TABLE OF CONTENTS


			Cautionary Statement Regarding Forward-Looking Information

					~~Cautionary Statement Regarding Forward-Looking Information~~

PART I. FINANCIAL INFORMATION
Item 1.			Financial Statements

			Duke Energy Corporation Financial Statements	69

			Duke Energy Carolinas, LLC Financial Statements	1114

			Progress Energy, Inc. Financial Statements	1518

			Duke Energy Progress, LLC Financial Statements	1922

			Duke Energy Florida, LLC Financial Statements	2326

			Duke Energy Ohio, Inc. Financial Statements	2730

			Duke Energy Indiana, LLC Financial Statements	3134

			Piedmont Natural Gas Company, Inc. Financial Statements	3538

			Combined Notes to Condensed Consolidated Financial Statements
			Note 1 – Organization and Basis of Presentation	3942

			Note 2 ~~– Acquisitions and Dispositions~~�� Business Segments	44
			Note 3 – ~~Business Segments~~Regulatory Matters	46
			Note 4 ~~– Regulatory Matters~~	49
	~~Note 5~~ – Commitments and Contingencies	5755

			Note 65 – Debt and Credit Facilities	6258

			Note 76 – ~~Asset Retirement Obligations~~Goodwill	6559
			Note ~~8 – Goodwill and Intangible Assets~~	65
	~~Note 9~~7 – Related Party Transactions	6760
			Note 108 – Derivatives and Hedging	6861
			Note 119 – Investments in Debt and Equity Securities	7466
			Note 1210 – Fair Value Measurements	8070
			Note 1311 – Variable Interest Entities	8675
			Note 1412 – ~~Common Stock~~Revenue	9178
			Note 1513 – ~~Stock-Based Compensation~~Stockholders' Equity	9182
			Note 1614 – Employee Benefit Plans	9283
			Note 1715 – Income Taxes	9684
			Note 1816 – Subsequent Events	9784

Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	9885

Item 3.			Quantitative and Qualitative Disclosures About Market Risk	~~126~~100

Item 4.			Controls and Procedures	~~126~~100

PART II. OTHER INFORMATION
Item 1.			Legal Proceedings	~~128~~101

Item 1A.			Risk Factors	~~128~~101

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	~~128~~101

Item 6.			Exhibits	~~129~~102

			Signatures	~~132~~105


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 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;

◦Changing customer expectations and demands including heightened emphasis on environmental, social and governance concerns;

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

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

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

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

◦The inherent risks associated with the operation 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;


◦			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;

FORWARD-LOOKING STATEMENTS
◦	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. electric grid or generating resources;


◦	~~The ability to complete necessary or desirable pipeline expansion or infrastructure projects in our natural gas business;~~


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


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


◦	The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches and 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 and general 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;~~


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


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


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


◦	~~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;~~


◦	~~The ability to successfully complete future merger, acquisition 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; and~~


◦	~~The ability to implement our business strategy.~~

◦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;

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

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

◦The ability to implement our business 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.


GLOSSARY OF TERMS

Glossary of Terms

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


Term or Acronym			Definition

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

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

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

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

AFS			Available for Sale

AFUDC			Allowance for funds used during construction

ARO			Asset retirement obligations

Bison			Bison Insurance Company Limited

CCR			Coal Combustion Residuals

Coal Ash Act			North Carolina Coal Ash Management Act of 2014

the company			Duke Energy Corporation and its subsidiaries

COVID-19			Coronavirus Disease 2019

CRC			Cinergy Receivables Company, LLC

Crystal River Unit 3			Crystal River Unit 3 Nuclear Plant

DEFPF			Duke Energy Florida Project Finance, LLC

DEFR			Duke Energy Florida Receivables, LLC

DEPR			Duke Energy Progress Receivables, LLC

DERF			Duke Energy Receivables Finance Company, LLC

Duke Energy			Duke Energy Corporation (collectively with its subsidiaries)

Duke Energy Ohio			Duke Energy Ohio, Inc.

Duke Energy Progress			Duke Energy Progress, LLC

Duke Energy Carolinas			Duke Energy Carolinas, LLC

Duke Energy Florida			Duke Energy Florida, LLC

Duke Energy Indiana			Duke Energy Indiana, LLC

Duke Energy Kentucky			Duke Energy Kentucky, Inc.

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

EDIT			Excess deferred income tax

EPA			U.S. Environmental Protection Agency

EPS			Earnings Per Share

ETR			Effective tax rate

Exchange Act			Securities Exchange Act of 1934

FERC			Federal Energy Regulatory Commission

FPSC			Florida Public Service Commission

FTR			Financial transmission rights

GAAP			Generally accepted accounting principles in the U.S.

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

GAAP Reported EPS			Basic Earnings Per Share Available to Duke Energy Corporation common stockholders


GLOSSARY OF TERMS

~~PART I. FINANCIAL INFORMATION~~


GIC			GIC Private Limited

GWh			Gigawatt-hours

IGCC			Integrated Gasification Combined Cycle

IMR			Integrity Management Rider

IRS			Internal Revenue Service

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

IURC			Indiana Utility Regulatory Commission

KPSC			Kentucky Public Service Commission

LLC			Limited Liability Company

MGP			Manufactured gas plant

MW			Megawatt

MWh			Megawatt-hour

NCUC			North Carolina Utilities Commission

NDTF			Nuclear decommissioning trust funds

NPNS			Normal purchase/normal sale

OPEB			Other Post-Retirement Benefit Obligations

OVEC			Ohio Valley Electric Corporation

Piedmont			Piedmont Natural Gas Company, Inc.

PJM			Pennsylvania-New Jersey-Maryland Interconnection

PPA			Purchase Power Agreement

Progress Energy			Progress Energy, Inc.

PSCSC			Public Service Commission of South Carolina

PUCO			Public Utilities Commission of Ohio

RTO			Regional Transmission Organization

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

the Tax Act			Tax Cuts and Jobs Act

TPUC			Tennessee Public Utility Commission

U.S.			United States

VIE			Variable Interest Entity

WACC			Weighted Average Cost of Capital


FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended
	March 31,
(in millions, except per share amounts)	2021		2020
Operating Revenues
Regulated electric	$	5,219	$	5,124
Regulated natural gas	749		638
Nonregulated electric and other	182		187
Total operating revenues	6,150		5,949
Operating Expenses
Fuel used in electric generation and purchased power	1,443		1,447
Cost of natural gas	276		199
Operation, maintenance and other	1,402		1,339
Depreciation and amortization	1,226		1,130
Property and other taxes	353		345
Impairment of assets and other charges	—		2
Total operating expenses	4,700		4,462
Gains on Sales of Other Assets and Other, net	—		1
Operating Income	1,450		1,488
Other Income and Expenses
Equity in (losses) earnings of unconsolidated affiliates	(17)		44
Other income and expenses, net	127		46
Total other income and expenses	110		90
Interest Expense	535		551
Income Before Income Taxes	1,025		1,027
Income Tax Expense	84		137


Net Income	941		890
Add: Net Loss Attributable to Noncontrolling Interests	51		48
Net Income Attributable to Duke Energy Corporation	992		938
Less: Preferred Dividends	39		39
Net Income Available to Duke Energy Corporation Common Stockholders	$	953	$	899

Earnings Per Share – Basic and Diluted






Net income available to Duke Energy Corporation common stockholders
Basic and Diluted	$	1.25	$	1.24

Weighted Average Shares Outstanding
Basic	769		734
Diluted	769		736

See Notes to Condensed Consolidated Financial Statements

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions, except per-share amounts) 2017
2016
2017
2016
Operating Revenues
Regulated electric $ 6,091
$ 6,303
$ 16,122
$ 16,321
Regulated natural gas 247
89
1,168
355
Nonregulated electric and other 144
184
476
490
Total operating revenues 6,482
6,576
17,766
17,166
Operating Expenses

Fuel used in electric generation and purchased power 1,863
2,031
4,853
5,140
Cost of natural gas 68
6
402
64
Operation, maintenance and other 1,442
1,460
4,282
4,227
Depreciation and amortization 900
819
2,594
2,402
Property and other taxes 313
302
924
887
Impairment charges 207
10
216
14
Total operating expenses 4,793
4,628
13,271
12,734
Gains on Sales of Other Assets and Other, net 6
6
24
21
Operating Income 1,695
1,954
4,519
4,453
Other Income and Expenses

Equity in earnings (losses) of unconsolidated affiliates 36
(60 ) 101
(37 )
Other income and expenses, net 88
86
255
237
Total other income and expenses 124
26
356
200
Interest Expense 498
464
1,475
1,431
Income From Continuing Operations Before Income Taxes 1,321
1,516
3,400
3,222
Income Tax Expense from Continuing Operations 364
515
1,035
1,020
Income From Continuing Operations 957
1,001
2,365
2,202
(Loss) Income From Discontinued Operations, net of tax (2 ) 180
(4 ) 190
Net Income 955
1,181
2,361
2,392
Less: Net Income Attributable to Noncontrolling Interests 1
5
5
13
Net Income Attributable to Duke Energy Corporation $ 954
$ 1,176
$ 2,356
$ 2,379

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
Weighted average shares outstanding
Basic 700
689
700
689
Diluted 700
691
700
690

~~PART I~~


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended
	March 31,
(in millions)		2021		2020
Net Income		$	941	$	890
Other Comprehensive Income (Loss), net of tax(a)

Pension and OPEB adjustments		2		1
Net unrealized gains (losses) on cash flow hedges		29		(81)
Reclassification into earnings from cash flow hedges		3		2

Unrealized (losses) gains on available-for-sale securities		(8)		1

Other Comprehensive Income (Loss), net of tax		26		(77)
Comprehensive Income		967		813
Add: Comprehensive Loss Attributable to Noncontrolling Interests		44		62
Comprehensive Income Attributable to Duke Energy		1,011		875
Less: Preferred Dividends		39		39
Comprehensive Income Available to Duke Energy Corporation Common Stockholders		$	972	$	836

(a)Net of income tax impacts of approximately $8 million and $23 million for the three months ended March 31, 2021, and 2020, respectively.

See Notes to Condensed Consolidated Financial Statements

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2017
2016
2017
2016
Net Income $ 955
$ 1,181
$ 2,361
$ 2,392
Other Comprehensive Income, net of tax
Foreign currency translation adjustments —
(12 ) —
95
Pension and OPEB adjustments —
—
2
2
Net unrealized gains (losses) on cash flow hedges 2
6
(2 ) (19 )
Reclassification into earnings from cash flow hedges (2 ) 1
3
3
Unrealized gains on available-for-sale securities 2
—
10
7
Other Comprehensive Income (Loss), net of tax 2
(5 ) 13
88
Comprehensive Income 957
1,176
2,374
2,480
Less: Comprehensive Income Attributable to Noncontrolling Interests 1
4
5
16
Comprehensive Income Attributable to Duke Energy Corporation $ 956
$ 1,172
$ 2,369
$ 2,464

~~PART I~~


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)


(in millions)	March 31, 2021		December 31, 2020
ASSETS
Current Assets
Cash and cash equivalents	$	379	$	259

Receivables (net of allowance for doubtful accounts of $31 at 2021 and $29 at 2020)	950		1,009
Receivables of VIEs (net of allowance for doubtful accounts of $116 at 2021 and $117 at 2020)	1,834		2,144
Inventory	3,076		3,167

Regulatory assets (includes $54 at 2021 and $53 at 2020 related to VIEs)	1,650		1,641
Other (includes $333 at 2021 and $296 at 2020 related to VIEs)	619		462
Total current assets	8,508		8,682
Property, Plant and Equipment
Cost	157,372		155,580
Accumulated depreciation and amortization	(49,772)		(48,827)
Generation facilities to be retired, net	29		29
Net property, plant and equipment	107,629		106,782
Other Noncurrent Assets
Goodwill	19,303		19,303
Regulatory assets (includes $927 at 2021 and $937 at 2020 related to VIEs)	12,441		12,421
Nuclear decommissioning trust funds	9,410		9,114
Operating lease right-of-use assets, net	1,540		1,524
Investments in equity method unconsolidated affiliates	919		961

Other (includes $82 at 2021 and $81 at 2020 related to VIEs)	3,715		3,601
Total other noncurrent assets	47,328		46,924
Total Assets	$	163,465	$	162,388
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	2,497	$	3,144
Notes payable and commercial paper	4,064		2,873
Taxes accrued	574		482
Interest accrued	536		537
Current maturities of long-term debt (includes $472 at 2021 and 2020 related to VIEs)	5,586		4,238

Asset retirement obligations	709		718
Regulatory liabilities	1,509		1,377
Other	1,858		2,936
Total current liabilities	17,333		16,305
Long-Term Debt (includes $3,686 at 2021 and $3,535 at 2020 related to VIEs)	54,768		55,625
Other Noncurrent Liabilities
Deferred income taxes	9,459		9,244
Asset retirement obligations	12,299		12,286
Regulatory liabilities	15,070		15,029
Operating lease liabilities	1,352		1,340
Accrued pension and other post-retirement benefit costs	1,010		969
Investment tax credits	747		687

Other (includes $331 at 2021 and $316 at 2020 related to VIEs)	1,769		1,719
Total other noncurrent liabilities	41,706		41,274
Commitments and Contingencies	0		0
Equity
Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2021 and 2020	973		973
Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2021 and 2020	989		989
Common stock, $0.001 par value, 2 billion shares authorized; 769 million shares outstanding at 2021 and 2020	1		1
Additional paid-in capital	43,761		43,767
Retained earnings	2,680		2,471
Accumulated other comprehensive loss	(218)		(237)
Total Duke Energy Corporation stockholders' equity	48,186		47,964
Noncontrolling interests	1,472		1,220
Total equity	49,658		49,184
Total Liabilities and Equity	$	163,465	$	162,388

See Notes to Condensed Consolidated Financial Statements

(in millions) September 30, 2017 December 31, 2016
ASSETS
Current Assets
Cash and cash equivalents $ 282
$ 392
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
Inventory 3,265
3,522
Regulatory assets (includes $51 at 2017 and $50 at 2016 related to VIEs) 1,109
1,023
Other 433
458
Total current assets 7,706
8,039
Property, Plant and Equipment
Cost 125,582
121,397
Accumulated depreciation and amortization (41,161 ) (39,406 )
Generation facilities to be retired, net 441
529
Net property, plant and equipment 84,862
82,520
Other Noncurrent Assets
Goodwill 19,418
19,425
Regulatory assets (includes $1,101 at 2017 and $1,142 at 2016 related to VIEs) 13,367
12,878
Nuclear decommissioning trust funds 6,814
6,205
Investments in equity method unconsolidated affiliates 1,366
925
Other 2,792
2,769
Total other noncurrent assets 43,757
42,202
Total Assets $ 136,325
$ 132,761
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 2,645
$ 2,994
Notes payable and commercial paper 1,899
2,487
Taxes accrued 627
384
Interest accrued 538
503
Current maturities of long-term debt (includes $215 at 2017 and $260 at 2016 related to VIEs) 2,485
2,319
Asset retirement obligations 619
411
Regulatory liabilities 273
409
Other 1,734
2,044
Total current liabilities 10,820
11,551
Long-Term Debt (includes $4,219 at 2017 and $3,587 at 2016 related to VIEs) 48,929
45,576
Other Noncurrent Liabilities
Deferred income taxes 15,058
14,155
Asset retirement obligations 9,586
10,200
Regulatory liabilities 7,027
6,881
Accrued pension and other post-retirement benefit costs 1,105
1,111
Investment tax credits 534
493
Other 1,624
1,753
Total other noncurrent liabilities 34,934
34,593
Commitments and Contingencies

Equity
Common stock, $0.001 par value, 2 billion shares authorized; 700 million shares outstanding at 2017 and 2016 1
1
Additional paid-in capital 38,774
38,741
Retained earnings 2,936
2,384
Accumulated other comprehensive loss (80 ) (93 )
Total Duke Energy Corporation stockholders' equity 41,631
41,033
Noncontrolling interests 11
8
Total equity 41,642
41,041
Total Liabilities and Equity $ 136,325
$ 132,761

~~PART I~~


FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended
	March 31,
(in millions)	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	941	$	890
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	1,385		1,301
Equity in losses (earnings) of unconsolidated affiliates	17		(44)
Equity component of AFUDC	(42)		(40)



Deferred income taxes	86		422



Payments for asset retirement obligations	(114)		(132)




(Increase) decrease in

Receivables	377		466
Inventory	91		(92)
Other current assets	(47)		(131)
Increase (decrease) in
Accounts payable	(467)		(657)
Taxes accrued	104		113
Other current liabilities	(263)		(455)
Other assets	51		(37)
Other liabilities	(31)		(50)
Net cash provided by operating activities	2,088		1,554
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,215)		(2,832)

Contributions to equity method investments	—		(77)


Purchases of debt and equity securities	(1,584)		(1,392)
Proceeds from sales and maturities of debt and equity securities	1,601		1,347



Disbursements to canceled equity method investments	(855)		—
Other	(84)		(68)
Net cash used in investing activities	(3,137)		(3,022)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	608		1,954

Issuance of common stock	5		40

Payments for the redemption of long-term debt	(76)		(292)

Proceeds from the issuance of short-term debt with original maturities greater than 90 days	50		1,784
Payments for the redemption of short-term debt with original maturities greater than 90 days	(909)		(17)
Notes payable and commercial paper	2,046		(198)


Contributions from noncontrolling interests	303		103
Dividends paid	(783)		(707)

Other	(59)		(74)
Net cash provided by financing activities	1,185		2,593

Net increase in cash, cash equivalents and restricted cash	136		1,125
Cash, cash equivalents and restricted cash at beginning of period	556		573
Cash, cash equivalents and restricted cash at end of period	$	692	$	1,698
Supplemental Disclosures:






Significant non-cash transactions:
Accrued capital expenditures	$	921	$	934
Non-cash dividends	—		27

See Notes to Condensed Consolidated Financial Statements

Nine Months Ended
September 30,
(in millions) 2017
2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,361
$ 2,392
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel) 2,990
2,847
Equity component of AFUDC (175 ) (140 )
Gains on sales of other assets (28 ) (27 )
Impairment charges 216
279
Deferred income taxes 1,016
648
Equity in earnings of unconsolidated affiliates (101 ) (34 )
Accrued pension and other post-retirement benefit costs 19
12
Contributions to qualified pension plans (8 ) —
Payments for asset retirement obligations (420 ) (443 )
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions 4
36
Receivables 80
(276 )
Inventory 248
455
Other current assets (176 ) (163 )
Increase (decrease) in
Accounts payable (554 ) (207 )
Taxes accrued 233
417
Other current liabilities (532 ) (157 )
Other assets (160 ) (64 )
Other liabilities (2 ) 36
Net cash provided by operating activities 5,011
5,611
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (5,841 ) (5,252 )
Contributions to equity method investments (370 ) (198 )
Purchases of available-for-sale securities (3,170 ) (4,048 )
Proceeds from sales and maturities of available-for-sale securities 3,199
4,107
Change in restricted cash (29 ) (34 )
Other (149 ) (130 )
Net cash used in investing activities (6,360 ) (5,555 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt 5,710
8,647
Issuance of common stock related to employee benefit plans —
7
Payments for the redemption of long-term debt (2,035 ) (988 )
Proceeds from the issuance of short-term debt with original maturities greater than 90 days 265
1,424
Payments for the redemption of short-term debt with original maturities greater than 90 days (237 ) (492 )
Notes payable and commercial paper (647 ) (1,579 )
Dividends paid (1,825 ) (1,731 )
Other 8
(22 )
Net cash provided by financing activities 1,239
5,266
Changes in cash and cash equivalents associated with assets held for sale —
11
Net (decrease) increase in cash and cash equivalents (110 ) 5,333
Cash and cash equivalents at beginning of period 392
383
Cash and cash equivalents at end of period $ 282
$ 5,716
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures $ 740
$ 631


FINANCIAL STATEMENTS

~~PART I~~

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

Accumulated Other Comprehensive Loss
Net Unrealized
Total

Foreign
Net
(Losses) Gains
Duke Energy

Common
Additional
Currency
Losses on
on Available-
Pension and
Corporation

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

$ 37,997

$ 3,212

$ (600 )
$ (66 )
$ 4

$ (59 )
$ 40,489

$ 57

$ 40,546

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

$ 1

$ 38,774

$ 2,936

$ —

$ (19 )
$ 9

$ (70 )
$ 41,631

$ 11

$ 41,642

~~(a)~~

~~Cumulative-effect adjustment due to implementation of a new accounting standard related to stock-based compensation and the associated income taxes. See Note 1 for more information.~~

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


	Three Months Ended March 31, 2021
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other		Eliminations		Total


Total revenues	$	363	$	169	$	532	$	—	$	—	$	532
Segment income/Net income	$	50	$	43	$	93	$	(2)	$	—	$	91

Segment assets	$	6,544	$	3,575	$	10,119	$	29	$	(7)	$	10,141

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 March 31, 2020
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other		Total


Total revenues	$	346	$	152	$	498	$	—	$	498
Segment income/Net income	$	30	$	36	$	66	$	(1)	$	65

Nine Months Ended September 30, 2016
Electric
Gas
Total

Utilities and
Utilities and
Reportable

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


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

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

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

~~PART I~~

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

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

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

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

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

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.

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

2021 Coal Ash ~~Basin Closure Costs Deferral~~Settlement

On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the Coal Combustion Residuals Settlement Agreement (the “CCR Settlement Agreement”) with the North Carolina Public Staff (Public Staff), the North Carolina Attorney General’s Office and the Sierra Club (collectively, the "Settling Parties"), which was filed with the NCUC on January 25, 2021. The CCR Settlement Agreement resolves all coal ash prudence and cost recovery issues in connection with 2019 rate cases filed by Duke Energy Carolinas and Duke Energy Progress with the NCUC, as well as the equitable sharing issue on remand from the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases as a result of the December 11, 2020, North Carolina Supreme Court opinion. The settlement also provides clarity on coal ash cost recovery in North Carolina for Duke Energy Carolinas and Duke Energy Progress through January 2030 and February 2030 (the "Term"), respectively.

Duke Energy Carolinas and Duke Energy Progress agreed not to seek recovery of approximately $1 billion of systemwide deferred coal ash expenditures, but will retain the ability to earn a debt and equity return during the amortization period, which shall be five years in the pending 2019 North Carolina rate cases and will be set by the NCUC in future rate case proceedings. The equity return and the amortization period on deferred coal ash costs under the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases will remain unaffected. The equity return on deferred coal ash costs under the 2019 North Carolina rate cases and future rate cases in North Carolina will be set at 150 basis points lower than the authorized return on equity (ROE) then in effect, with a capital structure composed of 48% debt and 52% equity. Duke Energy Carolinas and Duke Energy Progress retain the ability to earn a full WACC return during the deferral period, which is the period from when costs are incurred until they are recovered in rates.

The Settling Parties agreed that execution by Duke Energy Carolinas and Duke Energy Progress of a settlement agreement between themselves and the NCDEQ dated December 31, 2019, (the “DEQ Settlement”) and the coal ash management plans included therein or subsequently approved by DEQ are reasonable and prudent. The Settling Parties retain the right to challenge the reasonableness and prudence of actions taken by Duke Energy Carolinas and Duke Energy Progress and costs incurred to implement the scope of work agreed upon in the DEQ Settlement, after February 1, 2020, and March 1, 2020, for Duke Energy Carolinas and Duke Energy Progress, respectively. The Settling Parties further agreed to waive rights through the Term to challenge the reasonableness or prudence of Duke Energy Carolinas’ and Duke Energy Progress’ historical coal ash management practices, and to waive the right to assert any arguments that future coal ash costs, including financing costs, shall be shared between either company and customers through equitable sharing or any other rate base or return adjustment that shares the revenue requirement burden of coal ash costs not otherwise disallowed due to imprudence.

The Settling Parties agreed to a sharing arrangement for future coal ash insurance litigation proceeds between Duke Energy Carolinas and Duke Energy Progress and North Carolina customers, if achieved.

On ~~December 30, 2016,~~January 29, 2021, Duke Energy Carolinas and Duke Energy Progress filed joint motions with the Settling Parties seeking approval of the CCR Settlement Agreement, along with supporting testimony and exhibits from Duke Energy Carolinas and Duke Energy Progress. On February 5, 2021, the Public Staff filed testimony and exhibits supporting the CCR Settlement Agreement.

As a result of the CCR Settlement Agreement, Duke Energy Carolinas and Duke Energy Progress recorded a pretax charge of approximately $454 million and $494 million, respectively, in the fourth quarter of 2020 to Impairment charges and a reversal of approximately $50 million and $102 million, respectively, to Regulated electric operating revenues on the respective Consolidated Statements of Operations.

The Coal Ash Settlement was approved without modification in the NCUC Orders in the 2019 rate cases on March 31, 2021, and April 16, 2021, for Duke Energy Carolinas and Duke Energy Progress, respectively.

2020 North Carolina Storm Securitization Filings

On October 26, 2020, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the NCUC, ~~seeking an accounting order authorizing deferral of certain costs incurred~~as agreed to in ~~connection with federal and state environmental remediation requirements related to~~partial settlements reached in 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~~2019 North ~~Carolina. Initial comments were received in March 2017, and reply comments were filed on April 19, 2017. The NCUC has consolidated~~Carolina Rate Cases for Duke Energy ~~Carolinas'~~Carolinas and Duke Energy ~~Progress’ coal ash deferral requests into~~Progress, seeking authorization for the financing of the costs of each utility's storm recovery activities required as a result of Hurricane Florence, Hurricane Michael, Hurricane Dorian and Winter Storm Diego. Specifically, Duke Energy Carolinas and Duke Energy Progress requested that the NCUC find that their ~~respective general~~storm recovery costs and related financing costs are appropriately financed by debt secured by storm recovery property, and that the commission issue financing orders by which each utility may accomplish such financing using a securitization structure. On January 27, 2021, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain accounting issues, including agreement to support an 18- to 20-year bond period. The total revenue requirement over a proposed 20-year bond period for the storm recovery charges is approximately $287 million for Duke Energy Carolinas and $920 million for Duke Energy Progress. A remote evidentiary hearing ended on January 29, 2021, and on February 1, 2021, the NCUC granted a motion by Duke Energy Carolinas and Duke Energy Progress for a temporary 30-day waiver of the 135-day time frame for the NCUC to issue orders on the joint petition, extending the deadline for the NCUC to issue an order to May 10, 2021. In the NCUC Orders in the 2019 rate ~~case dockets~~cases on March 31, 2021, and April 16, 2021, for ~~decision. See "2017 North Carolina Rate Case" sections below for additional discussion.~~Duke Energy Carolinas and Duke Energy Progress, respectively, the reasonableness and prudence of the deferred storm costs was approved. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.


FINANCIAL STATEMENTS			REGULATORY MATTERS

COVID-19 Filings

North Carolina

Duke Energy Carolinas and Duke Energy Progress filed a joint petition on August 7, 2020, with the NCUC for deferral treatment of incremental costs and waived customer fees due to the COVID-19 pandemic. Comments on the joint petition were filed on November 5, 2020, and reply comments were filed on November 30, 2020. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

South Carolina

Duke Energy Carolinas and Duke Energy Progress filed a report on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. On August 14, 2020, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the PSCSC for approval of an accounting order to defer incremental COVID-19 related costs incurred through June 30, 2020, and for the ongoing months during the duration of the COVID-19 pandemic. The deferral request did not include lost revenues. Updates on cost impacts were filed on September 30, 2020, and included financial impacts through the end of August 2020. On October 16, 2020, the South Carolina Office of Regulatory Staff (ORS) requested the PSCSC delay taking formal action on the deferral request until the ORS and any intervenors complete discovery. The PSCSC issued an order on October 21, 2020, to grant additional time to complete discovery until January 20, 2021, and to establish a procedural schedule. Updates on cost impacts were filed on December 30, 2020, and included financial impacts through November 30, 2020. On January 15, 2021, the ORS requested the PSCSC suspend the dates for the ORS report and public hearing. The ORS conferred with the companies regarding the status of the docket, and the parties mutually agreed that recently enacted federal laws addressing COVID-19 aid and recovery should be studied before further action is taken in this docket. On January 27, 2021, the PSCSC voted to grant the ORS request to suspend the virtual public hearing. The ORS filed its report on April 16, 2021. 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. On February 28, 2018, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included an ROE 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 the North Carolina Supreme Court. The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. In response to a NCUC order seeking comments on the proposed procedure on remand, on January 11, 2021, Duke Energy Carolinas, Duke Energy Progress, the Public Staff, the North Carolina Attorney General, Sierra Club and Carolina Industrial Group for Fair Utility Rates II and III filed joint comments proposing that the NCUC not hold additional evidentiary hearings, but instead rely upon existing records in the 2017 North Carolina rate cases, or in the alternative the records in the 2019 North Carolina rate cases, in deciding the issue on remand. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021, and approved by the NCUC on March 31, 2021.

2019 North Carolina Rate Case

On September 30, 2019, Duke Energy Carolinas filed an application with the NCUC for a net rate increase for retail customers of approximately $291 million, which ~~represents~~represented an approximate ~~13.6 percent~~6% increase in annual base revenues. The gross rate case revenue increase request was $445 million, which was offset by an EDIT rider of $154 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase iswas driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Carolinas requested rates be effective no later than August 1, 2020. The NCUC established a procedural schedule with an evidentiary hearing to begin on March 23, 2020. On March 16, 2020, in consideration of public health and safety as a result of the COVID-19 pandemic, Duke Energy Carolinas filed a motion with the NCUC seeking a suspension of the procedural schedule in the rate case, including issuing discovery requests, and postponement of the evidentiary hearing for 60 days. Also on March 16, 2020, the NCUC issued an Order Postponing Hearing and Addressing Procedural Matters, which postponed the evidentiary hearing until further order by the commission.

On March 25, 2020, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. On July 24, 2020, Duke Energy Carolinas filed its request for approval of its notice to customers required to implement temporary rates. On July 27, 2020, Duke Energy Carolinas filed a joint motion with Duke Energy Progress and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff. Also on July 27, 2020, Duke Energy Carolinas filed a letter stating that it intended to update its temporary rates calculation to reflect the terms of the partial settlement. On July 31, 2020, Duke Energy Carolinas and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting, implementation of new depreciation rates and the amortization period of the loss on the hydro station sale.

On August 4, 2020, Duke Energy Carolinas filed an amended motion for approval of its amended notice to customers, seeking to exercise its statutory right to implement temporary rates subject to refund on or after August 24, 2020. The revenue requirement to be recovered, subject to refund, through the temporary rates was based on and consistent with the base rate component of the Second Partial Settlement and excluded the items to be litigated noted above. The NCUC approved the August 4, 2020 amended temporary rates motion on August 6, 2020, and temporary rates went into effect on August 24, 2020.


FINANCIAL STATEMENTS			REGULATORY MATTERS

The Duke Energy Carolinas evidentiary hearing concluded on September 18, 2020, and post-hearing filings were made with the NCUC from all parties by November 4, 2020. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021.

On March 31, 2021, the NCUC issued an order approving the March 25, 2020, and July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2) deferral treatment of approximately $800 million of grid improvement projects ~~investments~~with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the reasonableness and prudence of $213 million of deferred storm costs, which were removed from the rate case and for which Duke Energy Carolinas filed a petition seeking securitization in October 2020. Additionally, the order approved without modification the CCR Settlement Agreement.

The order denied Duke Energy Carolinas' proposal to shorten the remaining depreciable lives of certain Duke Energy Carolinas coal-fired generating units, indicating the appropriate proceeding for the review of generating plant retirements is Duke Energy Carolinas' integrated resource planning (IRP) proceeding.

On April 12, 2021, Duke Energy Carolinas filed its final revenue requirement with the NCUC, which results in a net increase of approximately $33 million. Revised customer ~~service technologies,~~rates are expected to become effective in June 2021.

2018 South Carolina Rate Case

On November 8, 2018, Duke Energy Carolinas filed an application with the PSCSC for a rate increase for retail customers of approximately $168 million.

After hearings in March 2019, the PSCSC issued an order on May 21, 2019, which included an ROE of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:

•Approval of cancellation of the Lee Nuclear Project, with Duke Energy Carolinas maintaining the Combined Operating License;

•Approval of recovery of $125 million (South Carolina retail portion) of Lee Nuclear Project development costs (including AFUDC through December 2017) over a 12-year period, but denial of ~~complying~~a return on the deferred balance of costs;

•Approval of recovery of $96 million of coal ash costs over a five-year period with a return at Duke Energy Carolinas' WACC;

•Denial of recovery of $115 million of certain coal ~~combustion residuals (CCR) regulations~~ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;

•Approval of a $66 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;

•Approval of a $45 million decrease through the EDIT Rider to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with the Average Rate Assumption Method (ARAM) for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a five-year period for the deferred revenues; and

•Approval of a $17 million decrease through the EDIT Rider related to reductions in the North Carolina ~~Coal Ash Management Act~~state income tax rate from 6.9% to 2.5% to be returned over a five-year period.

As a result of ~~2014 (Coal Ash Act)~~the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Carolinas filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Carolinas were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Carolinas' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, ROE and the recovery of a return on deferred operation and maintenance expenses. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Carolinas filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal with the Supreme Court of South Carolina. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to ~~licensing~~the Lee Nuclear Station. Response briefs were filed on July 6, 2020, and ~~development~~reply briefs were filed on August 11, 2020. Oral arguments before the Supreme Court of South Carolina have been scheduled to occur on May 26, 2021. Based on legal analysis and the filing of the ~~William States Lee III Nuclear Station (Lee Nuclear Station) discussed below. An evidentiary hearing is scheduled to begin on February 19, 2018.~~appeal, Duke Energy Carolinas has not recorded an adjustment for its deferred coal ash costs in this matter. Duke Energy Carolinas cannot predict the outcome of this matter.

~~Lincoln County Combustion Turbine Addition~~

On June 12, 2017, Duke Energy Carolinas filed an application with the NCUC for a Certificate of Public Convenience 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. The request also included construction of related transmission and natural gas pipeline interconnection facilities. If approved, construction would begin in 2018 with an extended commissioning and validation period from 2020-2024 and an estimated commercial operation date in 2024. An evidentiary hearing was held in August 2017. Briefs and proposed orders were filed on October 9, 2017. A decision is expected by the end of 2017. Duke Energy Carolinas cannot predict the outcome of this matter.

~~PART I~~

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

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

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

~~William States Lee Combined Cycle Facility~~

On April 9, 2014, the PSCSC granted Duke Energy Carolinas and North Carolina Electric Membership Corporation (NCEMC) a Certificate of Environmental Compatibility and Public Convenience and Necessity (CECPCN) for the construction and operation of a 750-MW combined-cycle natural gas-fired generating plant at Duke Energy Carolinas' existing William States Lee Generating Station in Anderson, South Carolina. Duke Energy Carolinas began construction in July 2015 and estimates a cost to build of $600 million for its share 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. On July 3, 2014, the South Carolina Coastal Conservation League (SCCL) and Southern Alliance for Clean Energy (SACE) jointly filed a Notice of Appeal with the Court of Appeals of South Carolina (S.C. Court of Appeals) seeking the court's review of the PSCSC's decision, claiming the PSCSC did not properly consider a request related to a proposed solar facility prior to granting approval of the CECPCN. The S.C. Court of Appeals affirmed the PSCSC's decision on February 10, 2016, and on March 24, 2016, denied a request for rehearing filed by SCCL and SACE. On April 21, 2016, SCCL and SACE petitioned the South Carolina Supreme Court for review of the S.C. Court of Appeals decision. On March 24, 2017, the South Carolina Supreme Court denied the request for review, thus concluding the matter.

~~Lee Nuclear Station~~

In December 2007, Duke Energy Carolinas applied to the NRC 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 development 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 ~~represents~~was subsequently adjusted to $420 million. On November 22, 2017, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included an ROE 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 Public Staff, the North Carolina Attorney General and the Sierra Club filed notices of appeal to the North Carolina Supreme Court.


FINANCIAL STATEMENTS			REGULATORY MATTERS

The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. In response to a NCUC order seeking comments on the proposed procedure on remand, on January 11, 2021, Duke Energy Carolinas, Duke Energy Progress, the Public Staff, the North Carolina Attorney General, Sierra Club and Carolina Industrial Group for Fair Utility Rates II and III filed joint comments proposing that the NCUC not hold additional evidentiary hearings, but instead rely upon existing records in the 2017 North Carolina rate cases or in the alternative the records in the 2019 North Carolina rate cases, in deciding the issue on remand. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021, and approved by the NCUC on April 16, 2021.

2019 North Carolina Rate Case

On October 30, 2019, Duke Energy Progress filed an application with the NCUC for a net rate increase for retail customers of approximately $464 million, which represented an approximate ~~14.9 percent~~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 iswas 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 sought to defer and recover incremental Hurricane Dorian storm costs in this proceeding and requested rates be effective no later than September 1, 2020. As a result of ~~complying with CCR regulations~~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 ~~Coal Ash Act,~~Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. On July 27, 2020, Duke Energy Progress filed a joint motion with Duke Energy Carolinas and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff. On July 31, 2020, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. The remaining items litigated at hearing included recovery of deferred coal ash compliance costs ~~relating~~that are subject to asset retirement obligation accounting and implementation of new depreciation rates.

On August 7, 2020, Duke Energy Progress filed a motion for approval of notice required to implement temporary rates, seeking to exercise its statutory right to implement temporary rates subject to refund on or after September 1, 2020. The revenue requirement to be recovered subject to refund through the temporary rates was based on and consistent with the terms of the base rate component of the settlement agreements with the Public Staff and excluded 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 sought authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Progress on a permanent basis. The NCUC approved the August 7, 2020 temporary rates motion on August 11, 2020, and temporary rates went into effect on September 1, 2020.

The Duke Energy Progress evidentiary hearing concluded on October 6, 2020, and post-hearing filings were filed with the NCUC from all parties by December 4, 2020. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021.

On April 16, 2021, the NCUC issued an order approving the June 2, 2020, and July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2) deferral treatment of approximately $400 million of grid improvement projects with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the reasonableness and prudence of approximately $714 million of deferred storm ~~recovery,~~costs, which were removed from the rate case and for which Duke Energy Progress filed a petition seeking securitization in October 2020. Additionally, the order approved without modification the CCR Settlement Agreement.

The order denied Duke Energy Progress' proposal to shorten the remaining depreciable lives of certain Duke Energy Progress coal-fired generating units, indicating the appropriate proceeding for the review of generating plant retirements is Duke Energy Progress' IRP proceeding.

On April 26, 2021, Duke Energy Progress filed its final revenue requirement with the NCUC, which results in a net increase of approximately $178 million. Revised customer rates are expected to become effective in June 2021.

Hurricane Dorian

Hurricane Dorian reached the Carolinas in September 2019 as a Category 2 hurricane making landfall within Duke Energy Progress’ service territory. Total estimated incremental operation and maintenance expenses incurred to repair and restore the system are approximately $168 million with an additional $4 million in capital investments made for restoration efforts. Approximately $145 million of the operation and maintenance expenses are deferred in ~~customer service technologies~~Regulatory assets within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of March 31, 2021, and ~~recovery of~~December 31, 2020. A request for an accounting order to defer incremental storm costs associated with ~~renewable purchased power. Intervenors~~Hurricane Dorian was included in ~~the case filed testimony in October 2017 and~~ Duke Energy Progress' ~~responses are due November 6, 2017. An evidentiary hearing is scheduled~~October 30, 2019, general rate case filing with the NCUC. Terms of the June 2, 2020, Agreement and Stipulation of Partial Settlement removed incremental storm costs from the general rate case. A petition seeking to ~~begin November 20, 2017.~~securitize these costs, along with costs from Hurricane Florence, Hurricane Michael and Winter Storm Diego, was filed on October 26, 2020, with the NCUC. For information on the securitization filing, see "2020 North Carolina Storm Securitization Filings." Duke Energy Progress cannot predict the outcome of this matter.

~~Storm Cost Deferral Filing~~


FINANCIAL STATEMENTS			REGULATORY MATTERS

2018 South Carolina Rate Case

On ~~December 16, 2016,~~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 May 21, 2019, which included an ROE of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:

•Approval of recovery of $4 million of coal ash costs over a five-year period with a return at Duke Energy Progress' WACC;

•Denial of recovery of $65 million of certain coal ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;

•Approval of a $17 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;

•Approval of a $12 million decrease through the EDIT Tax Savings Rider resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with ARAM for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a three-year period for the deferred revenues; and

•Approval of a $12 million increase due to the expiration of EDIT related to reductions in the North Carolina state income tax rate from 6.9% to 2.5%.

As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a ~~petition with~~Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the ~~NCUC requesting an accounting order~~PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Progress' request to ~~defer~~rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, ~~incurred in connection with response to Hurricane Matthew~~ROE and ~~other significant storms in 2016. The final estimate~~the recovery of ~~incremental~~a return on deferred operation and maintenance ~~and capital~~expenses, but allowing additional litigation-related costs. As a result of the Directive allowing litigation-related costs, ~~of $116 million~~customer rates were revised effective July 1, 2019. An order detailing the commission's decision in the Directive was ~~filed with the NCUC in September 2017. On March 15, 2017, the NCUC Public Staff filed comments supporting deferral of a portion of Duke Energy Progress’ requested amount.~~issued on October 18, 2019. Duke Energy Progress filed ~~reply comments~~a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. Initial briefs were filed on April ~~12, 2017. On~~21, 2020. Response briefs were filed on July ~~10, 2017,~~6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments before the ~~NCUC consolidated Duke Energy Progress' storm deferral request into~~Supreme Court of South Carolina have been scheduled to occur on May 26, 2021. Based on legal analysis and the filing of the appeal, Duke Energy Progress ~~rate case docket~~has not recorded an adjustment for ~~decision. See "2017 North Carolina Rate Case" for additional discussion.~~its deferred coal ash costs in this matter. 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,October 8, 2018, Duke Energy Progress filed an ~~annual progress report for the construction of the combined-cycle plants~~application with the NCUC for a CPCN to construct the Hot Springs Microgrid Solar and Battery Storage Facility, which was approved with ~~an estimated cost~~certain conditions on May 10, 2019. A hearing to update the NCUC on the status of ~~$893 million. Site preparation activities for~~ the ~~combined-cycle plants are underway and construction of these plants is scheduled~~project was held on March 5, 2020. Construction began in May 2020 with commercial operation expected to begin in ~~2017, with an expected in-service date in late 2019.~~October 2021.

On July 27, 2020, Duke Energy Progress ~~plans~~filed an application with the NCUC for a CPCN to ~~file~~construct the Woodfin Solar Facility, a 5-MW solar generating facility to be constructed on a closed landfill in Buncombe County. The expert hearing was held on November 18, 2020. The application was approved and a CPCN was granted by order of the NCUC on April 20, 2021.

FERC Return on Equity Complaints

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), alleging that the 11% stated ROE component contained in the demand formula rate in the Full Requirements Power Purchase Agreement (FRPPA) between NCEMPA and Duke Energy Progress is unjust and unreasonable. On July 16, 2020, the FERC set this matter for ~~future approvals~~hearing and settlement judge procedures and established a refund effective date of October 11, 2019. In its order setting the matter for settlement, the FERC allowed for the consideration of variations to the base transmission-related ROE methodology developed in its Order No. 569-A, through the introduction of “specific facts and circumstances” involving issues specific to the case. The parties reached a settlement in principle at a settlement conference on January 7, 2021, and filed a settlement package on March 10, 2021. The FERC Trial Staff filed comments in support of the settlement. On April 19, 2021, the Settlement Judge certified the settlement to the FERC as an uncontested settlement and recommended approval by the FERC. Duke Energy Progress cannot predict the outcome of this matter.

On October 16, 2020, North Carolina Electric Membership Corporation (NCEMC) filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the FPA, alleging that the 11% stated ROE component in the demand formula rate in the Power Supply and Coordination Agreement between NCEMC and Duke Energy Progress is unjust and unreasonable. Under FPA Section 206, the earliest refund effective date that the FERC can establish is the date of the filing of the complaint. Duke Energy Progress responded to the complaint on November 20, 2020, seeking dismissal, demonstrating that the 11% ROE is just and reasonable for the service provided. The parties filed responsive pleadings and are awaiting an order from the FERC. Duke Energy Progress cannot predict the outcome of this matter.

Duke Energy Florida

2021 Settlement Agreement

On January 14, 2021, Duke Energy Florida filed a Settlement Agreement (the “Settlement”) with the FPSC. The parties to the Settlement include Duke Energy Florida, the Office of Public Counsel (OPC), the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PCS Phosphate and NUCOR Steel Florida, Inc. (collectively, the “Parties”).


FINANCIAL STATEMENTS			REGULATORY MATTERS

Pursuant to the Settlement, the parties agreed to a base rate stay-out provision that expires year-end 2024; however, Duke Energy Florida is allowed an increase to its base rates of an incremental $67 million in 2022, $49 million in 2023 and $79 million in 2024, subject to adjustment in the event of tax reform during the years 2021, 2022 and 2023. The parties also agreed to a ROE band of 8.85% to 10.85% with a midpoint of 9.85% based on a capital structure of 53% equity and 47% debt. The ROE band can be increased by 25 basis points if the average 30-year U.S. Treasury rate increases 50 basis points or more over a six-month period in which case the midpoint ROE would rise from 9.85% to 10.10%. Duke Energy Florida will also be able to retain the DOE award of approximately $173 million for spent nuclear fuel, which is expected to be received in 2022, in order to mitigate customer rates over the term of the Settlement. In return, Duke Energy Florida will be able to recognize the $173 million into earnings from 2022 through 2024.

In addition to these terms, the Settlement contains provisions related to the ~~proposed~~accelerated depreciation of Crystal River Units 4-5, the approval of approximately $1 billion in future investments in new cost effective solar power, the implementation of a new Electric Vehicle Charging Station Program and the deferral and recovery of costs in connection with the implementation of Duke Energy Florida’s Vision Florida program, which explores various emerging non-carbon emitting generation technology, distributed technologies and ~~pilot battery storage project.~~resiliency projects, among other things. The Settlement also resolves remaining unrecovered storm costs for hurricanes Dorian and Michael.

The ~~carrying value~~FPSC approved the Settlement on May 4, 2021. Revised customer rates will be effective January 1, 2022, with subsequent base rate increases effective January 1, 2023, and January 1, 2024.

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 ~~376-MW Asheville coal-fired plant, including associated ash basin closure~~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 ~~$405~~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. Approximately $42 million and ~~$492~~$80 million isof these costs are included in ~~Generation facilities to be retired, net~~Regulatory assets within Current Assets and Other Noncurrent Assets on ~~Duke Energy Progress'~~the Condensed Consolidated Balance Sheets as of ~~September 30, 2017,~~March 31, 2021, and December 31, ~~2016,~~2020, 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 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. Duke Energy Florida is allowed to recover reasonable and prudent EPC cancellation costs from its retail customers. On May 1, 2017, Duke Energy Florida filed a request with the FPSC to recover approximately $82 million of Levy Nuclear Project costs from retail customers in 2018. As part of the 2017 Settlement discussed above, Duke Energy Florida is no longer seeking recovery of costs related to the Levy Nuclear Project and the ongoing Westinghouse litigation discussed in Note 5. All remaining Levy Nuclear Project issues have been resolved.

~~Hines Chiller Uprate Project~~

~~On February 2, 2017,~~ Duke Energy Florida filed a petition ~~seeking~~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. The final actual amount of $145 million was filed on September 30, 2020. The Settlement was approved by the FPSC and all matters regarding storm cost recovery relating to Hurricane Michael and Hurricane Dorian are resolved.

Clean Energy Connection

On July 1, 2020, Duke Energy Florida petitioned the FPSC for approval of a voluntary solar program. The program consists of 10 new solar generating facilities with combined capacity of approximately 750 MW. The program allows participants to ~~include~~support cost-effective solar development in ~~base rates~~Florida by paying a subscription fee based on per kilowatt-subscriptions and receiving a credit on their bill based on the ~~revenue requirement for a Chiller Uprate Project (Uprate Project) at~~actual generation associated with their portion of the ~~Hines Energy Complex.~~solar portfolio. The ~~Uprate Project was placed into service in March 2017 at a~~estimated cost of ~~approximately $150 million. The annual retail revenue requirement~~the 10 new solar generation facilities is approximately ~~$19 million. On March 28, 2017,~~$1 billion over the ~~FPSC issued an order approving the revenue requirement, which was~~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 ~~first billing cycle~~fuel cost recovery clause. A remote hearing was held on November 17, 2020, and post-hearing briefs were filed with the FPSC from all parties by December 9, 2020. The FPSC voted to approve the program on January 5, 2021, and issued its written order on January 26, 2021.

On February 24, 2021, the League of ~~April 2017.~~

United Latin American Citizens filed a notice of appeal of the FPSC’s Order approving the Clean Energy Connection to the Florida Supreme Court. The FPSC approval order remains in effect pending the outcome of the appeal. Duke Energy ~~Ohio~~

~~Duke Energy Kentucky Rate Case~~

On September 1, 2017, 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 modification to the Profit Sharing Mechanism to increase customers' share of proceeds from the benefits of owning generation and to mitigate shareholder risks associated with that generation. The KPSC set filing deadlines of December 29, 2017, and February 14, 2018, for intervenor testimony and rebuttal testimony, respectively. An evidentiary hearing has not been scheduled.~~Duke Energy Kentucky anticipates that rates will go into effect in mid-April 2018. Duke Energy Kentucky~~Florida cannot predict the outcome of this matter.

~~PART I~~Duke Energy Ohio

~~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)~~

~~Electric Security Plan Filing~~Ohio House Bill 6

On July 23, 2019, House Bill 6 was signed into law that became effective January 1, 2020. Among other things, the bill allows for funding, through a rider mechanism referred to as the Clean Air Fund (Rider CAF), of 2 nuclear generating facilities located in Northern Ohio owned by Energy Harbor (f/k/a FirstEnergy Solutions), repeal of energy efficiency mandates and recovery of prudently incurred costs, net of any revenues, for Ohio investor-owned utilities that are participants under the OVEC power agreement. The recovery is through a non-bypassable rider that replaced any existing recovery mechanism approved by the PUCO and will remain in place through 2030. As such, Duke Energy Ohio created the Legacy Generation Rider (Rider LGR) that replaced Rider PSR effective January 1, 2020. The amounts recoverable from customers are subject to an annual cap, with incremental costs that exceed such cap eligible for deferral and recovery subject to review. See Note 11 for additional discussion of Duke Energy Ohio's ownership interest in OVEC. House Bill 128 was signed into law on March 31, 2021, which becomes effective June ~~1, 2017,~~30, 2021. The bill removes nuclear plant funding from Rider CAF and does not impact OVEC cost recovery.


FINANCIAL STATEMENTS			REGULATORY MATTERS

Energy Efficiency Cost Recovery

On February 26, 2020, the PUCO issued an order directing utilities to wind down their demand-side management programs by September 30, 2020, and to terminate the programs by December 31, 2020, in response to changes in Ohio law that eliminated Ohio's energy efficiency mandates. On March 27, 2020, Duke Energy Ohio filed ~~with~~an Application for Rehearing seeking clarification on the final true up and reconciliation process after 2020. On November 18, 2020, the PUCO issued two orders on the application for rehearing. The first order was a ~~request~~Third Entry on Rehearing on the Duke Energy Ohio portfolio holding the cost cap previously imposed was unlawful, a shared savings cap of $8 million pretax should be imposed and lost distribution revenues could not be recovered after December 31, 2020. The second order directs all utilities set the rider to zero effective January 1, 2021, and to file a separate application for ~~a standard service offer in~~final reconciliation of all energy efficiency costs prior to December 31, 2020. On December 18, 2020, Duke Energy Ohio filed an application for rehearing. On January 13, 2021, the form of an electric security plan (ESP). If approved by the PUCO, the term of the ESP would be from June 1, 2018, to May 31, 2024. Terms of the ESP include continuation of market-based customer rates through competitive procurement processesapplication for generation, continuation and expansion of existing rider mechanisms and proposed new rider mechanisms relating to regulatory mandates, costs incurred to enhance the customer experience and transform the grid and a service reliability riderrehearing was granted for ~~vegetation management. Public hearings were held in October 2017 and an evidentiary hearing scheduled to begin on November 13, 2017, has been continued to November 28, 2017.~~further consideration. Duke Energy Ohio cannot predict the outcome of this matter.

~~Woodsdale Station Fuel System Filing~~

On ~~June~~October 9, 2015, the FERC ruled in favor of PJM Interconnection, LLC (PJM) on a revised Tariff and Reliability Assurance Agreement including implementation of a Capacity Performance (CP) proposal and to amend sections of the Operating Agreement related to generation non-performance. 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 Kentucky 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.

~~Ohio Valley Electric Corporation~~

~~On March 31, 2017,~~2020, Duke Energy Ohio filed an application to implement a voluntary efficiency program portfolio to commence on January 1, 2021. The application proposes a mechanism for ~~approval to adjust its existing price stabilization rider (Rider PSR), which is currently set at zero dollars, to pass through net~~recovery of program costs ~~related to its contractual entitlement to capacity~~ and ~~energy from the generating assets owned by OVEC.~~a benefit associated with avoided transmission and distribution costs. The ~~filing seeks to adjust Rider PSR for OVEC costs subsequent to April~~application remains under review. As of January 1, ~~2017.~~2021, Duke Energy Ohio ~~is seeking deferral authority for net costs incurred from April 1, 2017, until the new rates under Rider PSR are put into effect. Various intervenors have filed motions~~suspended its energy efficiency programs due to ~~dismiss or stay the proceeding and Duke Energy~~changes in Ohio ~~has opposed these filings. See Note 13 for additional discussion of Duke Energy Ohio's ownership interest in OVEC.~~law. 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~~installing 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. ~~On January 20, 2017,~~ Duke Energy Ohio ~~filed an amended application with~~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 will be completed before the 2021/2022 winter season. An evidentiary hearing for a Certificate of Environmental Compatibility and Public Need concluded on April 11, 2019. On November 21, 2019, the Ohio Power Siting Board 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(OPSB) approved construction of the pipeline extension is expected to be completed before the 2020/2021 winter season. The proposed project involves the installation of a natural gas line and is estimated to cost approximately $110 million, excluding AFUDC.

~~Advanced Metering Infrastructure~~

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

~~PART I~~

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

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

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

~~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 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 ~~PUCO~~OPSB’s 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 approvedapproving Duke Energy Ohio’s ~~application but found that Duke Energy Ohio~~Central Corridor application. The appeal 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 Ohiofully briefed and the PUCO Staff entered into a stipulation, pending the PUCO's approval, to resolve issues related to performance incentives and the PUCO Staff audit of 2013 costs, among other issues. In December 2015, based upon the stipulation, Duke Energy Ohio re-established approximately $20 million of the revenues that had been previously reversed. On October 26, 2016, the PUCO issued an order approving the stipulation without modification. Intervenors requested a rehearing of the PUCO decision. In December 2016, the PUCO granted a rehearing for the purpose of further review.Supreme Court oral argument was held on March 31, 2021. Duke Energy Ohio cannot predict the outcome of this matter.

On ~~June 15, 2016,~~September 22, 2020, Duke Energy Ohio filed an application with the OPSB for approval ~~of a three-year energy efficiency~~to amend the certificated pipeline route due to changes in the route negotiated with property owners and ~~peak demand reduction portfolio of programs. A stipulation~~municipalities. On January 21, 2021, the OPSB approved the amended filing with recommended conditions that reaffirm previous conditions and ~~modified stipulation were filed on December 22, 2016,~~provide guidance regarding local permitting and January 27, 2017, respectively. Under the terms of the stipulations, which included support for deferral authority of all costs and a cap on shared savings incentives, Duke Energy Ohio has offered its energy efficiency and peak demand reduction programs throughout 2017. On February 3, 2017, Duke Energy Ohio filed for deferral authority of its costs incurred in 2017 in respect of its proposed energy efficiency and peak demand reduction portfolio. The PUCO staff and one intervenor have proposed a cap on both program costs and shared savings. On September 27, 2017, the PUCO issued an order approving a modified stipulation. The modifications impose an annual cap of approximately $38 million on program costs and shared savings incentives combined, but allowed for Duke Energy Ohio to file for a waiver of costs in excess of the cap in 2017. On October 12, 2017, Duke Energy Ohio filed a motion for a waiver for recovery of costs incurred in 2017 above the annual cap.construction supervision. Duke Energy Ohio cannot predict the outcome of this matter.

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

~~On November 13,~~In an order issued in 2013, the PUCO ~~issued an order approving a settlement of~~approved Duke Energy Ohio's deferral and recovery of costs related to environmental remediation at 2 sites (East End and West End) that housed former MGP operations. Duke Energy Ohio has collected approximately $55 million in environmental remediation costs incurred between 2009 through 2012 through Rider MGP, which is currently suspended. Duke Energy Ohio has made annual applications with the PUCO to recover its incremental remediation costs consistent with the PUCO’s directive in Duke Energy Ohio’s 2012 natural gas base rate ~~case and authorizing~~case. To date, the ~~recovery~~PUCO has not ruled on Duke Energy Ohio’s annual applications for the calendar years 2013 through 2019. On September 28, 2018, the staff of the PUCO issued a report recommending a disallowance of approximately $12 million of the $26 million in MGP remediation costs incurred between ~~2008~~2013 through 2017 that staff believes are not eligible for recovery. Staff interprets the PUCO’s 2012 order granting Duke Energy Ohio recovery of MGP remediation as limiting the recovery to work directly on the East End and ~~2012~~West End sites. On October 30, 2018, Duke Energy Ohio filed reply comments objecting to the staff’s recommendations and explaining, among other things, the obligation Duke Energy Ohio has under Ohio law to remediate all areas impacted by the former MGPs and not just physical property that housed the former plants and equipment. On March 29, 2019, Duke Energy Ohio filed its annual application to recover incremental remediation expense for ~~environmental~~the calendar year 2018 seeking recovery of approximately $20 million in remediation costs. On July 12, 2019, the staff recommended a disallowance of approximately $11 million for work that staff believes occurred in areas not authorized for recovery. Additionally, staff recommended that any discussion pertaining to Duke Energy Ohio's recovery of ongoing MGP costs should be directly tied to or netted against insurance proceeds collected by Duke Energy Ohio. An evidentiary hearing concluded on November 21, 2019. Initial 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 March 31, 2020, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2019 seeking recovery of approximately $39 million in remediation costs incurred during 2019. On July 23, 2020, the staff recommended a disallowance of approximately $4 million for work the staff believes occurred in areas not authorized for recovery. Additionally, the staff recommended insurance proceeds, net of litigation costs and attorney fees, should be reimbursed to customers and not be held by Duke Energy Ohio until all investigation and remediation is complete. Duke Energy Ohio filed comments in response to the staff report on August 21, 2020, and intervenor comments were filed on November 9, 2020. Duke Energy Ohio cannot predict the outcome of ~~two former manufactured gas plant (MGP) sites.~~ this matter.

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

~~The PUCO order also~~ contained conditional deadlines for completing the MGP environmental ~~investigation~~remediation and the deferral of remediation costs at the MGP sites. ~~For~~Subsequent to the ~~property known as~~order, the ~~East End site, the PUCO order established a~~ deadline ~~of December 31, 2016, which~~ was ~~subsequently~~ extended to December 31, 2019. ~~In January 2017, intervening parties filed for rehearing of the PUCO's decision.~~ On ~~February 8, 2017, the PUCO denied the rehearing request. As of September 30, 2017,~~May 10, 2019, Duke Energy Ohio ~~had approximately $36 million included in Regulatory assets~~filed an application requesting a continuation of its existing deferral authority for MGP remediation that must occur after December 31, 2019. On July 12, 2019, staff recommended the commission deny the deferral authority request. On September 13, 2019, intervenor comments were filed opposing Duke Energy Ohio's request for continuation of existing deferral authority and on ~~the Condensed Consolidated Balance Sheets for future remediation costs expected to be incurred at the East End site.~~

~~Regional Transmission Organization Realignment~~

October 2, 2019, 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.filed reply comments. Duke Energy Ohio ~~is allowed~~cannot predict the outcome of this matter.


FINANCIAL STATEMENTS			REGULATORY MATTERS

Tax Act – Ohio

On December 21, 2018, Duke Energy Ohio filed an application to ~~recover all MISO Transmission Expansion Planning (MTEP) costs, including but not limited~~change its base rate tariffs and establish a new rider to ~~Multi Value Project (MVP) costs, directly or indirectly charged to Ohio~~implement the benefits of the Tax Act for natural gas customers. Duke Energy Ohio ~~also agreed~~requested commission approval to ~~vigorously defend against any charges for MVP projects~~implement the tariff changes and rider effective April 1, 2019. The new rider will flow through to customers the benefit of the lower statutory federal tax rate from ~~MISO. The KPSC also approved~~35% to 21% since January 1, 2018, all future benefits of the lower tax rates and a ~~request to effect~~full refund of deferred income taxes collected at the ~~RTO realignment,~~higher tax rates in prior years. Deferred income taxes subject to normalization rules will be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a ~~commitment not to seek double recovery in~~10-year period. The PUCO established a ~~future rate case~~procedural schedule and testimony was filed on July 31, 2019. An evidentiary hearing occurred on August 7, 2019. Initial briefs were filed on September 11, 2019. Reply briefs were filed on September 25, 2019. Duke Energy Ohio cannot predict the outcome of ~~the transmission expansion fees that may be charged by MISO and PJM in the same period or overlapping periods.~~this matter.

Duke Energy ~~Ohio had a recorded liability for its exit obligation and share of MTEP costs, excluding MVP, of $90 million at September~~Kentucky Natural Gas Base Rate Case

On April 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 by2021, 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~~Kentucky filed a ~~tariff~~Notice of Intent with the ~~FERC providing for~~KPSC to file a general natural gas rate case no earlier than 30 days from 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. Duke Energy Ohio filed exceptions to the initial decision, requesting FERC to overturn the ALJ’s decision.

On October 29, 2015, the FERC issued an order reversing the ALJ's decision. The FERC ruled the cost allocation methodology is not consistent with the MISO tariff and that 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 that Duke Energy Ohio has no liability for the costdate of the ~~MVP projects constructed after Duke Energy Ohio's withdrawal from MISO. MISO did not file further petitions for review and this matter is now final.~~notice.

Duke Energy Indiana

~~Coal Combustion Residual Plan~~2019 Indiana Rate Case

On March 17, 2016, Duke Energy Indiana filed with the IURC a request for approval of its first group of federally mandated CCR rule compliance projects (Phase I CCR Compliance Projects) to comply with the EPA's CCR rule. The projects 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 provides for timely recovery of 80 percent of such costs and deferral with carrying costs of 20 percent of such costs for recovery in a subsequent retail base rate case. On January 24, 2017, Duke Energy Indiana and various intervenors filed a settlement agreement with the IURC. Terms of the settlement include recovery of 60 percent of the estimated CCR compliance construction project capital costs through existing rider mechanisms and deferral of 40 percent of these costs until Duke Energy Indiana's next general retail rate case. The deferred costs will earn a return based on Duke Energy Indiana's long-term debt rate of 4.73 percent until costs are included in retail rates, at which time the deferred costs will earn a full return. Costs are to be capped at $365 million, plus actual AFUDC. Costs above the cap would be considered for recovery in the next rate case. Terms of the settlement agreement also require Duke Energy Indiana to perform certain reporting and groundwater monitoring. An evidentiary hearing was held on February 23, 2017, andJuly 2, 2019, Duke Energy Indiana filed a ~~proposed order~~general rate case with the IURC for a rate increase for retail customers of approximately $395 million. The rebuttal case, filed on ~~March 30, 2017. On May 24, 2017,~~December 4, 2019, updated the ~~IURC approved~~requested revenue requirement to result in a 15.6% or $396 million average retail rate increase, including the ~~settlement agreement.~~

~~FERC Transmission Return~~impacts of the Utility Receipts Tax. Hearings concluded 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.February 7, 2020. 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 anthe order in the rate case approving a ~~settlement agreement among~~revenue increase of $146 million before certain adjustments and ratemaking refinements. The order provided for an overall cost of capital of 5.7% based on an ROE of 9.7% and a 53% equity component of the capital structure, and approved Duke Energy ~~Indiana~~Indiana’s requested forecasted rate base of $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 utility receipts tax and ~~certain parties related~~other adjustments. Approximately 50% of the reduction is due to a ~~proposed grid infrastructure improvement plan. The settlement agreement included the removal of an AMI project and also provided for deferral accounting for~~prospective change in depreciation and ~~post-in-service carrying costs for AMI projects outside the plan. Duke Energy Indiana withdrew its request for a~~use of regulatory asset for ~~current meters~~the end-of-life inventory at retired generating plants, approximately 20% is due to the approved ROE of 9.7%versus the requested ROE of 10.4% and ~~will retain any savings associated with future AMI installation until the next retail base rate case, which~~approximately 20% is ~~required~~related to miscellaneous earnings neutral adjustments. Step one rates are estimated to be ~~filed prior to the end~~approximately 75% of the ~~plan. During~~total and became effective on July 30, 2020. Step two rates are estimated to be the ~~third quarter~~remaining 25% of ~~2016, Duke Energy Indiana decided to implement~~ the AMI project. This decision resulted in a pretax impairment charge related to existing or non-AMI meters of approximately $8 million for the three and nine months ended September 30, 2016, based in part on the requirement to file a basetotal 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~~increase 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~~implemented 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. BCWFmid-2021. Several groups 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. Appellate briefs were filed on October 14, 2020, focusing on three issues: wholesale sales allocations, coal ash basin cost recovery and the Edwardsport IGCC operating and maintenance expense level approved. The appeal was fully briefed in January 2021 and an oral argument was held on April 8, 2021. A decision is expected in the second or third quarter of 2021. Duke Energy Indiana cannot predict the outcome of this matter.

~~Piedmont~~

~~South Carolina Rate Stabilization Adjustment Filing~~2020 Indiana Coal Ash Recovery Case

In ~~June 2017,~~ Duke Energy Indiana’s 2019 rate case, the IURC approved coal ash basin closure costs expended through 2018 including financing costs as a regulatory asset and included in rate base. The IURC 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 was held on September 14, 2020, and the parties have agreed on a delayed briefing schedule that allows for the Indiana Rate Case appeal to proceed. Briefing will be completed by mid-August 2021. Duke Energy Indiana cannot predict the outcome of this matter.

Piedmont

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 Piedmont's previous rate case. Approximately half of the plant additions being added to rate base are categories of capital investment not covered under the IMR mechanism, which was approved in 2013. Piedmont amended its requested increase to approximately $26 million in December 2020. As authorized under Tennessee law, Piedmont implemented interim rates on January 2, 2021, at the level requested in its adjusted request. A settlement reached with the Tennessee Consumer Advocate in mid-January was filed with the ~~PSCSC~~TPUC on February 2, 2021. The settlement results in an increase of revenues of approximately $16 million and a ROE of 9.8%. On May 6, 2021, the TPUC issued an order approving the settlement. Revised customer rates became effective January 2, 2021. Piedmont refunded customers the difference between bills previously rendered under ~~the South~~interim rates and such bills if rendered under approved rates, plus interest, in April 2021.

2021 North Carolina Rate ~~Stabilization Act its quarterly monitoring report~~Case

On March 22, 2021, Piedmont filed an application with the NCUC for ~~the 12-month period ending March 31, 2017.~~a rate increase for retail customers of approximately $109 million, which represents an approximate 10% increase in retail revenues. The ~~filing included a revenue deficiency calculation~~rate increase is driven by customer growth and ~~tariff rates in order to permit Piedmont~~significant infrastructure upgrade investments (plant additions) since the ~~opportunity to earn the rate of return on equity of 12.6 percent established in its~~ last general rate case. ~~On October 4, 2017, the PSCSC approved a settlement agreement between Piedmont and the PSCSC Office of Regulatory Staff. Terms~~Approximately 30% of the ~~settlement included implementation~~plant additions being rolled into rate base are categories of ~~rates for~~plant investment that are covered under the ~~12-month period beginning November 2017 with a return on equity~~IMR mechanism, which was originally approved as part of ~~10.2 percent.~~

the 2013 North Carolina ~~Integrity Management Rider Filings~~

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

In May 2017, Piedmont filed, and the NCUC approved, a petition under the IMR mechanism to collect an additional $11.6 million in annual revenues, effective June 2017, based on the eligible capital investments closed to integrity and safety projects over the six-month period ending March 31, 2017.


FINANCIAL STATEMENTS			REGULATORY MATTERS

OTHER REGULATORY MATTERS

Atlantic Coast Pipeline, LLC

~~On September 2, 2014, Duke Energy, Dominion Resources (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), was planned to be an approximately 600-mile interstate natural gas pipeline running from West Virginia to North Carolina. ~~The ACP pipeline is designed to meet the needs identified by~~ Duke Energy Carolinas, Duke Energy Progress and Piedmont. The ACP pipeline development costs are estimated between $5.0 billion to $5.5 billion, excluding financing costs. Dominion will build and operate the ACP pipeline and holds a leading ownership percentage in ACP of 48 percent. Duke Energyindirectly owns a ~~47 percent~~47% interest, which is accounted for as an equity method investment through its Gas Utilities and Infrastructure segment. ~~Southern Company~~

As a result of the uncertainty created by various legal rulings, the potential impact on the cost and schedule for the project, the ongoing legal challenges and the risk of additional legal challenges and delays through the construction period and Dominion’s decision to sell substantially all of its gas transmission and storage segment assets, Duke Energy's Board of Directors and management decided that it was not prudent to continue to invest in the project. On July 5, 2020, Duke Energy and Dominion announced the cancellation of the ACP pipeline project.

As part of the pretax charges to earnings of approximately $2.1 billion recorded in June 2020, within Equity in (losses) earnings of unconsolidated affiliates on the Duke Energy Condensed Consolidated Statements of Operations, Duke Energy established liabilities related to the cancellation of the ACP pipeline project. In February 2021, Duke Energy paid approximately $855 million to fund ACP's outstanding debt, relieving Duke Energy of its guarantee. At March 31, 2021, there is $38 million and $48 million within Other Current Liabilities and Other Noncurrent Liabilities, respectively, in the Gas ~~maintains a 5 percent interest.~~ Utilities and Infrastructure segment. The liabilities represent Duke Energy's obligation of approximately $86 million to satisfy remaining ARO requirements to restore construction sites.

See ~~Note 13~~Notes 1 and 11 for additional information ~~related to Duke Energy's ownership interest.~~

Duke Energy Carolinas, Duke Energy Progress and Piedmont, among others, will be customers of the pipeline. Purchases will be made under several 20-year supply contracts, subject to state regulatory approval. On September 18, 2015, ACP filed an application with the FERC requesting a CPCN authorizing ACP to construct the pipeline. ACP executed a construction agreement in September 2016. ACP also requested approval of an open access tariff and the precedent agreements it entered into with future pipeline customers. In December 2016, FERC issued a draft Environmental Impact Statement (EIS) indicating that the proposed pipeline would not cause significant harm to the environment or protected populations. The FERC issued the final EIS in July 2017. On October 13, 2017, FERC 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 to other pending federal and state approvals.

~~Sabal Trail Transmission, LLC~~

On May 4, 2015, Duke Energy acquired a 7.5 percent ownership interest in Sabal Trail Transmission, LLC (Sabal Trail) from Spectra Energy Partners, LP, a master limited partnership, formed by Enbridge Inc. (formerly Spectra Energy Corp.). Spectra Energy Partners, LP holds a 50 percent ownership interest in Sabal Trail and NextEra Energy has a 42.5 percent ownership interest. Sabal Trail is a joint venture to construct a 515-mile natural gas pipeline (Sabal Trail pipeline) to transport natural gas to Florida. Total estimated project costs are approximately $3.2 billion. The Sabal Trail pipeline traverses Alabama, Georgia and Florida. The primary customers of the Sabal Trail pipeline, Duke Energy Florida and Florida Power & Light Company (FP&L), have each contracted to buy pipeline capacity for 25-year initial terms. See Note 13 for additional 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 an appeal of FERC's CPCN orders to the U.S. Court of Appeals for the District of Columbia Circuit. On August 22, 2017, the appeals court ruled against FERC in the case for failing to include enough information on the impact of greenhouse-gas emissions carried by the pipeline and vacated the CPCN order. In response to the August 2017 court decision, 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 Trail 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. 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. Duke Energy's total anticipated contributions are approximately $229 million.

On April 22, 2016, the New York State Department of Environmental Conservation (NYSDEC) denied Constitution’s application for a necessary water quality certification for the New York portion of the Constitution pipeline. Constitution filed legal actions in the U.S. Court of Appeals for the Second Circuit (U.S. Court of Appeals) challenging the legality and appropriateness of the NYSDEC’s decision and on August 18, 2017, the petition was denied in part and dismissed in part. On September 1, 2017, Constitution filed a petition for a rehearing of portions of the decision unrelated to the water quality certification, which was denied by the U.S. Court of Appeals. On October 11, 2017, Constitution filed a petition for declaratory order with the FERC requesting FERC 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 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.

~~See Note 13 for additional information related to ownership interest and carrying value of the investment.~~transaction.

Potential Coal Plant Retirements

The Subsidiary Registrants periodically file ~~Integrated Resource Plans (IRP)~~integrated resource plans with their state regulatory commissions. The IRPs provide a view of forecasted energy needs over a long term (10 to 20 years) and options being considered to meet those needs. ~~Recent~~ IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in North Carolina ~~Florida~~ and Indiana earlier than their current estimated useful lives. Duke Energy continues to evaluate the potential need to retire these coal-fired generating facilities earlier than the current estimated useful lives ~~primarily because facilities do~~and plans to seek regulatory recovery for amounts that would not ~~have the requisite emission control equipment to meet EPA regulations recently approved or proposed.~~be otherwise recovered when any of these assets are retired.

The table below contains the net carrying value of generating facilities planned for retirement or included in recent ~~IRPs~~integrated resource plans (IRPs) as evaluated for potential retirement. Dollar amounts in the table below are included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of ~~September 30, 2017,~~March 31, 2021, and exclude capitalized asset retirement costs.








		Remaining Net
	Capacity	Book Value
	(in MW)	(in millions)
Duke Energy Carolinas
Allen Steam Station Units 1-2(a)	334	$	21
Allen Steam Station Units 4-5(b)	526	388
Cliffside Unit 5(b)	546	343
Duke Energy Progress
Mayo Unit 1(b)	746	660
Roxboro Units 3-4(b)	1,409	478
Duke Energy Florida
Crystal River Units 4-5(c)	1,430	1,683
Duke Energy Indiana
Gallagher Units 2 and 4(d)	280	91
Gibson Units 1-5(e)	2,845	1,834
Cayuga Units 1-2(e)	1,005	755
Total Duke Energy	9,121	$	6,253

Remaining Net
Capacity
Book Value
(in MW)
(in millions)
Duke Energy Carolinas
Allen Steam Station Units 1-3^(a)
585
$ 164
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
Total Duke Energy 1,738
$ 405


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


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


~~(c)~~	~~Duke Energy Indiana committed to either retire or stop burning coal at Gallagher Units 2 and 4 by December 31, 2022, as~~ (a)As part of ~~the settlement of Edwardsport IGCC matters.~~

~~Refer to~~ the ~~"Western~~2015 resolution of a lawsuit involving alleged New Source Review violations, Duke Energy Carolinas ~~Modernization Plan" discussion above~~must retire Allen Steam Station Units 1 through 3 by December 31, 2024. The long-term energy options considered in the IRP could result in retirement of these units earlier than their current estimated useful lives. Unit 3 with a capacity of 270 MW and a net book value of $26 million at December 31, 2020, was retired in March 2021.

(b)These units are included in the IRP filed by Duke Energy Carolinas and Duke Energy Progress in North Carolina and South Carolina on September 1, 2020. The long-term energy options considered in the IRP could result in retirement of these units earlier than their current estimated useful lives. In 2019, Duke Energy Carolinas and Duke Energy Progress filed North Carolina rate cases that included depreciation studies that accelerate end-of-life dates for ~~details~~these plants. NCUC issued orders in the 2019 rate cases of Duke Energy ~~Progress' planned~~Carolinas and Duke Energy Progress on March 31, 2021, and April 16, 2021, respectively, in which the proposals to shorten the remaining depreciable lives of these units were denied, while indicating the IRP proceeding was the appropriate proceeding for the review of generating plant retirements.

~~PART I~~(c)On January 14, 2021, Duke Energy Florida filed a settlement agreement with the FPSC, which proposed depreciation rates reflecting retirement dates for Duke Energy Florida's last 2 coal-fired generating facilities, Crystal River Units 4-5, eight years ahead of schedule in 2034 rather than in 2042. The settlement was approved by the FPSC on May 4, 2021.

~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS, LLC – PROGRESS ENERGY, INC. –~~(d)Duke Energy Indiana committed to either retire or stop burning coal at Gallagher Units 2 and 4 by December 31, 2022, as part of the 2016 settlement of Edwardsport IGCC matters. In February 2021, upon approval by MISO of a new retirement date, Duke Energy Indiana determined it would modify the retirement date to June 1, 2021.

~~DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC – PIEDMONT NATURAL GAS COMPANY, INC.~~(e)On July 1, 2019, Duke Energy Indiana filed its 2018 IRP with the IURC. The 2018 IRP included scenarios evaluating the potential retirement of coal-fired generating units at Gibson and Cayuga. The rate case filed July 2, 2019, included proposed depreciation rates reflecting retirement dates from 2026 to 2038. The depreciation rates reflecting these updated retirement dates were approved by the IURC as part of the rate case order issued on June 29, 2020.

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

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.

The following ~~tables contain~~table contains information regarding reserves for probable and estimable costs related to the various environmental sites. These reserves are recorded in Accounts Payable within Current Liabilities and Other within Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets.

Nine Months Ended September 30, 2017
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

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

Duke
Energy
Progress
Energy
Energy
Energy
Energy

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


(in millions)	March 31, 2021		December 31, 2020
Reserves for Environmental Remediation
Duke Energy	$	74	$	75
Duke Energy Carolinas	18		19
Progress Energy	18		19
Duke Energy Progress	6		6
Duke Energy Florida	12		12
Duke Energy Ohio	21		22
Duke Energy Indiana	5		6
Piedmont	11		10

Additional losses in excess of recorded reserves that could be incurred for the stages of investigation, remediation and monitoring for environmental sites that have been evaluated at this time are not material except as presented in the table below.

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

~~North Carolina and South Carolina Ash Basins~~

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


(in millions)
Duke Energy	$	20
Duke Energy Carolinas	12



Duke Energy Ohio	4


FINANCIAL STATEMENTS			COMMITMENTS AND CONTINGENCIES

~~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

Texas Storm Uri Tort Litigation

Duke Energy ~~no longer has exposure to litigation matters related to~~and several Duke Energy renewables project companies have been named in multiple lawsuits arising out of Texas Storm Uri in mid-February 2021, and particularly, in the ~~International Disposal Group~~deregulated market managed by the Electric Reliability Council of Texas.. Currently, 15 state court actions have been filed in counties across Texas and 1 case is pending in federal court in Texas. These lawsuits, filed by individuals, seek recovery for property damages, personal injury and for wrongful death allegedly incurred by the plaintiffs as a result of power losses, which the ~~divestiture of~~plaintiffs claim was 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~~defendants' failure to ~~the compensation and director remuneration that was received despite these alleged breaches of fiduciary duty). The lawsuit seeks both injunctive relief against~~take appropriate precautions. Certain defendants have moved to transfer all related cases including those naming Duke Energy ~~and restitution from the~~entities into a Texas state court multi-district litigation proceeding for coordination before a single judge. No ruling has yet been issued on this motion. Duke Energy ~~Defendants. On April 22, 2016, plaintiffs filed an Amended Verified Consolidated Shareholder Derivative Complaint (Amended Complaint) making~~cannot predict 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. Eachoutcomes 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~~state 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.federal litigation matters.

Duke Energy Carolinas and Duke Energy Progress

Coal Ash Insurance Coverage Litigation

In March 2017, Duke Energy Carolinas and Duke Energy Progress filed a civil action in the North Carolina ~~Superior~~Business Court against various insurance providers. The lawsuit seeks payment for coal ash-related liabilities covered by third-party liability insurance policies. The insurance policies were issued between 1971 and 1986 and provide third-party liability insurance for property damage. The civil action seeks damages for breach of contract and indemnification for costs arising from the Coal Ash Act and the ~~EPA~~U.S. Environmental Protection Agency CCR rule at 15 coal-fired plants in North Carolina and South Carolina. Fact discovery has been completed. The parties' fully briefed and argued motions relating to key legal matters are pending before the court for rulings. Trial remains scheduled for January 24, 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

NTE 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.II, LLC Litigation

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,In November 2017, Duke Energy Carolinas ~~and Duke Energy Progress filed~~entered into a ~~Notice of Appeal~~standard FERC large generator interconnection agreement (LGIA) with NTE Carolinas II, LLC (NTE), a company that proposed to ~~challenge the trial court’s order. The parties were unable to reach an agreement at mediation~~build a combined-cycle natural gas plant in ~~April 2017. The parties submitted briefs to the court on remaining issues to be tried and a ruling is pending.~~Rockingham County, North Carolina. On ~~August 22, 2017,~~September 6, 2019, Duke Energy Carolinas ~~and~~filed a lawsuit in Mecklenburg County Superior Court against NTE for breach of contract, alleging that NTE's failure to pay benchmark payments for Duke Energy ~~Progress filed~~Carolinas' transmission system upgrades required under the interconnection agreement constituted a ~~Petition for Discretionary Review, requesting~~termination of the interconnection agreement. Duke Energy Carolinas is seeking a monetary judgment against NTE because NTE failed to make multiple milestone payments. The lawsuit was moved to federal court in North ~~Carolina Supreme Court to accept the appeal. On August 24, 2017, SELC~~Carolina. NTE filed a motion to dismiss ~~the appeal.~~ Duke Energy ~~Carolinas'~~Carolinas’ complaint 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~~brought counterclaims alleging anti-competitive conduct and violations of state and federal statutes. 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~~NTE's counterclaims.

On May 21, ~~2017.~~2020, in response to a NTE petition challenging Duke Energy Carolinas' termination of the LGIA, FERC issued a ruling (i) that it has exclusive jurisdiction to determine whether a transmission provider may terminate a LGIA, (ii) FERC approval is required to terminate a conforming LGIA if objected to by the interconnection customer, and (iii) Duke Energy may not announce the termination of a conforming LGIA unless FERC has approved the termination. FERC's Office of Enforcement also initiated an investigation of Duke Energy Carolinas into matters pertaining to the LGIA. Duke Energy Carolinas is cooperating with the Office of Enforcement but cannot predict the outcome of this investigation.

On August ~~2, 2017, RRBA filed a federal citizen suit in~~17, 2020, 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.~~court denied both NTE’s and Duke Energy ~~Progress filed a motion~~Carolinas’ Motion to ~~dismiss on October 2, 2017.~~

~~On October 3, 2017, various~~Dismiss. The parties ~~served~~are in active discovery and trial is scheduled for June 20, 2022. Duke Energy Carolinas ~~with a Notice~~cannot predict the outcome 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.~~this matter.

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

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

~~PART I~~

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

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

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

~~Groundwater Contamination Claims~~

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

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

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

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

Asbestos-related Injuries and Damages Claims

Duke Energy Carolinas has experienced numerous claims for indemnification and medical cost reimbursement related to asbestos exposure. These claims relate to damages for bodily injuries alleged to have arisen from exposure to or use of asbestos in connection with construction and maintenance activities conducted on its electric generation plants prior to 1985. As of ~~September 30, 2017,~~March 31, 2021, there were ~~120~~126 asserted claims for non-malignant cases with cumulative relief sought of up to ~~$29~~$31 million, and 5747 asserted claims for malignant cases with cumulative relief sought of up to ~~$16~~$17 million. Based on Duke Energy Carolinas’ experience, it is expected that the ultimate resolution of most of these claims likely will be less than the amount claimed.

Duke Energy ~~Carolinas~~Carolinas has recognized asbestos-related reserves of ~~$486~~$564 million at ~~September 30, 2017,~~March 31, 2021, and ~~$512~~$572 million at December 31, ~~2016.~~2020. These reserves are classified in Other within Other Noncurrent Liabilities and Other within Current Liabilities on the Condensed Consolidated Balance Sheets. These reserves are based upon ~~the minimum amount of the range of loss~~Duke Energy Carolinas' best estimate for current and future asbestos claims through ~~2036,~~2040 and are recorded on an undiscounted ~~basis and incorporate anticipated inflation.~~basis. In light of the uncertainties inherent in a longer-term forecast, management does not believe they can reasonably estimate the indemnity and medical costs that might be incurred after ~~2036~~2040 related to such potential claims. It is possible Duke Energy Carolinas may incur asbestos liabilities in excess of the recorded reserves.

Duke Energy Carolinas has third-party insurance to cover certain losses related to asbestos-related injuries and damages above an aggregate self-insured retention. Duke Energy Carolinas’ cumulative payments began to exceed the ~~self-insurance~~self-insured retention in 2008. Future payments up to the policy limit will be reimbursed by the third-party insurance carrier. The insurance policy limit for potential future insurance recoveries indemnification and medical cost claim payments is ~~$797~~$714 million in excess of the self-insured retention. Receivables for insurance recoveries were ~~$570~~$704 million at ~~September 30, 2017,~~ March 31, 2021, and ~~$587 million at~~ December 31, ~~2016.~~2020. 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.


FINANCIAL STATEMENTS			COMMITMENTS AND CONTINGENCIES

~~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)~~

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 March 31, 2021, and December 31, 2020. The insurance receivable is evaluated based on the risk of default and the historical losses, current conditions and expected conditions around collectability. Management evaluates the risk of default annually based on payment history, credit rating and changes in the risk of default from credit agencies.

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 $200 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 Lawsuit~~Power Purchase Dispute Arbitration

~~On February 22, 2016, a lawsuit was filed in the U.S. District Court for the Southern District of~~Duke Energy Florida, on behalf of its customers, entered into a ~~putative class~~PPA for the purchase of firm capacity and energy from a qualifying facility under the Public Utilities Regulatory Policies Act of 1978. Duke Energy Florida determined the qualifying facility did not perform in accordance with the PPA, and Duke Energy Florida terminated the PPA. The qualifying facility counterparty filed a confidential American Arbitration Association (AAA) arbitration demand, challenging the termination of the PPA and seeking damages.

The final arbitration hearing occurred during the week of December 7, 2020. An arbitral award was issued in March 2021, upholding Duke Energy Florida's positions on all issues and awarding the company termination costs.

Duke Energy Indiana

Coal Ash Basin Closure Plan Appeal

On January 27, 2020, Hoosier Environmental Council (HEC) filed a Petition for Administrative Review with the Indiana Office of Environmental Adjudication challenging the Indiana Department of Environmental Management’s December 10, 2019, partial approval of Duke Energy ~~Florida~~Indiana’s ash pond closure plan. On March 11, 2020, Duke Energy Indiana filed a Motion to Dismiss. On May 5, 2020, the court denied the motion. After hearing oral arguments in early April 2021 on Duke Energy Indiana's and ~~FP&L’s customers~~HEC's competing Motions for Summary Judgment, on May 4, 2021, the administrative court rejected all of HEC’s claims and issued a ruling in Florida. The suit alleges the State of Florida’s nuclear power plant cost recovery statutes (NCRS) are unconstitutional and pre-empted by federal law. Plaintiffs claim they are entitled to repayment of all money paid by customersfavor of Duke Energy ~~Florida and FP&L as a result~~Indiana. HEC has until June 3, 2021, to seek judicial review 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. Dukeorder. Duke Energy Florida and FP&L filed motions to dismiss the complaint on May 5, 2016. On September 21, 2016, the Court granted the motions to dismiss with prejudice. Plaintiffs filed a motion for reconsideration, which was denied. On January 4, 2017, plaintiffs filed a notice of appeal to the Eleventh Circuit U.S. Court of Appeals. The appeal, which has been fully briefed, was heard on August 22, 2017, and a decision is pending. Duke Energy FloridaIndiana cannot predict the outcome of this ~~appeal.~~

~~Westinghouse Contract Litigation~~

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

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

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

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

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

~~MGP Cost Recovery Action~~

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

Other Litigation and Legal Proceedings

The Duke Energy Registrants are involved in other legal, tax and regulatory proceedings arising in the ordinary course of business, some of which involve significant amounts. The Duke Energy Registrants believe the final disposition of these proceedings will not have a material effect on their results of operations, cash flows or financial position.

~~PART I~~

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

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

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

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


(in millions)	September 30, 2017		December 31, 2016		(in millions)	March 31, 2021		December 31, 2020
Reserves for Legal Matters					Reserves for Legal Matters
Duke Energy	$	83	$	98	Duke Energy	$	65	$	68
Duke Energy Carolinas	23		23		Duke Energy Carolinas	3		2
Progress Energy	56		59		Progress Energy	57		61
Duke Energy Progress	13		14		Duke Energy Progress	11		13
Duke Energy Florida	28		28		Duke Energy Florida	26		28
Duke Energy Ohio	—		4

Piedmont	2		2		Piedmont	1		1

OTHER COMMITMENTS AND CONTINGENCIES

General

As part of their normal business, the Duke Energy Registrants are party to various financial guarantees, performance guarantees and other contractual commitments to extend guarantees of credit and other assistance to various subsidiaries, investees and other third parties. These guarantees involve elements of performance and credit risk, which are not fully recognized on the Condensed Consolidated Balance Sheets and have ~~unlimited~~uncapped maximum potential payments. However, the Duke Energy Registrants do not believe these guarantees will have a material effect on their results of operations, cash flows or financial position.


FINANCIAL STATEMENTS			COMMITMENTS AND CONTINGENCIES

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

6.5. DEBT AND CREDIT FACILITIES

SUMMARY OF SIGNIFICANT DEBT ISSUANCES

The following table summarizes significant debt issuances (in millions). ~~Refer~~


				Three Months Ended March 31, 2021
						Duke		Duke		Duke		Duke		Duke		Duke
	Maturity	Interest		Duke		Energy		Energy		Energy		Energy		Energy		Energy
Issuance Date	Date	Rate		Energy		(Parent)		Carolinas		Progress		Florida		Ohio		Indiana		Piedmont
Unsecured Debt
March 2021(a)	Mar 2031	2.500	%	$	350	$	0	$	—	$	—	$	—	$	—	$	—	$	350












Total issuances				$	350	$	0	$	0	$	0	$	0	$	0	$	0	$	350

(a)Debt issued to repay at maturity $160 million senior unsecured notes due June 2021, pay down short-term debt and for general corporate purposes.

In March 2021, Duke Energy Carolinas priced $1 billion of First Mortgage Bonds. The issuance and sale of securities settled in April 2021, in 2 separate tranches. The first tranche was issued for $550 million at a fixed interest rate of 2.55% and mature in April 2031. The second tranche was issued for $450 million at a fixed interest rate of 3.45% and mature in April 2051. Proceeds from the ~~"Available Credit Facilities" section below regarding amounts issued under the Three Year Revolver~~issuance will be used to repay at maturity $500 million of 3.90% First Mortgage Bonds due June 2021, pay down intercompany short-term debt and ~~the Piedmont Term Loan facilities.~~

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

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

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

$ 800
$ 900

$ 100

~~PART I~~

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

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

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


~~(a)~~	~~Proceeds were used to refinance $400 million of unsecured debt at maturity and to repay a portion of outstanding commercial paper.~~


~~(b)~~	~~Debt issued to repay a portion of outstanding commercial paper.~~


~~(c)~~	~~Debt issued to repay at maturity $700 million of unsecured debt, to repay outstanding commercial paper and for general corporate~~for general company 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 million aggregate principal amount of bonds due November 2017, pay down intercompany short-term debt and for general corporate purposes, including capital expenditures.

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

CURRENT MATURITIES OF LONG-TERM DEBT

The following table shows the significant components of Current ~~Maturities~~maturities of ~~Long-Term Debt~~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			September 30, 2017		(in millions)	Maturity Date	Interest Rate			March 31, 2021
Unsecured Debt							Unsecured Debt
Duke Energy (Parent)	June 2018	6.250	%		$	250	Duke Energy (Parent)	May 2021	0.698	%	(a)	500
Piedmont							Piedmont	June 2021	4.240	%		160
Duke Energy (Parent)	June 2018	2.100	%		500		Duke Energy (Parent)	September 2021	3.550	%		500
Duke Energy (Parent)							Duke Energy (Parent)	September 2021	1.800	%		750
Duke Energy Florida							Duke Energy Florida	November 2021	0.441	%	(a)	200
Duke Energy Progress							Duke Energy Progress	February 2022	0.369	%	(a)	700
Duke Energy (Parent)							Duke Energy (Parent)	March 2022	3.227	%		300
Duke Energy (Parent)							Duke Energy (Parent)	March 2022	0.827	%	(a)	300

First Mortgage Bonds							First Mortgage Bonds
Duke Energy Progress	November 2017	1.516	%	^(b)	200
Duke Energy Carolinas	January 2018	5.250	%		400
Duke Energy Carolinas	April 2018	5.100	%		300		Duke Energy Carolinas	June 2021	3.900	%		500
Duke Energy Florida	June 2018	5.650	%		500		Duke Energy Florida	August 2021	3.100	%		300
Other^(a)					335
Duke Energy Progress							Duke Energy Progress	September 2021	3.000	%		500
Duke Energy Progress							Duke Energy Progress	September 2021	8.625	%		100
Duke Energy Indiana							Duke Energy Indiana	January 2022	8.850	%		53
Other(b)							Other(b)					723
Current maturities of long-term debt					$	2,485	Current maturities of long-term debt					$	5,586

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

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

(b) Includes finance lease obligations, amortizing debt, tax-exempt bonds with mandatory put options and small bullet maturities.

~~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,~~2021, 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.~~2026. 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.


FINANCIAL STATEMENTS			DEBT AND CREDIT FACILITIES

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


	March 31, 2021
			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	$	1,475	$	1,250	$	700	$	625	$	600	$	700
Reduction to backstop issuances
Commercial paper(b)	(3,466)		(1,781)		(741)		(292)		(243)		(259)		(150)		—
Outstanding letters of credit	(31)		(25)		(4)		(2)		—		—		—		—
Tax-exempt bonds	(81)		—		—		—		—		—		(81)		—

Available capacity under the Master Credit Facility	$	4,422	$	844	$	730	$	956	$	457	$	366	$	369	$	700

(a)Represents the ~~Master Credit Facility.~~sublimit of each borrower.

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


~~(a)~~	~~Represents the sublimit of each borrower.~~


~~(b)~~	(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 Credit Facility~~

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

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

~~Piedmont Term Loan Facility~~

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

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

~~PART I~~

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

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

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

~~7. ASSET RETIREMENT OBLIGATIONS~~

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

September 30, 2017
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

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

$ 3,297

$ 5,189

$ 4,426

$ 763

$ 75

$ 735
$ 15
Other Credit Facilities


	March 31, 2021
(in millions)	Facility size		Amount drawn
Duke Energy (Parent) Three-Year Revolving Credit Facility(a)	$	1,000	$	500

(a)During March 2021, Duke Energy ~~amount includes purchase accounting adjustments related to~~extended the ~~merger with Progress Energy.~~

~~ARO Liability Rollforward~~

~~Actual closure costs incurred could be materially different from current estimates that form the basis~~maturity date of the ~~recorded AROs. The following table presents the change in liability associated with AROs for the Duke Energy Registrants.~~Three-Year Revolving Credit Facility from May 2022, to May 2024.

~~PART I~~


MD&A			DUKE ENERGY

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

DUKE ENERGY

Duke Energy is an energy company headquartered in Charlotte, North Carolina. Duke Energy operates in the ~~United States (U.S.)~~U.S. primarily through its wholly owned subsidiaries, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont. When discussing Duke Energy’s consolidated financial information, it necessarily includes the results of the Subsidiary Registrants, which, along with Duke Energy, are collectively referred to as the Duke Energy Registrants. Piedmont's results of operations are included in Duke Energy's results for the three and nine months ended September 30, 2017, but not for the three and nine months ended September 30, 2016, as Piedmont's earnings are only included in Duke Energy's consolidated results subsequent to the acquisition date. See below for additional information regarding the acquisition.

Management’s Discussion and Analysis should be read in conjunction with the Condensed Consolidated Financial Statements and Notes for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, 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, 2016.2020.

Executive Overview

~~Hurricane Irma~~Advancing Our Clean Energy Transformation

During the first quarter, we continued to move past the challenges from 2020 while executing on our clean energy transformation. In ~~September 2017, Hurricane Irma caused widespread damage~~March of 2021, we expanded the company’s senior management team and realigned roles and responsibilities to further accelerate our clean energy transition. This realignment will accelerate the execution of our strategy, clarify important roles in our clean energy transformation and position our company to grow – for our customers, communities, employees and investors.

To further our progress toward achieving net-zero carbon emissions, we will transform our fleet to shift away from coal and expect our largest source of energy in our regulated utilities will come from renewable energy resources, representing about 40% of our capacity in 2050. During the next five years, we have plans for $600 million in new battery storage investment across our regulated businesses. We expect storage investment to accelerate over this decade and beyond – and presently project more than 13,000 MW's of energy storage on our system by 2050. Our generation transition relies upon modernizing and enhancing our energy grid. We continue to install smart meters – more than 8.5 million so far – providing customers with more information about their energy use while helping us improve outage detection and restoration. By the end of 2021, nearly all of our customers will be served by smart meters.

We developed innovative IRPs in the Carolinas, outlining comprehensive proposals and offering six potential pathways to meet key carbon reduction milestones over the next 15 years while balancing affordability for customers. We’ve been working with stakeholder groups to help shape North Carolina’s Clean Energy Plan, with a common goal of reaching net-zero carbon emissions in a way that best serves our customers and our state. This complements the efforts underway on regulatory reform, including the introduction of more efficient cost recovery mechanisms. We also continue to monitor legislative activity at the federal level and any potential impacts on our strategy and investments across the Southeast region, at its peak leaving approximately 1.3 million Duke Energy Florida customers without power. Duke Energy's restoration efforts in response to this devastating storm utilized a team of over 12,000 line and service crews and hundreds of employee volunteers. Storm restoration costs (including capital) forenterprise.

Regulatory Activity. During the Duke Energy Florida service territory are currently estimated at approximately $500 million. The vast majority of these costs have been deferred to the balance sheet for future recovery from customers in Florida, per existing state statute. Lost revenues associated with Hurricane Irma were approximately $20 million in the thirdfirst quarter of ~~2017.~~2021, we continued to move our regulatory strategy forward. See Note 43 to the Condensed Consolidated Financial Statements, "Regulatory ~~Matters"~~Matters," for additional information.

~~Regulatory Activity~~

~~In the third quarter of 2017,~~ Duke Energy ~~advanced regulatory activity underway~~Carolinas 2019 Rate Case Order

•On March 31, 2021, the NCUC issued an order approving without modification previous settlements reached by Duke Energy Carolinas, the North Carolina Public Staff (the “Public Staff”) and other parties on March 25, 2020, and July 31, 2020, which resolved certain issues in ~~multiple jurisdictions, achieving several key milestones.~~Duke Energy Carolinas' base rate case proceeding originally filed with the NCUC on September 31, 2019.

~~In August~~•The order approved without modification the Agreement and Stipulation of Partial Settlement filed with the NCUC on January 25, 2021, which resolved all coal ash prudence and cost recovery issues through early 2030, including in Duke Energy Carolinas' 2019 base rate case proceeding, as well as the equitable sharing issue on remand from the Duke Energy Carolinas 2017 North Carolina rate case as a result of the December 11, 2020, North Carolina Supreme Court opinion.

•The order also approved a return on equity of 9.6% based upon a capital structure of 52% equity and 48% debt, deferral treatment for approximately $0.8 billion of grid improvement projects with a return, Unprotected Federal Excess Deferred Income Taxes flow back over a period of five years, and the reasonableness and prudence of $213 million of deferred storm costs which were removed from the rate case and for which Duke Energy Carolinas filed a petition seeking to securitize the costs in October 2020.

•The order denied Duke Energy Carolinas' proposal to shorten the remaining depreciable lives of certain coal-fired generating plants, indicating that Duke Energy Carolinas' IRP proceeding was the appropriate proceeding for the review of generating plant retirements.

Duke Energy Progress 2019 Rate Case Order

•On April 16, 2021, the NCUC issued an order approving without modification previous settlements reached by Duke Energy Progress, the Public Staff and other parties on June 2, 2020, and July 31, 2020, which resolved certain issues in Duke Energy Progress’ base rate case proceeding originally filed with the NCUC on October 30, 2019.

•The order approved without modification the Agreement and Stipulation of Partial Settlement filed with the NCUC on January 25, 2021, which resolved all coal ash prudence and cost recovery issues through early 2030, including in Duke Energy Progress’ 2019 base rate case proceeding, as well as the equitable sharing issue on remand from the Duke Energy Progress 2017 North Carolina rate case as a result of the December 11, 2020, North Carolina Supreme Court opinion.


MD&A			DUKE ENERGY

◦The order also approved a return on equity of 9.6% based upon a capital structure of 52% equity and 48% debt, deferral treatment for approximately $0.4 billion of grid improvement projects with a return, Unprotected Federal Excess Deferred Income Taxes flow back over a period of five years, and the reasonableness and prudence of $714 million of deferred storm costs, which were removed from the rate case and for which Duke Energy Progress filed a petition seeking to securitize the costs in October 2020.

◦The order denied Duke Energy Progress’ proposal to shorten the remaining depreciable lives of certain coal-fired generating plants, indicating that Duke Energy Progress’ IRP proceeding was the appropriate proceeding for the review of generating plant retirements.

Piedmont 2021 North Carolina Rate Case

•On March 22, 2021, Piedmont filed an application with the NCUC for a rate increase for retail customers of approximately $109 million, which represents an approximate 10% increase in retail revenues. The rate increase is driven by customer growth and significant infrastructure upgrade investments (plant additions) since the last general rate case.

Matters Impacting Future Results

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

Regulatory Matters

Coal Ash Costs

As a result of the NCDEQ settlement on December 31, 2019, Duke Energy Carolinas and Duke Energy Progress agreed 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 off-site lined landfills. The majority of spend is expected to occur over the next 15-20 years. In January 2021, Duke Energy Carolinas and Duke Energy Progress reached a settlement agreement on recovery of coal ash costs as outlined in Note 3, "Regulatory Matters." The company agreed not to seek recovery of approximately $1 billion of deferred coal ash expenditures and Duke Energy Carolinas and Duke Energy Progress took a charge of approximately $500 million each in 2020. On March 31, 2021, and April 16, 2021, the NCUC approved the coal ash settlement for Duke Energy Carolinas and Duke Energy Progress, respectively.

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

Duke Energy Indiana has interpreted the CCR rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. In 2020, the Hoosier Environmental Council filed a petition challenging the Indiana Department of Environmental Management's (IDEM) partial approval of five of Duke Energy Indiana’s ash pond site closure plans at Gallagher Station. The petition does not challenge the other thirteen basin closures approved by IDEM at other Indiana stations. Interpretation of the requirements of the CCR rule is subject to further legal challenges and regulatory approvals, which could result in additional ash basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are not subject to the CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of coal ash.

Rate Cases

In March 2021, Piedmont filed a general rate case with the ~~North Carolina Utilities Commission.~~ NCUC.The outcome of this rate ~~request~~case could have a material impact.

MGP

The PUCO has issued an order authorizing recovery of MGP costs at certain sites in Ohio with a deadline to complete the MGP environmental investigation and remediation work prior to December 31, 2016. This deadline was driven by capital investments in new, highly efficient natural gas combined-cycle plants and other plant upgrades, coal ash basin closure activities and grid improvement projects. Hearings are scheduledsubsequently extended to ~~commence in February 2018.~~

~~In Florida,~~December 31, 2019. Duke Energy ~~worked closely with stakeholders~~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 ~~build upon and extend~~complete the existing settlement agreement from 2013. In late August, Duke Energy Florida reached a favorable agreement with numerous parties in the state, including the consumer advocate, and that agreement was approvedwork by the ~~Florida Public Service Commission (FPSC)~~deadline or failure to obtain an extension from the PUCO could result 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.an adverse impact.

~~See~~For additional information, see Note 43 to the Condensed Consolidated Financial Statements, ~~"Regulatory Matters" for additional information.~~“Regulatory Matters.”

~~2016 Acquisition of Piedmont Natural Gas~~

~~On October 3, 2016,~~Minority Interest Investment in Duke Energy ~~completed the acquisition of Piedmont~~Indiana

In January 2021, Duke Energy entered into a definitive agreement providing for a ~~total cash purchase price~~19.9% minority interest investment in Duke Energy Indiana by an affiliate of ~~$5.0 billion and assumed Piedmont's existing long-term debt, which had a fair value~~GIC, Singapore's sovereign wealth fund. The transaction is subject to the satisfaction of ~~approximately $2.0 billion at~~certain customary conditions described in the ~~time~~investment agreement, including receipt of the ~~acquisition. The acquisition provides a foundation for~~ approval of the FERC and completion of review by the Committee on Foreign Investments in the United States. Failure to obtain related approvals or satisfy the conditions in the investment agreement could result in the termination of the transaction and could result in an adverse impact.

Commercial Renewables

Duke Energy continues to ~~establish a broader,~~monitor recoverability of renewable merchant plants located in the Electric Reliability Council of Texas West market and in the PJM West market, due to declining market pricing and declining long-term ~~strategic~~forecasted energy prices, primarily driven by lower forecasted natural gas ~~infrastructure growth platform to complement~~prices. Based on the ~~existing natural gas pipeline investments and regulated natural gas business in~~most recent recoverability test, the ~~Midwest.~~

~~Duke Energy incurred pretax nonrecurring transaction and integration costs associated with~~carrying value approximated the ~~acquisition of $23 million and $69 million~~aggregate estimated future undiscounted cash flows for the ~~three and nine months ended September 30, 2017, respectively, and $65 million and $256 million for the three and nine months ended September 30, 2016, respectively. Acquisition-related costs~~assets under review. A continued decline in ~~the prior year were principally due to losses on forward-starting interest rate swaps related to the acquisition financing~~energy market pricing would likely result in a future impairment. Impairment of ~~$22 million and $190 million for the three and nine months ended September 30, 2016, respectively.~~these assets could result in adverse impacts. 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~~"Business Segments."


MD&A			MATTERS IMPACTING FUTURE RESULTS

In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and ~~Dispositions," for additional information regarding~~wind facilities to generate and sell electricity into the ~~transaction.~~

~~PART I~~

~~2016 Sale~~Electric Reliability Council of ~~International Energy~~

Texas market. Both lost revenues and higher than expected purchased power costs have negatively impacted the operating results of these generating units. The financial impact of the storm is expected to have a material impact on the Commercial Renewables segment's 2021 operating results. In ~~December 2016,~~ addition, Duke Energy ~~sold its Latin American generation businesses (International Disposal Group)~~has been named in ~~two separate transactions for a combined enterprise value~~multiple lawsuits arising out of ~~$2.4 billion. The transactions generated cash proceeds~~this winter storm, and particularly, the deregulated market managed by the Electric Reliability Council of $1.9 billion, excluding transaction costs, which were primarily used to reduce Duke Energy holding company debt. Due to the transactions, results of the International Disposal Group are classified as discontinued operations. See NoteTexas. For more information, see Notes 2 and 4 to the Condensed Consolidated Financial Statements, ~~"Acquisitions~~"Business Segments" and ~~Dispositions"~~"Commitments and Contingencies," respectively.

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 continues to cause an increase in certain costs, such as bad debt, and a reduction in the demand for ~~additional information.~~energy. Duke Energy has mitigation plans in place to partially offset these impacts, and the ability to execute these plans is critical to preserving future financial results. The company is in the process of reviewing the long-term real estate strategy due to a potential change of in-office work policies after the COVID-19 pandemic. The plan may result in a reduction of physical work space, which could create accounting impacts in 2021. Accounting impacts may include reassessments of lease terms and lease modifications, which could result in termination penalties, as well as, asset impairments on property, plant and equipment.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Duke Energy Registrants' Annual Reports on Form 10-K for the year ended December 31, 2020, for discussion of risks associated with the Tax Act.

Results of Operations

Non-GAAP Measures

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

Management evaluates financial performance in part based on non-GAAP financial measures, including adjusted earnings and adjusted ~~diluted earnings per share (EPS).~~EPS. Adjusted earnings and adjusted ~~diluted~~ EPS represent income from continuing operations ~~attributable~~available to Duke Energy Corporation common stockholders in dollar and per share amounts, adjusted for the dollar and ~~per-share~~per share impact of special items. As discussed below, special items represent certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance.

Management believes the presentation of adjusted earnings and adjusted diluted EPS provides useful information to investors, as it provides them with an additional relevant comparison of Duke Energy’s performance across periods. Management uses these non-GAAP financial measures for planning and forecasting and for reporting financial results to the Duke Energy Board of Directors, employees, stockholders, analysts and investors. Adjusted diluted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measures for adjusted earnings and adjusted ~~diluted~~ EPS are ~~Net Income Attributable to Duke Energy Corporation (GAAP~~GAAP Reported ~~Earnings)~~Earnings and ~~Diluted~~GAAP Reported EPS, ~~Attributable to Duke Energy Corporation common stockholders (GAAP Reported EPS),~~ respectively.

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

~~Costs~~•Gas Pipeline Investments represents additional exit obligations related to ~~Achieve Mergers represent charges that result from strategic acquisitions.~~ACP.

~~Cost Savings Initiatives represent~~•Severance represents the reversal of 2018 severance charges, ~~related to companywide initiatives, excluding merger integration, to standardize processes~~which were deferred as a result of a partial settlement in the Duke Energy Carolinas and ~~systems, leverage technology and workforce optimization.~~the Duke Energy Progress 2019 North Carolina rate cases.

~~Commercial Renewables Impairments represents other-than-temporary and asset impairments.~~

~~Florida Settlement represents an impairment charge related to the Levy nuclear project based on a settlement agreement approved by regulators.~~

Adjusted earnings also include operating results of the International Disposal Group, which have been classified as discontinued operations. Management believes inclusion of the operating results of the Disposal Group within adjusted earnings and adjusted diluted EPS results in a better reflection of Duke Energy's financial performance during the period.

Three Months Ended ~~September 30, 2017,~~March 31, 2021, as compared to ~~September 30, 2016~~March 31, 2020

GAAP ~~Reported~~reported EPS was ~~$1.36~~$1.25 for the ~~third~~first quarter of ~~2017~~2021 compared to ~~$1.70 for~~$1.24 in the ~~third~~first quarter of ~~2016. The decrease in~~2020. GAAP ~~Reported~~reported EPS ~~was primarily~~increased slightly due to ~~less~~ favorable weather ~~an impairment at Duke Energy Florida~~ and positive rate case impacts, offset by the deferral of severance costs in the prior year, ~~income~~Texas Storm Uri impacts and share dilution from discontinued operations including International Energy which was sold in 2016; partially offset by a lower effective tax rate, lower costs associated with the Piedmont acquisition and growth from investments.equity issuances.

As discussed above, management also evaluates financial performance based on adjusted ~~diluted~~ EPS. Duke Energy’s ~~third~~first quarter ~~2017~~2021 adjusted ~~diluted~~ EPS was ~~$1.59~~$1.26 compared to ~~$1.68~~$1.14 for the ~~third~~first quarter of ~~2016.~~ 2020. The increase in adjusted EPS was primarily due to better weather and positive rate case contributions, partially offset by Texas Storm Uri impacts, the loss of ACP and share dilution from equity issuances.

The following table reconciles non-GAAP measures, including adjusted ~~diluted~~ EPS, to their most directly comparable GAAP measures.


	Three Months Ended March 31,
	2021				2020
(in millions, except per share amounts)	Earnings		EPS		Earnings		EPS

GAAP Reported Earnings/GAAP Reported EPS	$	953	$	1.25	$	899	$	1.24
Adjustments:



Gas Pipeline Investments(a)	5		0.01		—		—

Severance(b)	—		—		(75)		(0.10)

Adjusted Earnings/Adjusted EPS	$	958	$	1.26	$	824	$	1.14

(a) Net of tax benefit of $1 million.

(b) Net of tax expense of $23 million.

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~~


~~(a)~~MD&A			~~Net of $9 million tax benefit in 2017 and $32 million tax benefit in 2016.~~SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE


~~(b)~~	~~Net of $7 million tax benefit in 2016.~~


~~(c)~~	~~Net of $28 million tax benefit in 2017 and $26 million tax benefit in 2016.~~


~~(d)~~	~~Net of $51 million tax benefit in 2017.~~


~~(e)~~	~~The 2016 amount represents tax adjustments related to previously sold businesses not related to the International Disposal Group.~~

~~The decrease in adjusted earnings for the three months ended September 30, 2017, compared to the same period in 2016 was primarily due to:~~

~~Lower regulated electric revenues due to less favorable weather in the current year, including lost revenues related to Hurricane Irma;~~

~~The prior year operating results of the International Disposal Group, which was sold in December 2016; and~~

~~Higher financing costs, primarily due to the Piedmont acquisition.~~

~~Partially offset by:~~

Higher regulated electric revenues from increased pricing and riders driven by new rates in Duke Energy Progress South Carolina, base rate adjustments in Florida, and energy efficiency rider revenues in North Carolina;

~~Additional earnings from incremental investments in the Atlantic Coast Pipeline (ACP) natural gas pipeline; and~~

~~Lower income taxes due to prior year unfavorable tax adjustments and benefits in the current year from legal entity restructuring.~~

~~Nine Months Ended September 30, 2017, as compared to September 30, 2016~~

Duke Energy's GAAP Reported EPS was $3.36 for the nine months ended September 30, 2017, compared to $3.44 for the nine months ended September 30, 2016. The decrease in GAAP Reported EPS was driven by less favorable weather compared to the prior year, an impairment at Duke Energy Florida and prior year income from discontinued operations including International Energy which was sold in 2016; partially offset by lower costs associated with the Piedmont acquisition, lower severance charges, effective cost control and growth from investments.

As discussed above, management also evaluates financial performance based on adjusted diluted EPS. Duke Energy’s adjusted diluted EPS for the nine months ended September 30, 2017, was $3.63 compared to $3.88 for the nine months ended September 30, 2016. The following table reconciles non-GAAP measures, including adjusted diluted EPS, to their most directly comparable GAAP measures.

Nine Months Ended September 30,
2017 2016
(in millions, except per-share amounts) Earnings EPS Earnings EPS
GAAP Reported Earnings/GAAP Reported EPS $ 2,356
$ 3.36
$ 2,379
$ 3.44
Adjustments:
Costs to Achieve Mergers^(a)
43
0.06
195
0.28
Cost Savings Initiatives^(b)
—
—
39
0.06
Commercial Renewables Impairments ^(c)
56
0.08
45
0.07
Florida Settlement^(d)
84
0.12
—
—
Discontinued Operations^(e)
4
0.01
21
0.03
Adjusted Earnings/Adjusted Diluted EPS $ 2,543
$ 3.63
$ 2,679
$ 3.88


~~(a)~~	~~Net of $26 million tax benefit in 2017 and $120 million tax benefit in 2016.~~


~~(b)~~	~~Net of $24 million tax benefit in 2016.~~


~~(c)~~	~~Net of $28 million tax benefit in 2017 and $26 million tax benefit in 2016.~~


~~(d)~~	~~Net of $51 million tax benefit in 2017.~~


~~(e)~~	The 2016 amount includes an impairment charge related to certain assets in Central America that were sold in 2016, partially offset by a tax benefit related to previously sold businesses not related to the International Disposal Group.

~~The decrease in adjusted earnings for the nine months ended September 30, 2017, compared to the same period in 2016 was primarily due to:~~

~~Lower regulated electric revenues due to unfavorable weather compared to the prior year; and~~

The prior year operating results of the International Disposal Group, which was sold in December 2016. The 2016 operating results included a benefit from the revaluation of deferred income taxes. See Note 17 to the Condensed Consolidated Financial Statements, "Income Taxes," for additional information.

~~Partially offset by:~~

Higher regulated electric revenues from increased pricing and riders driven by new rates in Duke Energy Progress South Carolina, base rate adjustments in Florida and energy efficiency rider revenues in North Carolina, as well as growth in weather-normal retail volumes;

Lower operations, maintenance and other expense, net of amounts recoverable in rates, at Electric Utilities and Infrastructure resulting from ongoing cost efficiency efforts and lower year-to-date storm costs than the prior year;

~~Higher allowance for funds used during construction (AFUDC) equity due to capital investments at the electric utilities; and~~

~~Additional earnings from incremental investments in the ACP and Sabal Trail natural gas pipelines.~~

~~PART I~~

~~SEGMENT RESULTS~~Matters Impacting Future Results

~~Management evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net~~The matters discussed herein could materially impact the future operating results, financial condition and cash flows of ~~income attributable to noncontrolling interests. Segment income includes intercompany revenues and expenses that are eliminated on the Condensed Consolidated Financial Statements.~~

Due to the Piedmont acquisition and the sale of International Energy in the fourth quarter of 2016, Duke Energy's segment structure was realigned to include 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.

~~Electric Utilities and Infrastructure~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017
2016
Variance
2017
2016
Variance
Operating Revenues $ 6,129
$ 6,340
$ (211 ) $ 16,234
$ 16,430
$ (196 )
Operating Expenses
Fuel used in electric generation and purchased power 1,872
2,016
(144 ) 4,875
5,102
(227 )
Operation, maintenance and other 1,297
1,291
6
3,833
3,819
14
Depreciation and amortization 777
729
48
2,228
2,139
89
Property and other taxes 277
274
3
808
799
9
Impairment charges 132
9
123
134
12
122
Total operating expenses 4,355
4,319
36
11,878
11,871
7
Gains on Sales of Other Assets and Other, net —
1
(1 ) 4
3
1
Operating Income 1,774
2,022
(248 ) 4,360
4,562
(202 )
Other Income and Expenses 67
75
(8 ) 222
215
7
Interest Expense 305
287
18
925
829
96
Income Before Income Taxes 1,536
1,810
(274 ) 3,657
3,948
(291 )
Income Tax Expense 516
621
(105 ) 1,273
1,391
(118 )
Segment Income $ 1,020
$ 1,189
$ (169 ) $ 2,384
$ 2,557
$ (173 )

Duke Energy Carolinas gigawatt-hours (GWh) sales 24,135
25,508
(1,373 ) 66,159
67,890
(1,731 )
Duke Energy Progress GWh sales 18,827
20,033
(1,206 ) 50,026
54,011
(3,985 )
Duke Energy Florida GWh sales 12,132
12,440
(308 ) 31,177
31,542
(365 )
Duke Energy Ohio GWh sales 6,672
7,214
(542 ) 18,632
19,117
(485 )
Duke Energy Indiana GWh sales 8,795
9,073
(278 ) 24,975
26,624
(1,649 )
Total Electric Utilities and Infrastructure GWh sales 70,561
74,268
(3,707 ) 190,969
199,184
(8,215 )
Net proportional megawatt (MW) capacity in operation

48,909
49,411
(502 )

~~Three Months Ended September 30, 2017, as Compared to September 30, 2016~~

Electric Utilities and Infrastructure’s results were impacted by less favorable weather and an impairment at Duke Energy Florida, partially offset by growth from investments. The following is a detailed discussion of the variance drivers by line item.

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

~~a $163 million decrease in fuel revenues due to 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, as well as increased rider revenues related to energy efficiency programs,~~Registrants and Business Segments.

Regulatory Matters

Coal Ash Costs

As a result of the NCDEQ settlement on December 31, 2019, 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-off of remaining unrecovered Levy Nuclear Project costs at Duke Energy Florida in the current year; and~~

~~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 million decrease in retail sales, net of fuel revenues, due to unfavorable weather compared to the prior year, including lost revenues related to Hurricane Irma; and~~

~~a $256 million decrease in fuel revenues primarily due to lower retail sales volumes.~~

~~Partially offset by:~~

~~a $346 million increase in rider revenues related to energy efficiency programs, Duke Energy Florida's nuclear asset securitization, Midwest transmission and distribution capital investments,~~Carolinas and Duke Energy ~~Indiana's Edwardsport Integrated Gasification Combined Cycle (IGCC) plant, as well as an increase~~Progress agreed to excavate seven of the nine remaining coal ash basins in ~~retail pricing due~~North Carolina with ash moved to on-site lined landfills. At the two remaining basins, uncapped basin ash will be excavated and moved to off-site lined landfills. The majority of spend is expected to occur over the next 15-20 years. In January 2021, Duke Energy ~~Florida's base rate adjustments for the Osprey acquisition~~Carolinas and ~~Hines Chillers and the~~ Duke Energy Progress ~~South Carolina rate case; and~~

reached a ~~$59 million increase~~settlement agreement on recovery of coal ash costs as outlined in ~~weather-normal sales volumes~~Note 3, "Regulatory Matters." The company agreed not to ~~retail customers.~~

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

~~a $122 million increase in impairment charges primarily due to the write-off~~seek recovery of ~~remaining unrecovered Levy Nuclear Project costs in the current year at Duke Energy Florida; and~~

~~an $89 million increase in depreciation and amortization expense primarily due to additional plant in service;~~

~~Partially offset by:~~

~~a $227 million decrease in fuel expense, including purchased power, primarily due to lower retail sales and changes in generation mix.~~

~~Interest Expense.~~ ~~The increase was primarily due to higher debt outstanding in the current year~~approximately $1 billion of deferred coal ash expenditures and Duke Energy ~~Florida's Crystal River 3 (CR3) regulatory asset debt return ending~~Carolinas and Duke Energy Progress took a charge of approximately $500 million each in ~~June 2016 upon securitization.~~2020. On March 31, 2021, and April 16, 2021, the NCUC approved the coal ash settlement for Duke Energy Carolinas and Duke Energy Progress, respectively.

~~Income Tax Expense.~~ ~~The variance was primarily due~~In 2019, Duke Energy Carolinas and Duke Energy Progress received orders from the PSCSC denying recovery of certain coal ash costs. Duke Energy Carolinas and Duke Energy Progress have appealed these decisions to ~~a decrease in pretax income~~the South Carolina Supreme Court 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~~

those appeals are pending. An order from regulatory or judicial authorities ~~disallowing~~that rejects our proposed settlement or disallows recovery of costs related to closure of these ash ~~impoundments~~basins could have an adverse ~~impact on Electric Utilities~~impact.

Duke Energy Indiana has interpreted the CCR rule to identify the coal ash basin sites impacted and ~~Infrastructure's financial position, results~~has assessed the amounts of ~~operations and cash flows. See Note 4 and Note 7~~coal ash subject to the ~~Condensed Consolidated Financial Statements, “Regulatory Matters”~~rule and ~~"Asset Retirement Obligations," respectively, for additional information.~~

~~On May 18, 2016,~~a method of compliance. In 2020, the ~~North Carolina~~Hoosier Environmental Council filed a petition challenging the Indiana Department of Environmental ~~Quality (NCDEQ) issued proposed risk classifications for all coal~~Management's (IDEM) partial approval of five of Duke Energy Indiana’s ash ~~surface impoundments~~pond site closure plans at Gallagher Station. The petition does not challenge the other thirteen basin closures approved by IDEM at other Indiana stations. Interpretation of the requirements of the CCR rule is subject to further legal challenges and regulatory approvals, which could result in ~~North Carolina. All~~additional ash ~~impoundments~~basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are 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 reassessed 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) relatedsubject to the ~~closure of North Carolina ash impoundments are based upon the mandated closure method~~CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations 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 amountmitigate risks associated with on-site storage 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 forash.

Rate Cases

In March 2021, Piedmont filed a general rate case with 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.~~ NCUC.The outcome of ~~these lawsuits and potential fines and penalties~~this rate case could have a material impact.

MGP

The PUCO has issued an ~~adverse impact on Electric Utilities~~order authorizing recovery of MGP costs at certain sites in Ohio with a deadline to complete the MGP environmental investigation and ~~Infrastructure's financial position, results of operations and cash flows. See Note 5~~remediation work prior 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~~December 31, 2016. This deadline was subsequently extended to December 31, 2019. Duke Energy ~~Progress service territory. Duke Energy Progress~~Ohio has filed for a ~~petition with~~request for extension of the ~~North Carolina Utilities Commission (NCUC) requesting an accounting order to defer incremental operation and maintenance and capital~~deadline. A hearing on that request has not been scheduled. Disallowance of costs incurred, ~~in response~~failure 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 ordercomplete the work by the deadline or failure to obtain an extension from the ~~NCUC that disallows the deferral and future recovery of all or a significant portion of the incremental storm restoration costs incurred~~PUCO 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.impact.

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 gas 68
6
62
402
64
338
Operation, maintenance and other 93
30
63
291
90
201
Depreciation and amortization 57
19
38
171
59
112
Property and other taxes 25
12
13
81
44
37
Total operating expenses 243
67
176
945
257
688
Operating Income 29
22
7
298
101
197
Other Income and Expenses 22
7
15
60
13
47
Interest Expense 26
6
20
78
19
59
Income Before Income Taxes 25
23
2
280
95
185
Income Tax Expense 6
8
(2 ) 101
32
69
Segment Income $ 19
$ 15
$ 4
$ 179
$ 63
$ 116

Piedmont LDC throughput (dekatherms) ^(a)
107,490,775
—
107,490,775
334,781,316
—
334,781,316
Duke Energy Midwest LDC throughput (Mcf) 9,904,644
9,568,340
336,304
52,940,410
57,023,986
(4,083,576 )

~~(a) Includes throughput subsequent to Duke Energy's acquisition of Piedmont on October 3, 2016.~~

~~Three Months Ended 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 million for the three months ended September 30, 2017. All variances are related to the inclusion of Piedmont's results of operations as a result of Duke Energy's acquisition of Piedmont on October 3, 2016, except for the following:

~~Other Income and Expenses.~~ ~~The variance was driven primarily by increased investments in the ACP pipeline.~~

~~PART I~~

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

Gas Utilities and Infrastructure’s higher results were due to the inclusion of Piedmont's earnings in the current year as a result of Duke Energy's acquisition of Piedmont on October 3, 2016, as well as growth from investments in ACP and Sabal Trail pipelines. Piedmont's earnings included in Gas Utilities and Infrastructure's results were $95 million for the nine months ended September 30, 2017. All variances are related to the inclusion of Piedmont's results of operations, except for the following:

~~Other Income and Expenses.~~ ~~The variance was driven primarily by increased investments in the ACP and Sabal Trail pipelines.~~

~~Matters Impacting Future Gas Utilities and Infrastructure Results~~

Gas Utilities and Infrastructure has a 24 percent ownership interest in Constitution Pipeline Company, LLC (Constitution), a natural gas pipeline project slated to transport natural gas supplies to major northeastern markets. On April 22, 2016, the New York State Department of Environmental Conservation denied Constitution’s application for a necessary water quality certification for the New York portion of the Constitution pipeline. Constitution has stopped construction and discontinued capitalization of future development costs until the project's uncertainty is resolved. To the extent the legal and regulatory proceedings have unfavorable outcomes, or if Constitution concludes that the project is not viable or does not go forward, an impairment charge of up to the recorded investment in the project, net of any cash and working capital returned, may be recorded. With the project on hold, funding of project costs has ceased until resolution of legal actions. At September 30, 2017, Duke Energy's investment in Constitution was $82 million.

Rapidly rising interest rates without timely or adequate updates to the regulated allowed return on equity or failure to achieve the anticipated benefits of the Piedmont merger, including cost savings and growth targets, could significantly impact the estimated fair value of reporting units in Gas Utilities and Infrastructure. In the event of a significant decline in the estimated fair value of the reporting units, goodwill impairment charges could be recorded. The carrying value of goodwill within Gas Utilities and Infrastructure was approximately $1,924 million at September 30, 2017.

~~Commercial Renewables~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017
2016
Variance
2017
2016
Variance
Operating Revenues $ 95
$ 139
$ (44 ) $ 333
$ 365
$ (32 )
Operating Expenses
Operation, maintenance and other 56
98
(42 ) 191
253
(62 )
Depreciation and amortization 39
34
5
116
96
20
Property and other taxes 9
8
1
26
20
6
Impairment charges 76
—
76
76
—
76
Total operating expenses 180
140
40
409
369
40
Gains on Sales of Other Assets and Other, net 1
2
(1 ) 5
4
1
Operating (Loss) Income (84 ) 1
(85 ) (71 ) —
(71 )
Other Income and Expenses (10 ) (76 ) 66
(12 ) (78 ) 66
Interest Expense 22
15
7
64
38
26
Loss Before Income Taxes (116 ) (90 ) (26 ) (147 ) (116 ) (31 )
Income Tax Benefit (65 ) (65 ) —
(146 ) (127 ) (19 )
Less: Loss Attributable to Noncontrolling Interests (2 ) (1 ) (1 ) (3 ) (2 ) (1 )
Segment (Loss) Income $ (49 )
$ (24 ) $ (25 ) $ 2
$ 13
$ (11 )

Renewable plant production, GWh 1,760
1,801
(41 ) 6,276
5,619
657
Net proportional MW capacity in operation

2,908
2,725
183

~~Three Months Ended September 30, 2017, as Compared to September 30, 2016~~

Commercial Renewables' results were impacted by lower investment tax credits (ITCs), higher interest expense on new debt financings and higher losses from Duke Energy's REC Solar investment. The following is a detailed discussion of the variance drivers by line item.

~~Operating Revenues.~~ ~~The decrease was primarily due to lower engineering, procurement and construction revenues from REC Solar.~~

~~Operating Expenses.~~ The increase was primarily due to a $69 million pretax impairment charge in 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.~~“Regulatory Matters.”

~~Other Income and Expenses.~~Minority Interest Investment in Duke Energy Indiana

In January 2021, Duke Energy entered into a definitive agreement providing for a 19.9% minority interest investment in Duke Energy Indiana by an affiliate of GIC, Singapore's sovereign wealth fund. The ~~variance was primarily due~~transaction is subject to ~~a $71 million pretax impairment charge~~the satisfaction of certain customary conditions described in the ~~prior year related to certain equity method investments. For additional information see Note 3 to~~investment agreement, including receipt of the ~~Condensed Consolidated Financial Statements, “Business Segments.”~~

~~Interest Expense.~~ ~~The increase was primarily due to new project financings.~~

~~Income Tax Benefit. Lower ITCs due to lower solar investments~~approval of the FERC and completion of review by the Committee on Foreign Investments in the ~~current year were offset by higher production tax credits (PTCs)~~United States. Failure to obtain related ~~to wind projects placed~~approvals or satisfy the conditions in ~~service.~~

~~PART I~~

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~the investment agreement could result in the termination of the transaction and could result in an adverse impact.

Commercial Renewables' results were impacted by lower ITCs, higher interest expense on new debt financings and higher losses from REC Solar, partially offset by increased PTCs. The following is a detailed discussionRenewables

Duke Energy continues to monitor recoverability of ~~the variance drivers by line item.~~

~~Operating Revenues.~~ ~~The decrease was primarily due to lower engineering, procurement and construction revenues from REC Solar.~~

~~Operating Expenses.~~ The increase was primarily due to a $69 million pretax impairment charge 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 variance was primarily due to a $71 million pretax impairment charge in the prior year related to certain equity method investments. For additional information see Note 3 to the Condensed Consolidated Financial Statements, “Business Segments.”

~~Interest Expense.~~ ~~The 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 to an increase in PTCs related to wind projects placed in service, partially offset by lower ITCs due to lower solar investments in the current year.~~

~~Matters Impacting Future Commercial Renewables Results~~

Changes or variability in assumptions used in calculating the fair value of the 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~~renewable merchant plants located in the Electric Reliability Council of Texas West market and in the PJM West market, due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Based on the most recent recoverability test, the carrying value approximated the aggregate estimated future ~~expiration~~undiscounted cash flows for the assets under review. A continued decline in energy market pricing would likely result in a future impairment. Impairment of ~~tax incentives including ITCs and PTCs~~these assets could result in adverse ~~impacts to the future results of Commercial Renewables.~~

~~Other~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2017
2016
Variance
2017
2016
Variance
Operating Revenues $ 35
$ 32
$ 3
$ 103
$ 91
$ 12
Operating Expenses
Fuel used in electric generation and purchased power 13
14
(1 ) 42
37
5
Operation, maintenance and other 21
70
(49 ) 47
145
(98 )
Depreciation and amortization 27
37
(10 ) 79
108
(29 )
Property and other taxes 3
8
(5 ) 10
25
(15 )
Impairment charges —
—
—
7
2
5
Total operating expenses 64
129
(65 ) 185
317
(132 )
Gains on Sales of Other Assets and Other, net 4
3
1
15
14
1
Operating Loss (25 ) (94 ) 69
(67 ) (212 ) 145
Other Income and Expenses 51
24
27
100
60
40
Interest Expense 150
157
(7 ) 423
553
(130 )
Loss Before Income Taxes (124 ) (227 ) 103
(390 ) (705 ) 315
Income Tax Benefit (93 ) (49 ) (44 ) (193 ) (276 ) 83
Less: Income Attributable to Noncontrolling Interests 3
3
—
8
7
1
Net Expense $ (34 ) $ (181 ) $ 147
$ (205 ) $ (436 ) $ 231

~~Three Months Ended September 30, 2017, as Compared to September 30, 2016~~

Other's lower net expense was driven by tax benefits, insurance proceeds resulting from settlement of the shareholder litigation related to the Progress Energy merger, prior year donations to the Duke Energy Foundation and lower severance expenses. The following is a detailed discussion of the variance drivers by line item.

~~Operating Expenses.~~ The decrease was primarily due to prior year donations to the Duke Energy Foundation, less captive insurance losses for Bison Insurance Company Limited and prior year severance expense related to cost savings initiatives.

~~Other Income and Expenses.~~ The increase was driven by insurance proceeds resulting from settlement of the shareholder litigation related to the Progress Energy merger and higher earnings from the equity method investment in National Methanol Company (NMC).

~~Interest Expense.~~ The decrease was driven by prior year losses on forward-starting interest rate swaps related to Piedmont pre-acquisition financing, partially offset by additional long-term debt outstanding in the current year. For additional information see Notes 2 ~~and~~ 10 ~~to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions" and "Derivatives and Hedging," respectively.~~

~~PART I~~

~~Income Tax Benefit.~~ The variance was primarily due to higher tax benefits resulting from legal entity restructuring, the 2016 North Carolina corporate tax rate reduction and prior year unfavorable impacts of finalizing federal tax audits, partially offset by lower pretax losses.

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

Other's lower net expense was driven by prior year losses on forward-starting interest rate swaps, prior year donations to the Duke Energy Foundation, insurance proceeds resulting from settlement of the shareholder litigation related to the Progress Energy merger and decreased severance expenses. The following is a detailed discussion of the variance drivers by line item.

~~Operating Expenses.~~ The decrease was primarily due to prior year severance expenses related to cost savings initiatives, prior year donations to the Duke Energy Foundation and lower franchise taxes resulting from a North Carolina law change.

~~Interest Expense.~~ The decrease was primarily by prior year losses on forward-starting interest rate swaps related to Piedmont pre-acquisition financing, partially offset by higher interest costs on $3.75 billion of debt issued in August 2016 to fund the acquisition. For additional information see Notes 2 ~~and~~ 10 ~~to the Condensed Consolidated Financial Statements, "Acquisitions and Dispositions" and "Derivatives and Hedging," respectively.~~

~~Income Tax Benefit.~~ The variance was primarily due to a decrease in pretax losses, partially offset by tax benefits resulting from legal entity restructuring and the net impact of North Carolina corporate tax rate reductions in 2017 and 2016.

~~Matters Impacting Future Other Results~~

Included in Other is Duke Energy Ohio's 9 percent ownership interest in the Ohio Valley Electric Corporation (OVEC), which owns 2,256 MW of coal-fired generation capacity. As a counterparty to an inter-company power agreement (ICPA), Duke Energy Ohio has a contractual arrangement to receive entitlements to capacity and energy from OVEC’s power plants through June 2040 commensurate with its power participation ratio, which is equivalent to Duke Energy Ohio's ownership interest. Costs, including fuel, operating expenses, fixed costs, debt amortization and interest expense, are allocated to counterparties to the ICPA, including Duke Energy Ohio, based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuations in power prices and changes in OVEC’s costs of business. Deterioration in the credit quality or bankruptcy of one or more parties to the ICPA could increase the costs of OVEC. In addition, certain proposed environmental rulemaking costs could result in future increased cost allocations. For information on Duke Energy's regulatory filings related to OVEC, see Note 4 to the Condensed Consolidated Financial Statements, “Regulatory Matters.”

The retired Beckjord generating station (Beckjord), a nonregulated facility retired during 2014, is not subject to the U.S. Environmental Protection Agency (EPA) rule related to the disposal of CCR from electric utilities. However, if costs are incurred as a result of environmental regulations or to mitigate risk associated with on-site storage of coal ash, the costs could have an 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 )

~~Three Months Ended September 30, 2017, as Compared to September 30, 2016~~

The variance was primarily driven by a $122 million income tax benefit in the prior year resulting from immaterial out of period deferred tax liability adjustments, as well as earnings from the International Disposal Group, which was sold in December 2016.impacts. For additional information, see Note 2 to the Condensed Consolidated Financial Statements, ~~"Acquisitions~~"Business Segments."


MD&A			MATTERS IMPACTING FUTURE RESULTS

In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and ~~Dispositions."~~

~~Nine Months Ended September 30, 2017, as Compared~~wind facilities to ~~September 30, 2016~~

generate and sell electricity into the Electric Reliability Council of Texas market. Both lost revenues and higher than expected purchased power costs have negatively impacted the operating results of these generating units. The ~~variance was primarily driven by~~financial impact of the storm is expected to have a ~~$122 million income tax benefit~~material impact on the Commercial Renewables segment's 2021 operating results. In addition, Duke Energy has been named in ~~the prior year resulting from immaterial~~multiple lawsuits arising out of ~~period deferred tax liability adjustments, as well as operating earnings from~~this winter storm, and particularly, the ~~International Disposal Group, partially offset~~deregulated market managed by ~~an impairment charged related to certain assets in Central America that were sold in 2016.~~the Electric Reliability Council of Texas. For ~~additional~~more information, see ~~Note~~Notes 2 and 4 to the Condensed Consolidated Financial Statements, ~~"Acquisitions~~"Business Segments" and ~~Dispositions.~~"Commitments and Contingencies,"

respectively.

~~PART I~~

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 continues to cause an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy has mitigation plans in place to partially offset these impacts, and the ability to execute these plans is critical to preserving future financial results. The company is in the process of reviewing the long-term real estate strategy due to a potential change of in-office work policies after the COVID-19 pandemic. The plan may result in a reduction of physical work space, which could create accounting impacts in 2021. Accounting impacts may include reassessments of lease terms and lease modifications, which could result in termination penalties, as well as, asset impairments on property, plant and equipment.

~~DUKE ENERGY CAROLINAS~~

~~Management’s~~See "Item 7. Management's Discussion and Analysis ~~should be read~~of Financial Condition and Results of Operations," in ~~conjunction with~~ the ~~accompanying Condensed Consolidated Financial Statements and Notes for the nine months ended September 30, 2017, and 2016 and the~~Duke Energy Registrants' Annual ~~Report~~Reports on Form 10-K for the year ended December 31, ~~2016.~~2020, for discussion of risks associated with the Tax Act.

Results of Operations

Nine Months Ended September 30,
(in millions) 2017
2016
Variance
Operating Revenues $ 5,581
$ 5,641
$ (60 )
Operating Expenses
Fuel used in electric generation and purchased power 1,394
1,391
3
Operation, maintenance and other 1,431
1,481
(50 )
Depreciation and amortization 804
802
2
Property and other taxes 206
206
—
Total operating expenses 3,835
3,880
(45 )
Losses on Sales of Other Assets and Other, net —
(1 ) 1
Operating Income 1,746
1,760
(14 )
Other Income and Expenses 99
121
(22 )
Interest Expense 314
316
(2 )
Income Before Income Taxes 1,531
1,565
(34 )
Income Tax Expense 522
539
(17 )
Net Income $ 1,009
$ 1,026
$ (17 )

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



~~Increase (Decrease) over prior year~~	~~2017~~
~~Residential sales~~	~~(6.7~~	)%
~~General service sales~~	~~(2.1~~	)%
~~Industrial sales~~	~~(0.5~~	)%
~~Wholesale power sales~~	~~3.9~~	%
~~Joint dispatch sales~~	~~87.6~~	%
~~Total sales~~	~~(2.5~~	)%
~~Average number of customers~~	~~1.5~~	%

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

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

~~a $213 million decrease in retail sales, net of fuel revenues, due to less favorable weather in the current year.~~

~~Partially offset by:~~

~~an $89 million increase in rider revenues and retail pricing primarily related to energy efficiency programs;~~

~~a $30 million increase in weather-normal sales volumes to retail customers, net of fuel revenues;~~

~~a $15 million increase in wholesale power revenues, net of sharing and fuel revenues, primarily due to additional volumes for customers served under long-term contracts; and~~

~~an $8 million increase in fuel 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.

~~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~~Non-GAAP Measures

Management’s Discussion and Analysis ~~should be read~~includes financial information prepared in ~~conjunction~~accordance with GAAP in 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 power 2,588
2,832
(244 )
Operation, maintenance and other 1,650
1,699
(49 )
Depreciation and amortization 958
904
54
Property and other taxes 386
375
11
Impairment charges 137
4
133
Total operating expenses 5,719
5,814
(95 )
Gains on Sales of Other Assets and Other, net 19
18
1
Operating Income 1,735
1,849
(114 )
Other Income and Expenses 65
79
(14 )
Interest Expense 595
497
98
Income Before Income Taxes 1,205
1,431
(226 )
Income Tax Expense 384
496
(112 )
Net Income 821
935
(114 )
Less: Net Income Attributable to Noncontrolling Interests 7
8
(1 )
Net Income Attributable to Parent $ 814
$ 927
$ (113 )

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

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

~~a $256 million decrease in fuel revenues due to lower retail sales and changes in generation mix at Duke Energy Progress,~~U.S., as well as ~~decreased capacity rates~~certain non-GAAP financial measures such as adjusted earnings and adjusted EPS discussed below. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as a supplement to, ~~retail customers at~~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 EPS. Adjusted earnings and adjusted EPS represent income from continuing operations available to Duke Energy ~~Florida, partially offset by an increase~~Corporation common stockholders in ~~fuel rates to retail customers;~~dollar and per share amounts, adjusted for the dollar and per share impact of special items. As discussed below, special items represent certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. The most directly comparable GAAP measures for adjusted earnings and adjusted EPS are GAAP Reported Earnings and GAAP Reported EPS, respectively.

~~a $132 million decrease in retail sales, net of fuel revenues, due to less favorable weather~~Special items included in the ~~current year, including lost revenues~~periods presented below include the following, which management believes do not reflect ongoing costs:

•Gas Pipeline Investments represents additional exit obligations related to ~~Hurricane Irma at~~ACP.

•Severance represents the reversal of 2018 severance charges, which were deferred as a result of a partial settlement in the Duke Energy ~~Florida.~~

~~Partially offset by:~~

~~an $81 million increase in retail pricing due to the base rate adjustment for the Osprey acquisition~~Carolinas and ~~the completion of the Hines Energy Complex Chiller Uprate Project, as well as~~ the Duke Energy Progress ~~South~~2019 North Carolina rate ~~case; and~~cases.

~~a $79 million increase~~Three Months Ended March 31, 2021, as compared to March 31, 2020

GAAP reported EPS was $1.25 for the first quarter of 2021 compared to $1.24 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~~the first quarter of 2020. GAAP reported EPS increased slightly due to ~~lower retail sales~~favorable weather and ~~changes in generation mix at Duke Energy Progress, as well as decreased purchased power and lower capacity costs, partially~~positive rate case impacts, offset by ~~higher generation and deferred fuel costs at Duke Energy Florida; and~~

~~a $49 million decrease in operation, maintenance and other expense due to lower storm restoration costs at Duke Energy Progress, lower planned outage costs and lower~~the deferral of severance ~~expenses, 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~~prior year, atTexas Storm Uri impacts and share dilution from equity issuances.

As discussed above, management also evaluates financial performance based on adjusted EPS. Duke ~~Energy Florida; and~~

~~a $54 million~~Energy’s first quarter 2021 adjusted EPS was $1.26 compared to $1.14 for the first quarter of 2020. The increase in ~~depreciation and amortization expense primarily due to nuclear regulatory asset amortization, as well as additional plant in service at Duke Energy Florida.~~

~~Interest Expense.~~ ~~The variance~~adjusted EPS was primarily due to ~~higher debt outstanding, as well as interest charges on North Carolina fuel overcollections at Duke Energy Progress~~better weather and ~~lower debt returns driven by the CR3 regulatory asset debt return ending in June 2016 upon securitization at Duke Energy Florida.~~

~~PART I~~

~~Income Tax Expense.~~ The variance was primarily due to a decrease 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~~positive rate case ~~with~~contributions, partially offset by Texas Storm Uri impacts, the ~~NCUC on June 1, 2017. Duke Energy Progress will seek to recover costs~~loss of ~~complying with CCR regulations~~ACP 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.share dilution from equity issuances.

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~~

~~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,
(in millions) 2017
2016
Variance
Operating Revenues $ 3,878
$ 4,103
$ (225 )
Operating Expenses
Fuel used in electric generation and purchased power 1,214
1,441
(227 )
Operation, maintenance and other 1,032
1,067
(35 )
Depreciation and amortization 536
526
10
Property and other taxes 120
119
1
Impairment charges —
1
(1 )
Total operating expenses 2,902
3,154
(252 )
Gains on Sales of Other Assets and Other, net 3
2
1
Operating Income 979
951
28
Other Income and Expenses 47
47
—
Interest Expense 217
188
29
Income Before Income Taxes 809
810
(1 )
Income Tax Expense 262
271
(9 )
Net Income $ 547
$ 539
$ 8

The following table ~~shows the percent changes in GWh sales and average number~~reconciles non-GAAP measures, including adjusted EPS, to their most directly comparable GAAP measures.


	Three Months Ended March 31,
	2021				2020
(in millions, except per share amounts)	Earnings		EPS		Earnings		EPS

GAAP Reported Earnings/GAAP Reported EPS	$	953	$	1.25	$	899	$	1.24
Adjustments:



Gas Pipeline Investments(a)	5		0.01		—		—

Severance(b)	—		—		(75)		(0.10)

Adjusted Earnings/Adjusted EPS	$	958	$	1.26	$	824	$	1.14

(a) Net 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.tax benefit of $1 million.

(b) Net of tax expense of $23 million.



~~Increase (Decrease) over prior period~~MD&A			~~2017~~
~~Residential sales~~	~~(4.6~~	)%
~~General service sales~~	~~(2.0~~	)%
~~Industrial sales~~	~~0.5~~	%
~~Wholesale power sales~~	~~(5.6~~	)%
~~Joint dispatch sales~~	~~(35.3~~	)%
~~Total sales~~	~~(7.4~~	)%
~~Average number of customers~~	~~1.3~~	%SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

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

~~a $242 million decrease in fuel revenues due to lower retail 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:~~

~~a $41 million increase in rider revenues primarily due to energy efficiency programs;~~

~~a $29 million increase in retail pricing due to the Duke Energy Progress South Carolina rate case;~~

~~a $21 million increase in wholesale power revenues, net of fuel, primarily due to higher peak demand.~~

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

~~a $227 million decrease in fuel expense primarily due to lower retail sales and changes in generation mix; and~~

~~a $35 million decrease in operation, maintenance and other expense primarily due to lower storm restoration costs.~~

~~Interest Expense.~~ ~~The increase was primarily due to higher debt outstanding, as well as interest charges on North Carolina fuel overcollections.~~

~~Income Tax Expense.~~ ~~The variance was 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. The decrease in the effective tax rate was primarily due to the favorable impact of research credits 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 reassessed in the future as low risk pursuant to legislation signed by the former North Carolina governor on July 14, 2016. Duke Energy Progress' estimated AROs related to the closure of North Carolina ash impoundments are based upon the mandated closure method or a probability weighting of potential closure methods for the impoundments that may be reassessed to low risk. As the final risk ranking classifications in North Carolina are delineated, final closure plans and corrective action measures are developed and approved for each site, the closure work progresses, and the closure method scope and remedial action methods are determined, the complexity of work and the amount of coal combustion material could be different than originally estimated and, therefore, could materially impact Duke Energy Progress' financial position. See Note 9 in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2016, "Asset Retirement Obligations," for additional information.

Duke Energy Progress is a party to multiple lawsuits and subject to fines and other penalties related to operations at certain North Carolina facilities with ash basins. The outcome of these lawsuits, fines and penalties could have an adverse impact on Duke Energy Progress’ financial position, results of operations and cash flows. See Note 5 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for additional information.

In the fourth quarter of 2016, Hurricane Matthew caused historic flooding, extensive damage and widespread power outages within the Duke Energy Progress service territory. Duke Energy Progress filed a petition with the NCUC requesting an accounting order to defer incremental operation and maintenance and capital costs incurred in response to Hurricane Matthew and other significant 2016 storms. Current estimated incremental costs are approximately $116 million. The NCUC will address this request in Duke Energy Progress' currently pending rate case. A final order from the NCUC that disallows the deferral and future recovery of all or a significant portion of the incremental storm restoration costs incurred could result in an adverse impact on Duke Energy Progress' financial position, results of operations and cash flows.

Duke Energy Progress filed a general rate case with the NCUC on June 1, 2017. 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~~

~~DUKE ENERGY FLORIDA~~

~~Results of Operations~~

Nine Months Ended September 30,
(in millions) 2017
2016
Variance
Operating Revenues $ 3,551
$ 3,538
$ 13
Operating Expenses
Fuel used in electric generation and purchased power 1,374
1,391
(17 )
Operation, maintenance and other 610
623
(13 )
Depreciation and amortization 423
378
45
Property and other taxes 265
256
9
Impairment charges 137
4
133
Total operating expenses 2,809
2,652
157
Operating Income 742
886
(144 )
Other Income and Expenses 45
30
15
Interest Expense 211
143
68
Income Before Income Taxes 576
773
(197 )
Income Tax Expense 208
286
(78 )
Net Income $ 368
$ 487
$ (119 )

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



~~Increase (Decrease) over prior period~~	~~2017~~
~~Residential sales~~	~~(3.6~~	)%
~~General service sales~~	~~(1.3~~	)%
~~Industrial sales~~	~~(1.4~~	)%
~~Wholesale and other~~	~~18.5~~	%
~~Total sales~~	~~(1.2~~	)%
~~Average number of customers~~	~~1.5~~	%

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

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

~~a $52 million increase in retail pricing primarily due to the base rate adjustment for the Osprey acquisition and the completion of the Hines Energy Complex Chiller Uprate Project;~~

~~a $38 million increase in rider revenues primarily due to nuclear asset securitization beginning in July 2016 and extended power uprate project revenues beginning in 2017; and~~

~~a $30 million increase in weather-normal sales volumes to retail customers in the current year.~~

~~Partially offset by:~~

~~a $59 million decrease in retail sales, net of fuel revenues, due to less favorable weather in the current year, including lost revenues related to Hurricane Irma;~~

~~a $31 million decrease in wholesale power revenues primarily due to contracts that expired in the prior year; and~~

~~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 million increase in impairment charges primarily due to the write-off of remaining unrecovered Levy Nuclear Project costs in the current year; and~~

~~a $45 million increase in depreciation and amortization expense primarily due to nuclear regulatory asset amortization, as well as additional plant in service.~~

~~PART I~~

~~Partially offset by:~~

~~a $17 million decrease in fuel expense primarily due to decreased purchased power and lower capacity costs, partially offset by higher generation and deferred fuel costs; and~~

a $13 million decrease in operation, maintenance and other expense primarily due to lower planned outage costs and lower severance expenses, partially offset by higher storm restoration costs in the current year.

~~Other Income and Expenses.~~ ~~The variance was driven by higher AFUDC equity.~~

~~Interest Expense.~~ ~~The variance was primarily due to higher debt outstanding and lower debt returns driven by the CR3 regulatory asset debt return ending in June 2016 upon securitization.~~

~~Income Tax Expense.~~ ~~The variance was primarily due to a decrease 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~~

~~PART I~~

~~DUKE ENERGY OHIO~~

~~Results of Operations~~

Nine Months Ended September 30,
(in millions) 2017
2016
Variance
Operating Revenues
Regulated electric $ 1,036
$ 1,053
$ (17 )
Regulated natural gas 360
358
2
Nonregulated electric and other 30
22
8
Total operating revenues 1,426
1,433
(7 )
Operating Expenses
Fuel used in electric generation and purchased power – regulated 283
340
(57 )
Fuel used in electric generation and purchased power – nonregulated 42
37
5
Cost of natural gas 69
64
5
Operation, maintenance and other 385
367
18
Depreciation and amortization 193
175
18
Property and other taxes 204
195
9
Impairment charges 1
—
1
Total operating expenses 1,177
1,178
(1 )
Gains on Sales of Other Assets and Other, net 1
2
(1 )
Operating Income 250
257
(7 )
Other Income and Expenses 12
6
6
Interest Expense 67
63
4
Income from Continuing Operations Before Income Taxes 195
200
(5 )
Income Tax Expense from Continuing Operations 67
65
2
Income from Continuing Operations 128
135
(7 )
(Loss) Income from Discontinued Operations, net of tax (1 ) 36
(37 )
Net Income $ 127
$ 171
$ (44 )



~~Increase (Decrease) over prior year~~	~~2017~~
~~Residential sales~~	~~(5.8~~	)%
~~General service sales~~	~~(3.2~~	)%
~~Industrial sales~~	~~(1.3~~	)%
~~Wholesale power sales~~	~~127.3~~	%
~~Total sales~~	~~(2.5~~	)%
~~Average number of customers~~	~~0.8~~	%

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

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

a $59 million decrease in fuel revenues primarily due to lower electric fuel prices and sales volumes, partially offset by higher costs passed through to natural gas customers due to higher natural gas prices; and

~~a $16 million decrease in electric retail sales, net of fuel 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 $18 million increase in operation, maintenance and other expense due to higher energy efficiency program costs and higher transmission and distribution operations costs;~~

~~an $18 million increase in depreciation and amortization expense due to additional plant in service and a true up related to Smart Grid assets in the prior year;~~

~~a $9 million increase in property and other taxes primarily due to higher property taxes;~~

~~a $5 million increase in nonregulated fuel expenses related to OVEC; and~~

~~a $5 million increase in natural gas costs due to higher natural gas prices.~~

~~Partially offset by:~~

~~a $57 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~~

~~DUKE ENERGY INDIANA~~

~~Results of Operations~~

Nine Months Ended September 30,
(in millions) 2017
2016
Variance
Operating Revenues $ 2,302
$ 2,225
$ 77
Operating Expenses
Fuel used in electric generation and purchased power 744
690
54
Operation, maintenance and other 541
526
15
Depreciation and amortization 336
345
(9 )
Property and other taxes 56
67
(11 )
Impairment charges —
8
(8 )
Total operating expenses 1,677
1,636
41
Gains on Sales of Other Assets and Other, net 1
—
1
Operating Income 626
589
37
Other Income and Expenses 27
15
12
Interest Expense 132
136
(4 )
Income Before Income Taxes 521
468
53
Income Tax Expense 203
159
44
Net Income $ 318
$ 309
$ 9



~~Increase (Decrease) over prior year~~	~~2017~~
~~Residential sales~~	~~(5.5~~	)%
~~General service sales~~	~~(2.5~~	)%
~~Industrial sales~~	~~0.1~~	%
~~Wholesale power sales~~	~~(19.8~~	)%
~~Total sales~~	~~(6.2~~	)%
~~Average number of customers~~	~~0.8~~	%

~~Nine Months Ended September 30, 2017, as Compared to September 30, 2016~~

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

~~a $64 million increase in rider revenues related to the Edwardsport IGCC plant and energy efficiency programs; and~~

~~a $47 million increase in fuel revenues primarily due to higher purchased power costs passed through to customers and higher financial transmission right (FTR) revenues.~~

~~Partially offset by:~~

~~an $18 million decrease in retail sales due to less favorable weather in the current year; and~~

~~a $15 million decrease in wholesale power revenues, net of fuel, primarily due to a decrease in demand rates and contracts that expired in the current year.~~

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

~~a $54 million increase in fuel and purchased power expense, primarily due to higher purchased power volumes and prices; and~~

~~a $15 million increase in operation, maintenance and other expense due to growth in energy efficiency programs and higher transmission costs.~~

~~Partially offset by:~~

~~an $11 million decrease in property and other taxes primarily due to utilization of ITCs;~~

a $9 million decrease in depreciation and amortization primarily due to the 2017 deferral of certain asset retirement obligations and the completion of the amortization of a regulated asset for costs associated with the termination of a gasification services agreement in 2000, partially offset by new IGCC rider rates that result in a lower deferral amount and higher depreciation due to additional plant in service; and

~~PART I~~

~~an $8 million decrease in impairments and other charges primarily due to the early retirement of certain metering equipment in the prior year~~.

~~Other Income and Expenses.~~ ~~The increase was primarily driven by higher AFUDC equity.~~

~~Income Tax Expense.~~ The variance was primarily due to an increase in pretax income. The effective tax rates for the nine months ended September 30, 2017, and 2016 were 39.0 percent and 34.0 percent, respectively. The increase in the effective tax rate was primarily due to an immaterial out of period adjustment in the prior year related to deferred tax balances associated with property, plant and equipment.

Matters Impacting Future Results

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

Regulatory Matters

Coal Ash Costs

As a result of the NCDEQ settlement on December 31, 2019, Duke Energy Carolinas and Duke Energy Progress agreed 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 off-site lined landfills. The majority of spend is expected to occur over the next 15-20 years. In January 2021, Duke Energy Carolinas and Duke Energy Progress reached a settlement agreement on recovery of coal ash costs as outlined in Note 3, "Regulatory Matters." The company agreed not to seek recovery of approximately $1 billion of deferred coal ash expenditures and Duke Energy Carolinas and Duke Energy Progress took a charge of approximately $500 million each in 2020. On March 31, 2021, and April ~~17, 2015,~~16, 2021, the ~~EPA published in~~NCUC approved the ~~Federal Register a rule~~coal ash settlement for Duke Energy Carolinas and Duke Energy Progress, respectively.

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

Duke Energy Indiana has interpreted the CCR rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. In 2020, the Hoosier Environmental Council filed a petition challenging the Indiana Department of Environmental Management's (IDEM) partial approval of five of Duke Energy ~~Indiana's interpretation~~Indiana’s ash pond site closure plans at Gallagher Station. The petition does not challenge the other thirteen basin closures approved by IDEM at other Indiana stations. Interpretation of the requirements of the CCR rule is subject to ~~potential~~further 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

Rate Cases

In March 2021, Piedmont filed a general rate case with the NCUC.The outcome of this rate case could have a material impact.

MGP

The PUCO has issued an order ~~from regulatory authorities disallowing~~authorizing recovery of MGP costs ~~related~~at certain sites in Ohio with a deadline to ~~closure~~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 ~~ash basins~~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 ~~have~~result in an adverse impact.

For additional information, see Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters.”

Minority Interest Investment in Duke Energy Indiana

In January 2021, Duke Energy entered into a definitive agreement providing for a 19.9% minority interest investment in Duke Energy Indiana by an affiliate of GIC, Singapore's sovereign wealth fund. The transaction is subject to the satisfaction of certain customary conditions described in the investment agreement, including receipt of the approval of the FERC and completion of review by the Committee on Foreign Investments in the United States. Failure to obtain related approvals or satisfy the conditions in the investment agreement could result in the termination of the transaction and could result in an adverse impact.

Commercial Renewables

Duke Energy continues to monitor recoverability of renewable merchant plants located in the Electric Reliability Council of Texas West market and in the PJM West market, due to declining market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Based on the most recent recoverability test, the carrying value approximated the aggregate estimated future undiscounted cash flows for the assets under review. A continued decline in energy market pricing would likely result in a future impairment. Impairment of these assets could result in adverse impacts. For additional information, see Note 2 to the Condensed Consolidated Financial Statements, "Business Segments."


MD&A			MATTERS IMPACTING FUTURE RESULTS

In February 2021, a severe winter storm impacted certain Commercial Renewables assets in Texas. Extreme weather conditions limited the ability for these solar and wind facilities to generate and sell electricity into the Electric Reliability Council of Texas market. Both lost revenues and higher than expected purchased power costs have negatively impacted the operating results of these generating units. The financial impact of the storm is expected to have a material impact on the Commercial Renewables segment's 2021 operating results. In addition, Duke Energy ~~Indiana's financial position, results~~has been named in multiple lawsuits arising out of ~~operations~~this winter storm, and ~~cash flows. See Note~~particularly, the deregulated market managed by the Electric Reliability Council of Texas. For more information, see Notes 2 and 4 to the Condensed Consolidated Financial Statements, ~~“Regulatory Matters,” for additional information.~~"Business Segments" and "Commitments and Contingencies," respectively.

~~The Indiana Utility Regulatory Commission (IURC) approved a settlement agreement between~~ COVID-19

Duke Energy ~~Indiana and multiple parties that resolves all disputes, claims and issues from~~cannot predict the ~~IURC proceedings related~~extent to ~~post-commercial operating performance and recovery of ongoing operating and capital costs at~~which 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 adverseCOVID-19 pandemic will impact ~~on Duke Energy Indiana's financial position,~~its results of operations, financial position and cash ~~flows.~~

flows in the future. Duke Energy will continue to actively monitor the impacts of COVID-19 including the economic slowdown caused by business closures or by reduced operations of businesses and governmental agencies. The pandemic and resultant economic slowdown continues to cause an increase in certain costs, such as bad debt, and a reduction in the demand for energy. Duke Energy has mitigation plans in place to partially offset these impacts, and the ability to execute these plans is critical to preserving future financial results. The company is in the process of reviewing the long-term real estate strategy due to a potential change of in-office work policies after the COVID-19 pandemic. The plan may result in a reduction of physical work space, which could create accounting impacts in 2021. Accounting impacts may include reassessments of lease terms and lease modifications, which could result in termination penalties, as well as, asset impairments on property, plant and equipment.

~~PART I~~

~~PIEDMONT~~

~~Management’s~~See "Item 7. Management's Discussion and Analysis ~~should be read~~of Financial Condition and Results of Operations," in ~~conjunction with~~ the ~~Condensed Consolidated Financial Statements and Notes for the nine months ended September 30, 2017, Piedmont's~~Duke Energy Registrants' Annual ~~Report~~Reports on Form 10-K for the year ended ~~October~~December 31, ~~2016,~~2020, for discussion of risks associated with the Tax Act.

Results of Operations

Non-GAAP Measures

Management’s Discussion and Analysis includes financial information prepared in accordance with GAAP in the U.S., as well as certain non-GAAP financial measures such as adjusted earnings and adjusted EPS discussed below. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. 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 EPS. Adjusted earnings and adjusted EPS represent income from continuing operations available to Duke Energy Corporation common stockholders in dollar and per share amounts, adjusted for the dollar and per share impact of special items. As discussed below, special items represent certain charges and credits, which management believes are not indicative of Duke Energy's ongoing performance. The most directly comparable GAAP measures for adjusted earnings and adjusted EPS are GAAP Reported Earnings and GAAP Reported EPS, respectively.

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

•Gas Pipeline Investments represents additional exit obligations related to ACP.

•Severance represents the reversal of 2018 severance charges, which were deferred as a result of a partial settlement in the Duke Energy Carolinas and the ~~Form 10‑QT~~Duke Energy Progress 2019 North Carolina rate cases.

Three Months Ended March 31, 2021, as ~~of December~~compared to March 31, ~~2016,~~2020

GAAP reported EPS was $1.25 for the ~~transition period~~first quarter of 2021 compared to $1.24 in the first quarter of 2020. GAAP reported EPS increased slightly due to favorable weather and positive rate case impacts, offset by the deferral of severance costs in the prior year, Texas Storm Uri impacts and share dilution from ~~November~~equity issuances.

As discussed above, management also evaluates financial performance based on adjusted EPS. Duke Energy’s first quarter 2021 adjusted EPS was $1.26 compared to $1.14 for the first quarter of 2020. The increase in adjusted EPS was primarily due to better weather and positive rate case contributions, partially offset by Texas Storm Uri impacts, the loss of ACP and share dilution from equity issuances.

The following table reconciles non-GAAP measures, including adjusted EPS, to their most directly comparable GAAP measures.


	Three Months Ended March 31,
	2021				2020
(in millions, except per share amounts)	Earnings		EPS		Earnings		EPS

GAAP Reported Earnings/GAAP Reported EPS	$	953	$	1.25	$	899	$	1.24
Adjustments:



Gas Pipeline Investments(a)	5		0.01		—		—

Severance(b)	—		—		(75)		(0.10)

Adjusted Earnings/Adjusted EPS	$	958	$	1.26	$	824	$	1.14

(a) Net of tax benefit of $1 million.

(b) Net of tax expense of $23 million.


MD&A			SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

SEGMENT RESULTS

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

Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. The remainder of Duke Energy’s operations is presented as Other. See Note 2 to the Condensed Consolidated Financial Statements, “Business Segments,” for additional information on Duke Energy’s segment structure.

Electric Utilities and Infrastructure


	Three Months Ended March 31,
(in millions)		2021		2020		Variance
Operating Revenues		$	5,281	$	5,183	$	98
Operating Expenses
Fuel used in electric generation and purchased power		1,462		1,467		(5)
Operation, maintenance and other		1,282		1,325		(43)
Depreciation and amortization		1,057		977		80
Property and other taxes		311		303		8
Impairment of assets and other charges		—		2		(2)
Total operating expenses		4,112		4,074		38
Gains on Sales of Other Assets and Other, net		—		1		(1)
Operating Income		1,169		1,110		59
Other Income and Expenses, net		104		85		19
Interest Expense		340		339		1
Income Before Income Taxes		933		856		77
Income Tax Expense		113		151		(38)
Segment Income		$	820	$	705	$	115

Duke Energy Carolinas GWh sales		21,962		21,236		726
Duke Energy Progress GWh sales		16,537		15,670		867
Duke Energy Florida GWh sales		8,554		8,617		(63)
Duke Energy Ohio GWh sales		6,004		5,823		181
Duke Energy Indiana GWh sales		7,726		7,606		120
Total Electric Utilities and Infrastructure GWh sales		60,783		58,952		1,831
Net proportional MW capacity in operation		50,026		49,561		465

Three Months Ended March 31, 2021, as compared to March 31, 2020

Electric Utilities and Infrastructure’s higher segment income is due to better weather compared to prior year, lower labor related expenses and rate case contributions in various jurisdictions. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:

•a $92 million increase in retail sales, net of fuel revenues, due to better weather compared to prior year;

•a $33 million increase primarily due to higher base rate pricing from the Duke Energy Indiana retail rate case, partially offset by lower rider revenues;

•an $18 million increase in retail pricing due to base rate adjustments related to Duke Energy Florida annual increases from the 2017 Settlement Agreement and the solar base rate adjustment; and

•an $8 million increase in retail pricing primarily due to the Duke Energy Kentucky general rate case.

Partially offset by:

•a $24 million decrease in rider revenues at Duke Energy Carolinas primarily due to energy efficiency programs;

•a $15 million decrease in wholesale power revenues, net of fuel, at Duke Energy Florida primarily due to a restructured capacity contract which was converted to a seasonal contract; and

•an $8 million decrease in weather-normal retail sales volumes.


MD&A			SEGMENT RESULTS — ELECTRIC UTILITIES AND INFRASTRUCTURE

Operating Expenses. The variance was driven primarily by:

•an $80 million increase in depreciation and amortization primarily due to accelerated depreciation of retired coal units Crystal River 1 ~~2016,~~and 2, a change in depreciation rates from the Indiana, North Carolina and South Carolina retail rate cases and additional plant in service.

Partially offset by:

•a $43 million decrease in operation, maintenance and other primarily driven by lower labor related expenses, partially offset by higher storm costs.

Other Income and Expenses, net. The variance was primarily due to ~~December~~lower non-service pension costs and unrealized gains on the Duke Energy Florida nuclear decommissioning trust fund.

Income Tax Expense. The decrease in tax expense was primarily due to an increase in the amortization of excess deferred taxes, partially offset by an increase in pretax income. The ETRs for the three months ended March 31, ~~2016.~~2021, and 2020, were 12.1% and 17.6%, respectively. The decrease in the ETR was primarily due to an increase in the amortization of excess deferred taxes.

Gas Utilities and Infrastructure


	Three Months Ended March 31,
(in millions)		2021		2020		Variance
Operating Revenues		$	775	$	664	$	111
Operating Expenses
Cost of natural gas		276		199		77
Operation, maintenance and other		102		110		(8)
Depreciation and amortization		68		66		2
Property and other taxes		35		30		5

Total operating expenses		481		405		76

Operating Income		294		259		35



Other Income and Expenses, net		17		49		(32)
Interest Expense		33		31		2
Income Before Income Taxes		278		277		1
Income Tax Expense		33		28		5

Segment Income		$	245	$	249	$	(4)

Piedmont LDC throughput (dekatherms)		149,626,582		148,503,995		1,122,587
Duke Energy Midwest LDC throughput (Mcf)		37,109,003		33,785,834		3,323,169

Three Months Ended March 31, 2021, as compared to March 31, 2020

Gas Utilities and Infrastructure’s results were impacted primarily by the cancellation of the ACP pipeline offset by margin growth at Piedmont. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues.The variance was driven primarily by:

•a $77 million increase due to higher natural gas costs passed through to customers, higher volumes and increased off-system sales natural gas costs;

•an $11 million increase due to Tennessee base rate case increases; and

•a $7 million increase due to North Carolina IMR.

Operating Expenses.The variance was driven primarily by:

•a $77 million increase in cost of natural gas primarily due to higher natural gas prices, higher volumes and increased off-system sales natural gas costs.

Other Income and Expenses, net. The variance was primarily driven by the cancellation of the ACP pipeline.

Income Tax Expense. The increase in the tax expense was primarily due to a decrease in AFUDC equity, partially offset by an increase in the amortization of excess deferred taxes. The ETRs for the three months ended March 31, 2021, and 2020 were 11.9% and 10.1%, respectively. The increase in the ETR was primarily due to a decrease in AFUDC equity, partially offset by an increase in the amortization of excess deferred taxes.


MD&A			SEGMENT RESULTS — COMMERCIAL RENEWABLES

Commercial Renewables


	Three Months Ended March 31,
(in millions)		2021		2020		Variance
Operating Revenues		$	119	$	129	$	(10)
Operating Expenses
Operation, maintenance and other		72		69		3
Depreciation and amortization		53		48		5
Property and other taxes		9		8		1

Total operating expenses		134		125		9

Operating Income		(15)		4		(19)
Other Income and Expenses, net		(25)		(1)		(24)
Interest Expense		13		18		(5)
Loss Before Income Taxes		(53)		(15)		(38)
Income Tax Benefit		(29)		(24)		(5)
Add: Loss Attributable to Noncontrolling Interests		51		48		3
Segment Income		$	27	$	57	$	(30)

Renewable plant production, GWh		2,588		2,437		151
Net proportional MW capacity in operation(a)		4,294		3,502		792

(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 March 31, 2021, as compared to March 31, 2020

Commercial Renewables' results were unfavorable primarily due to the impacts from Texas Storm Uri resulting in a $35 million pre-tax loss.

Operating Revenues. The variance was primarily driven by a $13 million decrease for lower market prices in the current year impacting the wind portfolio and a $8 million decrease due to low wind resource and operating downtime. This was partially offset by an $8 million increase for market sales in excess of market purchases during Texas Storm Uri and a $5 million increase due to growth of new projects.

Operating Expenses. The variance was primarily driven by a $7 million increase due to the growth of new projects placed in service and a $2 million increase associated with Texas Storm Uri.

Other Income and Expenses, net. The variance was primarily driven by a $29 million loss in equity earnings due to the impacts from Texas Storm Uri, partially offset by $4 million increase in equity earnings from the wind and distributed asset portfolios.

Interest Expense. The decrease was primarily driven by a $4 million gain on an interest rate swap that does not qualify for hedge accounting.

Income Tax Benefit. The increase in the tax benefit was primarily driven by an increase in pretax losses, partially offset by a decrease in production tax credits generated.

Loss Attributable to Noncontrolling Interests. The increase was driven primarily by $15 million for the growth of new projects financed by tax equity, partially offset by a $12 million loss resulting from Texas Storm Uri.

Other


	Three Months Ended March 31,
(in millions)		2021		2020		Variance
Operating Revenues		$	26	$	23	$	3






Operating Expenses		28		(89)		117

Operating (Loss) Income		(2)		112		(114)
Other Income and Expenses, net		21		(33)		54
Interest Expense		151		171		(20)
Loss Before Income Taxes		(132)		(92)		(40)
Income Tax Benefit		(32)		(19)		(13)

Less: Preferred Dividends		39		39		—
Net Loss		$	(139)	$	(112)	$	(27)


MD&A			SEGMENT RESULTS — COMMERCIAL RENEWABLES

Three Months Ended March 31, 2021, as compared to March 31, 2020

The higher net loss was driven by the prior year reversal of severance charges incurred in previous periods, partially offset by higher returns on investments that fund certain employee benefit obligations and lower interest rates. The following is a detailed discussion of the variance drivers by line item.

Operating Expenses. The increase was primarily due to the 2020 reversal of severance charges, incurred as a result of a 2018 corporate cost savings initiative, due to reaching settlement for regulatory recovery and higher expenses associated with certain employee benefit obligations.

Other Income and Expenses, net. The variance was primarily due to higher returns on investments that fund certain employee benefit obligations.

Interest Expense. The variance was primarily due to lower interest rates on floating rate debt.

Income Tax Benefit. The increase in the tax benefit was primarily driven by an increase in pretax losses. The ETRs for the three months ended March 31, 2021, and 2020 were 24.2% and 20.7%, respectively. The increase in the ETR was primarily due to unfavorable tax impacts in the prior year related to lower investment returns on certain employee benefit obligations.

DUKE ENERGY CAROLINAS

Results of Operations


	Three Months Ended March 31,
(in millions)	2021		2020		Variance
Operating Revenues	$	1,716	$	1,748	$	(32)
Operating Expenses
Fuel used in electric generation and purchased power	422		453		(31)
Operation, maintenance and other	441		386		55
Depreciation and amortization	359		343		16
Property and other taxes	83		81		2
Impairment of assets and other charges	—		2		(2)
Total operating expenses	1,305		1,265		40
Gains on Sales of Other Assets and Other, net	—		1		(1)
Operating Income	411		484		(73)
Other Income and Expenses, net	48		43		5
Interest Expense	124		123		1
Income Before Income Taxes	335		404		(69)
Income Tax Expense	23		65		(42)
Net Income	$	312	$	339	$	(27)


Increase (Decrease) over prior year	2021
Residential sales	13.5	%
General service sales	(3.6)	%
Industrial sales	(2.4)	%
Wholesale power sales	15.0	%
Joint dispatch sales	33.0	%
Total sales	3.4	%
Average number of customers	2.1	%

Three Months Ended March 31, 2021, as compared to March 31, 2020

Operating Revenues.The variance was driven primarily by:

•a $33 million decrease in fuel revenues due to lower prices and retail sales volumes;

•a $24 million decrease in rider revenues primarily due to energy efficiency programs; and

•a $14 million decrease in weather-normal retail sales volumes.

Partially offset by:

•a $50 million increase in retail sales due to better weather compared to prior year.


MD&A			DUKE ENERGY CAROLINAS

Nine Months Ended September 30,
(in millions) 2017
2016
Variance
Operating Revenues
Regulated natural gas $ 877
$ 815
$ 62
Nonregulated natural gas and other 7
8
(1 )
Total operating revenues 884
823
61
Operating Expenses
Cost of natural gas 333
289
44
Operation, maintenance and other 226
221
5
Depreciation and amortization 109
103
6
Property and other taxes 38
33
5
Impairment charges 7
—
7
Total operating expenses 713
646
67
Operating Income 171
177
(6 )
Equity in earnings of unconsolidated affiliates 8
25
(17 )
Other income and expenses, net (1 ) (1 ) —
Total other income and expenses 7
24
(17 )
Interest Expense 59
50
9
Income Before Income Taxes 119
151
(32 )
Income Tax Expense 43
57
(14 )
Net Income $ 76
$ 94
$ (18 )
Operating Expenses. The variance was driven primarily by:

•a $55 million increase in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement with the Public Staff of the NCUC related to the 2019 North Carolina retail rate case recorded in 2020; partially offset by lower nuclear outage costs; and

•a $16 million increase in depreciation and amortization expense primarily due to additional plant in service and new depreciation rates associated with the North Carolina rate cases.

Partially offset by:

•a $31 million decrease in fuel used in electric generation and purchased power primarily due to lower retail sales volumes.

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

PROGRESS ENERGY

Results of Operations


	Three Months Ended March 31,
(in millions)	2021		2020		Variance
Operating Revenues	$	2,505	$	2,422	$	83
Operating Expenses
Fuel used in electric generation and purchased power	795		763		32
Operation, maintenance and other	601		554		47
Depreciation and amortization	485		452		33
Property and other taxes	142		135		7

Total operating expenses	2,023		1,904		119
Losses on Sales of Other Assets and Other, net	—		(1)		1
Operating Income	482		517		(35)
Other Income and Expenses, net	43		32		11
Interest Expense	192		206		(14)
Income Before Income Taxes	333		343		(10)
Income Tax Expense	43		60		(17)
Net Income	290		283		7

Three Months Ended March 31, 2021, as compared to March 31, 2020

Operating Revenues. The variance was driven primarily by:

•a $33 million increase in retail sales, net of fuel revenues, due to better weather compared to prior year;

•a $21 million increase in fuel cost recovery driven by higher fuel prices and volumes in the current year;

•a $19 million increase in fuel and capacity revenues primarily due to recovery of the remaining value of retired coal units Crystal River 1 and 2; and

•an $18 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.

Partially offset by:

•a $15 million decrease in wholesale power revenues, net of fuel, primarily due to a restructured capacity contract, which was converted to a seasonal contract at Duke Energy Florida.

Operating Expenses. The variance was driven primarily by:

•a $47 million increase in operation, maintenance and other expense at Duke Energy Progress primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement with the Public Staff of the NCUC related to the 2019 North Carolina retail rate case recorded in 2020, as well as increased storm costs;

•a $33 million increase in depreciation and amortization primarily due to accelerated depreciation of retired coal units Crystal River 1 and 2, and increase in plant base; and

•a $32 million increase in fuel used in electric generation and purchased power primarily due to higher demand and changes in generation mix at Duke Energy Progress.

Other Income and Expenses, net. The increase is primarily due to unrealized gains on the nuclear decommissioning trust fund and pension plan assets at Duke Energy Florida.


MD&A			PROGRESS ENERGY

Interest Expense. The variance was driven primarily by lower intercompany interest expense and lower debt outstanding at Progress Energy, Inc.

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

DUKE ENERGY PROGRESS

Results of Operations


	Three Months Ended March 31,
(in millions)	2021		2020		Variance
Operating Revenues	$	1,401	$	1,338	$	63
Operating Expenses
Fuel used in electric generation and purchased power	436		405		31
Operation, maintenance and other	357		305		52
Depreciation and amortization	285		287		(2)
Property and other taxes	49		47		2

Total operating expenses	1,127		1,044		83
Losses on Sales of Other Assets and Other, net	—		(1)		1
Operating Income	274		293		(19)
Other Income and Expenses, net	24		22		2
Interest Expense	69		69		—
Income Before Income Taxes	229		246		(17)
Income Tax Expense	19		42		(23)
Net Income	$	210	$	204	$	6


Increase (Decrease) over prior period	2021
Residential sales	18.7	%
General service sales	(0.9)	%
Industrial sales	(1.8)	%
Wholesale power sales	10.2	%
Joint dispatch sales	(7.6)	%
Total sales	5.5	%
Average number of customers	2.0	%

Three Months Ended March 31, 2021, as compared to March 31, 2020

Operating Revenues. The variance was driven primarily by:

•a $42 million increase in retail sales due to better weather compared to prior year; and

•a $21 million increase in fuel cost recovery driven by higher fuel prices and volumes in the current year.

Operating Expenses. The variance was driven primarily by:

•a $52 million increase in operation, maintenance and other expense primarily driven by the deferral of 2018 severance costs due to the partial settlement agreement with the Public Staff of the NCUC related to the 2019 North Carolina retail rate case recorded in 2020, as well as increased storm costs; and

•a $31 million increase in fuel used in electric generation and purchased power primarily due to higher demand and changes in generation mix.

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


MD&A			DUKE ENERGY FLORIDA

DUKE ENERGY FLORIDA

Results of Operations


	Three Months Ended March 31,
(in millions)	2021		2020		Variance
Operating Revenues	$	1,101	$	1,080	$	21
Operating Expenses
Fuel used in electric generation and purchased power	359		358		1
Operation, maintenance and other	242		245		(3)
Depreciation and amortization	200		165		35
Property and other taxes	93		88		5

Total operating expenses	894		856		38

Operating Income	207		224		(17)
Other Income and Expenses, net	18		10		8
Interest Expense	80		84		(4)
Income Before Income Taxes	145		150		(5)
Income Tax Expense	28		30		(2)
Net Income	$	117	$	120	$	(3)

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


Increase (Decrease) over prior period	2021
Residential sales	10.5	%
General service sales	(2.1)	%
Industrial sales	5.6	%
Wholesale and other	38.2	%
Total sales	(0.7)	%
Average number of customers	1.9	%

Three Months Ended March 31, 2021, as compared to March 31, 2020

Operating Revenues. The variance was driven primarily by:

•a $19 million increase in fuel and capacity revenues primarily due to recovery of the remaining value of retired coal units Crystal River 1 and 2;

•an $18 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;

•an $8 million increase in rider revenues primarily due to increased volumes;

•a $7 million increase in transmission revenues and customer equipment rentals: and

•a $5 million increase in weather-normal retail sales volumes.

Partially offset by:

•a $15 million decrease in wholesale power revenues, net of fuel, primarily due to a restructured capacity contract which was converted to a seasonal contract;

•a $12 million decrease in storm revenues due to full recovery of Hurricane Dorian costs in the prior year; and

•a $9 million decrease in retail sales, net of fuel revenues, due to unfavorable weather in the current year.

Operating Expenses. The variance was driven primarily by:

•a $35 million increase in depreciation and amortization primarily due to accelerated depreciation of retired coal units Crystal River 1 and 2 and an increase in plant base.

Other Income and Expense, net. The increase is primarily due to lower non-service pension costs and unrealized gains on the nuclear decommissioning trust fund.


MD&A			DUKE ENERGY OHIO

DUKE ENERGY OHIO

Results of Operations


	Three Months Ended March 31,
(in millions)	2021		2020		Variance
Operating Revenues
Regulated electric	$	363	$	346	$	17
Regulated natural gas	169		152		17

Total operating revenues	532		498		34
Operating Expenses
Fuel used in electric generation and purchased power	82		87		(5)

Cost of natural gas	51		37		14
Operation, maintenance and other	108		123		(15)
Depreciation and amortization	74		68		6
Property and other taxes	92		83		9

Total operating expenses	407		398		9

Operating Income	125		100		25
Other Income and Expenses, net	5		3		2
Interest Expense	25		24		1
Income Before Income Taxes	105		79		26
Income Tax Expense	14		14		—


Net Income	$	91	$	65	$	26

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


	Electric		Natural Gas
Increase (Decrease) over prior year	2021		2021
Residential sales	13.0	%	13.6	%
General service sales	(1.2)	%	12.0	%
Industrial sales	(2.2)	%	(0.8)	%
Wholesale electric power sales	115.8	%	n/a
Other natural gas sales	n/a		0.8	%
Total sales	3.1	%	9.8	%
Average number of customers	0.8	%	0.8	%

Three Months Ended March 31, 2021, as compared to March 31, 2020

Operating Revenues. The variance was driven primarily by:

•a $10 million increase in fuel related revenues primarily due to higher prices and increased volumes;

•an $8 million increase in retail pricing primarily due to the Duke Energy Kentucky general rate case;

•a $7 million increase in revenues due to better weather compared to prior year;

•a $7 million increase in PJM transmission revenues as a result of increased capital spend;

•a $4 million increase in other revenues due to higher OVEC sales into PJM; and

•a $3 million increase in bulk power marketing sales.

Partially offset by:

•a $7 million decrease in retail revenue riders primarily due to the suspension of the Ohio energy efficiency rider and a decrease in the Kentucky gas weather normalization rider, partially offset by an increase in the distribution capital investment rider due to an increase in capital spend.


MD&A			DUKE ENERGY OHIO

Operating Expenses. The variance was driven primarily by:

•a $9 million increase in fuel expense primarily driven by higher retail prices and increased volumes for natural gas;

•a $9 million increase in property and other taxes primarily due to increased plant in service, higher kilowatt and natural gas distribution taxes due to increased usage and a lower Network Integration Transmission Service tax deferral; and

•a $6 million increase in depreciation and amortization primarily driven by an increase in distribution plant.

. Partially offset by:

•a $15 million decrease in operations, maintenance and other expense primarily due lower vegetation management costs, employee-related expenses, environmental reserves and energy efficiency program costs in Ohio.

DUKE ENERGY INDIANA

Results of Operations


	Three Months Ended March 31,
(in millions)	2021		2020		Variance
Operating Revenues	$	745	$	692	$	53
Operating Expenses
Fuel used in electric generation and purchased power	217		194		23
Operation, maintenance and other	178		186		(8)
Depreciation and amortization	152		132		20
Property and other taxes	21		22		(1)

Total operating expenses	568		534		34

Operating Income	177		158		19
Other Income and Expenses, net	9		10		(1)
Interest Expense	50		43		7
Income Before Income Taxes	136		125		11
Income Tax Expense	24		26		(2)
Net Income	$	112	$	99	$	13


Increase (Decrease) over prior year	2021
Residential sales	12.3	%
General service sales	(0.2)	%
Industrial sales	(2.6)	%
Wholesale power sales	12.1	%
Total sales	1.6	%
Average number of customers	1.2	%

Three Months Ended March 31, 2021, as compared to March 31, 2020

Operating Revenues.The variance was driven primarily by:

•a $33 million increase primarily due to higher base rate pricing from the Indiana retail rate case, net of lower rider revenues; and

•a $19 million increase in fuel revenues primarily due to higher fuel cost recovery driven by customer demand and fuel prices.

Operating Expenses.The variance was driven primarily by:

•a $23 million increase in fuel used in electric generation and purchased power expense primarily due to higher coal and natural gas costs; and

•a $20 million increase in depreciation and amortization primarily due to a change in depreciation rates from the Indiana retail rate case and additional plant in service.

Partially offset by:

•an $8 million decrease in operation, maintenance and other primarily due to lower outage and other contractor spend.

Interest Expense. The variance was driven by higher post-in-service carrying costs interest resulting from the Indiana retail rate case, partially offset by higher fixed-rate debt outstanding in the prior year.


MD&A			PIEDMONT

PIEDMONT

Results of Operations


	Three Months Ended March 31,
(in millions)	2021		2020		Variance



Operating Revenues	$	606	$	512	$	94
Operating Expenses
Cost of natural gas	225		162		63
Operation, maintenance and other	78		80		(2)
Depreciation and amortization	48		45		3
Property and other taxes	14		12		2

Total operating expenses	365		299		66

Operating Income	241		213		28
Other Income and Expenses, net	17		12		5
Interest Expense	29		27		2
Income Before Income Taxes	229		198		31
Income Tax Expense	26		20		6
Net Income	$	203	$	178	$	25

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



Increase (Decrease) over prior year	~~2017~~		2021
Residential deliveries	~~(19.2~~27.1	)%
Commercial deliveries	~~(11.8~~16.0	)%
Industrial deliveries	~~(4.3~~2.6	)%
Power generation deliveries	~~(11.0~~(12.8)	)%
For resale	~~(6.9~~40.9	)%
Total throughput deliveries	~~(10.5~~0.8	)%
Secondary market volumes	~~6.2~~5.4	%
Average number of customers	~~1.6~~2.2	%

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~~weather normalization adjustment mechanisms mostly offset the impact of weather on bills rendered, but do not ensure full recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.

~~Nine~~Three Months Ended ~~September 30, 2017,~~March 31, 2021, as ~~Compared~~compared to ~~September 30, 2016~~March 31, 2020

Operating Revenues.The variance was driven primarily by:

•a ~~$44~~$63 million increase due to higher natural gas costs passed through to customers, ~~primarily due to~~ higher volumes and higher off-system sales natural gas ~~prices; and~~costs;

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;~~Tennessee base rate case increases; and

•a $7 million increase due to ~~an impairment~~North Carolina IMR.

Operating Expenses.The variance was driven primarily by:

•a $63 million increase in cost of ~~software resulting from planned accounting system~~natural gas due to higher natural gas prices, higher volumes and ~~process integration~~higher off-system sales natural gas costs.

Income Tax Expense. The increase in ~~2018.~~

~~Equity in Earnings of Unconsolidated Affiliates.~~ ~~The decrease~~tax expense 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~~an increase in pretax income. The effective tax rates for the nine months ended September 30, 2017, and 2016 were 36.1 percent and 37.7 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, for~~2020, included a summary and detailed discussion of projected primary sources and uses of cash for ~~2017~~2021 to ~~2019.~~2023.

The Subsidiary Registrants generally maintain minimal cash balances and use short-term borrowings to meet their working capital needs and other cash requirements. The Subsidiary Registrants, excluding Progress Energy (Parent), support their short-term borrowing needs through participation with


MD&A			LIQUIDITY AND CAPITAL RESOURCES

In January 2021, Duke Energy ~~and certain~~entered into a definitive agreement with an affiliate of ~~its other subsidiaries~~GIC, for GIC to make a minority interest investment of 19.9% in ~~a money pool arrangement. The companies with short-term funds may provide short-term loans to affiliates participating under this arrangement.~~

Duke Energy Indiana. The investment will be completed following two closings for an aggregate investment amount of approximately $2 billion. The first closing is expected to be completed in the second quarter of 2021 and ~~the Subsidiary Registrants, excluding Progress~~Duke Energy ~~(Parent), may also use short-term debt, including commercial paper and the money pool, as a bridge to long-term debt financings. The levels of borrowing may vary significantly over the course~~will issue 11.1% of the ~~year due~~membership interests in exchange for 50% of the total investment amount. Duke Energy has the discretion to determine the timing of ~~long-term debt financings and~~ the ~~impact~~second closing, but the closing will occur no later than January 2023. At the second closing, Duke Energy will issue additional membership interests, so GIC's minority interest ownership is 19.9% of ~~fluctuations in cash flows from operations. From time to time,~~ Duke ~~Energy’s current liabilities may exceed current assets resulting~~Energy Indiana, for the remaining 50% of the total investment amount. Proceeds from the ~~use~~minority interest investment are expected to address common equity needs through 2025 to partially fund Duke Energy's $59 billion capital and investment expenditure plan.

As of ~~short-term debt as a~~March 31, 2021, Duke Energy had approximately $379 million of cash on hand, $4.4 billion available under its $8 billion Master Credit Facility and $500 million available under the $1 billion Three-Year Revolving Credit Facility. Duke Energy expects to have sufficient liquidity in the form of cash on hand, cash from operations and available credit capacity to support its funding ~~source to meet scheduled maturities of long-term debt, as well as cash needs, which can fluctuate due to the seasonality of its business.~~

~~CREDIT FACILITIES AND REGISTRATION STATEMENTS~~

needs. Refer to Note 65 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities," for ~~further~~ information regarding Duke Energy's debt issuances and maturities, and available credit facilities including the Master Credit Facility.

~~Shelf Registration~~

In September 2016, Duke Energy filed a registration statement (Form S-3) with the U.S. Securities and Exchange Commission (SEC). Under this Form S-3, which is uncapped, the Duke Energy Registrants, excluding Progress Energy, may issue debt and other securities in the future at amounts, prices and with terms to be determined at the time of future offerings. The registration statement also allows for the issuance of common stock by Duke Energy.

In January 2017, Duke Energy amended its Form S-3 to add Piedmont as a registrant and included in the amendment a prospectus for Piedmont under which it may issue debt securities in the same manner as other Duke Energy Registrants.

~~DEBT MATURITIES~~

Refer to Note 6 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, working capital and commodity price fluctuations, and unanticipated expenses including unplanned plant outages, storms, legal costs and related settlements can affect the timing and level of cash flows from operations. 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,” in the Duke Energy Registrants’ Annual Reports on Form 10-K for additional information).

~~Restrictive Debt Covenants~~

The 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~~In March 2021, Moody's Investors Services, Inc. (Moody's) downgraded by one notch 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 providelong-term credit ratings for Duke Energy ~~Corporation.~~

~~In May 2017, Moody’s changed its rating outlook~~(Parent) and Duke Energy Carolinas. The downgrade reflects Duke Energy's balance sheet objectives. The downgrade for Duke Energy ~~Corporation to stable from negative~~(Parent) and ~~affirmed~~ Duke Energy ~~Corporation's credit ratings. In August 2017, Moody's changed its rating outlook~~Carolinas also considers the impact for Duke Energy ~~Ohio to positive from stable~~Carolinas and Duke Energy Progress as a result of the 2019 rate case orders and approval of the CCR Settlement Agreement. While these agreements are indicative of a regulatory environment that remains broadly supportive of utility credit quality, their financial terms resulted in current impairment charges and lowered the amount of future cash flow Duke Energy Carolinas and Duke Energy Progress will receive in conjunction with their coal ash remediation spending. As part of the credit rating action, Moody's affirmed Duke Energy's (Parent) short-term and commercial paper credit ratings and confirmed the credit ratings for Duke Energy ~~Ohio's~~Progress. Following a January 2021, credit ~~ratings.~~

rating downgrade of Duke Energy (Parent) and its subsidiaries, Standard & Poor's Rating Services continues to maintain a stable outlook on Duke Energy Corporation and its subsidiaries as of March 31, 2021.

~~PART I~~

Cash Flow Information

The following table summarizes Duke Energy’s cash flows.


	Nine Months Ended							Three Months Ended
	September 30,							March 31,
(in millions)	2017			2016			(in millions)	2021		2020
Cash flows provided by (used in):							Cash flows provided by (used in):
Operating activities	$	5,011		$	5,611		Operating activities	$	2,088	$	1,554
Investing activities	(6,360		)	(5,555		)	Investing activities	(3,137)		(3,022)
Financing activities	1,239			5,266			Financing activities	1,185		2,593
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 in cash, cash equivalents and restricted cash							Net increase in cash, cash equivalents and restricted cash	136		1,125
Cash, cash equivalents and restricted cash at beginning of period							Cash, cash equivalents and restricted cash at beginning of period	556		573
Cash, cash equivalents and restricted cash at end of period							Cash, cash equivalents and restricted cash at end of period	$	692	$	1,698



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

1-32853	DUKE ENERGY CORPORATION	20-2777218



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

		~~1-3274~~	~~DUKE ENERGY FLORIDA, LLC~~ ~~(a Florida limited liability company)~~ ~~299 First Avenue North~~ ~~St. Petersburg, Florida 33701~~ ~~704-382-3853~~ ~~59-0247770~~
1-15929			PROGRESS ENERGY, INC.						56-2155481

		~~1-1232~~	~~DUKE ENERGY OHIO, INC.~~ ~~(an Ohio corporation)~~ ~~139 East Fourth Street~~ ~~Cincinnati, Ohio 45202~~ ~~704-382-3853~~ ~~31-0240030~~
1-3382			DUKE ENERGY PROGRESS, LLC						56-0165465

		~~1-3543~~
1-3274			DUKE ENERGY FLORIDA, LLC						59-0247770



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



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


Registrant			Description	Shares
Duke Energy			Common stock, $0.001 par value	769,218,956







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



									Accumulated Other Comprehensive Loss
															Net Unrealized						Total
									Foreign			Net			(Losses) Gains						Duke Energy
	Common			Additional					Currency			Losses on			on Available-			Pension and			Corporation
	Stock	Common		Paid-in		Retained			Translation			Cash Flow			for-Sale-			OPEB			Stockholders'			Noncontrolling			Total
(in millions)	Shares	Stock		Capital		Earnings			Adjustments			Hedges			Securities			Adjustments			Equity			Interests			Equity
Balance at December 31, 2015	688	$	1	$	37,968	$	2,564		$	(692	)	$	(50	)	$	(3	)	$	(61	)	$	39,727		$	44		$	39,771
Net income	—	—		—		2,379			—			—			—			—			2,379			13			2,392
Other comprehensive income (loss)	—	—		—		—			92			(16		)	7			2			85			3			88
Common stock issuances, including dividend reinvestment and employee benefits	1	—		29		—			—			—			—			—			29			—			29
Common stock dividends	—	—		—		(1,731		)	—			—			—			—			(1,731		)	—			(1,731		)
Distributions to noncontrolling interest in subsidiaries	—	—		—		—			—			—			—			—			—			(3		)	(3		)
Balance at September 30, 2016	689	$	1	$	37,997	$	3,212		$	(600	)	$	(66	)	$	4		$	(59	)	$	40,489		$	57		$	40,546

Balance at December 31, 2016	700	$	1	$	38,741	$	2,384		$	—		$	(20	)	$	(1	)	$	(72	)	$	41,033		$	8		$	41,041
Net income	—	—		—		2,356			—			—			—			—			2,356			5			2,361
Other comprehensive income	—	—		—		—			—			1			10			2			13			—			13
Common stock issuances, including dividend reinvestment and employee benefits	—	—		33		—			—			—			—			—			33			—			33
Common stock dividends	—	—		—		(1,825		)	—			—			—			—			(1,825		)	—			(1,825		)
Distributions to noncontrolling interest in subsidiaries	—	—		—		—			—			—			—			—			—			(2		)	(2		)
Other^(a)	—	—		—		21			—			—			—			—			21			—			21
Balance at September 30, 2017	700	$	1	$	38,774	$	2,936		$	—		$	(19	)	$	9		$	(70	)	$	41,631		$	11		$	41,642



										Accumulated Other Comprehensive
										(Loss) Income
												Net Unrealized				Total
										Net Gains		Gains (Losses)				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, 2019	$	1,962	733	$	1	$	40,881	$	4,108	$	(51)	$	3	$	(82)	$	46,822	$	1,129	$	47,951
Net income (loss)	—		—	—		—		899		—		—		—		899		(48)		851
Other comprehensive (loss) income	—		—	—		—		—		(65)		1		1		(63)		(14)		(77)


Common stock issuances, including dividend reinvestment and employee benefits	—		2	—		50		—		—		—		—		50		—		50

Common stock dividends	—		—	—		—		(695)		—		—		—		(695)		—		(695)


Contributions from noncontrolling interests, net of transaction costs	—		—	—		—		—		—		—		—		—		103		103
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(7)		(7)
Other(a)	—		—	—		(1)		(91)		—		—		—		(92)		(1)		(93)
Balance at March 31, 2020	$	1,962	735	$	1	$	40,930	$	4,221	$	(116)	$	4	$	(81)	$	46,921	$	1,162	$	48,083

Balance at December 31, 2020	$	1,962	769	$	1	$	43,767	$	2,471	$	(167)	$	6	$	(76)	$	47,964	$	1,220	$	49,184
Net income (loss)	—		—	—		—		953		—		—		—		953		(51)		902
Other comprehensive income (loss)	—		—	—		—		—		25		(8)		2		19		7		26


Common stock issuances, including dividend reinvestment and employee benefits	—		—	—		(3)		—		—		—		—		(3)		—		(3)

Common stock dividends	—		—	—		—		(744)		—		—		—		(744)		—		(744)

Contributions from noncontrolling interests, net of transaction costs	—		—	—		(3)		—		—		—		—		(3)		303		300
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—		—		—		—		—		(7)		(7)

Balance at March 31, 2021	$	1,962	769	$	1	$	43,761	$	2,680	$	(142)	$	(2)	$	(74)	$	48,186	$	1,472	$	49,658






















			Accumulated Other
			Comprehensive
			Loss
	Member's		Net Losses on		Total
(in millions)	Equity		Cash Flow Hedges		Equity
Balance at December 31, 2019	$	12,818	$	(7)	$	12,811
Net income	339		—		339

Distributions to parent	(300)		—		(300)
Other(a)	(13)		—		(13)
Balance at March 31, 2020	$	12,844	$	(7)	$	12,837

Balance at December 31, 2020	$	13,161	$	(7)	$	13,154
Net income	312		—		312



Balance at March 31, 2021	$	13,473	$	(7)	$	13,466


























					Accumulated Other Comprehensive Income (Loss)
					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
	Capital		Earnings		Hedges		Sale Securities		Adjustments		Equity		Interests		Equity
Balance at December 31, 2019	$	9,143	$	6,465	$	(10)	$	(1)	$	(7)	$	15,590	$	3	$	15,593
Net income	—		283		—		—		—		283		—		283
Other comprehensive income	—		—		1		1		—		2		—		2





Other	—		(1)		—		—		—		(1)		—		(1)
Balance at March 31, 2020	$	9,143	$	6,747	$	(9)	$	—	$	(7)	$	15,874	$	3	$	15,877

Balance at December 31, 2020	$	9,143	$	7,109	$	(5)	$	(2)	$	(8)	$	16,237	$	4	$	16,241
Net income	—		290		—		—		—		290		—		290
Other comprehensive income (loss)	—		—		1		(1)		—		—		—		—
Distributions to noncontrolling interests	—		—		—		—		—		—		(1)		(1)


Other	—		1		—		—		—		1		(1)		—
Balance at March 31, 2021	$	9,143	$	7,400	$	(4)	$	(3)	$	(8)	$	16,528	$	2	$	16,530


~~(a)~~FINANCIAL STATEMENTS			~~Includes a $547 million non-cash dividend related to a legal entity restructuring.~~




























			Accumulated
			Other
			Comprehensive
			Income (Loss)
			Net Unrealized
			Gains (Losses) on
	Member's		Available-for-Sale		Total
(in millions)	Equity		Securities		Equity
Balance at December 31, 2019	$	6,789	$	(1)	$	6,788
Net income	120		—		120
Other comprehensive income	—		1		1





Balance at March 31, 2020	$	6,909	$	—	$	6,909

Balance at December 31, 2020	$	7,560	$	(2)	$	7,558
Net income	117		—		117
Other comprehensive loss	—		(1)		(1)




Balance at March 31, 2021	$	7,677	$	(3)	$	7,674



	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2017		2016		2017		2016
Duke Energy	$	107	$	107	$	289	$	285
Duke Energy Carolinas	9		6		27		21
Progress Energy	67		65		168		161
Duke Energy Progress	5		4		14		13
Duke Energy Florida	62		61		154		148
Duke Energy Ohio	24		26		75		77
Duke Energy Indiana	6		10		16		26
Piedmont	1		1		3		2


	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



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


~~(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.



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


	Three Months Ended September 30, 2017																			Three Months Ended March 31, 2021
	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			(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other		Eliminations		Total
Unaffiliated revenues	$	6,122	$	249	$	95		$	6,466	$	16		$	—		$	6,482		Unaffiliated revenues	$	5,273	$	752	$	119	$	6,144	$	6	$	—	$	6,150
Intersegment revenues	7		23		—			30		19			(49		)	—			Intersegment revenues	8		23		—		31		20		(51)		—
Total revenues	$	6,129	$	272	$	95		$	6,496	$	35		$	(49	)	$	6,482		Total revenues	$	5,281	$	775	$	119	$	6,175	$	26	$	(51)	$	6,150
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 income (loss)(a)																			Segment income (loss)(a)	$	820	$	245	$	27	$	1,092	$	(139)	$	—	$	953
Less: Noncontrolling interests																			Less: Noncontrolling interests													51
Add: Preferred stock dividend																			Add: Preferred stock dividend													39

Net Income																			Net Income													$	941
Segment assets	$	118,323	$	11,361	$	4,216		$	133,900	$	2,240		$	185		$	136,325		Segment assets	$	138,734	$	14,139	$	6,894	$	159,767	$	3,710	$	(12)	$	163,465



	Three Months Ended September 30, 2016
	Electric		Gas					Total
	Utilities and		Utilities and		Commercial			Reportable
(in millions)	Infrastructure		Infrastructure		Renewables			Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	6,332	$	89	$	139		$	6,560	$	16		$	—		$	6,576
Intersegment revenues	8		—		—			8		16			(24		)	—
Total revenues	$	6,340	$	89	$	139		$	6,568	$	32		$	(24	)	$	6,576
Segment income (loss)^(a)(c)	$	1,189	$	15	$	(24	)	$	1,180	$	(181	)	$	—		$	999
Add back noncontrolling interests																2
Income from discontinued operations, net of tax^(d)																180
Net income																$	1,181



	Nine Months Ended September 30, 2017
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	16,211	$	1,175	$	333	$	17,719	$	47		$	—		$	17,766
Intersegment revenues	23		68		—		91		56			(147		)	—
Total revenues	$	16,234	$	1,243	$	333	$	17,810	$	103		$	(147	)	$	17,766
Segment income (loss)^(a)(b)(c)	$	2,384	$	179	$	2	$	2,565	$	(205	)	$	—		$	2,360
Add back noncontrolling interests															5
Loss from discontinued operations, net of tax															(4		)
Net income															$	2,361



	Nine Months Ended September 30, 2016
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Consolidated
Unaffiliated revenues	$	16,406	$	355	$	365	$	17,126	$	40		$	—		$	17,166
Intersegment revenues	24		3		—		27		51			(78		)	—
Total revenues	$	16,430	$	358	$	365	$	17,153	$	91		$	(78	)	$	17,166
Segment income (loss)^(a)(c)	$	2,557	$	63	$	13	$	2,633	$	(436	)	$	—		$	2,197
Add back noncontrolling interests															5
Income from discontinued operations, net of tax^(d)															190
Net income															$	2,392


~~(a)~~	~~Other includes costs to achieve the Piedmont acquisition. See Notes 2 and 10 for additional information.~~


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


~~(a)~~	Primarily relates to decommissioning nuclear power facilities, closure of ash impoundments, asbestos removal, closure of landfills at fossil generation facilities, retirement of natural gas mains and removal of renewable energy generation assets.


~~(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.~~



	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)~~FINANCIAL STATEMENTS			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.RELATED PARTY TRANSACTIONS


~~(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.


~~(a)~~	~~Duke Energy includes amounts related to consolidated VIEs of $703 million and $750 million as of September 30, 2017, and December 31, 2016, respectively.~~



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