 9
 —
 —
Other current liabilities920
 —
 4
 924
 —
 —
Other noncurrent liabilities—
 —
 10
 10
 —
 —
Total liabilities$929
 $—
 $14
 $943
 $—
 $—
Net (liabilities) assets$(490) $412
 $(13) $(91) $34
 $49
 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 affiliates895
 172
 39
 1,106
 —
 —
Other noncurrent assets18
 —
 —
 18
 —
 —
Total assets$913
 $172
 $39
 $1,124
 $46
 $75
Other current liabilities—
 —
 3
 3
 —
 —
Deferred income taxes29
 —
 —
 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 affiliates1,179
 300
 —
 1,479
 —
 —
Total assets$1,179
 $299
 $—
 $1,478
 $64
 $77
Taxes accrued(1) —
 —
 (1) —
 —
Other current liabilities—
 —
 4
 4
 —
 —
Deferred income taxes59
 —
 —
 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 affiliates487
 174
 90
 751
 —
 —
 139
Other noncurrent assets12
 —
 —
 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
 $135
(a)In April 2017, Piedmont transferred its non-consolidated VIE investments to a wholly owned subsidiary of Duke Energy. See "Pipeline Investments" section below for additional detail.
The Duke Energy Registrants are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying values shown above except for the power purchase agreementPPA with OVEC, which is discussed below, and various guarantees, somefuture exit costs associated with the abandonment of which are reflectedthe investment in the table aboveACP, as Other noncurrent liabilities. For more information on various guarantees, refer to Note 5.discussed below.
Pipeline Investments
Duke Energy has investments in various joint ventures withto construct and operate pipeline projects currently under construction.projects. These entities are considered VIEs due to having insufficient equity to finance their own activities without subordinated financial support. Duke Energy does not have the power to direct the activities that most significantly impact the economic performance, the obligation to absorb losses or the right to receive benefits of these VIEs and therefore does not consolidate these entities.
On July 5, 2020, Duke Energy determined that it would no longer invest in the construction of the ACP pipeline. See Notes 1, 3 and 4 for further information regarding this transaction.
For the three and six months ended June 30, 2020, the ACP investment is considered a significant subsidiary because its income exceeds 20% of Duke Energy’s income. The table below presents unaudited summarized financial information for ACP.
 Three Months Ended June 30,Six Months Ended June 30,
(in millions)2020
2019
2020
2019
Net (Loss) Income$(4,414)$61
$(4,342)$114

85



FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES


The table below presents Duke Energy's ownership interest and investment balances in these joint ventures.
   VIE Investment Amount (in millions)
 Ownership June 30, December 31,
Entity NameInterest 2020 2019
ACP(a)
47% $(920) $1,179
Constitution(b)
24% —
 —
Total  $(920) $1,179

   VIE Investment Amount (in millions)
 Ownership September 30, December 31,
Entity NameInterest 2017 2016
ACP47% $595
 $265
Sabal Trail7.5% 218
 140
Constitution24% 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)During the quarter ended June 30, 2020, Duke Energy abandoned its investment in ACP as described above. The current liability related to the abandonment of ACP represents Duke Energy's obligation to fund ACP's obligations. See Notes 1, 3 and 4 for more information.
(b)During the year ended December 31, 2019, Duke Energy recorded an other-than-temporary impairment 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 holdsacquired a 50 percent equity interestmajority 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 bydistributed fuel cell projects from Bloom Energy Corporation. Duke Energy andis not the other joint venture partner, American Electric Power; therefore, Duke Energyprimary 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 percent9% 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 agreementInter-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, includingbusiness. 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. Deteriorationallocated 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 orFES 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. In July 2020, legislation was proposed to repeal HB 6. Duke Energy cannot predict the outcome in this matter. See Note 3 for additional information.
CRC
See discussion under Consolidated VIEs for additional information related to CRC.
Amounts included in Receivables from affiliated companies in the above table for Duke Energy Ohio and Duke Energy Indiana reflect their retained interest in receivables sold to CRC. These subordinated notes held by Duke Energy Ohio and Duke Energy Indiana are stated at fair value. Carrying values of retained interests are determined by allocating carrying value of the receivables between assets sold and interests retained based on relative fair value. The allocated bases of the subordinated notes are not materially different than their face value because (i) the receivables generally 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 ratio0.5% 0.5% 0.3% 0.3%
Discount rate2.0% 1.5% 2.0% 1.5%
Receivable turnover rate13.4% 13.3% 10.7% 10.6%
The following table shows the gross and net receivables sold.
 Duke Energy Ohio Duke Energy Indiana
(in millions)June 30, 2020
 December 31, 2019
 June 30, 2020
 December 31, 2019
Receivables sold$221
 $253
 $280
 $307
Less: Retained interests34
 64
 49
 77
Net receivables sold$187
 $189
 $231
 $230


86



 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 interests46
 82
 75
 101
Net receivables sold$163
 $185
 $229
 $205
FINANCIAL STATEMENTSVARIABLE INTEREST ENTITIES


The following table shows sales and cash flows related to receivables sold.
 Duke Energy Ohio Duke Energy Indiana
 Three Months Ended Six Months Ended Three Months Ended Six Months Ended
 June 30, June 30, June 30, June 30,
(in millions)2020
 2019
 2020
 2019
 2020
 2019
 2020
 2019
Sales               
Receivables sold$429
 $429
 $966
 $1,004
 $583
 $676
 $1,230
 $1,410
Loss recognized on sale2
 3
 6
 7
 2
 4
 6
 9
Cash flows               
Cash proceeds from receivables sold$431
 $448
 $990
 $1,045
 $580
 $680
 $1,252
 $1,438
Return received on retained interests—
 2
 2
 4
 1
 2
 3
 5
 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 sale2
 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 received1
 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 I12. 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 NotesElectric 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$58
$92
$94
$44
$45
$58
$391
Duke Energy Progress4
8
8
8
8
—
36
Duke Energy Florida54
84
86
36
37
58
355
Duke Energy Indiana5
5
—
—
—
—
10

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$34
$65
$64
$61
$58
$376
$658

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.

87



FINANCIAL STATEMENTSREVENUE


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 June 30, 2020
  Duke
 Duke
Duke
Duke
Duke
 
(in millions)Duke
Energy
Progress
Energy
Energy
Energy
Energy
 
By market or type of customerEnergy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Electric Utilities and Infrastructure        
   Residential$2,249
$677
$1,173
$460
$713
$169
$231
$—
   General1,379
507
611
298
313
103
161
—
   Industrial658
260
212
154
58
33
152
—
   Wholesale435
101
285
240
45
5
44
—
   Other revenues284
62
191
70
121
19
25
—
Total Electric Utilities and Infrastructure revenue from contracts with customers$5,005
$1,607
$2,472
$1,222
$1,250
$329
$613
$—
         
Gas Utilities and Infrastructure        
   Residential$157
$—
$—
$—
$—
$62
$—
$96
   Commercial75
—
—
—
—
23
—
52
   Industrial27
—
—
—
—
3
—
22
   Power Generation—
—
—
—
—
—
—
6
   Other revenues12
—
—
—
—
3
—
11
Total Gas Utilities and Infrastructure revenue from contracts with customers$271
$—
$—
$—
$—
$91
$—
$187
         
Commercial Renewables        
Revenue from contracts with customers$55
$—
$—
$—
$—
$—
$—
$—
         
Other        
Revenue from contracts with customers$7
$—
$—
$—
$—
$—
$—
$—
Total revenue from contracts with customers$5,338
$1,607
$2,472
$1,222
$1,250
$420
$613
$187
         
Other revenue sources(a)
$83
$3
$26
$21
$—
$3
$4
$10
Total revenues$5,421
$1,610
$2,498
$1,243
$1,250
$423
$617
$197
(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.

88



FINANCIAL STATEMENTSREVENUE


 Three Months Ended June 30, 2019
  Duke
 Duke
Duke
Duke
Duke
 
(in millions)Duke
Energy
Progress
Energy
Energy
Energy
Energy
 
By market or type of customerEnergy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Electric Utilities and Infrastructure        
   Residential$2,304
$679
$1,243
$496
$747
$159
$225
$—
   General1,584
531
750
339
411
105
197
—
   Industrial759
289
231
164
67
36
201
—
   Wholesale527
109
351
309
42
9
59
—
   Other revenues187
68
99
44
55
25
27
—
Total Electric Utilities and Infrastructure revenue from contracts with customers$5,361
$1,676
$2,674
$1,352
$1,322
$334
$709
$—
         
Gas Utilities and Infrastructure        
   Residential$146
$—
$—
$—
$—
$64
$—
$82
   Commercial85
—
—
—
—
26
—
59
   Industrial29
—
—
—
—
3
—
24
   Power Generation—
—
—
—
—
—
—
13
   Other revenues22
—
—
—
—
2
—
19
Total Gas Utilities and Infrastructure revenue from contracts with customers$282
$—
$—
$—
$—
$95
$—
$197
         
Commercial Renewables        
Revenue from contracts with customers$46
$—
$—
$—
$—
$—
$—
$—
         
Other        
Revenue from contracts with customers$6
$—
$—
$—
$—
$—
$—
$—
Total revenue from contracts with customers$5,695
$1,676
$2,674
$1,352
$1,322
$429
$709
$197
         
Other revenue sources(a)
$178
$37
$70
$35
$31
$4
$5
$12
Total revenues$5,873
$1,713
$2,744
$1,387
$1,353
$433
$714
$209
(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.

89



FINANCIAL STATEMENTSREVENUE


 Six Months Ended June 30, 2020
  Duke
 Duke
Duke
Duke
Duke
 
(in millions)Duke
Energy
Progress
Energy
Energy
Energy
Energy
 
By market or type of customerEnergy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Electric Utilities and Infrastructure        
   Residential$4,515
$1,433
$2,242
$962
$1,280
$345
$496
$—
   General2,887
1,056
1,275
617
658
217
342
—
   Industrial1,351
529
428
308
120
68
327
—
   Wholesale932
215
606
519
87
12
99
—
   Other revenues475
122
309
133
176
39
41
—
Total Electric Utilities and Infrastructure revenue from contracts with customers$10,160
$3,355
$4,860
$2,539
$2,321
$681
$1,305
$—
         
Gas Utilities and Infrastructure        
   Residential$519
$—
$—
$—
$—
$159
$—
$360
   Commercial244
—
—
—
—
66
—
178
   Industrial68
—
—
—
—
9
—
58
   Power Generation—
—
—
—
—
—
—
17
   Other revenues42
—
—
—
—
9
—
35
Total Gas Utilities and Infrastructure revenue from contracts with customers$873
$—
$—
$—
$—
$243
$—
$648
         
Commercial Renewables        
Revenue from contracts with customers$113
$—
$—
$—
$—
$—
$—
$—
         
Other        
Revenue from contracts with customers$13
$—
$—
$—
$—
$—
$—
$—
Total Revenue from contracts with customers$11,159
$3,355
$4,860
$2,539
$2,321
$924
$1,305
$648
         
Other revenue sources(a)
$211
$3
$60
$42
$9
$(3)$4
$61
Total revenues$11,370
$3,358
$4,920
$2,581
$2,330
$921
$1,309
$709
(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.

90



FINANCIAL STATEMENTSREVENUE


 Six Months Ended June 30, 2019
  Duke
 Duke
Duke
Duke
Duke
 
(in millions)Duke
Energy
Progress
Energy
Energy
Energy
Energy
 
By market or type of customerEnergy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Electric Utilities and Infrastructure        
   Residential$4,674
$1,439
$2,357
$1,032
$1,325
$348
$531
$—
   General3,011
1,027
1,382
645
737
208
394
—
   Industrial1,470
555
453
325
128
69
391
—
   Wholesale1,068
228
704
624
80
23
113
—
   Other revenues359
146
271
169
102
41
44
—
Total Electric Utilities and Infrastructure revenue from contracts with customers$10,582
$3,395
$5,167
$2,795
$2,372
$689
$1,473
$—
         
Gas Utilities and Infrastructure        
   Residential$560
$—
$—
$—
$—
$176
$—
$384
   Commercial291
—
—
—
—
75
—
216
   Industrial77
—
—
—
—
10
—
66
   Power Generation—
—
—
—
—
—
—
26
   Other revenues85
—
—
—
—
10
—
75
Total Gas Utilities and Infrastructure revenue from contracts with customers$1,013
$—
$—
$—
$—
$271
$—
$767
         
Commercial Renewables        
Revenue from contracts with customers$88
$—
$—
$—
$—
$—
$—
$—
         
Other        
Revenue from contracts with customers$10
$—
$—
$—
$—
$—
$—
$—
Total Revenue from contracts with customers$11,693
$3,395
$5,167
$2,795
$2,372
$960
$1,473
$767
         
Other revenue sources(a)
$343
$62
$149
$76
$67
$4
$9
$21
Total revenues$12,036
$3,457
$5,316
$2,871
$2,439
$964
$1,482
$788
(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.

91



FINANCIAL STATEMENTSREVENUE


As described in Note 1, Duke Energy adopted the new guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. The following table presents the reserve for credit losses for trade and other receivables based on adoption of the new standard.
 Three Months Ended June 30, 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 March 31, 2020$89
$11
$20
$9
$11
$5
$3
$9
Write-Offs(9)(3)(3)(3)—
—
—
(4)
Credit Loss Expense15
6
12
8
3
—
—
1
Other Adjustments7
—
—
—
—
—
—
—
Balance at June 30, 2020$102
$14
$29
$14
$14
$5
$3
$6
 Six Months Ended June 30, 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 Principle5
1
2
1
1
—
—
1
Write-Offs(19)(6)(7)(5)(2)—
—
(5)
Credit Loss Expense33
9
18
10
8
1
—
4
Other Adjustments7
—
—
—
—
—
—
—
Balance at June 30, 2020$102
$14
$29
$14
$14
$5
$3
$6

Trade and other receivables are evaluated based on an estimate of the risk of loss over the life of the receivable and current and historical conditions using supportable assumptions. Management evaluates the risk of loss for trade and other receivables by comparing the historical write-off amounts to total revenue over a specified period. Historical loss rates are adjusted due to the impact of current conditions, including the impacts of COVID-19, as well as forecasted conditions over a reasonable time period. The calculated write-off rate can be applied to the receivable balance for which an established reserve does not already exist. Management reviews the assumptions and risk of loss periodically for trade and other receivables. Due to the COVID-19 pandemic, as described in Note 1, 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.
The aging of trade receivables is presented in the table below. Duke Energy considers receivables greater than 30 days outstanding past due.
 June 30, 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$829
$332
$274
$137
$137
$1
$7
$6
0-30 days1,624
470
685
336
344
48
28
73
30-60 days152
49
56
28
28
6
1
6
60-90 days90
29
34
17
17
4
1
5
90+ days209
64
53
24
29
29
10
18
Trade and Other Receivables$2,904
$944
$1,102
$542
$555
$88
$47
$108

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.

92



FINANCIAL STATEMENTSREVENUE


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)June 30, 2020
 December 31, 2019
Duke Energy$829
 $843
Duke Energy Carolinas332
 298
Progress Energy274
 217
Duke Energy Progress137
 122
Duke Energy Florida137
 95
Duke Energy Ohio1
 1
Duke Energy Indiana7
 16
Piedmont6
 78






Collection fees received in connection with servicing transferred accounts receivable are included in Operation, maintenance and other onAdditionally, Duke Energy Ohio’sOhio and Duke Energy Indiana’sIndiana 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 StatementsBalance Sheets of OperationsDuke Energy Ohio and Comprehensive Income. The loss recognized on sales ofDuke Energy Indiana. See Note 11 for further information. These receivables is calculated monthly by multiplying receivables sold duringfor 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)June 30, 2020
 December 31, 2019
Duke Energy Ohio$68
 $82
Duke Energy Indiana106
 115

14. COMMON STOCK13. STOCKHOLDERS' EQUITY
Basic Earnings Per Share (EPS)EPS is computed by dividing net income attributableavailable 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 attributableavailable 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.
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 ofand 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 – basic700
 689
 700
 689
Equity Forwards—
 2
 —
 1
Weighted average shares outstanding – diluted700 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
 $2.505
 Three Months Ended June 30, Six Months Ended June 30,
(in millions, except per share amounts)2020
 2019
 2020
 2019
Net (loss) income available to Duke Energy common stockholders excluding impact of participating securities$(817) $819
 $82
 $1,718
Accumulated preferred stock dividends(12) —
 —
 —
Net (loss) income available to Duke Energy common stockholders excluding impact of participating securities and including accumulated preferred stock dividends$(829) $819
 $82
 $1,718
        
Weighted average common shares outstanding – basic735
 728
 734
 728
Equity forwards—
 —
 1
 —
Weighted average common shares outstanding – diluted735
 728
 735
 728
Earnings (Loss) Per Share available to Duke Energy common stockholders       
Basic and diluted$(1.13) $1.12
 $0.11
 $2.36
Potentially dilutive items excluded from the calculation(a)
2
 2
 2
 2
Dividends declared per common share$0.945
 $0.928
 $1.890
 $1.855
Dividends declared on Series A preferred stock per depositary share(b)
$0.359
 $0.307
 $0.719
 $0.307
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
93



FINANCIAL STATEMENTSSTOCKHOLDERS' EQUITY


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. In May 2020, Duke Energy marketed approximately 903,000 shares of common stock through an equity forward transaction under the ATM with an initial forward price of $82.44 per share.
Separately, in November 2019, Duke Energy marketed an equity offering of 10.628.75 million shares of common stock.stock through an Underwriting Agreement. In lieu of issuing equity at the time ofconnection with the offering, Duke Energy entered into an equity forward salesales agreement with an initial forward price of $85.99 per share.
The equity forward sales agreements with Barclays (the Equity Forwards). The Equity Forwards requiredrequire Duke Energy to either physically settle the transactionstransaction 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, sharethe 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, wasif 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 awards7
 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 capitalized1
 —
 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’sEnergy'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, 20178
 4
 —
Remaining estimated contributions to be made in 2017$11
 $—
 $11
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
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$40
 $12
 $12
 $6
 $5
 $1
 $2
 $3
Interest cost on projected benefit obligation82
 20
 25
 12
 13
 4
 7
 3
Expected return on plan assets(136) (35) (43) (21) (21) (7) (11) (6)
Amortization of actuarial loss36
 8
 14
 6
 7
 1
 3
 3
Amortization of prior service credit(6) (2) (1) —
 —
 —
 —
 (1)
Other2
 —
 1
 —
 —
 —
 —
 —
Net periodic pension costs$18
 $3
 $8
 $3
 $4
 $(1) $1
 $2
 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$36
 $12
 $11
 $6
 $4
 $1
 $2
 $3
Interest cost on projected benefit obligation83
 21
 27
 12
 14
 5
 7
 2
Expected return on plan assets(128) (35) (42) (21) (21) (6) (10) (6)
Amortization of actuarial loss33
 8
 14
 6
 7
 1
 3
 2
Amortization of prior service credit(4) (2) (1) —
 (1) —
 —
 (1)
Other2
 1
 1
 —
 1
 —
 —
 —
Net periodic pension costs$22
 $5
 $10
 $3
 $4
 $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 obligation246
 60
 75
 36
 39
 14
 21
 9
Expected return on plan assets(408) (106) (129) (63) (63) (21) (33) (18)
Amortization of actuarial loss108
 24
 42
 18
 21
 3
 9
 9
Amortization of prior service credit(18) (6) (3) —
 —
 —
 —
 (3)
Other6
 —
 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 obligation249
 64
 80
 37
 42
 15
 21
 7
Expected return on plan assets(386) (106) (126) (62) (63) (20) (31) (18)
Amortization of actuarial loss99
 24
 41
 17
 21
 3
 9
 6
Amortization of prior service credit(12) (6) (3) (1) (1) —
 —
 (2)
Other6
 2
 2
 1
 1
 —
 —
 —
Net periodic pension costs$65
 $14
 $26
 $10
 $14
 $1
 $5
 $1

 Three Months Ended June 30, 2020
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$42
 $14
 $12
 $8
 $6
 $1
 $2
 $2
Interest cost on projected benefit obligation68
 15
 22
 9
 11
 4
 5
 3
Expected return on plan assets(143) (36) (47) (22) (26) (7) (10) (6)
Amortization of actuarial loss30
 7
 9
 4
 5
 1
 3
 3
Amortization of prior service credit(8) (2) (1) (1) (1) —
 (1) (3)
Amortization of settlement charges3
 1
 —
 1
 —
 —
 —
 —
Net periodic pension costs$(8) $(1) $(5) $(1) $(5) $(1) $(1) $(1)
PART I
 Three Months Ended June 30, 2019
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$37
 $12
 $10
 $6
 $6
 $1
 $2
 $2
Interest cost on projected benefit obligation82
 21
 26
 12
 13
 4
 7
 3
Expected return on plan assets(143) (37) (45) (21) (22) (6) (10) (6)
Amortization of actuarial loss25
 5
 9
 3
 6
 —
 1
 1
Amortization of prior service credit(8) (2) —
 (1) (1) —
 (1) (2)
Net periodic pension costs$(7) $(1) $—
 $(1) $2
 $(1) $(1) $(2)

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.
94
Combined Notes to Condensed Consolidated Financial Statements – (Unaudited) – (Continued)








FINANCIAL STATEMENTSEMPLOYEE BENEFIT PLANS


 Six Months Ended June 30, 2020
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$83
 $26
 $24
 $14
 $11
 $2
 $4
 $3
Interest cost on projected benefit obligation135
 31
 43
 19
 23
 8
 11
 5
Expected return on plan assets(286) (72) (95) (44) (51) (14) (21) (11)
Amortization of actuarial loss64
 14
 20
 9
 11
 3
 6
 5
Amortization of prior service credit(16) (4) (2) (1) (1) —
 (1) (5)
Amortization of settlement charges5
 2
 1
 1
 —
 —
 —
 —
Net periodic pension costs$(15) $(3) $(9) $(2) $(7) $(1) $(1) $(3)
 Six Months Ended June 30, 2019
   Duke
   Duke
 Duke
 Duke
 Duke
  
 Duke
 Energy
 Progress
 Energy
 Energy
 Energy
 Energy
  
(in millions)Energy
 Carolinas
 Energy
 Progress
 Florida
 Ohio
 Indiana
 Piedmont
Service cost$74
 $24
 $21
 $12
 $10
 $2
 $4
 $3
Interest cost on projected benefit obligation165
 41
 52
 24
 27
 9
 13
 6
Expected return on plan assets(286) (75) (89) (44) (44) (14) (21) (11)
Amortization of actuarial loss49
 11
 18
 6
 12
 1
 3
 3
Amortization of prior service credit(16) (4) (1) (1) (1) —
 (1) (5)
Net periodic pension costs$(14) $(3) $1
 $(3) $4
 $(2) $(2) $(4)

NON-QUALIFIED PENSION PLANS
The following tables include the components of netNet 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 obligation4
 —
 1
 1
 1
Amortization of actuarial loss2
 —
 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 obligation4
 —
 2
 —
 —
Amortization of actuarial loss2
 —
 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 obligation10
 1
 3
 2
 2
Amortization of actuarial loss6
 —
 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 obligation11
 1
 4
 1
 1
Amortization of actuarial loss6
 —
 2
 1
 1
Amortization of prior service credit(1) —
 —
 —
 —
Net periodic pension costs$18

$1

$6

$2

$2
the three and six months ended June 30, 2020, and 2019.
OTHER POST-RETIREMENT BENEFIT PLANS
Duke Energy provides,Net periodic costs for OPEB plans were not material for the three and the Subsidiary Registrants participate in, some health caresix months ended June 30, 2020, and life insurance benefits 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
 $—
 $—
 $—
 $—
 $—
 $—
 $—
Interest cost on accumulated post-retirement benefit obligation9
 2
 4
 2
 2
 —
 1
 —
Expected return on plan assets(3) (2) —
 —
 —
 —
 —
 —
Amortization of actuarial loss2
 —
 5
 3
 2
 —
 —
 —
Amortization of prior service credit(29) (2) (21) (14) (8) —
 —
 —
Net periodic other post-retirement benefit costs$(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
 $—
 $—
 $—
 $—
 $1
Interest cost on accumulated post-retirement benefit obligation9
 2
 4
 2
 3
 —
 1
 —
Expected return on plan assets(2) (2) (1) —
 —
 —
 —
 —
Amortization of actuarial loss (gain)2
 —
 5
 3
 2
 (1) —
 —
Amortization of prior service credit(35) (4) (26) (16) (8) —
 (1) —
Net periodic other post-retirement benefit costs$(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
 $—
 $—
 $—
 $—
 $—
 $—
 $—
Interest cost on accumulated post-retirement benefit obligation27
 6
 11
 6
 6
 —
 1
 —
Expected return on plan assets(10) (6) —
 —
 —
 —
 —
 —
Amortization of actuarial loss (gain)6
 (2) 15
 9
 6
 (1) —
 —
Amortization of prior service credit(87) (6) (63) (41) (23) —
 —
 —
Net periodic other post-retirement benefit costs$(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
 $—
 $—
 $—
 $—
 $1
Interest cost on accumulated post-retirement benefit obligation26
 6
 11
 6
 6
 1
 3
 1
Expected return on plan assets(9) (6) (1) —
 —
 —
 (1) (1)
Amortization of actuarial loss (gain)5
 (2) 16
 9
 7
 (2) (1) —
Amortization of prior service credit(106) (10) (77) (50) (26) —
 (1) —
Net periodic other post-retirement benefit costs$(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, 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
201639
 13
 12
 8
 3
 1
 2
 2
Nine Months Ended September 30,            
2017$147
 $49
 $42
 $30
 $13
 $3
 $7
 $5
2016130
 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 ratesETRs from continuing operations for each of the Duke Energy Registrants are included in the following table.
 Three Months Ended Six Months Ended
 June 30, June 30,
 2020
 2019
 2020
 2019
Duke Energy26.2% 15.9% 98.9% 12.6%
Duke Energy Carolinas13.7% 19.7% 15.1% 18.7%
Progress Energy14.9% 16.7% 16.1% 17.0%
Duke Energy Progress13.9% 16.3% 15.7% 17.1%
Duke Energy Florida19.1% 19.6% 19.4% 19.5%
Duke Energy Ohio15.4% 16.1% 16.6% 16.5%
Duke Energy Indiana17.3% 24.2% 19.3% 24.2%
Piedmont128.6% 22.2% 5.8% 21.8%
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2017
 2016
 2017
 2016
Duke Energy27.6% 34.0% 30.4% 31.7%
Duke Energy Carolinas32.9% 34.3% 34.1% 34.4%
Progress Energy29.1% 32.8% 31.9% 34.7%
Duke Energy Progress31.7% 31.4% 32.4% 33.5%
Duke Energy Florida34.8% 36.0% 36.1% 37.0%
Duke Energy Ohio33.3% 36.8% 34.4% 32.5%
Duke Energy Indiana38.3% 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 in the effective tax rate (ETR) for Duke Energy for the three months ended September 30, 2017, is primarily due to higher research credits, tax benefits of legal entity restructuring and prior year unfavorable impacts of finalizing federal tax audits. The decreaseincrease in the ETR for Duke Energy for the ninethree and six months ended SeptemberJune 30, 2017, is2020, was primarily due to higher research credits, tax benefitsthe impact of legal entity restructuringan abandonment of the ACP investment and higher production tax credits related to wind projects placedan increase in service; partially offset by lower investment tax credits due to lower solar investments.the amortization of excess deferred taxes.
The decrease in the ETR for Duke Energy Carolinas for the three months ended SeptemberJune 30, 2017, is2020, was primarily due to an increase in the amortization of excess deferred taxes and certain favorable impacttax credits.
The decrease in the ETR for Duke Energy Carolinas for the six months ended June 30, 2020, was primarily due to an increase in the amortization of research credits, provision to return true ups, and lower North Carolina corporate tax rates.excess deferred taxes.
The decrease in the ETR for Progress Energy for the three and nine months ended SeptemberJune 30, 2017, is2020, was primarily due to an increase in the favorable impactamortization of research credits and lower North Carolina corporate tax rates.excess deferred taxes.

95



FINANCIAL STATEMENTSINCOME TAXES


The decrease in the ETR for Duke Energy Progress for the ninethree and six months ended SeptemberJune 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, is2020, was primarily due to an immaterial out of period adjustmentincrease in the prior year related toamortization 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 increasedecrease in the ETR for Duke Energy Indiana for the three and six months ended SeptemberJune 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, is2020, was primarily due to an immaterial out of period adjustmentincrease in the prior year related toamortization of excess deferred tax balances associated with property, plant and equipment.taxes.
The increase in the ETR for Piedmont for the three months ended SeptemberJune 30, 2017, is2020, was primarily due to favorable tax return true ups and lower North Carolina corporate tax ratesan increase in AFUDC Equity, in relation to pretax losses.
The decrease in the ETR for Piedmont for the ninesix months ended SeptemberJune 30, 2017, is2020, was 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 increase in the company's intent, combined withamortization of excess deferred taxes and an increase in AFUDC equity.
OTHER TAX MATTERS
On March 27, 2020, the extension of bonus depreciation by CongressCARES Act was enacted. The CARES Act is an emergency economic stimulus package 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 ofCOVID-19 pandemic. Among other provisions, the International Disposal Group as discontinued operations, income tax amounts relatedCARES 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 presentedremaining AMT credit carryforwards were reclassified in the first quarter 2020 to a current receivable included in Other within (Loss) Income from Discontinued Operations, net of taxCurrent Assets on the Condensed Consolidated StatementsBalance Sheets. The total income tax receivable related to AMT credit carryforwards is approximately $572 million as of Operations.June 30, 2020. 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,variable interest entities, see Notes 3 4, 5 and 13.11.

96


PART I

MD&ADUKE 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 ninesix months ended SeptemberJune 30, 2017,2020, 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 IrmaACP
On April 15, 2020, the United States District Court for the District of Montana granted partial summary judgment in favor of the plaintiffs in Northern Plains Resource Council v. U.S. Army Corps of Engineers (USACE) (Northern Plains), vacating USACE’s Nationwide Permit 12 (NWP 12) and remanding it to USACE for consultation under the Endangered Species Act (ESA) of 1973. In September 2017, Hurricane Irma caused widespread damage acrossNorthern Plains, the Southeast region, atcourt ruled that NWP 12 was unlawful because USACE did not consult under the ESA with the U.S. Fish and Wildlife Service and/or National Marine Fisheries Service prior to NWP 12’s reissuance in 2017. Because NWP 12 has been vacated and its peak leaving approximately 1.3 millionapplication enjoined, USACE currently has suspended verification of any new or pending applications under NWP 12 until further court action clarifies the situation.
On May 28, 2020, the U.S. Court of Appeals for the Ninth Circuit issued a ruling that limited the NWP 12 vacatur to energy infrastructure projects. In July 2020, the Supreme Court of the United States issued an order allowing other new oil and gas pipeline projects to use the NWP 12 process pending appeal to the U.S. Court of Appeals for the Ninth Circuit; however, that did not decrease the uncertainty associated with an eventual ruling. Together, these rulings indicated that the timeline to reinstate the necessary water crossing permits for ACP would likely cause further delays and cost increases.
On July 5, 2020, Dominion announced a sale of substantially all of its gas transmission and storage segment assets, operations core to the ACP pipeline project.
As a result of the uncertainty created by the NWP 12 rulings, the potential impact on the cost and schedule for the project, the ongoing legal challenges and risk of additional legal challenges throughout construction and Dominion’s decision to sell substantially all of its gas transmission and storage segment assets, Duke Energy's Board of Directors and management decided that it was not prudent to continue to invest in the project. On July 5, 2020, Duke Energy Florida customers without power.and Dominion announced the cancellation of the ACP pipeline.
As a result, Duke Energy's restoration effortsEnergy recorded a pretax charge to earnings of approximately $2.0 billion for the three months and six months ended June 30, 2020, within Equity in response to this devastating storm utilized a team(losses) earnings of over 12,000 line and service crews and hundreds of employee volunteers. Storm restoration costs (including capital) forunconsolidated affiliates on the Duke Energy FloridaCondensed Consolidated Statements of Operations. The tax benefit associated with this abandonment was $374 million and is recorded in Income Tax (Benefit) Expense on the Duke Energy Condensed Consolidated Statements of Operations. Additional charges of less than $100 million are expected to be recorded within the next 12 months as ACP incurs obligations to exit operations.
See Notes 3, 4, and 11 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” “Commitments and Contingencies,” and “Variable Interest Entities,” respectively, for additional information.
Even though the ACP pipeline was a critical infrastructure project for transporting natural gas into the Southeastern United States, natural gas still is an important fuel to help Duke Energy reach its carbon reduction goals of 50% by 2030 and net-zero carbon emissions by 2050 in a reliable and cost effective manner. In addition, Duke Energy will continue advancing its clean energy goals by investing in renewables, battery storage, energy efficiency programs and grid projects.
Social Justice and Racial Equity
In response to national events, in June and July 2020, the Duke Energy Foundation pledged $1.75 million to nonprofit organizations committed to social justice and racial equity. This grant builds upon the company’s past efforts to support and encourage diversity, inclusion and equity in our company and communities. The company will continue to engage its employees, local organizations and leaders to understand how to be a part of the long-term solution to the social justice issues our communities and organizations face.
COVID-19
The COVID-19 pandemic is having a significant impact on global health and economic environments. Retail electric sales are down 6.5% for the quarter compared to the prior year due to the pandemic. This reduction however is not as steep as expected in our revised March 2020 forecast reflecting the potential economic impact of COVID-19 on 2020 results. The company also incurred approximately $40 million of incremental COVID-19 costs, primarily bad debt expense, personal protective equipment and cleaning supplies, and experienced another $25 million of waived late payment fees for the six months ended June 30, 2020. The Duke Energy 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 and communities. We expect to begin a sales rebound during the second half of 2020 and have cost mitigation plans. 

97

MD&ADUKE ENERGY


Employees. The health of 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 territory are currently estimated at approximately $500 million. The vast majority of these costsor certain other functions have been deferredperforming their work duties remotely from home. Employees who need to interact with customers in person are following the Centers for Disease Control and Prevention’s safety guidelines, including social distancing and use of face masks. Operating procedure changes include additional cleaning and disinfection procedures at our facilities.
•
Customers. The Duke Energy Subsidiary Registrants began, 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 begun to restart their businesses since initially closing in late March and April.
Communities. The Duke Energy Foundation announced approximately $6 million in donations and grants as of June 30, 2020, to support hunger relief, local health and human services nonprofits, and education initiatives across the Duke Energy Registrants’ service 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. During the six months ended June 30, 2020:
◦Duke Energy issued approximately $3.3 billion of debt.
◦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.
Policymaker actions. The CARES Act was signed by President Trump on March 27, 2020. Duke Energy Registrants will benefit from certain provisions such as the AMT acceleration and deferral of certain payroll taxes. See Note 15 to the balance sheetCondensed Consolidated Financial Statements, “Income Taxes,” 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.additional information.
Rate Case and utility commission filings. See Note 43 to the Condensed Consolidated Financial Statements, "Regulatory Matters"Matters," for additional information.
•
On July 31, 2020, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain remaining issues in the 2019 base rate proceeding. As a result of the additional settlement terms, the NCUC ordered the remote evidentiary hearing to be delayed until August 24, 2020. Duke Energy Carolinas and Duke Energy Progress expect the NCUC to issue an order on each net rate increase by the end of the year. On August 4, 2020 and August 7, 2020, respectively, Duke Energy Carolinas and Duke Energy Progress filed a motion for approval of notice required to implement temporary rates, seeking to exercise its statutory right to implement temporary rates subject to refund.
Regulatory Activity
In the third quarter of 2017, Duke Energy advanced regulatory activity underwayFlorida filed a petition with the FPSC on April 2, 2020, to accelerate a fuel cost refund to customers in multiple jurisdictions, achieving several key milestones.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.
In August 2017, Duke Energy CarolinasKentucky filed a basean electric rate case with the North Carolina Utilities Commission. The rate request was driven by capital investments inKPSC on September 3, 2019. On April 27, 2020, the KPSC issued its decision and new highly efficient natural gas combined-cycle plants and other plant upgrades, coal ash basin closure activities and grid improvement projects. Hearings are scheduled to commence in February 2018.
In Florida,customer rates were effective on May 1, 2020. On May 18, 2020, Duke Energy worked closely with stakeholders to build uponKentucky filed its motion for rehearing, and extendon June 4, 2020, the existing settlement agreement from 2013. In late August, Duke Energy Florida reached a favorable agreement with numerous partiesmotion was granted in the state, including the consumer advocate,part and that agreement was approveddenied in part 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 charge of $135 million during the third quarter.
See Note 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters" for additional information.
2016 Acquisition 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 business in the Midwest.KPSC.
Duke Energy incurred pretax nonrecurring transaction and integration costs associatedIndiana filed a general rate case with the acquisitionIURC on July 2, 2019. The IURC issued its order June 29, 2020, approving a revenue increase of $23approximately $146 million, and $69 million for the three and nine months ended Septemberbefore utility receipt taxes. Customer rates were effective July 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 financing2020. Several groups filed notices 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, resultsappeal 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.IURC order on July 29, 2020.
COVID-19 deferral requests
◦Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the NCUC for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic on August 7, 2020. Duke Energy Carolinas and Duke Energy Progress are evaluating a filing with the PSCSC for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic.
◦Duke Energy Ohio on May 11, 2020, filed with the PUCO a request seeking deferral of incremental costs incurred due to the COVID-19 pandemic, 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. On June 17, 2020, the PUCO approved Duke Energy Ohio’s deferral application.
◦On May 8, 2020, Duke Energy Indiana, along with other Indiana utilities, filed a request with the IURC for approval of deferral treatment for costs associated with the COVID-19 pandemic. On June 29, 2020, the IURC issued its order permitting jurisdictional utilities to use regulatory accounting for any impacts associated with the prohibition on utility disconnections, waiver or exclusion of certain utility fees, the use of expanded payment arrangements to aid customers, and for COVID-19 related uncollectible and incremental bad debt expense.

98

MD&ADUKE ENERGY


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 attributableavailable to Duke Energy Corporation common stockholders in dollar and per share amounts, adjusted for the dollar and per-shareper 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 (GAAPGAAP Reported Earnings)Earnings (Loss) and Diluted EPS Attributable to Duke Energy Corporation common stockholders (GAAPGAAP Reported EPS),Earnings (Loss) Per Share, respectively.
Special items included in the periods presented below include the following, items, which management believes do not reflect ongoing costs:
Costs to Achieve Mergers represent charges that 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 ImpairmentsACP represents other-than-temporary and asset impairments.
Florida Settlement represents an impairment chargecosts related to the Levy nuclear project based on a settlement agreement approved by regulators.
Adjusted earnings also include operating resultsabandonment of the International Disposal Group,ACP investment.
Severance represents the reversal of 2018 costs which have been classifiedwere deferred as discontinued operations. Management believes inclusiona result of the operating results ofpartial settlement in 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 SeptemberJune 30, 2017,2020, as compared to SeptemberJune 30, 20162019
GAAP Reported EPSreported loss per share was $1.36$(1.13) for the thirdsecond quarter of 20172020 compared to $1.70 forearnings per share of $1.12 in the thirdsecond quarter of 2016. The decrease in2019. GAAP Reported EPS wasreported earnings decreased primarily due to less favorable weather, an impairment at Duke Energy Florida and prior year income from discontinued operations including International Energy which was soldthe abandonment of the investment in 2016; partially offset by a lower effective tax rate, lower costs associated with the Piedmont acquisition and growth from investments.ACP.
As discussed above, management also evaluates financial performance based on adjusted diluted EPS. Duke Energy’s thirdsecond quarter 20172020 adjusted diluted EPS was $1.59$1.08 compared to $1.68$1.12 for the thirdsecond quarter of 2016. 2019. The decrease in adjusted earnings was primarily due to unfavorable weather, lower volumes and higher depreciation expense, partially offset by lower operations and maintenance expense.
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

PART I

 Three Months Ended June 30,
 2020 2019
(in millions, except per share amounts)(Loss) Earnings (Loss) Earnings Per Share Earnings EPS
GAAP Reported (Loss) Earnings/GAAP Reported (Loss) Earnings Per Share$(817) $(1.13) $820
 $1.12
Adjustments:       
ACP(a)
1,626
 2.21
 —
 —
Adjusted Earnings/Adjusted EPS$809
 $1.08
 $820
 $1.12
(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.$374 million.
The decrease in adjusted earnings
Six Months Ended June 30, 2020, as compared to June 30, 2019
GAAP Reported EPS was $0.11 for the threesix months ended SeptemberJune 30, 2017,2020, compared to $2.36 for 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,six months ended June 30, 2019. GAAP reported earnings decreased primarily due to the Piedmont acquisition.abandonment of the investment in ACP.
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 was $2.22 for the ninesix months ended SeptemberJune 30, 2017, was $3.632020, compared to $3.88$2.36 for the ninesix months ended SeptemberJune 30, 2016. 2019. The decrease in adjusted earnings was primarily due to unfavorable weather, lower volumes, higher depreciation expense, higher financing costs and a prior year adjustment related to income tax recognition for equity method investments. This was partially offset by positive rate case impacts, growth in Commercial Renewables and lower operations and maintenance expense.

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MD&ADUKE ENERGY


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
 Six Months Ended June 30,
 2020 2019
(in millions, except per-share amounts)Earnings EPS Earnings EPS
GAAP Reported Earnings/GAAP Reported EPS$82
 $0.11
 $1,720
 $2.36
Adjustments:       
ACP(a)
1,626
 2.21
 —
 —
Severance(b)
(75) (0.10) —
 —
Adjusted Earnings/Adjusted EPS$1,633
 $2.22
 $1,720
 $2.36
(a)Net of $26 million tax benefit in 2017 and $120 million tax benefit in 2016.of $374 million.
(b)Net of $24 million tax benefit in 2016.
(c)Netexpense 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.$23 million.
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 includeincludes 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 June 30, Six Months Ended June 30,
(in millions)2017
 2016
 Variance
 2017
 2016
 Variance
2020
 2019
 Variance
 2020
 2019
 Variance
Operating Revenues$6,129
 $6,340
 $(211) $16,234
 $16,430
 $(196)$5,034
 $5,475
 $(441) $10,217
 $10,804
 $(587)
Operating Expenses                      
Fuel used in electric generation and purchased power1,872
 2,016
 (144) 4,875
 5,102
 (227)1,367
 1,662
 (295) 2,834
 3,292
 (458)
Operation, maintenance and other1,297
 1,291
 6
 3,833
 3,819
 14
1,240
 1,318
 (78) 2,565
 2,600
 (35)
Depreciation and amortization777
 729
 48
 2,228
 2,139
 89
993
 951
 42
 1,970
 1,898
 72
Property and other taxes277
 274
 3
 808
 799
 9
296
 297
 (1) 599
 598
 1
Impairment charges132
 9
 123
 134
 12
 122
1
 4
 (3) 3
 4
 (1)
Total operating expenses4,355
 4,319
 36
 11,878
 11,871
 7
3,897
 4,232
 (335) 7,971
 8,392
 (421)
Gains on Sales of Other Assets and Other, net—
 1
 (1) 4
 3
 1
7
 3
 4
 8
 —
 8
Operating Income1,774
 2,022
 (248) 4,360
 4,562
 (202)1,144
 1,246
 (102) 2,254
 2,412
 (158)
Other Income and Expenses67
 75
 (8) 222
 215
 7
Other Income and Expenses, net89
 89
 —
 174
 180
 (6)
Interest Expense305
 287
 18
 925
 829
 96
344
 330
 14
 683
 668
 15
Income Before Income Taxes1,536
 1,810
 (274) 3,657
 3,948
 (291)889
 1,005
 (116) 1,745
 1,924
 (179)
Income Tax Expense516
 621
 (105) 1,273
 1,391
 (118)136
 196
 (60) 287
 365
 (78)
Segment Income$1,020
 $1,189
 $(169) $2,384
 $2,557
 $(173)$753
 $809
 $(56) $1,458
 $1,559
 $(101)
          

          

Duke Energy Carolinas gigawatt-hours (GWh) sales24,135
 25,508
 (1,373) 66,159
 67,890
 (1,731)
Duke Energy Carolinas GWh sales19,083
 21,604
 (2,521) 40,319
 43,432
 (3,113)
Duke Energy Progress GWh sales18,827
 20,033
 (1,206) 50,026
 54,011
 (3,985)14,807
 16,222
 (1,415) 30,477
 32,570
 (2,093)
Duke Energy Florida GWh sales12,132
 12,440
 (308) 31,177
 31,542
 (365)10,800
 11,301
 (501) 19,417
 19,622
 (205)
Duke Energy Ohio GWh sales6,672
 7,214
 (542) 18,632
 19,117
 (485)5,262
 5,660
 (398) 11,085
 11,824
 (739)
Duke Energy Indiana GWh sales8,795
 9,073
 (278) 24,975
 26,624
 (1,649)6,773
 7,437
 (664) 14,379
 15,470
 (1,091)
Total Electric Utilities and Infrastructure GWh sales70,561
 74,268
 (3,707) 190,969
 199,184
 (8,215)56,725
 62,224
 (5,499) 115,677
 122,918
 (7,241)
Net proportional megawatt (MW) capacity in operation    

 48,909
 49,411
 (502)
Net proportional MW capacity in operation    

 50,364
 49,725
 639
Three Months Ended SeptemberJune 30, 2017,2020, as Comparedcompared to SeptemberJune 30, 20162019
Electric Utilities and Infrastructure’s results were impactedvariance is due to unfavorable weather, lower weather-normal retail sale volumes driven by less favorable weatherimpacts from the COVID-19 pandemic and an impairment atlower 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$332 million decrease in fuel revenues due todriven by lower retail sales volumes; and
a $160 million decrease in retail sales, net of fuel revenues, due to less favorable weather in the current year, including lost revenues related to Hurricane Irma.
Partially offset by:
a $90 million 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,volumes as well as increased rider revenues related to energy efficiency programs, Duke Energy Florida's nuclear asset securitization, and Midwest capital investments.
Operating Expenses. The variance was driven primarily by:
a $123 million increase in impairment charges primarily due to write-offan accelerated refund of remaining unrecovered Levy Nuclear Projectfuel costs at Duke Energy Florida in response to the current year; andCOVID-19 pandemic;

100

MD&ASEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE


a $48 million increase in depreciation and amortization expense primarily due to additional plant in service.

PART I

Partially offset by:
a $144 million decrease in fuel 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. The effective tax rates for the three months ended September 30, 2017, and 2016 were 33.6 percent and 34.3 percent, 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$79 million decrease in retail sales, net of fuel revenues, due to unfavorable weather compared to prior year;
a $47 million decrease in wholesale revenues, net of fuel, primarily due to higher recovery of coal ash cost in the prior year including lost revenues related to Hurricane Irma;and lower capacity volumes at Duke Energy Progress; and
a $256$32 million decrease in fuel revenues primarilyweather-normal retail sale volumes due to lower retail sales volumes.nonresidential customer demand driven by impacts from the COVID-19 pandemic.
Partially offset by:
a $346$23 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 forrelated to annual increases from the Osprey acquisition and Hines Chillers2017 Settlement Agreement and the Duke Energy ProgressSolar Base Rate Adjustment; and
a $13 million increase due to higher pricing from South Carolina retail rate case; and
case, net of a $59 million increase in weather-normal sales volumesreturn of EDIT to retail customers.
Operating Expenses. The variance was driven primarily by:
a $122$295 million increasedecrease in impairment chargesfuel used in electric generation and purchased power primarily due to the write-off of remaining unrecovered Levy Nuclear Projectlower generation demand and lower fuel, coal, and natural gas costs; and
a $78 million decrease in operation, maintenance and other expense driven by lower employee benefit costs in the current year at Duke Energy Florida; and lower outage costs.
an $89Partially offset by:
a $42 million increase in depreciation and amortization expense primarily due to additional plant in service;service and impacts from the South Carolina retail rate cases.
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 increasevariance was primarily due to higher outstanding debt outstanding in the current year and Duke Energy Florida's Crystal River 3 (CR3) regulatory assetfavorable debt return endingon deferred coal ash spend in June 2016 upon securitization.the prior year.
Income Tax Expense. The variancedecrease in tax expense 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
An order from regulatory authorities disallowing recovery of costs related to closure of ash impoundments could have an adverse impact on Electric Utilities and Infrastructure's financial position, results of operations and cash flows. See Note 4 and Note 7 to the Condensed Consolidated Financial Statements, “Regulatory Matters” and "Asset Retirement Obligations," respectively, for additional information.
On May 18, 2016, the North Carolina Department 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 reassessedincrease 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 closureamortization 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 Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," 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.excess deferred taxes. The outcome 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 costs 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.
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 gas68
 6
 62
 402
 64
 338
Operation, maintenance and other93
 30
 63
 291
 90
 201
Depreciation and amortization57
 19
 38
 171
 59
 112
Property and other taxes25
 12
 13
 81
 44
 37
Total operating expenses243
 67
 176
 945
 257
 688
Operating Income29
 22
 7
 298
 101
 197
Other Income and Expenses22
 7
 15
 60
 13
 47
Interest Expense26
 6
 20
 78
 19
 59
Income Before Income Taxes25
 23
 2
 280
 95
 185
Income Tax Expense6
 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 September 30, 2017, as Compared to September 30, 2016
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 millionETRs for the three months ended SeptemberJune 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 Income2020, and Expenses. June 30, 2019, were 15.3% and 19.5%. The variance was driven primarily by increased investmentsdecrease in the ACP pipeline.ETR was primarily due to an increase in the amortization of excess deferred taxes.

PART I

NineSix Months Ended SeptemberJune 30, 2017,2020, as Comparedcompared to SeptemberJune 30, 20162019
GasElectric Utilities and Infrastructure’s higher results werevariance is due to unfavorable weather, lower weather-normal retail sale volumes driven by impacts from the inclusion of Piedmont's earnings inCOVID-19 pandemic and lower wholesale revenues, partially offset by higher revenues resulting from the current year as a result ofSouth Carolina retail rate cases and Duke Energy's acquisition of Piedmont on October 3, 2016, as well as growth from investments in ACPEnergy Florida base 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
 $(32)
Operating Expenses           
Operation, maintenance and other56
 98
 (42) 191
 253
 (62)
Depreciation and amortization39
 34
 5
 116
 96
 20
Property and other taxes9
 8
 1
 26
 20
 6
Impairment charges76
 —
 76
 76
 —
 76
Total operating expenses180
 140
 40
 409
 369
 40
Gains on Sales of Other Assets and Other, net1
 2
 (1) 5
 4
 1
Operating (Loss) Income(84) 1
 (85) (71) —
 (71)
Other Income and Expenses(10) (76) 66
 (12) (78) 66
Interest Expense22
 15
 7
 64
 38
 26
Loss Before Income Taxes(116) (90) (26) (147) (116) (31)
Income Tax Benefit(65) (65) —
 (146) (127) (19)
Less: Loss Attributable to Noncontrolling Interests(2) (1) (1) (3) (2) (1)
Segment (Loss) Income$(49)
$(24) $(25) $2
 $13
 $(11)
            
Renewable plant production, GWh1,760
 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 tax credits (ITCs), higher interest expense on new debt financings and higher losses from Duke Energy's REC Solar investment.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 $482 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs at Duke Energy Florida in response to the COVID-19 pandemic;
a $124 million decrease in retail sales, net of fuel revenues, due to unfavorable weather in the current year;
a $63 million decrease in wholesale revenues, net of fuel, primarily due to higher recovery of coal ash cost in the prior year and lower capacity volumes at Duke Energy Progress; and
a $15 million decrease in weather-normal retail sale volumes due to lower nonresidential customer demand driven by impacts from the COVID-19 pandemic.
Partially offset by:
a $39 million increase in retail pricing due to Duke Energy Florida's base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment; and
a $32 million increase due to higher pricing from South Carolina retail rate case, net of a return of EDIT to customers.
Operating Expenses. The variance was driven primarily by:
a $458 million decrease in fuel used in electric generation and purchased power primarily due to lower engineering, procurementgeneration demand and construction revenues from REC Solar.lower fuel, coal, and natural gas costs; and
Operating Expenses. Thea $35 million decrease in operation, maintenance and other expense primarily lower employee benefit costs and lower outage costs.
Partially offset by:
a $72 million increase wasin depreciation and amortization expense primarily due to a $69 million pretax impairment chargeadditional plant in service and impacts from the current year related to a wholly owned non-contracted wind project, 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.”South Carolina retail rate cases.
Other Income and Expenses.Interest Expense. The variance was primarily due to a $71 million pretax impairment chargehigher outstanding debt in the current year and favorable debt return on deferred coal ash spend in the prior year related to certain equity method investments. For additional information see Note 3 to the Condensed Consolidated Financial Statements, “Business Segments.”year.
Interest
101

MD&ASEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE


Income Tax Expense. The increasedecrease in tax expense was primarily due to new project financings.
Income Tax Benefit. Lower ITCsa decrease in pretax income and an increase in the amortization of excess deferred taxes. The ETRs for the six months ended June 30, 2020, and 2019, were 16.4% and 19.0%, respectively. The decrease in the ETR was primarily due to lower solar investmentsan increase in the current year were offset by higher production tax credits (PTCs) related to wind projects placed in service.amortization of excess deferred taxes.

Gas Utilities and Infrastructure

PART I

 Three Months Ended June 30, Six Months Ended June 30,
(in millions)2020
 2019
 Variance
 2020
 2019
 Variance
Operating Revenues$289
 $306
 $(17) $953
 $1,062
 $(109)
Operating Expenses           
Cost of natural gas60
 76
 (16) 259
 403
 (144)
Operation, maintenance and other99
 107
 (8) 209
 217
 (8)
Depreciation and amortization62
 63
 (1) 128
 128
 —
Property and other taxes26
 27
 (1) 56
 60
 (4)
Total operating expenses247
 273
 (26) 652
 808
 (156)
Operating Income42
 33
 9
 301
 254
 47
Other Income and Expenses           
Equity in (losses) earnings of unconsolidated affiliates(1,970) 31
 (2,001) (1,933) 64
 (1,997)
Other income and expenses, net14
 6
 8
 26
 13
 13
Total other income and expenses(1,956) 37
 (1,993) (1,907) 77
 (1,984)
Interest Expense37
 27
 10
 68
 57
 11
(Loss) Income Before Income Taxes(1,951) 43
 (1,994) (1,674) 274
 (1,948)
Income Tax (Benefit) Expense(375) 3
 (378) (347) 8
 (355)
Segment (Loss) Income$(1,576) $40
 $(1,616) $(1,327) $266
 $(1,593)
       

    
Piedmont LDC throughput (dekatherms)96,807,940
 104,684,733
 (7,876,793) 245,311,935
 256,347,474
 (11,035,539)
Duke Energy Midwest LDC throughput (Mcf)15,106,407
 13,742,907
 1,363,500
 48,892,241
 52,281,179
 (3,388,938)
NineThree Months Ended SeptemberJune 30, 2017,2020, as Comparedcompared to SeptemberJune 30, 20162019
Commercial Renewables'Gas Utilities and Infrastructure’s results were impacted primarily by lower ITCs, higher interest expense on new debt financings and higher losses from REC Solar, partially offset by increased PTCs.the abandonment of the investment in ACP. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues.The decreasevariance was driven primarily by:
a $16 million decrease due to lower engineering, procurementnatural gas costs passed through to customers and construction revenues from REC Solar.decreased off-system sales natural gas costs; and
a $7 million decrease due to return of EDIT to customers.
Partially offset by:
a $7 million increase due to North Carolina base rate case increases.
Operating Expenses.The increasevariance was driven primarily by:
a $16 million decrease in cost of natural gas due to lower natural gas prices and decreased off-system sales natural gas costs; and
an $8 million decrease in operation, maintenance and other due to deferral of previously expensed IT project costs and lower employee benefits costs.
Equity in (losses) earnings of unconsolidated affiliates. The variance was driven primarily by the abandonment of the investment in ACP.
Interest Expense. The variance was driven primarily by interest on the EDIT balance being returned to customers and higher debt outstanding in the current year, offset by lower AFUDC debt income.
Income Tax Benefit. The decrease in tax expense was primarily due to a $69 milliondecrease in pretax impairment chargeincome driven by the impact of an abandonment of the ACP investment. The ETRs for the three months ended June 30, 2020, and 2019, were 19.2% and 7%, respectively. The increase in the current year related to a wholly owned non-contracted wind project 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.”
Other Income and Expenses. The varianceETR 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 variance was primarily due to new project financings and less capitalized interest due to fewer projects under construction.
Income Tax Benefit.The variance was primarily due toimpact of 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 valueabandonment of the Commercial Renewables reporting units for goodwill testing purposes including but not limited to legislative actions related to tax credit extensions, long-term growth rates and discount rates could significantly impact the estimated fair value of the Commercial Renewables reporting units. In the event of a significant decline in the estimated fair value of the Commercial Renewables reporting units, goodwill or other asset impairment charges could be recorded. The carrying value of goodwill within Commercial Renewables was approximately $115 million at September 30, 2017.
Persistently low market pricing for wind resources, primarily in the Electric Reliability Council of Texas West market, and the future expiration of tax incentives including ITCs and PTCs could result in adverse impacts to the future results of Commercial Renewables.ACP investment.
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
 $12
Operating Expenses           
Fuel used in electric generation and purchased power13
 14
 (1) 42
 37
 5
Operation, maintenance and other21
 70
 (49) 47
 145
 (98)
Depreciation and amortization27
 37
 (10) 79
 108
 (29)
Property and other taxes3
 8
 (5) 10
 25
 (15)
Impairment charges—
 —
 —
 7
 2
 5
Total operating expenses64
 129
 (65) 185
 317
 (132)
Gains on Sales of Other Assets and Other, net4
 3
 1
 15
 14
 1
Operating Loss(25) (94) 69
 (67) (212) 145
Other Income and Expenses51
 24
 27
 100
 60
 40
Interest Expense150
 157
 (7) 423
 553
 (130)
Loss Before Income Taxes(124) (227) 103
 (390) (705) 315
Income Tax Benefit(93) (49) (44) (193) (276) 83
Less: Income Attributable to Noncontrolling Interests3
 3
 —
 8
 7
 1
Net Expense$(34) $(181) $147
 $(205) $(436) $231
ThreeSix Months Ended SeptemberJune 30, 2017,2020, as Comparedcompared to SeptemberJune 30, 20162019
Other's lower net expense was drivenGas Utilities and Infrastructure’s results were impacted primarily by tax benefits, insurance proceeds resulting from settlementthe abandonment of the shareholder litigation related to the Progress Energy merger, prior year donations to the Duke Energy Foundation and lower severance expenses.ACP. The following is a detailed discussion of the variance drivers by line item.

102

MD&ASEGMENT RESULTS — GAS UTILITIES AND INFRASTRUCTURE


Operating Expenses.Revenues.The decreasevariance was driven primarily by:
a $144 million decrease due to prior year donationslower natural gas costs passed through to the Duke Energy Foundation, less captive insurance losses for Bison Insurance Company Limitedcustomers and prior year severance expense relateddecreased off-system sales natural gas costs; and
a $27 million decrease due to cost savings initiatives.return of EDIT to customers.
Other Income andPartially offset by:
a $60 million increase due to North Carolina base rate case increases.
Operating Expenses.The increasevariance was driven primarily by:
a $144 million decrease in cost of natural gas due to lower natural gas prices and decreased off-system sales natural gas costs; and
an $8 million decrease in operation, maintenance and other due to deferral of previously expensed IT project costs and lower employee benefits costs.
Equity in (losses) earnings of unconsolidated affiliates. The variance was driven primarily by insurance proceeds resulting from settlementthe abandonment of the shareholder litigation related to the Progress Energy merger and higher earnings from the equity method investment in National Methanol Company (NMC).ACP.
Interest Expense. The decreasevariance was driven primarily by prior year lossesinterest on forward-starting interest rate swaps relatedthe EDIT balance being returned to Piedmont pre-acquisition financing, partially offset by additional long-termcustomers and higher 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.year, offset by lower AFUDC debt income.

PART I

Income Tax Benefit. The variancedecrease in tax expense 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 lowera decrease in pretax losses.
Nine Months Ended September 30, 2017, as Compared to September 30, 2016
Other's lower net expense wasincome driven by prior year losses on forward-starting interest rate swaps, prior year donations to the Duke Energy Foundation, insurance proceeds resulting from settlementimpact of an abandonment of the shareholder litigationACP investment. The ETRs for the six months ended June 30, 2020, and 2019, were 20.7% and 2.9%, respectively. The increase in the ETR was primarily due to an adjustment, recorded in the first quarter of 2019, related to the Progress Energy mergerincome tax recognition for equity method investments. The equity method investment adjustment was immaterial and decreased severance expenses.relates to prior years.
Commercial Renewables
 Three Months Ended June 30, Six Months Ended June 30,
(in millions)2020
 2019
 Variance
 2020
 2019
 Variance
Operating Revenues$123
 $118
 $5
 $252
 $224
 $28
Operating Expenses           
Operation, maintenance and other63
 64
 (1) 132
 130
 2
Depreciation and amortization48
 40
 8
 96
 80
 16
Property and other taxes8
 6
 2
 16
 12
 4
Impairment charges6
 —
 6
 6
 —
 6
Total operating expenses125
 110
 15
 250
 222
 28
Operating (Loss) Income(2) 8
 (10) 2
 2
 —
Other Income and Expenses, net2
 (8) 10
 1
 (10) 11
Interest Expense13
 22
 (9) 31
 43
 (12)
Loss Before Income Taxes(13) (22) 9
 (28) (51) 23
Income Tax Benefit(13) (24) 11
 (37) (59) 22
Add: Loss Attributable to Noncontrolling Interests90
 84
 6
 138
 91
 47
Segment Income$90

$86
 $4
 $147
 $99
 $48
            
Renewable plant production, GWh2,660
 2,314
 346
 5,097
 4,382
 715
Net proportional MW capacity in operation(a)
    

 3,779
 3,157
 622
(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.
Three Months Ended June 30, 2020, as compared to June 30, 2019
Commercial Renewables' results were favorable primarily due to new investments in solar projects. During the second quarter of 2020, Commercial Renewables had over 250MW of capacity placed in service. The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The increase was primarily due to new solar projects placed in service.
Operating Expenses. The increase was primarily due to higher depreciation and property tax expense as a result of new projects placed in service and an impairment charge in the current year related to a non-contracted wind project.
Other Income and Expenses, net. The increase was primarily due to mark-to-market losses in the solar portfolio in the prior year.
Interest Expense. The decrease was primarily due to prior year severance expenseshigher capitalized interest for solar and wind projects in development.

103

MD&ASEGMENT RESULTS — COMMERCIAL RENEWABLES


Income Tax Benefit. The decrease in the tax benefit was primarily driven by a decrease in production tax credits generated and an increase in taxes associated with new tax equity investments.
Loss Attributable to Noncontrolling Interests. The increase was primarily due to tax equity structures related to cost savings initiatives, priornew renewable investments.
Six Months Ended June 30, 2020, as compared to June 30, 2019
Commercial Renewables' results were favorable primarily due to new investments in renewable projects and favorable wind revenue. Since the second quarter of 2019, Commercial Renewables has placed in service over 700MW of capacity.
The following is a detailed discussion of the variance drivers by line item.
Operating Revenues. The increase was primarily due to new projects placed in service and favorable wind portfolio revenue as a result of favorable market pricing and wind resource.
Operating Expenses. The increase was primarily due to higher depreciation and property tax expense as a result of new projects placed in service and an impairment charge in the current year donationsrelated to the Duke Energy Foundation and lower franchise taxes resulting from a North Carolina law change.non-contracted wind project.
Other Income and Expenses.Expenses, net. The increase was driven by insurance proceeds resulting from settlement ofprimarily due to mark-to-market losses in the shareholder litigation related tosolar portfolio in the Progress Energy merger and higher earnings from the equity method investment in NMC.prior year.
Interest Expense. The decrease was primarily due to higher capitalized interest for solar and wind projects in development.
Income Tax Benefit. The decrease in the tax benefit was primarily driven by prior year losses on forward-starting interest rate swapsan increase in taxes associated with new tax equity investments and a decrease in production tax credits generated.
Loss Attributable to Noncontrolling Interests. The increase was primarily due to tax equity structures related to Piedmont pre-acquisition financing, partially offsetnew renewable investments.
Other
 Three Months Ended June 30, Six Months Ended June 30,
(in millions)2020
 2019
 Variance
 2020
 2019
 Variance
Operating Revenues$26
 $25
 $1
 $49
 $46
 $3
Operating Expenses37
 11
 26
 (52) 39
 (91)
Operating (Loss) Income(11) 14
 (25) 101
 7
 94
Other Income and Expenses, net45
 30
 15
 12
 74
 (62)
Interest Expense167
 180
 (13) 338
 351
 (13)
Loss Before Income Taxes(133) (136) 3
 (225) (270) 45
Income Tax Benefit(64) (33) (31) (83) (78) (5)
Less: Preferred Dividends15
 12
 3
 54
 12
 42
Net Loss$(84)
$(115) $31
 $(196) $(204) $8
Three Months Ended June 30, 2020, as compared to June 30, 2019
The variance was primarily driven by lower state income tax expense. The following is a detailed discussion of the variance drivers by line item.
Operating Expenses. The increase was primarily driven by higher interest costs on $3.75 billion of debt issued in August 2016loss experience related to fund the acquisition. For additional information see Notes 2non-property captive insurance claims and 10 to the Condensed Consolidated Financial Statements, "Acquisitionshigher expenses associated with certain employee benefit obligations.
Other Income and Dispositions" and "Derivatives and Hedging," respectively.
Income Tax Benefit.Expenses, net. The variance was primarily due to a decrease in pretax losses,higher returns on investments that fund certain employee benefit obligations, partially offset by tax benefits resulting from legal entity restructuringlower earnings on the NMC investment.
Interest Expense. The variance was primarily due to lower outstanding short-term debt and the net impact of North Carolina corporate tax rate reductions in 2017 and 2016.lower interest rates.
Matters Impacting Future Other Results
Included in Other is Duke Energy Ohio's 9 percent ownership interestIncome Tax Benefit. The increase in the Ohio Valley Electric Corporation (OVEC)tax benefit was primarily driven by lower state income tax expense. The ETRs for the three months ended June 30, 2020, and 2019 were 48.1% and 24.3%, which owns 2,256 MW of coal-fired generation capacity. As a counterparty to an inter-company power agreement (ICPA), Duke Energy Ohio has a contractual arrangement to receive entitlements to capacity and energy from OVEC’s power plants through June 2040 commensurate with its power participation ratio, which is equivalent to Duke Energy Ohio's ownership interest. Costs, including fuel, operating expenses, fixed costs, debt amortization and interest expense, are allocated to counterparties torespectively. The increase in the ICPA, including Duke Energy Ohio, based on their power participation ratio. The value of the ICPA is subject to variabilityETR was primarily 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.”lower state income tax expense.
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 adverse impact on Other's financial position, results of operations 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. Weakness in the market price of Brent crude oil and related commodities may result in a decline in earnings. In October 2017, Duke Energy's economic ownership interest in NMC decreased from 25 percent to 17.5 percent.
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)
ThreeSix Months Ended SeptemberJune 30, 2017,2020, as Comparedcompared to SeptemberJune 30, 20162019
The variance was primarily driven by a $122 million income tax benefit inreversal of corporate allocated severance costs, partially offset by lower returns on investments and the prior year resulting from immaterial outdeclaration of period deferred tax liability adjustments, as well as earnings frompreferred stock dividends. The following is a detailed discussion of the International Disposal Group, whichvariance drivers by line item.
Operating Expenses. The decrease was sold in December 2016. For additional information see Note 2primarily due to the Condensed Consolidated Financial Statements, "Acquisitionsdeferral of 2018 corporate allocated severance costs due to the partial settlement between Duke Energy Carolinas and Dispositions."the Public Staff of the NCUC related to the 2019 North Carolina retail rate case.
Nine Months Ended September 30, 2017, as Compared to September 30, 2016
Other Income and Expenses, net. The variance was primarily driven bydue to lower returns on investments that fund certain employee benefit obligations, lower earnings on the NMC investment and lower interest income due to a $122 million income tax benefittrue up in the prior year resulting from immaterial outyear.
Interest Expense. The variance was primarily due to lower outstanding short-term debt and lower interest rates.
Preferred Dividends. The variance was driven by the declaration 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 assetspreferred stock dividends on preferred stock issued in Central America that were sold in 2016. For additional information see Note 2 to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions."2019.

104


PART I

MD&ADUKE ENERGY CAROLINAS


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,Six Months Ended June 30,
(in millions)2017
 2016
 Variance
2020
 2019
 Variance
Operating Revenues$5,581
 $5,641
 $(60)$3,358
 $3,457
 $(99)
Operating Expenses          
Fuel used in electric generation and purchased power1,394
 1,391
 3
829
 867
 (38)
Operation, maintenance and other1,431
 1,481
 (50)816
 881
 (65)
Depreciation and amortization804
 802
 2
718
 663
 55
Property and other taxes206
 206
 —
156
 155
 1
Impairment charges2
 5
 (3)
Total operating expenses3,835
 3,880
 (45)2,521
 2,571
 (50)
Losses on Sales of Other Assets and Other, net—
 (1) 1
Operating Income1,746
 1,760
 (14)837
 886
 (49)
Other Income and Expenses99
 121
 (22)
Other Income and Expenses, net86
 72
 14
Interest Expense314
 316
 (2)248
 227
 21
Income Before Income Taxes1,531
 1,565
 (34)675
 731
 (56)
Income Tax Expense522
 539
 (17)102
 137
 (35)
Net Income$1,009
 $1,026
 $(17)$573
 $594
 $(21)
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 year20172020

Residential sales(6.75.0)%
General service sales(2.16.7)%
Industrial sales(0.59.6)%
Wholesale power sales3.9(3.0)%
Joint dispatch sales87.6(60.0)%
Total sales(2.57.2)%
Average number of customers1.51.8 %
NineSix Months Ended SeptemberJune 30, 2017,2020, as Comparedcompared to SeptemberJune 30, 20162019
Operating Revenues.The variance was driven primarily by:
a $213$77 million decrease in retail sales due to unfavorable weather in the current year; and
a $66 million decrease in fuel revenues due to lower prices and retail sales volumes.
Partially offset by:
a $37 million increase in weather-normal retail sales volumes; and
a $17 million increase due to higher 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 $65 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 $38 million decrease in fuel used in electric generation and purchased power primarily due to lower retail sales volumes, net of a prior period true up.
Partially offset by:
a $55 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 higher AFUDC equity in the current year.
Interest Expense. The variance was primarily due to higher debt outstanding in the current year.
Income Tax Expense. The decrease in tax expense was primarily due to a decrease in pretax income and an increase in the amortization of excess deferred taxes.

105

MD&APROGRESS ENERGY


PROGRESS ENERGY
Results of Operations
 Six Months Ended June 30,
(in millions)2020
 2019
 Variance
Operating Revenues$4,920
 $5,316
 $(396)
Operating Expenses     
Fuel used in electric generation and purchased power1,540
 1,913
 (373)
Operation, maintenance and other1,143
 1,173
 (30)
Depreciation and amortization884
 881
 3
Property and other taxes272
 280
 (8)
Total operating expenses3,839
 4,247
 (408)
Gains (Losses) on Sales of Other Assets and Other, net6
 (1) 7
Operating Income1,087
 1,068
 19
Other Income and Expenses, net65
 65
 —
Interest Expense405
 438
 (33)
Income Before Income Taxes747
 695
 52
Income Tax Expense120
 118
 2
Net Income627
 577
 50
Six Months Ended June 30, 2020, as compared to June 30, 2019
Operating Revenues. The variance was driven primarily by:
a $380 million decrease in fuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs in response to the COVID-19 pandemic at Duke Energy Florida and lower fuel prices, volumes and native load transfer sales in the current year at Duke Energy Progress;
a $49 million decrease in wholesale power revenues, net of fuel, primarily due to higher recovery of coal ash cost in the prior year and lower capacity volumes at Duke Energy Progress, partially offset by increased demand at Duke Energy Florida;
a $44 million decrease in retail sales, net of fuel revenues, due to lessunfavorable weather in the current year at Duke Energy Progress, partially offset by favorable weather in the current year.year at Duke Energy Florida;
a $32 million decrease in rider revenues primarily due to the Crystal River 3 uprate regulatory asset being fully recovered in 2019 at Duke Energy Florida; and
a $29 million decrease in weather-normal retail sales volume.
Partially offset by:
an $89a $55 million increase in riderstorm revenues and retail pricing primarily relateddue to energy efficiency programs;Hurricane Dorian collections at Duke Energy Florida;
a $30$39 million increase in weather-normal sales volumesretail pricing due to retail customers, net of fuel revenues;base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment at Duke Energy Florida;
a $15 million increase in wholesale power revenues,due to higher pricing from the South Carolina retail rate case, net of sharinga return of EDIT to customers at Duke Energy Progress; and fuel
a $12 million increase in other revenues primarily due to additional volumes for customers served under long-term contracts; and
an $8 million increase in fuelincreased transmission revenues primarily due to changes in generation mix.
Operating Expenses. The variance was primarily due to a $50 million decrease 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.
Other Income and Expenses. The variance was primarily due to a decrease in recognition of post in-service equity returns for projects that had been completed prior to being reflected in customer rates.
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.
Matters Impacting Future Results
An order from regulatory authorities disallowing recovery of costs related to closure of ash impoundments could have an adverse impact on Duke Energy Carolinas' 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.Florida.

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
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,
(in millions)2017
 2016
 Variance
Operating Revenues$7,435
 $7,645
 $(210)
Operating Expenses     
Fuel used in electric generation and purchased power2,588
 2,832
 (244)
Operation, maintenance and other1,650
 1,699
 (49)
Depreciation and amortization958
 904
 54
Property and other taxes386
 375
 11
Impairment charges137
 4
 133
Total operating expenses5,719
 5,814
 (95)
Gains on Sales of Other Assets and Other, net19
 18
 1
Operating Income1,735
 1,849
 (114)
Other Income and Expenses65
 79
 (14)
Interest Expense595
 497
 98
Income Before Income Taxes1,205
 1,431
 (226)
Income Tax Expense384
 496
 (112)
Net Income821
 935
 (114)
Less: Net Income Attributable to Noncontrolling Interests7
 8
 (1)
Net Income Attributable to Parent$814
 $927
 $(113)
Nine Months Ended September 30, 2017, as Compared to September 30, 2016
Operating Revenues. Expenses. The variance was driven primarily by:
a $256$373 million decrease in fuel revenuesused in electric generation and purchased power primarily due to lower retail salesdemand and changes in generation mix at Duke Energy Progress as well as decreased capacity rates to retail customers at Duke Energy Florida, partially offset by an increase in fuel rates to retail customers; and
a $132 million decrease in retail sales, net of fuel revenues, due to less favorable weather in the current year, including lost revenues related to Hurricane Irma at Duke Energy Florida.
Partially offset by:
an $81 million increase in retail pricing due to the base rate adjustment for the Osprey acquisition and the completion of the Hines Energy Complex Chiller Uprate Project, as well as the Duke Energy Progress South Carolina rate case; and
a $79 million increase in rider revenues related to energy efficiency programs at Duke Energy Progress, as well as nuclear asset securitization beginning in July 2016 and extended uprate project revenues beginning in 2017 at Duke Energy Florida.
Operating Expenses. The variance was driven primarily by:
a $244 million decrease in fuel expense primarily due to lower retail sales and changes in generation mix at Duke Energy Progress, as well as decreased purchased power and lower capacity costs, partially offset by higher generation and deferred fuel costs at Duke Energy Florida; and
a $49$30 million decrease in operation, maintenance and other expense due to lower storm restoration costs at Duke Energy Progress lower plannedprimarily 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, reduced outage costs and lower severance expenses,energy efficiency program costs, partially offset by higher storm restoration costs at Duke Energy Florida.
Partially offset by:
a $133 million increase in impairment charges primarily due to the write-off of remaining unrecovered Levy Nuclear Project costs in the current yearcost amortizations at Duke Energy Florida; and
a $54an $8 million increasedecrease in depreciationproperty and amortization expenseother taxes primarily due to nuclear regulatory asset amortization,lower revenue related taxes as well as additional plant in servicea result of the decreased fuel revenues, and lower accrued property taxes at Duke Energy Florida.
Interest Expense. The variance was driven primarily due to higherby lower interest rates on outstanding 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.Progress.


106
PART I


MD&ADUKE ENERGY PROGRESS
Income Tax Expense. The variance was primarily due to a decrease 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
An order from regulatory authorities disallowing recovery of costs related to closure of ash impoundments could have an adverse impact on Progress Energy’s 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. 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 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. 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.  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 costs 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 Duke Energy Florida’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.

PART I


DUKE ENERGY PROGRESS
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,Six Months Ended June 30,
(in millions)2017
 2016
 Variance
2020
 2019
 Variance
Operating Revenues$3,878
 $4,103
 $(225)$2,581
 $2,871
 $(290)
Operating Expenses          
Fuel used in electric generation and purchased power1,214
 1,441
 (227)800
 994
 (194)
Operation, maintenance and other1,032
 1,067
 (35)622
 692
 (70)
Depreciation and amortization536
 526
 10
544
 541
 3
Property and other taxes120
 119
 1
91
 85
 6
Impairment charges—
 1
 (1)
Total operating expenses2,902
 3,154
 (252)2,057
 2,312
 (255)
Gains on Sales of Other Assets and Other, net3
 2
 1
5
 —
 5
Operating Income979
 951
 28
529
 559
 (30)
Other Income and Expenses47
 47
 —
Other Income and Expenses, net41
 48
 (7)
Interest Expense217
 188
 29
137
 158
 (21)
Income Before Income Taxes809
 810
 (1)433
 449
 (16)
Income Tax Expense262
 271
 (9)68
 77
 (9)
Net Income$547
 $539
 $8
$365
 $372
 $(7)
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 period20172020

Residential sales(4.66.0)%
General service sales(2.08.8)%
Industrial sales0.5(4.8)%
Wholesale power sales(5.612.2)%
Joint dispatch sales(35.322.8)%
Total sales(7.46.4)%
Average number of customers1.31.6 %
NineSix Months Ended SeptemberJune 30, 2017,2020, as Comparedcompared to SeptemberJune 30, 20162019
Operating Revenues. The variance was driven primarily by:
a $242$185 million decrease in fuel revenues due tocost recovery driven by lower retailfuel prices and volumes as well as less native load transfer sales and changes in generation mix; and
a $73 million decrease in retail sales, net of fuel revenues, due to less favorable weather in the current year.
Partially offset by:year;
a $41$61 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 increasedecrease in wholesale power revenues, net of fuel, primarily due to higher peak demand.recovery of coal ash cost in the prior year and decreased volumes, partially offset by increased capacity rates;
a $60 million decrease in retail sales due to unfavorable weather in the current year; and
a $13 million decrease in weather-normal retail sales volumes in the current year.
Partially Offset by:
a $15 million increase due to higher 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$194 million decrease in fuel expenseused in electric generation and purchased power primarily due to lower retail salesdemand and changes in generation mix; and
a $35$70 million decrease in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to lower storm restorationthe partial settlement agreement between Duke Energy Carolinas and the Public Staff of the NCUC related to the 2019 North Carolina retail rate case, reduced outage costs and energy efficiency program costs.
Interest Expense. The increasevariance was driven primarily by lower interest rates on outstanding debt.
Income Tax Expense. The decrease in tax expense was primarily due to higher debt outstanding, as well as interest charges on North Carolina fuel overcollections.
Income Tax Expense. The variance was primarily due to the favorable impact of research credits and lower North Carolina corporate tax rates. The effective tax rates for the nine months ended September 30, 2017, and 2016 were 32.4 percent and 33.5 percent, respectively. Thea decrease in the effective tax rate was primarily due to the favorable impact of research creditspretax income and lower North Carolina corporate tax rates.

PART I

Matters Impacting Future Results
An order from regulatory authorities disallowing recovery of costs related to closure of ash impoundments 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 reassessedincrease 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 closureamortization 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.excess deferred taxes.
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.
107
Duke Energy Progress filed a general rate case with the NCUC on June 1, 2017. Duke Energy Progress will seek 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 Progress' earnings could be adversely impacted if the rate increase is delayed or denied by the NCUC.


PART I

MD&ADUKE ENERGY FLORIDA


DUKE ENERGY FLORIDA
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,Six Months Ended June 30,
(in millions)2017
 2016
 Variance
2020
 2019
 Variance
Operating Revenues$3,551
 $3,538
 $13
$2,330
 $2,439
 $(109)
Operating Expenses          
Fuel used in electric generation and purchased power1,374
 1,391
 (17)740
 919
 (179)
Operation, maintenance and other610
 623
 (13)514
 474
 40
Depreciation and amortization423
 378
 45
340
 340
 —
Property and other taxes265
 256
 9
180
 196
 (16)
Impairment charges137
 4
 133
Total operating expenses2,809
 2,652
 157
1,774
 1,929
 (155)
Losses on Sales of Other Assets and Other, net—
 (1) 1
Operating Income742
 886
 (144)556
 509
 47
Other Income and Expenses45
 30
 15
Other Income and Expenses, net25
 25
 —
Interest Expense211
 143
 68
164
 165
 (1)
Income Before Income Taxes576
 773
 (197)417
 369
 48
Income Tax Expense208
 286
 (78)81
 72
 9
Net Income$368
 $487
 $(119)$336
 $297
 $39
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 period20172020

Residential sales(3.61.2)%
General service sales(1.36.6)%
Industrial sales(1.45.4)%
Wholesale and other18.5(10.7)%
Total sales(1.21.0)%
Average number of customers1.51.7 %
NineSix Months Ended SeptemberJune 30, 2017,2020, as Comparedcompared to SeptemberJune 30, 20162019
Operating Revenues. The variance was driven primarily by:
a $52$195 million increasedecrease in retail pricing primarily duefuel revenues driven by lower sales volumes as well as an accelerated refund of fuel costs in response to the base rate adjustment for the Osprey acquisition and the completion of the Hines Energy Complex Chiller Uprate Project;COVID-19 pandemic;
a $38$32 million increasedecrease in rider revenues primarily due to nuclearfull recovery of the Crystal River 3 uprate regulatory asset securitization beginning in July 2016 and extended power uprate project revenues beginning in 2017;2019; and
a $30$16 million increasedecrease in weather-normal retail sales volumes to retail customers in the current year.volumes.
Partially offset by:
a $59$55 million decreaseincrease in storm revenues due to Hurricane Dorian collections;
a $39 million increase in retail pricing due to base rate adjustments related to annual increases from the 2017 Settlement Agreement and the Solar Base Rate Adjustment;
a $16 million increase in retail sales, net of fuel revenues, due to less favorable weather in the current year, including lost revenues related to Hurricane Irma;year;
a $31$12 million decreaseincrease in other revenues primarily due to increased transmission revenues; and
a $12 million increase in wholesale power revenues, net of fuel, primarily due to contracts that expired in the prior year; andincreased 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$179 million increasedecrease in impairment chargesfuel used in electric generation and purchased power primarily due to the write-off of remaining unrecovered Levy Nuclear Project costs in the current year;lower fuel costs; and
a $45$16 million increasedecrease in depreciationproperty and amortization expense primarilyother taxes driven by lower gross receipts taxes due to nuclear regulatory asset amortization,decreased fuel revenues as well as additional plant in service.

PART I

lower accrued property taxes.
Partially offset by:
a $17$40 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 decreaseincrease in operation, maintenance and other expense primarily due to lower planned outage costsstorm cost amortizations.
Income Tax Expense. The increase in tax expense was primarily due to an increase in pretax income.

108

MD&ADUKE ENERGY OHIO


DUKE ENERGY OHIO
Results of Operations
 Six Months Ended June 30,
(in millions)2020
 2019
 Variance
Operating Revenues     
Regulated electric$676
 $691
 $(15)
Regulated natural gas245
 273
 (28)
Total operating revenues921
 964
 (43)
Operating Expenses     
Fuel used in electric generation and purchased power164
 179
 (15)
Cost of natural gas43
 64
 (21)
Operation, maintenance and other218
 255
 (37)
Depreciation and amortization136
 130
 6
Property and other taxes161
 158
 3
Total operating expenses722
 786
 (64)
Operating Income199
 178
 21
Other Income and Expenses, net7
 15
 (8)
Interest Expense49
 54
 (5)
Income Before Income Taxes157
 139
 18
Income Tax Expense26
 23
 3
Net Income$131
 $116
 $15
The following table shows the percent changes in GWh sales of electricity, dekatherms of natural gas delivered and lower severance expenses, partially offset by higher storm restoration costs in the current year.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.
Other Income and Expenses.
 ElectricNatural Gas
Increase (Decrease) over prior year2020
2020
Residential sales(2.3)%(7.5)%
General service sales(8.1)%(10.1)%
Industrial sales(8.0)%(3.2)%
Wholesale electric power sales(52.0)%n/a
Other natural gas salesn/a
(0.5)%
Total sales(6.3)%(6.5)%
Average number of customers1.3 %0.8 %
Six Months Ended June 30, 2020, as compared to June 30, 2019
Operating Revenues. The variance was driven primarily by:
a $34 million decrease in fuel related revenues primarily due to lower natural gas prices and decreased volumes;
an $8 million decrease in other revenues due to lower OVEC sales into PJM; and
a $6 million decrease in bulk power marketing sales.
Partially offset by:
a $10 million increase in retail pricing primarily due to rate case impacts in Kentucky.
Operating Expenses. The variance was driven primarily by:
a $36 million decrease in fuel expense, primarily driven by higher AFUDC equity.lower natural gas prices and decreased volumes; and
Interest Expense. a $37 million decrease in operations, maintenance and other expense primarily due to Customer Connect and Network Integration Transmission Services deferrals, the timing of energy efficiency programs and outage costs, lower employee benefit expenses and lower vegetation and pole maintenance costs.
Partially offset by:
a $6 million increase in depreciation and amortization primarily driven by an increase in distribution plant, partially offset by lower amortization due to the suspension of the MGP rider in Ohio.
Other Income and Expenses, net. The variance was primarily due to higher debt outstandinglower AFUDC equity and lower debt returns driven by the CR3 regulatory asset debt return ending in June 2016 upon securitization.intercompany interest income.
Income Tax Expense. The variance was primarily due to a decrease 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
109
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.

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 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 costs 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 Duke Energy Florida’s financial position, results of operations and cash flows. 

PART I

MD&ADUKE ENERGY INDIANA


DUKE ENERGY OHIOINDIANA
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,
(in millions)2017
 2016
 Variance
Operating Revenues     
Regulated electric$1,036
 $1,053
 $(17)
Regulated natural gas360
 358
 2
Nonregulated electric and other30
 22
 8
Total operating revenues1,426
 1,433
 (7)
Operating Expenses     
Fuel used in electric generation and purchased power – regulated283
 340
 (57)
Fuel used in electric generation and purchased power – nonregulated42
 37
 5
Cost of natural gas69
 64
 5
Operation, maintenance and other385
 367
 18
Depreciation and amortization193
 175
 18
Property and other taxes204
 195
 9
Impairment charges1
 —
 1
Total operating expenses1,177
 1,178
 (1)
Gains on Sales of Other Assets and Other, net1
 2
 (1)
Operating Income250
 257
 (7)
Other Income and Expenses12
 6
 6
Interest Expense67
 63
 4
Income from Continuing Operations Before Income Taxes195
 200
 (5)
Income Tax Expense from Continuing Operations67
 65
 2
Income from Continuing Operations128
 135
 (7)
(Loss) Income from Discontinued Operations, net of tax(1) 36
 (37)
Net Income$127
 $171
 $(44)
 Six Months Ended June 30,
(in millions)2020
 2019
 Variance
Operating Revenues$1,309
 $1,482
 $(173)
Operating Expenses     
Fuel used in electric generation and purchased power355
 486
 (131)
Operation, maintenance and other357
 377
 (20)
Depreciation and amortization266
 263
 3
Property and other taxes42
 39
 3
Total operating expenses1,020
 1,165
 (145)
Operating Income289
 317
 (28)
Other Income and Expenses, net19
 27
 (8)
Interest Expense85
 71
 14
Income Before Income Taxes223
 273
 (50)
Income Tax Expense43
 66
 (23)
Net Income$180
 $207
 $(27)
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 year20172020

Residential sales(5.83.5)%
General service sales(3.29.3)%
Industrial sales(1.39.8)%
Wholesale power sales127.3(4.3)%
Total sales(2.57.1)%
Average number of customers0.81.4 %
NineSix Months Ended SeptemberJune 30, 2017,2020, as Comparedcompared to SeptemberJune 30, 20162019
Operating Revenues.The variance was driven primarily by:
a $59$118 million decrease in fuel revenues primarily due to lower electric fuel pricescost recovery driven by customer demand and sales volumes, partially offset by higher costs passed through to natural gas customers due to higher natural gasfuel prices; and
a $16$20 million decrease in electricweather-normal retail sales netvolumes driven by lower nonresidential customer demand;
an $18 million decrease in rider revenues primarily related to lower Edwardsport IGCC sales volumes; and
a $9 million decrease primarily related to the true up of fuelwholesale revenues due to less favorable weather in the current year.
Partially offset by:
a $40 million increase 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.

PART I

Operating Expenses.The variance was driven primarily by:
an $18a $131 million increasedecrease in fuel used in electric generation and purchased power expense primarily due to lower coal and natural gas costs, lower amortization of deferred fuel costs and lower purchased power expense; and
a $20 million decrease in operation, maintenance and other expense primarily due to higher energy efficiency programlower outage expenses, storm restoration costs, training costs, employee related costs and higher transmissionthe Customer Connect deferral.
Other Income and distribution operations costs;
an $18 million increase in depreciation and amortization expenseExpenses, net. The decrease was primarily due to additional plant in service and a true up related to Smart Grid assetslife insurance proceeds received in the prior year;year.
a $9 million increase in property and other taxesInterest Expense. The variance was primarily due to higher property taxes;fixed-rate debt outstanding in the current year and a favorable debt return, in the prior year, on the cumulative balance of deferred coal ash spend.
Income Tax Expense. The decrease in income tax expense was primarily due to a $5 milliondecrease in pretax income and an increase in nonregulated fuel expenses related to OVEC; andthe amortization of excess deferred taxes.
a $5 million increase in natural gas costs due to higher natural gas prices.
Partially offset by:
110
a $57 million decrease in fuel expense driven by lower sales volumes and lower electric fuel costs.

Other Income and Expenses. The increase was primarily driven by higher AFUDC equity.
Interest Expense. The increase was primarily driven by interest related to new debt issued in June 2016.
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 impact on Duke Energy Ohio's 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.
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 4 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

MD&APIEDMONT
DUKE ENERGY INDIANA
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.
PIEDMONT
Results of Operations
Nine Months Ended September 30,Six Months Ended June 30,
(in millions)2017
 2016
 Variance
2020
 2019
 Variance
Operating Revenues$2,302
 $2,225
 $77
$709
 $788
 $(79)
Operating Expenses          
Fuel used in electric generation and purchased power744
 690
 54
Cost of natural gas215
 338
 (123)
Operation, maintenance and other541
 526
 15
159
 163
 (4)
Depreciation and amortization336
 345
 (9)88
 84
 4
Property and other taxes56
 67
 (11)24
 25
 (1)
Impairment charges—
 8
 (8)
Total operating expenses1,677
 1,636
 41
486
 610
 (124)
Gains on Sales of Other Assets and Other, net1
 —
 1
Operating Income626
 589
 37
223
 178
 45
Other Income and Expenses27
 15
 12
Other Income and Expenses, net28
 12
 16
Interest Expense132
 136
 (4)60
 43
 17
Income Before Income Taxes521
 468
 53
191
 147
 44
Income Tax Expense203
 159
 44
11
 32
 (21)
Net Income$318
 $309
 $9
$180
 $115
 $65
The following table shows the percent changes in GWh salesdekatherms delivered and average number of customers. The percentages for retail customer classesall throughput deliveries 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.sales. Amounts are not weather-normalized.
Increase (Decrease) over prior year20172020

Residential salesdeliveries(5.54.6)%
General service salesCommercial deliveries(2.511.8)%
Industrial salesdeliveries0.1(3.3)%
Wholesale power salesPower generation deliveries(19.82.8)%
For resale(15.0)%
Total salesthroughput deliveries(6.24.3)%
Secondary market volumes(17.7)%
Average number of customers0.81.7 %
NineDue 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.
Six Months Ended SeptemberJune 30, 2017,2020, as Comparedcompared to SeptemberJune 30, 20162019
Operating Revenues.The variance was driven primarily by:
a $64$123 million increase in rider revenues related to the Edwardsport IGCC plant and energy efficiency programs; and
a $47 million increase in fuel revenues primarilydecrease due to higher purchased powerlower natural gas costs passed through to customers and higher financial transmission right (FTR) revenues.decreased off-system sales natural gas costs;
a $27 million decrease due to return of EDIT to customers; and
a $7 million decrease due to NCUC approval related to tax reform accounting from fixed-rate contracts in the prior year.
Partially offset by:
an $18a $60 million decrease in retail salesincrease due to less favorable weather in the current year;North Carolina base rate case increases; and
a $15 million decrease in wholesale power revenues, net of fuel, primarilyincrease due to a decrease in demand rates and contracts that expired in the current year.North Carolina IMR increases.
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$123 million decrease in property and other taxes primarilycost of natural gas due to utilization of ITCs;lower natural gas prices and decreased off-system sales natural gas costs.
a $9 million decreaseOther Income and Expenses, net.The variance was driven primarily by AFUDC equity and intercompany interest related to Belews Creek and Marshall Power Generation contracts.
Interest Expense.The variance was driven primarily by interest on the EDIT balance being returned to customers and higher debt outstanding 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,current year, partially offset by new IGCC rider rates that result in a lower deferral amount and higher depreciation due to additional plant in service; andAFUDC debt income.

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 variancedecrease in income tax expense was primarily due to an increase in pretax income. The effective tax rates for the nine months ended September 30, 2017,amortization of excess deferred taxes and 2016 were 39.0 percent and 34.0 percent, respectively. Thean increase in the effective tax rate was primarily due toAFUDC Equity, partially offset by an immaterial out of period adjustmentincrease in the prior year related to deferred tax balances associated with property, plant and equipment.pretax income.

111

MD&AMATTERS IMPACTING FUTURE RESULTS


Matters Impacting Future Results
The matters discussed herein could materially impact the future operating results, financial condition and cash flows of the Duke Energy Registrants and Business Segments.
COVID-19
Duke Energy cannot predict the extent to which the COVID-19 pandemic will impact its results of operations, financial position and cash flows in the future. Duke Energy will continue to actively monitor the impacts of COVID-19 including the economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown will adversely affect the company’s customers, suppliers and partners and could cause an increase in certain costs, such as bad debt, and a reduction in the demand for energy. It could also cause delays in construction for Commercial Renewables and availability of financing. The company also has various pending rate case proceedings that have been delayed. Duke Energy has cost mitigation plans in place to partially offset these impacts, and the ability to execute these plans is critical to preserving future financial results. 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.
ACP
On April 17,July 5, 2020, Duke Energy and Dominion Energy determined that they would no longer invest in the construction of the Atlantic Coast Pipeline. Duke Energy has recorded $2.0 billion of pretax charges and expects additional charges of less than $100 million to be recorded when certain exit costs related to the project are incurred by ACP. Estimates used to calculate the loss could be revised and exit obligations which have not yet been incurred or recorded could have an adverse impact on future results. Furthermore, the loss of earnings from this project, including AFUDC, will lower Duke Energy's future expected results. See Notes 1, 3, 4 and 11 to the Condensed Consolidated Financial Statements, "Organization and Basis of Presentation," "Regulatory Matters," "Commitments and Contingencies," and "Variable Interest Entities," respectively, for additional information.
Regulatory Matters
On December 31, 2019, Duke Energy Carolinas and Duke Energy Progress entered into a settlement agreement with North Carolina Department of Environmental Quality 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. Duke Energy Carolinas and Duke Energy Progress have also 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. Appeals of the 2017 North Carolina approved rate cases for Duke Energy Carolinas and Duke Energy Progress are still pending at the North Carolina Supreme Court. The North Carolina Attorney General and various intervenors primarily dispute the allowance of recovery of coal ash costs from customers, which was approved by the NCUC. An order from regulatory or judicial authorities disallowing recovery of costs related to closure of these ash basins could have an adverse impact on future results.
In 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 impact.
Duke Energy Indiana's financial position, resultsCarolinas, 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 operationsDuke Energy Carolinas and cash flows. SeeDuke 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.
Duke Energy Carolinas received an order from the NCUC in 2018, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas and Duke Energy Progress have petitioned for deferral of future grid improvement costs in their 2019 rate cases. There could be adverse impact if grid improvement costs are not ultimately approved for recovery and/or deferral treatment.
In 2019, Duke Energy Carolinas and Duke Energy Progress filed general rate cases with the NCUC. The outcome of these rate cases could have a material impact.
The PUCO has issued an order authorizing recovery of MGP costs at certain sites in Ohio with a deadline to complete the MGP environmental investigation and remediation work prior to December 31, 2016. This deadline was subsequently extended to December 31, 2019. Duke Energy Ohio has filed for a request for extension of the deadline. A hearing on that request has not been scheduled. Disallowance of costs incurred, failure to complete the work by the deadline or failure to obtain an extension from the PUCO could result in an adverse impact.
For additional information, see Note 43 to the Condensed Consolidated Financial Statements, “Regulatory Matters,Matters.” for additional information.
The Indiana Utility Regulatory Commission (IURC) approved a settlement agreement between Other Matters
Duke Energy Indiana and multiple parties that resolves all disputes, claims and issues fromcontinues to experience growth in Commercial Renewables with tax equity structures; however, the IURC proceedings relatedfuture expiration of federal tax incentives could result in adverse impacts 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,future results of operations, financial position and cash flows.


112

PART I

MD&AMATTERS IMPACTING FUTURE RESULTS
PIEDMONT
Management’s Discussion
Duke Energy continues to monitor recoverability of a renewable merchant plant located in the Electric Reliability Council of Texas West market, due to declining market pricing and Analysis should be readdeclining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Based on the most recent recoverability test performed this quarter, the carrying value approximated the aggregate estimated future cash flows for this plant and therefore further testing was not required. A continued decline in conjunction withenergy market pricing would likely result in a future impairment. Impairment of this asset could result in adverse impacts. For additional information, see Note 2 to the Condensed Consolidated Financial Statements, "Business Segments."
See "Item 7. Management's Discussion and Notes forAnalysis of Financial Condition and Results of Operations," in the nine months ended September 30, 2017, Piedmont'sDuke Energy Registrants' Annual ReportReports on Form 10-K for the year ended October 31, 2016, and the Form 10‑QT as of December 31, 2016,2019, for discussion of risks associated with the transition period from November 1, 2016, to December 31, 2016.Tax Act.
Results of Operations
 Nine Months Ended September 30,
(in millions)2017
 2016
 Variance
Operating Revenues     
Regulated natural gas$877
 $815
 $62
Nonregulated natural gas and other7
 8
 (1)
Total operating revenues884
 823
 61
Operating Expenses     
Cost of natural gas333
 289
 44
Operation, maintenance and other226
 221
 5
Depreciation and amortization109
 103
 6
Property and other taxes38
 33
 5
Impairment charges7
 —
 7
Total operating expenses713
 646
 67
Operating Income171
 177
 (6)
Equity in earnings of unconsolidated affiliates8
 25
 (17)
Other income and expenses, net(1) (1) —
Total other income and expenses7
 24
 (17)
Interest Expense59
 50
 9
Income Before Income Taxes119
 151
 (32)
Income Tax Expense43
 57
 (14)
Net Income$76
 $94
 $(18)
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 year2017
Residential deliveries(19.2)%
Commercial deliveries(11.8)%
Industrial deliveries(4.3)%
Power generation deliveries(11.0)%
For resale(6.9)%
Total throughput deliveries(10.5)%
Secondary market volumes6.2 %
Average number of customers1.6 %
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 weather normalization adjustment (WNA) mechanisms in South Carolina and Tennessee, 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 Months Ended September 30, 2017, as Compared to September 30, 2016
Operating Revenues.The variance was driven primarily by:
a $44 million increase due to higher natural gas costs passed through to customers primarily due to higher natural gas prices; and
a $17 million increase in revenues 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; and
a $7 million increase due to an impairment of software resulting from planned accounting system and process integration in 2018.
Equity in Earnings of Unconsolidated Affiliates. The decrease was primarily due to equity earnings from the investment in SouthStar Energy Services, LLC (SouthStar) 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 in pretax income. The effective tax rates for the nine months ended September 30, 2017, and 2016 were 36.1 percent and 37.7 percent, respectively. The decrease in the effective tax rate was primarily due to favorable tax return true ups and lower North Carolina corporate tax rates.

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, for2019, included a summary and detailed discussion of projected primary sources and uses of cash for 20172020 to 2019.2022.
The Subsidiary Registrants generally maintain minimal cash balancesDuring March 2020, in response to market volatility and use short-term borrowingsthe ongoing economic uncertainty related to meet their working capital needs and other cash requirements. The Subsidiary Registrants, excluding Progress Energy (Parent), support their short-term borrowing needs through participation withCOVID-19, Duke Energy and certain of its other subsidiaries in a money pool arrangement. The companies with short-term funds may provide short-term loanstook 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, which was subsequently repaid during the second quarter of 2020; and
Duke Energy entered into and borrowed the Subsidiary Registrants, excluding Progressfull 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 paperexercised the provision and the money pool, asborrowed an additional $188 million, for a bridgetotal borrowing of approximately $1.7 billion.
Following March 2020, access to long-term debt financings. The levels of borrowing may vary significantly over the course of the year duecredit and equity markets has normalized. In addition to the timingfinancings to address the company's liquidity position, for the six months ended June 30, 2020, Duke Energy issued approximately $3.3 billion in debt, raised $111 million of long-term debt financingscommon equity through its dividend reinvestment program, and paid down $500 million on the impactThree-Year Revolving Credit Facility. Despite the recovery in capital markets, Duke Energy continues to monitor access to credit and equity markets amid the ongoing economic uncertainty related to COVID-19.
As of fluctuationsJune 30, 2020, Duke Energy had approximately $341 million of cash on hand, $5.4 billion available under its $8 billion Master Credit Facility and $500 million available under the $1 billion Three-Year Revolving 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 form of cash flowson hand, cash from operations. From timeoperations and available credit capacity to time,support its funding needs. Duke Energy’s current liabilities may exceed current assets resulting from the use of short-term debt as a funding sourceEnergy continues to meet scheduled maturities of long-term debt, as well as cash needs, which can fluctuate duemonitor access to the seasonality of its business.
CREDIT FACILITIES AND REGISTRATION STATEMENTS
credit and equity markets. Refer to Note 6Notes 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 and cancellation of the ACP pipeline, 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 6currently 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, workingtotal projected 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
Thethe 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 Six Months Ended
 September 30, June 30,
(in millions) 2017
 2016
 2020
 2019
Cash flows provided by (used in):        
Operating activities $5,011
 $5,611
 $3,357
 $3,056
Investing activities (6,360) (5,555) (5,471) (5,788)
Financing activities 1,239
 5,266
 2,182
 2,622
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 68
 (110)
Cash, cash equivalents and restricted cash at beginning of period 573
 591
Cash, cash equivalents and restricted cash at end of period $641
 $481

113

MD&ALIQUIDITY AND CAPITAL RESOURCES


OPERATING CASH FLOWS
The following table summarizes key components of Duke Energy’s operating cash flows.
 Nine Months Ended Six Months Ended
 September 30, June 30,
(in millions) 2017
 2016
 2020
 2019
 Variance
Net income $2,361
 $2,392
Net (loss) income $(2) $1,641
 $(1,643)
Non-cash adjustments to net income 3,937
 3,585
 4,592
 2,917
 1,675
Contributions to qualified pension plans (8) —
Payments for asset retirement obligations (420) (443) (287) (336) 49
Working capital (859) 77
 (946) (1,166) 220
Net cash provided by operating activities $5,011
 $5,611
 $3,357
 $3,056
 $301
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 weathercurrent 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 contributionstorm costs in the current year.
INVESTING CASH FLOWS
The following table summarizes key components of Duke Energy’s investing cash flows.
 Nine Months Ended Six Months Ended
 September 30, June 30,
(in millions) 2017
 2016
 2020
 2019
 Variance
Capital, investment and acquisition expenditures $(6,211) $(5,450) $(5,267) $(5,627) $360
Other investing items (149) (105) (204) (161) (43)
Net cash used in investing activities $(6,360) $(5,555) $(5,471) $(5,788) $317
The variance was primarily due to:
a $761 million increaserelates to lower capital expenditures in capital, investment and acquisition expenditures due to growththe current year for plants now in regulated generation investments and natural gas infrastructure, partially offset by a reduction in Commercial Renewables capital expenditures.

PART I

service.
FINANCING CASH FLOWS
The following table summarizes key components of Duke Energy’s financing cash flows.
 Nine Months Ended Six Months Ended
 September 30, June 30,
(in millions) 2017
 2016
 2020
 2019
 Variance
Issuances of long-term debt, net $3,675
 $7,659
 $1,837
 $2,467
 $(630)
Notes payable and commercial paper (619) (647)
Issuances of common stock 57
 27
 30
Issuances of preferred stock —
 973
 (973)
Notes payable, commercial paper and other short-term borrowings 1,624
 324
 1,300
Dividends paid (1,825) (1,731) (1,391) (1,312) (79)
Contributions from noncontrolling interests 163
 193
 (30)
Other financing items 8
 (15) (108) (50) (58)
Net cash provided by financing activities $1,239
 $5,266
 $2,182
 $2,622
 $(440)
The variance was primarily due to:
a $3,984$1.3 billion increase in 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.
Partially offset by:
•
a $973 million decrease in proceeds from the issuance of preferred stock; and
a $630 million net decrease in proceeds from net 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 million increase in current year redemptions; and
a $94 million current year increase in dividends paid.
Summary of Significant Debt Issuances
Refer to Note 6primarily due to the Condensed Consolidated Financial Statements, "Debttiming of issuances and Credit Facilities," for further information regarding significant debt issuances.redemptions of long-term debt.
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,
114
MD&AOTHER MATTERS

On May 14, 2020, the five-year probation period following the Dan River coal ash spill ended. The court appointed monitor confirmed in U.S. District Court for the Eastern District of North Carolina that Duke Energy met or exceeded every obligation throughout the process. Separately, in a final report to the EPA, publishedit was noted that the company made significant enhancements to its Ethics and Compliance Program and its environmental compliance programs.
Section 126 Petitions
On November 16, 2016, the state of Maryland filed 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 CCRpetition 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 resultEPA under Section 126 of the EPA rule,Clean Air Act alleging that 19 power plants, including two plants (three units) that Duke Energy Carolinas, Progress Energy,Registrants own and operate, contribute to violations of EPA’s National Ambient Air Quality Standards (NAAQS) for ozone in the state of Maryland. On March 12, 2018, the state of New York filed a petition with EPA, also under Section 126 of the Clean Air Act alleging that over 60 power plants, including six that Duke Energy Progress, Duke Energy OhioRegistrants own and Duke Energy Indiana recorded additional ARO amounts during 2015. Various industryoperate, contribute to violations of EPA’s ozone NAAQS in the state of New York. Both Maryland and environmental parties haveNew York sought EPA orders requiring the states in which the named power plants operate to impose more stringent NOx emission limitations on the plants. On October 5, 2018, EPA denied the Maryland petition. That same day, Maryland appealed EPA's denial. On October 18, 2019, EPA denied the EPA's CCR rule inNew York petition, and New York appealed that decision on October 29, 2019. On May 19, 2020, 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 Courtissued its decision, finding, with one exception, that EPA reasonably denied the Maryland petition. The court remanded one issue to hold the litigation in abeyance. While EPA has confirmed that it will reconsider certain provisionsregarding target sources lacking catalytic controls. All 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, includeunits targeted have selective catalytic reduction so the legal obligationdecision is favorable for closure of coal ash basins and the disposal of related ash as a resultthese units. A different panel 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 Carolinas580
Progress Energy420
Duke Energy Progress310
Duke Energy Florida110
Duke Energy Ohio90
Duke Energy Indiana250
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 (NOX) 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 NOX 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 NOX 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 (CO2) 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 CO2 per 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 canceledheard oral argument in New York’s appeal of EPA’s denial of its Section 126 Petition on May 7, 2020, and on July 14, 2020, the case, which had been scheduledpanel issued its decision remanding the Petition to EPA 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 itsfurther 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 CO2 emissions from existing fossil fuel-fired EGUs. The CPP established CO2 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.matter.
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 ninesix months ended SeptemberJune 30, 2017,2020, there were no material changes to Duke Energy’s off-balance sheet arrangements. See Notes 1, 3, 4 and 11 to the Condensed Consolidated Financial Statements, "Organization and Basis of Presentation," "Regulatory Matters," "Commitments and Contingencies," and "Variable Interest Entities," respectively, for additional information on ACP. See Note 13 to the Condensed Consolidated Financial Statements, "Variable Interest Entities,"Stockholders' Equity," for a discussion of off-balance sheet arrangementsinformation regarding Atlantic Coast Pipeline.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 ninesix months ended SeptemberJune 30, 2017,2020, 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 and six months ended June 30, 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 has resulted 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) areis recorded, processed, summarized and reported, within the time periods specified by the SEC rules and forms.
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 areis 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 SeptemberJune 30, 2017,2020, 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.

115

ITEM 4.CONTROLS AND PROCEDURES


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 SeptemberJune 30, 2017,2020, and have concluded no change has materially affected, or is reasonably likely to materially affect, internal control over financial reporting.

116


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’sEnergy'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. 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;
The health and availability of our critical personnel and their ability to perform business functions; and
Actions of state utility commissions or federal or state governments to allow customers to suspend or delay payment of bills related to the provision of electric or gas services.
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; and
Impairment charges, which could include real estate as options for working remotely are evaluated and goodwill.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ISSUERPURCHASES OF EQUITY SECURITIESNone.
There were no issuer purchases of equity securities during the third quarter of 2017.
117


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 Companycompany agrees to furnish upon request to the Commissioncommission a copy of any omitted schedules or exhibits upon request on all items designated by a triple asterisk (***).
     Duke   Duke Duke Duke Duke  
Exhibit Duke Energy Progress Energy Energy Energy Energy  
Number Energy Carolinas Energy Progress Florida Ohio Indiana Piedmont
4.1
SeventeenthTwenty-third Supplemental Indenture, dated as of August 10, 2017May 15, 2020 (incorporated by reference to Exhibit 4.1 to Registrant'sRegistrant’s Current Report on Form 8-K filed on August 10, 2017,May 15, 2020, File No. 1-32853).
X              
4.2
Eighty-SeventhForty-seventh Supplemental Indenture, dated as of September 1, 2017May 21, 2020 (incorporated by reference to Exhibit 4.1 to Registrant'sRegistrant’s Current Report on Form 8-K filed on September 8, 2017,May 21, 2020, File No. 1-3382)1-1232).
      X    
*10.14.3
Amendment to Duke Energy Corporation Executive Savings Plan, effectiveTenth Supplemental Indenture, dated as of January 1, 2014.May 21, 2020 (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed on May 21, 2020, File No. 1-6196).
X              X
*124.4
ComputationFifty-seventh Supplemental Indenture, dated as of Ratio of EarningsJune 1, 2020 (incorporated by reference to Fixed Charges – DUKE ENERGY CORPORATION.Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed on June 11, 2020, File No. 1-3274).
X        X      
*31.1.1
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X              
*31.1.2
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  X            
*31.1.3
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
    X          
*31.1.4
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
      X        
*31.1.5
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
        X      
*31.1.6
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
          X    
*31.1.7
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
            X  
*31.1.8
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
              X
*31.2.1
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X              
*31.2.2
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  X            
*31.2.3
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
    X          
*31.2.4
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
      X        
*31.2.5
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
        X      

118

*31.2.6
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
XEXHIBITS 

PART II


*31.2.731.2.6
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
*31.2.7
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
            X  
*31.2.8
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
              X
*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.
X              
*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.
  X            
*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.
    X          
*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.
      X        
*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.
        X      
*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.
          X    
*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.
            X  
*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.
              X
*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.
X              
*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.
  X            
*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.
    X          
*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.
      X        
*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.
        X      
*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.
          X    
*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.
            X  
*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.
              X

119

EXHIBITS


*101.INSXBRL Instance Document.Document (this does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).X X X X X X X X
*101.SCHXBRL Taxonomy Extension Schema Document.X X X X X X X X

PART II

*101.CALXBRL Taxonomy Calculation Linkbase Document.X X X X X X X X
*101.LABXBRL Taxonomy Label Linkbase Document.X X X X X X X X
*101.PREXBRL Taxonomy Presentation Linkbase Document.X X X X X X X X
*101.DEFXBRL Taxonomy Definition Linkbase Document.X X X X X X X X
*104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).XXXXXXXX
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 percent10% 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.

120


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, 2017August 10, 2020/s/ STEVEN K. YOUNG
  Steven K. Young

Executive Vice President and Chief Financial Officer (Principal Financial Officer)

   
Date:November 3, 2017August 10, 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)


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