UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended ~~September 30, 2018~~March 31, 2019



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

For the transition period from to

~~________________________~~_________to_________



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

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



Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number	Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number
1-4928	DUKE ENERGY CAROLINAS, LLC (a North Carolina limited liability company) 526 South Church Street Charlotte, North Carolina 28202-1803 704-382-3853 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. (a North Carolina corporation) 410 South Wilmington Street Raleigh, North Carolina 27601-1748 704-382-3853 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 (a North Carolina limited liability company) 410 South Wilmington Street Raleigh, North Carolina 27601-1748 704-382-3853 56-0165465	1-3543	DUKE ENERGY INDIANA, LLC (an Indiana limited liability company) 1000 East Main Street Plainfield, Indiana 46168 704-382-3853 35-0594457
1-6196	PIEDMONT NATURAL GAS COMPANY, INC. (a North Carolina corporation) 4720 Piedmont Row Drive Charlotte, North Carolina 28210 704-364-3120 56-0556998

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



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

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



Duke Energy	Yes x	No ¨	Duke Energy Florida	Yes x	No ¨
Duke Energy Carolinas	Yes x	No ¨	Duke Energy Ohio	Yes x	No ¨
Progress Energy	Yes x	No ¨	Duke Energy Indiana	Yes x	No ¨
Duke Energy Progress	Yes x	No ¨	Piedmont	Yes x	No ¨

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



Duke Energy	Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨	Emerging ~~Growth Company~~growth company ¨
Duke Energy Carolinas	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨	Emerging ~~Growth Company~~growth company ¨
Progress Energy	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨	Emerging ~~Growth Company~~growth company ¨
Duke Energy Progress	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨	Emerging ~~Growth Company~~growth company ¨
Duke Energy Florida	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨	Emerging ~~Growth Company~~growth company ¨
Duke Energy Ohio	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨	Emerging ~~Growth Company~~growth company ¨
Duke Energy Indiana	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨	Emerging ~~Growth Company~~growth company ¨
Piedmont	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x	Smaller reporting company ¨	Emerging ~~Growth Company~~growth company ¨

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Duke Energy	Yes ¨	No x	Duke Energy Florida	Yes ¨	No x
Duke Energy Carolinas	Yes ¨	No x	Duke Energy Ohio	Yes ¨	No x
Progress Energy	Yes ¨	No x	Duke Energy Indiana	Yes ¨	No x
Duke Energy Progress	Yes ¨	No x	Piedmont	Yes ¨	No x



SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Registrant	Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Duke Energy	Common Stock, $0.001 par value	DUK	New York Stock Exchange LLC
Duke Energy	5.125% Junior Subordinated Debentures due January 15, 2073	DUKH	New York Stock Exchange LLC
Duke Energy	5.625% Junior Subordinated Debentures due September 15, 2078	DUKB	New York Stock Exchange LLC
Duke Energy	Depositary Shares, each representing a 1/1,000th interest in a share of 5.75% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share	DUK PR A	New York Stock Exchange LLC

Number of shares of Common stock outstanding at ~~October 31, 2018:~~April 30, 2019:



Registrant	Description	Shares
Duke Energy	Common stock, $0.001 par value	~~712,877,558~~728,046,950

This combined Form 10-Q is filed separately by eight registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont (collectively the Duke Energy Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.

Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.

~~TABLE OF CONTENTS~~DUKE ENERGY CORPORATION

(a Delaware corporation)

550 South Tryon Street

Charlotte, North Carolina 28202-1803

704-382-3853

20-2777218



	~~Cautionary Statement Regarding Forward-Looking Information~~

Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number	Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number
1-4928	DUKE ENERGY CAROLINAS, LLC (a North Carolina limited liability company) 526 South Church Street Charlotte, North Carolina 28202-1803 704-382-3853 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. (a North Carolina corporation) 410 South Wilmington Street Raleigh, North Carolina 27601-1748 704-382-3853 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 (a North Carolina limited liability company) 410 South Wilmington Street Raleigh, North Carolina 27601-1748 704-382-3853 56-0165465	1-3543	DUKE ENERGY INDIANA, LLC (an Indiana limited liability company) 1000 East Main Street Plainfield, Indiana 46168 704-382-3853 35-0594457
1-6196	PIEDMONT NATURAL GAS COMPANY, INC. (a North Carolina corporation) 4720 Piedmont Row Drive Charlotte, North Carolina 28210 704-364-3120 56-0556998
~~PART I. FINANCIAL INFORMATION~~

~~Item 1.~~

~~Financial Statements~~

~~Duke Energy Corporation Financial Statements~~

~~Duke Energy Carolinas, LLC Financial Statements~~

~~Progress Energy, Inc. Financial Statements~~

~~Duke Energy Progress, LLC Financial Statements~~

~~Duke Energy Florida, LLC Financial Statements~~

~~Duke Energy Ohio, Inc. Financial Statements~~

~~Duke Energy Indiana, LLC Financial Statements~~

~~Piedmont Natural Gas Company, Inc. Financial Statements~~

~~Combined Notes to Condensed Consolidated Financial Statements~~

~~Note 1 – Organization and Basis of Presentation~~

~~Note 2 – Business Segments~~

~~Note 3 – Regulatory Matters~~

~~Note 4 – Commitments and Contingencies~~

~~Note 5 – Debt and Credit Facilities~~

~~Note 6 – Asset Retirement Obligations~~

~~Note 7 – Goodwill~~

~~Note 8 – Related Party Transactions~~

~~Note 9 – Derivatives and Hedging~~

~~Note 10 – Investments in Debt and Equity Securities~~

~~Note 11 – Fair Value Measurements~~

~~Note 12 – Variable Interest Entities~~

~~Note 13 – Revenue~~

~~Note 14 – Common Stock~~

~~Note 15 – Stock-Based Compensation~~

~~100~~

~~Note 16 – Employee Benefit Plans~~

~~100~~

~~Note 17 – Income Taxes~~

~~104~~

~~Note 18 – Subsequent Events~~

~~105~~

~~Item 2.~~

~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~

~~106~~

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

~~136~~

~~Item 4.~~

~~Controls and Procedures~~

~~136~~

~~PART II. OTHER INFORMATION~~

~~Item 1.~~

~~Legal Proceedings~~

~~137~~

~~Item 1A.~~

~~Risk Factors~~

~~137~~

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

~~137~~

~~Item 6.~~

~~Exhibits~~

~~138~~

~~Signatures~~

~~141~~



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



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



Duke Energy	Large accelerated filerx	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨	Emerging growth company ¨
Duke Energy Carolinas	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨
Progress Energy	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨
Duke Energy Progress	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨
Duke Energy Florida	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨
Duke Energy Ohio	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨
Duke Energy Indiana	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨
Piedmont	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



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



SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Registrant	Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Duke Energy	Common Stock, $0.001 par value	DUK	New York Stock Exchange LLC
Duke Energy	5.125% Junior Subordinated Debentures due January 15, 2073	DUKH	New York Stock Exchange LLC
Duke Energy	5.625% Junior Subordinated Debentures due September 15, 2078	DUKB	New York Stock Exchange LLC
Duke Energy	Depositary Shares, each representing a 1/1,000th interest in a share of 5.75% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share	DUK PR A	New York Stock Exchange LLC

Number of shares of Common stock outstanding at April 30, 2019:



Registrant	Description	Shares
Duke Energy	Common stock, $0.001 par value	728,046,950

~~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:


◦	State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, including those related to climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;


◦	The extent and timing of costs and liabilities to comply with federal and state laws, regulations and legal requirements related to coal ash remediation, including amounts for required closure of certain ash impoundments, are uncertain and difficult to estimate;


◦	The ability to recover eligible costs, including amounts associated with coal ash impoundment retirement obligations and costs related to significant weather events, and to earn an adequate return on investment through rate case proceedings and the regulatory process;


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


◦	~~Costs and effects of legal and administrative proceedings, settlements, investigations and claims;~~


◦	Industrial, commercial and residential growth or decline in service territories or customer bases resulting from sustained downturns of the economy and the economic health of our service territories or variations in customer usage patterns, including energy efficiency efforts and use of alternative energy sources, such as self-generation and distributed generation technologies;


◦	Federal and state regulations, laws and other efforts designed to promote and expand the use of energy efficiency measures and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in customers leaving the electric distribution system, excess generation resources as well as stranded costs;


◦	~~Advancements in technology;~~


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


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


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


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


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


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


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


◦	~~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;~~


◦	~~The impact of new U.S. 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.~~

Additional risks and uncertainties are identified and discussed in the Duke Energy Registrants' reports filed with the SEC and available at the SEC's website at sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made and the Duke Energy Registrants expressly disclaim an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

~~PART I. FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

DUKE ENERGY CORPORATION

~~Condensed Consolidated Statements of Operations~~(a Delaware corporation)

~~(Unaudited)~~550 South Tryon Street

Charlotte, North Carolina 28202-1803

704-382-3853

20-2777218

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions, except per-share amounts) 2018
2017
2018
2017
Operating Revenues
Regulated electric $ 6,216
$ 6,091
$ 16,678
$ 16,122
Regulated natural gas 230
247
1,221
1,168
Nonregulated electric and other 182
144
507
476
Total operating revenues 6,628
6,482
18,406
17,766
Operating Expenses

Fuel used in electric generation and purchased power 1,931
1,863
5,181
4,853
Cost of natural gas 58
68
460
402
Operation, maintenance and other 1,584
1,476
4,592
4,385
Depreciation and amortization 1,039
900
2,979
2,594
Property and other taxes 323
313
954
924
Impairment charges 124
207
339
216
Total operating expenses 5,059
4,827
14,505
13,374
Gains (Losses) on Sales of Other Assets and Other, net 10
6
(87 ) 24
Operating Income 1,579
1,661
3,814
4,416
Other Income and Expenses

Equity in earnings of unconsolidated affiliates 37
36
49
101
Other income and expenses, net 131
122
327
358
Total other income and expenses 168
158
376
459
Interest Expense 517
498
1,550
1,475
Income From Continuing Operations Before Income Taxes 1,230
1,321
2,640
3,400
Income Tax Expense From Continuing Operations 168
364
449
1,035
Income From Continuing Operations 1,062
957
2,191
2,365
Income (Loss) From Discontinued Operations, net of tax 4
(2 ) (1 ) (4 )
Net Income 1,066
955
2,190
2,361
Less: Net (Loss) Income Attributable to Noncontrolling Interests (16 ) 1
(12 ) 5
Net Income Attributable to Duke Energy Corporation $ 1,082
$ 954
$ 2,202
$ 2,356

Earnings Per Share – Basic and Diluted
Income from continuing operations attributable to Duke Energy Corporation common stockholders
Basic $ 1.51
$ 1.36
$ 3.12
$ 3.37
Diluted $ 1.51
$ 1.36
$ 3.11
$ 3.37
Loss from discontinued operations attributable to Duke Energy Corporation common stockholders
Basic $ —
$ —
$ —
$ (0.01 )
Diluted $ —
$ —
$ —
$ (0.01 )
Net income attributable to Duke Energy Corporation common stockholders
Basic $ 1.51
$ 1.36
$ 3.12
$ 3.36
Diluted $ 1.51
$ 1.36
$ 3.11
$ 3.36
Weighted average shares outstanding
Basic 713
700
705
700
Diluted 714
700
706
700

~~PART I~~

~~DUKE ENERGY CORPORATION~~

~~Condensed Consolidated Statements~~

Commission file number

Registrant, State of ~~Comprehensive Income~~

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2018
2017
2018
2017
Net Income $ 1,066
$ 955
$ 2,190
$ 2,361
Other Comprehensive Income, net of tax
Pension and OPEB adjustments 1
—
3
2
Net unrealized (losses) gains on cash flow hedges (3 ) 2
10
(2 )
Reclassification into earnings from cash flow hedges 6
(2 ) 5
3
Unrealized (losses) gains on available-for-sale securities —
2
(5 ) 10
Other Comprehensive Income, net of tax 4
2
13
13
Comprehensive Income 1,070
957
2,203
2,374
Less: Comprehensive (Loss) Income Attributable to Noncontrolling Interests (16 ) 1
(12 ) 5
Comprehensive Income Attributable to Duke Energy Corporation $ 1,086
$ 956
$ 2,215
$ 2,369

~~PART I~~

~~DUKE ENERGY CORPORATION~~

~~Condensed Consolidated Balance Sheets~~

~~(Unaudited)~~

(in millions) September 30, 2018 December 31, 2017
ASSETS
Current Assets
Cash and cash equivalents $ 303
$ 358
Receivables (net of allowance for doubtful accounts of $17 at 2018 and $14 at 2017) 682
779
Receivables of VIEs (net of allowance for doubtful accounts of $55 at 2018 and $54 at 2017) 2,397
1,995
Inventory 3,140
3,250
Regulatory assets (includes $52 at 2018 and $51 at 2017 related to VIEs) 1,906
1,437
Other 1,092
634
Total current assets 9,520
8,453
Property, Plant and Equipment
Cost 132,677
127,507
Accumulated depreciation and amortization (43,200 ) (41,537 )
Generation facilities to be retired, net 388
421
Net property, plant and equipment 89,865
86,391
Other Noncurrent Assets
Goodwill 19,303
19,396
Regulatory assets (includes $1,055 at 2018 and $1,091 at 2017 related to VIEs) 12,616
12,442
Nuclear decommissioning trust funds 7,421
7,097
Investments in equity method unconsolidated affiliates 1,328
1,175
Other 3,112
2,960
Total other noncurrent assets 43,780
43,070
Total Assets $ 143,165
$ 137,914
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 3,234
$ 3,043
Notes payable and commercial paper 2,891
2,163
Taxes accrued 674
551
Interest accrued 557
525
Current maturities of long-term debt (includes $228 at 2018 and $225 at 2017 related to VIEs) 3,455
3,244
Asset retirement obligations 902
689
Regulatory liabilities 506
402
Other 1,703
1,865
Total current liabilities 13,922
12,482
Long-Term Debt (includes $4,015 at 2018 and $4,306 at 2017 related to VIEs) 50,507
49,035
Other Noncurrent Liabilities
Deferred income taxes 7,765
6,621
Asset retirement obligations 9,354
9,486
Regulatory liabilities 15,587
15,330
Accrued pension and other post-retirement benefit costs 1,001
1,103
Investment tax credits 539
539
Other 1,477
1,581
Total other noncurrent liabilities 35,723
34,660
Commitments and Contingencies

Equity
Common stock, $0.001 par value, 2 billion shares authorized; 713 million shares outstanding at 2018 and 700 million shares outstanding at 2017 1
1
Additional paid-in capital 39,747
38,792
Retained earnings 3,313
3,013
Accumulated other comprehensive loss (66 ) (67 )
Total Duke Energy Corporation stockholders' equity 42,995
41,739
Noncontrolling interests 18
(2 )
Total equity 43,013
41,737
Total Liabilities and Equity $ 143,165
$ 137,914

~~PART I~~

~~DUKE ENERGY CORPORATION~~

~~Condensed Consolidated Statements~~Incorporation or Organization, Address of ~~Cash Flows~~

~~(Unaudited)~~

Nine Months Ended
September 30,
(in millions) 2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,190
$ 2,361
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel) 3,447
2,990
Equity component of AFUDC (175 ) (175 )
Losses (gains) on sales of other assets 87
(28 )
Impairment charges 339
216
Deferred income taxes 1,099
1,016
Equity in earnings of unconsolidated affiliates (49 ) (101 )
Accrued pension and other post-retirement benefit costs 46
19
Contributions to qualified pension plans (141 ) (8 )
Payments for asset retirement obligations (389 ) (420 )
Payment for disposal of other assets (105 ) —
Other rate case adjustments 37
—
Provision for rate refunds 375
—
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions 15
4
Receivables (288 ) 80
Inventory 104
248
Other current assets (648 ) (210 )
Increase (decrease) in
Accounts payable 389
(554 )
Taxes accrued 122
233
Other current liabilities (180 ) (532 )
Other assets (585 ) (159 )
Other liabilities (23 ) (2 )
Net cash provided by operating activities 5,667
4,978
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (6,752 ) (5,841 )
Contributions to equity method investments (298 ) (370 )
Purchases of debt and equity securities (2,763 ) (3,170 )
Proceeds from sales and maturities of debt and equity securities 2,718
3,199
Other (175 ) (149 )
Net cash used in investing activities (7,270 ) (6,331 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt 4,110
5,710
Issuance of common stock 834
—
Payments for the redemption of long-term debt (2,278 ) (2,035 )
Proceeds from the issuance of short-term debt with original maturities greater than 90 days 243
265
Payments for the redemption of short-term debt with original maturities greater than 90 days (207 ) (237 )
Notes payable and commercial paper 638
(647 )
Dividends paid (1,835 ) (1,825 )
Other 42
8
Net cash provided by financing activities 1,547
1,239
Net decrease in cash, cash equivalents and restricted cash (56 ) (114 )
Cash, cash equivalents and restricted cash at beginning of period 505
541
Cash, cash equivalents and restricted cash at end of period $ 449
$ 427
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures $ 1,016
$ 740
Non-cash dividends 79
—

~~PART I~~

~~DUKE ENERGY CORPORATION~~

~~Condensed Consolidated Statements~~Principal Executive Offices, Telephone Number and IRS Employer Identification Number

Commission file number

Registrant, State of ~~Changes in Equity~~

~~(Unaudited)~~

Accumulated Other Comprehensive Income (Loss)
Net Unrealized
Total

Net Gains
(Losses) Gains
Duke Energy

Common
Additional
(Losses) on
on Available-
Pension and
Corporation

Stock
Common
Paid-in
Retained
Cash Flow
for-Sale-
OPEB
Stockholders'
Noncontrolling
Total
(in millions) Shares
Stock
Capital
Earnings
Hedges
Securities
Adjustments
Equity
Interests
Equity
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

Balance at December 31, 2017 700
$ 1
$ 38,792
$ 3,013
$ (10 ) $ 12
$ (69 ) $ 41,739
$ (2 ) $ 41,737
Net income (loss) —
—
—
2,202
—
—
—
2,202
(12 ) 2,190
Other comprehensive income (loss) —
—
—
—
15
(5 ) 3
13
—
13
Common stock issuances, including dividend reinvestment and employee benefits 13
—
955
—
—
—
—
955
—
955
Common stock dividends —
—
—
(1,914 ) —
—
—
(1,914 ) —
(1,914 )
Distributions to noncontrolling interest in subsidiaries —
—
—
—
—
—
—
—
(1 ) (1 )
Other^(b)
—
—
—
12
—
(12 ) —
—
33
33
Balance at September 30, 2018 713

$ 1

$ 39,747

$ 3,313

$ 5

$ (5 )
$ (66 )
$ 42,995

$ 18

$ 43,013

Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number

1-4928
~~(a)~~	~~Cumulative-effect adjustment due to implementation of a new accounting standard related to stock-based compensation and the associated income taxes.~~


~~(b)~~	Amounts in Retained Earnings and Accumulated Other Comprehensive Loss represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information. Amount in Noncontrolling Interests relates to tax equity financing activity in the Commercial Renewables segment.

~~PART I~~

DUKE ENERGY CAROLINAS, LLC

~~Condensed Consolidated Statements of Operations and Comprehensive Income~~(a North Carolina limited liability company)

~~(Unaudited)~~526 South Church Street

Charlotte, North Carolina 28202-1803

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2018
2017
2018
2017
Operating Revenues $ 2,090
$ 2,136
$ 5,525
$ 5,581
Operating Expenses
Fuel used in electric generation and purchased power 490
531
1,370
1,394
Operation, maintenance and other 514
494
1,464
1,472
Depreciation and amortization 305
281
866
804
Property and other taxes 67
67
214
206
Impairment charges 1
—
191
—
Total operating expenses 1,377
1,373
4,105
3,876
Losses on Sales of Other Assets and Other, net —
—
(1 ) —
Operating Income 713
763
1,419
1,705
Other Income and Expenses, net 34
40
108
140
Interest Expense 106
108
323
314
Income Before Income Taxes 641
695
1,204
1,531
Income Tax Expense 145
229
268
522
Net Income $ 496
$ 466
$ 936
$ 1,009
Other Comprehensive Income, net of tax
Reclassification into earnings from cash flow hedges —
—
1
1
Comprehensive Income $ 496
$ 466
$ 937
$ 1,010

704-382-3853

~~PART I~~56-0205520

1-3274

DUKE ENERGY ~~CAROLINAS,~~FLORIDA, LLC

~~Condensed Consolidated Balance Sheets~~(a Florida limited liability company)

~~(Unaudited)~~299 First Avenue North

St. Petersburg, Florida 33701

(in millions) September 30, 2018
December 31, 2017
ASSETS
Current Assets
Cash and cash equivalents $ 27
$ 16
Receivables (net of allowance for doubtful accounts of $2 at 2018 and 2017) 203
200
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2018 and 2017) 795
640
Receivables from affiliated companies 158
95
Inventory 976
971
Regulatory assets 435
299
Other 55
19
Total current assets 2,649
2,240
Property, Plant and Equipment
Cost 44,086
42,939
Accumulated depreciation and amortization (15,536 ) (15,063 )
Net property, plant and equipment 28,550
27,876
Other Noncurrent Assets
Regulatory assets 3,188
2,853
Nuclear decommissioning trust funds 3,943
3,772
Other 1,009
979
Total other noncurrent assets 8,140
7,604
Total Assets $ 39,339
$ 37,720
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 888
$ 842
Accounts payable to affiliated companies 142
209
Notes payable to affiliated companies 804
104
Taxes accrued 189
234
Interest accrued 141
108
Current maturities of long-term debt 506
1,205
Asset retirement obligations 292
337
Regulatory liabilities 144
126
Other 419
486
Total current liabilities 3,525

3,651
Long-Term Debt 9,589
8,598
Long-Term Debt Payable to Affiliated Companies 300
300
Other Noncurrent Liabilities
Deferred income taxes 3,639
3,413
Asset retirement obligations 3,420
3,273
Regulatory liabilities 6,480
6,231
Accrued pension and other post-retirement benefit costs 97
95
Investment tax credits 233
232
Other 508
566
Total other noncurrent liabilities 14,377
13,810
Commitments and Contingencies

Equity
Member's equity 11,554
11,368
Accumulated other comprehensive loss (6 ) (7 )
Total equity 11,548
11,361
Total Liabilities and Equity $ 39,339
$ 37,720

704-382-3853

~~PART I~~59-0247770

~~DUKE ENERGY CAROLINAS, LLC~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Nine Months Ended
September 30,
(in millions) 2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 936
$ 1,009
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel) 1,084
1,051
Equity component of AFUDC (57 ) (79 )
Losses on sales of other assets 1
—
Impairment charges 191
—
Deferred income taxes 266
330
Accrued pension and other post-retirement benefit costs 3
—
Contributions to qualified pension plans (46 ) —
Payments for asset retirement obligations (174 ) (201 )
Provision for rate refunds 163
—
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions 2
1
Receivables (154 ) (40 )
Receivables from affiliated companies (63 ) 17
Inventory (11 ) 50
Other current assets (54 ) 8
Increase (decrease) in
Accounts payable 69
(78 )
Accounts payable to affiliated companies (67 ) (88 )
Taxes accrued (47 ) 225
Other current liabilities (129 ) (149 )
Other assets 18
(18 )
Other liabilities (47 ) (26 )
Net cash provided by operating activities 1,884
2,012
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (2,006 ) (1,747 )
Purchases of debt and equity securities (1,386 ) (1,660 )
Proceeds from sales and maturities of debt and equity securities 1,386
1,664
Notes receivable from affiliated companies —
66
Other (103 ) (58 )
Net cash used in investing activities (2,109 ) (1,735 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 991
—
Payments for the redemption of long-term debt (704 ) (115 )
Notes payable to affiliated companies 700
468
Distributions to parent (750 ) (625 )
Other (1 ) (1 )
Net cash provided by (used in) financing activities 236
(273 )
Net increase in cash and cash equivalents 11
4
Cash and cash equivalents at beginning of period 16
14
Cash and cash equivalents at end of period $ 27
$ 18
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures $ 299
$ 292

~~PART I~~

~~DUKE ENERGY CAROLINAS, LLC~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(Unaudited)~~

Accumulated Other
Comprehensive
Loss
Net Losses on

Member's
Cash Flow
Total
(in millions) Equity
Hedges
Equity
Balance at December 31, 2016 $ 10,781
$ (9 ) $ 10,772
Net income 1,009
—
1,009
Other comprehensive income —
1
1
Distributions to parent (625 ) —
(625 )
Other (1 ) —
(1 )
Balance at September 30, 2017 $ 11,164
$ (8 ) $ 11,156

Balance at December 31, 2017 $ 11,368
$ (7 ) $ 11,361
Net income 936
—
936
Other comprehensive income —
1
1
Distributions to parent (750 ) —
(750 )
Balance at September 30, 2018 $ 11,554
$ (6 ) $ 11,548

~~PART I~~

1-15929

PROGRESS ENERGY, INC.

~~Condensed Consolidated Statements of Operations and Comprehensive Income~~(a North Carolina corporation)

~~(Unaudited)~~410 South Wilmington Street

Raleigh, North Carolina 27601-1748

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2018
2017
2018
2017
Operating Revenues $ 3,045
$ 2,864
$ 8,119
$ 7,435
Operating Expenses
Fuel used in electric generation and purchased power 1,148
1,031
3,019
2,588
Operation, maintenance and other 680
588
1,913
1,697
Depreciation and amortization 419
334
1,183
958
Property and other taxes 145
140
399
386
Impairment charges 1
135
34
137
Total operating expenses 2,393
2,228
6,548
5,766
Gains on Sales of Other Assets and Other, net 11
5
23
19
Operating Income 663
641
1,594
1,688
Other Income and Expenses, net 51
36
128
112
Interest Expense 214
193
626
595
Income Before Income Taxes 500
484
1,096
1,205
Income Tax Expense 94
141
186
384
Net Income 406
343
910
821
Less: Net Income Attributable to Noncontrolling Interests 2
2
6
7
Net Income Attributable to Parent $ 404
$ 341
$ 904
$ 814

Net Income $ 406
$ 343
$ 910
$ 821
Other Comprehensive Income, net of tax
Pension and OPEB adjustments —
3
2
5
Net unrealized gains (losses) on cash flow hedges 2
(2 ) 5
4
Unrealized (losses) gains on available-for-sale securities —
1
(1 ) 3
Other Comprehensive Income, net of tax 2

2

6

12
Comprehensive Income 408
345
916
833
Less: Comprehensive Income Attributable to Noncontrolling Interests 2
2
6
7
Comprehensive Income Attributable to Parent $ 406

$ 343

$ 910

$ 826
704-382-3853

56-2155481

1-1232

~~PART I~~

~~PROGRESS~~DUKE ENERGY OHIO, INC.

~~Condensed Consolidated Balance Sheets~~(an Ohio corporation)

~~(Unaudited)~~139 East Fourth Street

Cincinnati, Ohio 45202

(in millions) September 30, 2018
December 31, 2017
ASSETS
Current Assets
Cash and cash equivalents $ 43
$ 40
Receivables (net of allowance for doubtful accounts of $5 at 2018 and $4 at 2017) 131
123
Receivables of VIEs (net of allowance for doubtful accounts of $8 at 2018 and $7 at 2017) 1,098
780
Receivables from affiliated companies 15
31
Notes receivable from affiliated companies 445
240
Inventory 1,473
1,592
Regulatory assets (includes $52 at 2018 and $51 at 2017 related to VIEs) 1,122
741
Other 256
334
Total current assets 4,583
3,881
Property, Plant and Equipment
Cost 49,822
47,323
Accumulated depreciation and amortization (16,652 ) (15,857 )
Generation facilities to be retired, net 388
421
Net property, plant and equipment 33,558
31,887
Other Noncurrent Assets
Goodwill 3,655
3,655
Regulatory assets (includes $1,055 at 2018 and $1,091 at 2017 related to VIEs) 5,987
6,010
Nuclear decommissioning trust funds 3,477
3,324
Other 1,019
931
Total other noncurrent assets 14,138
13,920
Total Assets $ 52,279
$ 49,688
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 1,301
$ 1,006
Accounts payable to affiliated companies 327
251
Notes payable to affiliated companies 794
805
Taxes accrued 244
101
Interest accrued 228
212
Current maturities of long-term debt (includes $53 at 2018 and 2017 related to VIEs) 1,322
771
Asset retirement obligations 475
295
Regulatory liabilities 246
213
Other 672
729
Total current liabilities 5,609
4,383
Long-Term Debt (includes $1,636 at 2018 and $1,689 at 2017 related to VIEs) 17,440
16,916
Long-Term Debt Payable to Affiliated Companies 150
150
Other Noncurrent Liabilities
Deferred income taxes 3,947
3,502
Asset retirement obligations 4,960
5,119
Regulatory liabilities 5,275
5,306
Accrued pension and other post-retirement benefit costs 513
545
Other 255
302
Total other noncurrent liabilities 14,950
14,774
Commitments and Contingencies

Equity
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2018 and 2017 —
—
Additional paid-in capital 9,143
9,143
Retained earnings 5,009
4,350
Accumulated other comprehensive loss (24 ) (25 )
Total Progress Energy, Inc. stockholders' equity 14,128
13,468
Noncontrolling interests 2
(3 )
Total equity 14,130
13,465
Total Liabilities and Equity $ 52,279
$ 49,688

704-382-3853

~~PART I~~31-0240030

~~PROGRESS ENERGY, INC.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Nine Months Ended
September 30,
(in millions) 2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 910
$ 821
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel) 1,458
1,130
Equity component of AFUDC (80 ) (68 )
Gains on sales of other assets (23 ) (20 )
Impairment charges 34
137
Deferred income taxes 342
651
Accrued pension and other post-retirement benefit costs 18
(9 )
Contributions to qualified pension plans (45 ) —
Payments for asset retirement obligations (164 ) (190 )
Other rate case adjustments 37
—
Provision for rate refunds 101
—
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions 14
1
Receivables (316 ) (182 )
Receivables from affiliated companies 16
102
Inventory 119
126
Other current assets (156 ) (312 )
Increase (decrease) in
Accounts payable 427
(281 )
Accounts payable to affiliated companies 76
(59 )
Taxes accrued 143
143
Other current liabilities (28 ) (184 )
Other assets (668 ) (100 )
Other liabilities (34 ) (85 )
Net cash provided by operating activities 2,181
1,621
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (2,689 ) (2,419 )
Purchases of debt and equity securities (1,216 ) (1,393 )
Proceeds from sales and maturities of debt and equity securities 1,225
1,411
Net proceeds from the sales of other assets 20
—
Notes receivable from affiliated companies (205 ) (90 )
Other (142 ) (36 )
Net cash used in investing activities (3,007 ) (2,527 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 1,785
1,720
Payments for the redemption of long-term debt (719 ) (611 )
Notes payable to affiliated companies (11 ) (129 )
Dividends to parent (250 ) (125 )
Other (3 ) (3 )
Net cash provided by financing activities 802
852
Net decrease in cash, cash equivalents and restricted cash (24 ) (54 )
Cash, cash equivalents and restricted cash at beginning of period 87
110
Cash, cash equivalents and restricted cash at end of period $ 63
$ 56
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures $ 441
$ 174
Equitization of certain notes payable to affiliates —
1,047
Dividend to parent related to a legal entity restructuring —
547

~~PART I~~

~~PROGRESS ENERGY, INC.~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(Unaudited)~~

Accumulated Other Comprehensive Income (Loss)
Net Unrealized
Total Progress

Additional
Net Losses on
Gains (losses) on
Pension and
Energy, Inc.

Paid-in
Retained
Cash Flow
Available-for-
OPEB
Stockholders'
Noncontrolling
Total
(in millions) Capital
Earnings
Hedges
Sale Securities
Adjustments
Equity
Interests
Equity
Balance at December 31, 2016 $ 8,094
$ 3,764
$ (23 ) $ 1
$ (16 ) $ 11,820
$ (13 ) $ 11,807
Net income —
814
—
—
—
814
7
821
Other comprehensive income —
—
4
3
5
12
—
12
Dividends to parent^(a)
—
(672 ) —
—
—
(672 ) —
(672 )
Equitization of certain notes payable to affiliates 1,047
—
—
—
—
1,047
—
1,047
Other 2
—
—
—
—
2
—
2
Balance at September 30, 2017 $ 9,143

$ 3,906

$ (19 )
$ 4

$ (11 ) $ 13,023

$ (6 )
$ 13,017

Balance at December 31, 2017 $ 9,143
$ 4,350
$ (18 ) $ 5
$ (12 ) $ 13,468
$ (3 ) $ 13,465
Net income —
904
—
—
—
904
6
910
Other comprehensive income (loss) —
—
5
(1 ) 2
6
—
6
Distributions to noncontrolling interests —
—
—
—
—
—
(1 ) (1 )
Dividends to parent —
(250 ) —
—
—
(250 ) —
(250 )
Other^(b)
—
5
—
(5 ) —
—
—
—
Balance at September 30, 2018 $ 9,143

$ 5,009

$ (13 )
$ (1 )
$ (10 ) $ 14,128

$ 2

$ 14,130

1-3382
~~(a)~~	~~Includes a $547 million non-cash dividend related to a legal entity restructuring.~~


~~(b)~~	Amounts in Retained Earnings and Accumulated Other Comprehensive Loss represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.

~~PART I~~

DUKE ENERGY PROGRESS, LLC

~~Condensed Consolidated Statements of Operations and Comprehensive Income~~(a North Carolina limited liability company)

~~(Unaudited)~~410 South Wilmington Street

Raleigh, North Carolina 27601-1748

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2018
2017
2018
2017
Operating Revenues $ 1,582
$ 1,460
$ 4,333
$ 3,878
Operating Expenses
Fuel used in electric generation and purchased power 535
475
1,452
1,214
Operation, maintenance and other 431
365
1,187
1,069
Depreciation and amortization 253
182
723
536
Property and other taxes 40
40
115
120
Impairment charges —
—
33
—
Total operating expenses 1,259
1,062
3,510
2,939
Gains on Sales of Other Assets and Other, net 7
—
9
3
Operating Income 330
398
832
942
Other Income and Expenses, net 24
27
61
84
Interest Expense 82
65
241
217
Income Before Income Taxes 272
360
652
809
Income Tax Expense 56
114
120
262
Net Income and Comprehensive Income $ 216
$ 246
$ 532
$ 547
704-382-3853

56-0165465

~~PART I~~

~~DUKE ENERGY PROGRESS, LLC~~

~~Condensed Consolidated Balance Sheets~~

~~(Unaudited)~~

(in millions) September 30, 2018
December 31, 2017
ASSETS
Current Assets
Cash and cash equivalents $ 17
$ 20
Receivables (net of allowance for doubtful accounts of $2 at 2018 and $1 at 2017) 34
56
Receivables of VIEs (net of allowance for doubtful accounts of $5 at 2018 and 2017) 635
459
Receivables from affiliated companies 6
3
Notes receivable from affiliated companies 52
—
Inventory 956
1,017
Regulatory assets 677
352
Other 112
97
Total current assets 2,489
2,004
Property, Plant and Equipment
Cost 31,091
29,583
Accumulated depreciation and amortization (11,484 ) (10,903 )
Generation facilities to be retired, net 388
421
Net property, plant and equipment 19,995
19,101
Other Noncurrent Assets
Regulatory assets 3,822
3,507
Nuclear decommissioning trust funds 2,744
2,588
Other 653
599
Total other noncurrent assets 7,219
6,694
Total Assets $ 29,703
$ 27,799
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 808
$ 402
Accounts payable to affiliated companies 252
179
Notes payable to affiliated companies —
240
Taxes accrued 92
64
Interest accrued 100
102
Current maturities of long-term debt 603
3
Asset retirement obligations 470
295
Regulatory liabilities 162
139
Other 353
376
Total current liabilities 2,840
1,800
Long-Term Debt 7,401
7,204
Long-Term Debt Payable to Affiliated Companies 150
150
Other Noncurrent Liabilities
Deferred income taxes 2,076
1,883
Asset retirement obligations 4,371
4,378
Regulatory liabilities 4,128
3,999
Accrued pension and other post-retirement benefit costs 240
248
Investment tax credits 143
143
Other 48
45
Total other noncurrent liabilities 11,006
10,696
Commitments and Contingencies

Equity
Member's Equity 8,306
7,949
Total Liabilities and Equity $ 29,703
$ 27,799

~~PART I~~

~~DUKE ENERGY PROGRESS, LLC~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Nine Months Ended
September 30,
(in millions) 2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 532
$ 547
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel) 869
691
Equity component of AFUDC (41 ) (35 )
Gains on sales of other assets (9 ) (4 )
Impairment charges 33
—
Deferred income taxes 187
287
Accrued pension and other post-retirement benefit costs 11
(15 )
Contributions to qualified pension plans (25 ) —
Payments for asset retirement obligations (133 ) (149 )
Other rate case adjustments 37
—
Provision for rate refunds 101
—
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions 3
(2 )
Receivables (154 ) (47 )
Receivables from affiliated companies (3 ) (3 )
Inventory 62
52
Other current assets (239 ) (34 )
Increase (decrease) in
Accounts payable 325
(286 )
Accounts payable to affiliated companies 73
(20 )
Taxes accrued 28
33
Other current liabilities (27 ) (139 )
Other assets (358 ) (49 )
Other liabilities 11
(9 )
Net cash provided by operating activities 1,283
818
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,526 ) (1,247 )
Purchases of debt and equity securities (831 ) (995 )
Proceeds from sales and maturities of debt and equity securities 807
974
Net proceeds from the sales of other assets 20
—
Notes receivable from affiliated companies (52 ) 64
Other (82 ) (26 )
Net cash used in investing activities (1,664 ) (1,230 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 796
812
Payments for the redemption of long-term debt (2 ) (270 )
Notes payable to affiliated companies (240 ) —
Distributions to parent (175 ) (125 )
Other (1 ) (1 )
Net cash provided by financing activities 378
416
Net (decrease) increase in cash and cash equivalents (3 ) 4
Cash and cash equivalents at beginning of period 20
11
Cash and cash equivalents at end of period $ 17
$ 15
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures $ 261
$ 116

~~PART I~~

~~DUKE ENERGY PROGRESS, LLC~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(Unaudited)~~

Member's
(in millions) Equity
Balance at December 31, 2016 $ 7,358
Net income 547
Distributions to parent (125 )
Balance at September 30, 2017 $ 7,780

Balance at December 31, 2017 $ 7,949
Net income 532
Distributions to parent (175 )
Balance at September 30, 2018 $ 8,306

~~PART I~~

~~DUKE ENERGY FLORIDA, LLC~~

~~Condensed Consolidated Statements of Operations and Comprehensive Income~~

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2018
2017
2018
2017
Operating Revenues $ 1,462
$ 1,401
$ 3,780
$ 3,551
Operating Expenses
Fuel used in electric generation and purchased power 614
557
1,567
1,374
Operation, maintenance and other 245
220
719
623
Depreciation and amortization 166
154
460
423
Property and other taxes 105
99
284
265
Impairment charges 1
135
1
137
Total operating expenses 1,131
1,165
3,031
2,822
Operating Income 331
236
749
729
Other Income and Expenses, net 28
19
75
58
Interest Expense 73
71
210
211
Income Before Income Taxes 286
184
614
576
Income Tax Expense 43
64
100
208
Net Income $ 243
$ 120
$ 514
$ 368
Other Comprehensive (Loss) Income, net of tax

Unrealized (losses) gains on available-for-sale securities —
1
(1 ) 3
Comprehensive Income $ 243
$ 121
$ 513

$ 371

~~PART I~~

~~DUKE ENERGY FLORIDA, LLC~~

~~Condensed Consolidated Balance Sheets~~

~~(Unaudited)~~

(in millions) September 30, 2018
December 31, 2017
ASSETS
Current Assets
Cash and cash equivalents $ 20
$ 13
Receivables (net of allowance for doubtful accounts of $3 at 2018 and 2017) 95
65
Receivables of VIEs (net of allowance for doubtful accounts of $3 at 2018 and $2 at 2017) 463
321
Receivables from affiliated companies 20
2
Notes receivable from affiliated companies 393
313
Inventory 517
574
Regulatory assets (includes $52 at 2018 and $51 at 2017 related to VIEs) 445
389
Other (includes $14 at 2018 and $40 at 2017 related to VIEs) 27
86
Total current assets 1,980
1,763
Property, Plant and Equipment
Cost 18,722
17,730
Accumulated depreciation and amortization (5,161 ) (4,947 )
Net property, plant and equipment 13,561
12,783
Other Noncurrent Assets
Regulatory assets (includes $1,055 at 2018 and $1,091 at 2017 related to VIEs) 2,165
2,503
Nuclear decommissioning trust funds 734
736
Other 315
284
Total other noncurrent assets 3,214
3,523
Total Assets $ 18,755
$ 18,069
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 492
$ 602
Accounts payable to affiliated companies 83
74
Taxes accrued 232
34
Interest accrued 74
56
Current maturities of long-term debt (includes $53 at 2018 and 2017 related to VIEs) 269
768
Asset retirement obligations 4
—
Regulatory liabilities 84
74
Other 315
334
Total current liabilities 1,553
1,942
Long-Term Debt (includes $1,336 at 2018 and $1,389 at 2017 related to VIEs) 7,102
6,327
Other Noncurrent Liabilities
Deferred income taxes 2,012
1,761
Asset retirement obligations 589
742
Regulatory liabilities 1,146
1,307
Accrued pension and other post-retirement benefit costs 241
264
Other 56
108
Total other noncurrent liabilities 4,044
4,182
Commitments and Contingencies

Equity
Member's equity 6,058
5,614
Accumulated other comprehensive (loss) income (2 ) 4
Total equity 6,056
5,618
Total Liabilities and Equity $ 18,755
$ 18,069

~~PART I~~

~~DUKE ENERGY FLORIDA, LLC~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Nine Months Ended
September 30,
(in millions) 2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 514
$ 368
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 581
431
Equity component of AFUDC (40 ) (33 )
Impairment charges 1
137
Deferred income taxes 169
366
Accrued pension and other post-retirement benefit costs 4
3
Contributions to qualified pension plans (20 ) —
Payments for asset retirement obligations (31 ) (41 )
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions 7
3
Receivables (163 ) (140 )
Receivables from affiliated companies (18 ) 1
Inventory 57
74
Other current assets 51
(195 )
Increase (decrease) in
Accounts payable 101
6
Accounts payable to affiliated companies 9
(35 )
Taxes accrued 198
109
Other current liabilities 1
(45 )
Other assets (308 ) (35 )
Other liabilities (58 ) (71 )
Net cash provided by operating activities 1,055
903
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,162 ) (1,172 )
Purchases of debt and equity securities (385 ) (398 )
Proceeds from sales and maturities of debt and equity securities 418
437
Notes receivable from affiliated companies (80 ) (70 )
Other (61 ) (10 )
Net cash used in investing activities (1,270 ) (1,213 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 989
908
Payments for the redemption of long-term debt (717 ) (341 )
Notes payable to affiliated companies —
(297 )
Distributions to parent (75 ) —
Other (1 ) (1 )
Net cash provided by financing activities 196
269
Net decrease in cash, cash equivalents and restricted cash (19 ) (41 )
Cash, cash equivalents and restricted cash at beginning of period 53
69
Cash, cash equivalents and restricted cash at end of period $ 34
$ 28
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures $ 180
$ 102

~~PART I~~

~~DUKE ENERGY FLORIDA, LLC~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(Unaudited)~~

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

Balance at December 31, 2017 $ 5,614
$ 4
$ 5,618
Net income 514
—
514
Other comprehensive loss —
(1 ) (1 )
Distributions to parent (75 ) —
(75 )
Other^(a)
5
(5 ) —
Balance at September 30, 2018 $ 6,058
$ (2 ) $ 6,056

	1-3543
~~(a)~~	Amounts in Member's Equity and Accumulated Other Comprehensive Income (Loss) represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement. See Note 1 for more information.

~~PART I~~

~~DUKE ENERGY OHIO, INC.~~

~~Condensed Consolidated Statements of Operations and Comprehensive Income~~

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2018
2017
2018

2017
Operating Revenues
Regulated electric $ 373
$ 371
$ 1,055
$ 1,036
Regulated natural gas 84
90
361
360
Nonregulated electric and other 12
10
36
30
Total operating revenues 469
471
1,452
1,426
Operating Expenses
Fuel used in electric generation and purchased power – regulated 99
100
284
283
Fuel used in electric generation and purchased power – nonregulated 14
13
43
42
Cost of natural gas 4
5
73
69
Operation, maintenance and other 76
125
337
388
Depreciation and amortization 64
63
196
193
Property and other taxes 73
65
218
204
Impairment charges —
—
—
1
Total operating expenses 330
371
1,151
1,180
Gains (Losses) on Sales of Other Assets and Other, net —
1
(106 ) 1
Operating Income 139
101
195
247
Other Income and Expenses, net 3
5
17
15
Interest Expense 23
22
68
67
Income From Continuing Operations Before Income Taxes 119
84
144
195
Income Tax Expense From Continuing Operations 19
28
23
67
Income From Continuing Operations 100
56
121
128
Loss From Discontinued Operations, net of tax —
(1 ) —
(1 )
Net Income and Comprehensive Income $ 100
$ 55
$ 121
$ 127

~~PART I~~

~~DUKE ENERGY OHIO, INC.~~

~~Condensed Consolidated Balance Sheets~~

~~(Unaudited)~~

(in millions) September 30, 2018
December 31, 2017
ASSETS
Current Assets
Cash and cash equivalents $ 7
$ 12
Receivables (net of allowance for doubtful accounts of $3 at 2018 and 2017) 112
68
Receivables from affiliated companies 71
133
Notes receivable from affiliated companies —
14
Inventory 135
133
Regulatory assets 41
49
Other 28
39
Total current assets 394
448
Property, Plant and Equipment
Cost 9,176
8,732
Accumulated depreciation and amortization (2,683 ) (2,691 )
Net property, plant and equipment 6,493
6,041
Other Noncurrent Assets
Goodwill 920
920
Regulatory assets 427
445
Other 62
21
Total other noncurrent assets 1,409
1,386
Total Assets $ 8,296
$ 7,875
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 251
$ 313
Accounts payable to affiliated companies 54
62
Notes payable to affiliated companies 268
29
Taxes accrued 159
190
Interest accrued 34
21
Current maturities of long-term debt 452
3
Asset retirement obligations 7
3
Regulatory liabilities 57
36
Other 67
71
Total current liabilities 1,349
728
Long-Term Debt 1,589
2,039
Long-Term Debt Payable to Affiliated Companies 25
25
Other Noncurrent Liabilities
Deferred income taxes 790
781
Asset retirement obligations 91
81
Regulatory liabilities 865
891
Accrued pension and other post-retirement benefit costs 84
59
Other 113
108
Total other noncurrent liabilities 1,943
1,920
Commitments and Contingencies
Equity
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2018 and 2017 762
762
Additional paid-in capital 2,776
2,670
Accumulated deficit (148 ) (269 )
Total equity 3,390
3,163
Total Liabilities and Equity $ 8,296
$ 7,875

~~PART I~~

~~DUKE ENERGY OHIO, INC.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Nine Months Ended
September 30,
(in millions) 2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 121
$ 127
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 199
196
Equity component of AFUDC (10 ) (8 )
Losses (gains) on sales of other assets 106
(1 )
Impairment charges —
1
Deferred income taxes 9
70
Accrued pension and other post-retirement benefit costs 3
3
Contributions to qualified pension plans —
(4 )
Payments for asset retirement obligations (3 ) (4 )
Provision for rate refunds 23
—
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions —
1
Receivables (44 ) 3
Receivables from affiliated companies 62
48
Inventory (2 ) 1
Other current assets 12
(8 )
Increase (decrease) in
Accounts payable (47 ) (48 )
Accounts payable to affiliated companies (8 ) (4 )
Taxes accrued (31 ) (21 )
Other current liabilities 19
(6 )
Other assets 3
(13 )
Other liabilities (17 ) (2 )
Net cash provided by operating activities 395
331
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (588 ) (457 )
Cost of removal, net of salvage (63 ) (25 )
Notes receivable from affiliated companies 14
7
Other 1
—
Net cash used in investing activities (636 ) (475 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt —
182
Payments for the redemption of long-term debt (3 ) (2 )
Notes payable to affiliated companies 239
(16 )
Dividends to parent —
(25 )
Other —
(1 )
Net cash provided by financing activities 236
138
Net decrease in cash and cash equivalents (5 ) (6 )
Cash and cash equivalents at beginning of period 12
13
Cash and cash equivalents at end of period $ 7
$ 7
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures $ 83
$ 65
Non-cash equity contribution from parent 106
—

~~PART I~~

~~DUKE ENERGY OHIO, INC.~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(Unaudited)~~

Additional

Common
Paid-in
Accumulated
Total
(in millions) Stock
Capital
Deficit
Equity
Balance at December 31, 2016 $ 762
$ 2,695
$ (461 ) $ 2,996
Net income —
—
127
127
Dividends to parent —
(25 ) —
(25 )
Balance at September 30, 2017 $ 762
$ 2,670
$ (334 ) $ 3,098

Balance at December 31, 2017 $ 762
$ 2,670
$ (269 ) $ 3,163
Net income —
—
121
121
Contribution from parent^(a)
—
106
—
106
Balance at September 30, 2018 $ 762

$ 2,776

$ (148 )
$ 3,390


~~(a)~~	~~Represents a non-cash settlement through equity of an intercompany payable from Duke Energy Ohio to its parent.~~

~~PART I~~

DUKE ENERGY INDIANA, LLC

~~Condensed Consolidated Statements of Operations and Comprehensive Income~~(an Indiana limited liability company)

~~(Unaudited)~~1000 East Main Street

Plainfield, Indiana 46168

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2018
2017
2018
2017
Operating Revenues $ 819
$ 802
$ 2,288
$ 2,302
Operating Expenses
Fuel used in electric generation and purchased power 272
259
730
744
Operation, maintenance and other 198
177
576
546
Depreciation and amortization 130
120
386
336
Property and other taxes 16
19
56
56
Impairment charges 30
—
30
—
Total operating expenses 646
575
1,778
1,682
Gains on Sale of Other Assets and Other, net —

1
—
1
Operating Income 173
228

510

621
Other Income and Expenses, net 23
12
36
32
Interest Expense 42
44
125
132
Income Before Income Taxes 154
196

421

521
Income Tax Expense 35
75
104
203
Net Income and Comprehensive Income $ 119
$ 121

$ 317

$ 318
704-382-3853

35-0594457

~~PART I~~

~~DUKE ENERGY INDIANA, LLC~~

~~Condensed Consolidated Balance Sheets~~

~~(Unaudited)~~

(in millions) September 30, 2018
December 31, 2017
ASSETS
Current Assets
Cash and cash equivalents $ 17
$ 9
Receivables (net of allowance for doubtful accounts of $2 at 2018 and 2017) 56
57
Receivables from affiliated companies 98
125
Inventory 434
450
Regulatory assets 190
165
Other 64
30
Total current assets 859
836
Property, Plant and Equipment
Cost 15,298
14,948
Accumulated depreciation and amortization (4,831 ) (4,662 )
Net property, plant and equipment 10,467
10,286
Other Noncurrent Assets
Regulatory assets 950
978
Other 233
189
Total other noncurrent assets 1,183
1,167
Total Assets $ 12,509
$ 12,289
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 177
$ 196
Accounts payable to affiliated companies 72
78
Notes payable to affiliated companies 201
161
Taxes accrued 44
95
Interest accrued 54
57
Current maturities of long-term debt 62
3
Asset retirement obligations 128
54
Regulatory liabilities 25
24
Other 109
104
Total current liabilities 872
772
Long-Term Debt 3,571
3,630
Long-Term Debt Payable to Affiliated Companies 150
150
Other Noncurrent Liabilities
Deferred income taxes 988
925
Asset retirement obligations 616
727
Regulatory liabilities 1,761
1,723
Accrued pension and other post-retirement benefit costs 110
76
Investment tax credits 147
147
Other 31
18
Total other noncurrent liabilities 3,653
3,616
Commitments and Contingencies
Equity
Member's Equity 4,263
4,121
Total Liabilities and Equity $ 12,509
$ 12,289

~~PART I~~

~~DUKE ENERGY INDIANA, LLC~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Nine Months Ended
September 30,
(in millions) 2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 317
$ 318
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 388
339
Equity component of AFUDC (28 ) (20 )
Gain on sale of other assets and other, net —
(1 )
Impairment charges 30
—
Deferred income taxes 94
101
Accrued pension and other post-retirement benefit costs 5
4
Contributions to qualified pension plans (8 ) —
Payments for asset retirement obligations (49 ) (26 )
Provision for rate refunds 58
—
(Increase) decrease in
Receivables 1
53
Receivables from affiliated companies 27
31
Inventory 16
54
Other current assets (59 ) 18
Increase (decrease) in
Accounts payable 28
(71 )
Accounts payable to affiliated companies (6 ) (1 )
Taxes accrued (51 ) 115
Other current liabilities 6
(18 )
Other assets 29
(24 )
Other liabilities (13 ) 32
Net cash provided by operating activities 785
904
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (619 ) (603 )
Purchases of debt and equity securities (42 ) (15 )
Proceeds from sales and maturities of debt and equity securities 18
6
Notes receivable from affiliated companies —
57
Other 3
(40 )
Net cash used in investing activities (640 ) (595 )
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for the redemption of long-term debt (1 ) (3 )
Notes payable to affiliated companies 40
—
Distributions to parent (175 ) (300 )
Other (1 ) (1 )
Net cash used in financing activities (137 ) (304 )
Net increase in cash and cash equivalents 8

5
Cash and cash equivalents at beginning of period 9
17
Cash and cash equivalents at end of period $ 17
$ 22
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures $ 71
$ 101

~~PART I~~

~~DUKE ENERGY INDIANA, LLC~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(Unaudited)~~

Member's
(in millions) Equity
Balance at December 31, 2016 $ 4,067
Net income 318
Distributions to parent (300 )
Balance at September 30, 2017
$ 4,085

Balance at December 31, 2017 $ 4,121
Net income 317
Distributions to parent (175 )
Balance at September 30, 2018
$ 4,263

~~PART I~~

1-6196

PIEDMONT NATURAL GAS COMPANY, INC.

~~Condensed Consolidated Statements of Operations and Comprehensive Income~~(a North Carolina corporation)

~~(Unaudited)~~4720 Piedmont Row Drive

Charlotte, North Carolina 28210

704-364-3120

56-0556998

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2018
2017
2018
2017
Operating Revenues $ 172
$ 183
$ 940
$ 884
Operating Expenses
Cost of natural gas 54
63
387
333
Operation, maintenance and other 85
73
252
226
Depreciation and amortization 40
38
118
109
Property and other taxes 12
13
36
38
Impairment charges —
—
—
7
Total operating expenses 191
187
793
713
Operating (Loss) Income (19 ) (4 ) 147
171
Other Income and Expenses
Equity in earnings of unconsolidated affiliates 3
3
6
8
Other income and expenses, net 3
—
9
(1 )
Total other income and expenses 6
3
15
7
Interest Expense 19
20
60
59
(Loss) Income Before Income Taxes (32 ) (21 ) 102
119
Income Tax (Benefit) Expense (11 ) (10 ) 21
43
Net (Loss) Income and Comprehensive (Loss) Income $ (21 ) $ (11 ) $ 81
$ 76



Duke Energy Corporation (Duke Energy)	Yesx	No ¨	Duke Energy Florida, LLC (Duke Energy Florida)	Yesx	~~PART I~~No ¨
Duke Energy Carolinas, LLC (Duke Energy Carolinas)	Yesx	No ¨	Duke Energy Ohio, Inc. (Duke Energy Ohio)	~~PIEDMONT NATURAL GAS COMPANY, INC.~~Yesx	~~Condensed Consolidated Balance Sheets~~No ¨
Progress Energy, Inc. (Progress Energy)	~~(Unaudited)~~Yesx	No ¨	Duke Energy Indiana, LLC (Duke Energy Indiana)	Yesx	No ¨
Duke Energy Progress, LLC (Duke Energy Progress)	Yesx	No ¨	Piedmont Natural Gas Company, Inc. (Piedmont)	Yesx	No ¨

(in millions) September 30, 2018
December 31, 2017
ASSETS
Current Assets
Cash and cash equivalents $ 6
$ 19
Receivables (net of allowance for doubtful accounts of $1 at 2018 and $2 at 2017) 83
275
Receivables from affiliated companies 10
7
Notes receivable from affiliated companies 11
—
Inventory 51
66
Regulatory assets 38
95
Other 48
52
Total current assets 247
514
Property, Plant and Equipment
Cost 7,265
6,725
Accumulated depreciation and amortization (1,553 ) (1,479 )
Net property, plant and equipment 5,712
5,246
Other Noncurrent Assets
Goodwill 49
49
Regulatory assets 305
283
Investments in equity method unconsolidated affiliates 63
61
Other 65
65
Total other noncurrent assets 482
458
Total Assets $ 6,441
$ 6,218
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 131
$ 125
Accounts payable to affiliated companies 27
13
Notes payable to affiliated companies —
364
Taxes accrued 31
19
Interest accrued 25
31
Current maturities of long-term debt 350
250
Regulatory liabilities 34
3
Other 51
69
Total current liabilities 649
874
Long-Term Debt 1,788
1,787
Other Noncurrent Liabilities
Deferred income taxes 586
564
Asset retirement obligations 15
15
Regulatory liabilities 1,171
1,141
Accrued pension and other post-retirement benefit costs 3
5
Other 186
170
Total other noncurrent liabilities 1,961
1,895
Commitments and Contingencies

Equity
Common stock, no par value: 100 shares authorized and outstanding at 2018 and 2017 1,160
860
Retained earnings 883
802
Total equity 2,043
1,662
Total Liabilities and Equity $ 6,441
$ 6,218



Duke Energy	Yesx	No ¨	Duke Energy Florida	Yesx	~~PART I~~No ¨
Duke Energy Carolinas	Yesx	No ¨	Duke Energy Ohio	~~PIEDMONT NATURAL GAS COMPANY, INC.~~Yesx	~~Condensed Consolidated Statements of Cash Flows~~No ¨
Progress Energy	~~(Unaudited)~~Yesx	No ¨	Duke Energy Indiana	Yesx	No ¨
Duke Energy Progress	Yesx	No ¨	Piedmont	Yesx	No ¨

Nine Months Ended
September 30,
(in millions) 2018
2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 81
$ 76
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 120
112
Impairment charges —
7
Deferred income taxes 2
127
Equity in earnings from unconsolidated affiliates (6 ) (8 )
Accrued pension and other post-retirement benefit costs (3 ) 9
Provision for rate refunds 31
—
(Increase) decrease in
Receivables 192
157
Receivables from affiliated companies (3 ) (1 )
Inventory 16
13
Other current assets 58
(129 )
Increase (decrease) in
Accounts payable (48 ) (52 )
Accounts payable to affiliated companies 14
(1 )
Taxes accrued 11
(37 )
Other current liabilities 8
(21 )
Other assets (4 ) (9 )
Other liabilities (5 ) (7 )
Net cash provided by operating activities 464
236
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (497 ) (407 )
Cost of removal, net of salvage (8 ) —
Contributions to equity method investments —
(12 )
Notes receivable from affiliated companies (11 ) —
Other 3
2
Net cash used in investing activities (513 ) (417 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 100
250
Payments for the redemption of long-term debt —
(35 )
Notes payable and commercial paper —
(330 )
Notes payable to affiliated companies (364 ) 284
Capital contributions from parent 300
—
Other —
(1 )
Net cash provided by financing activities 36
168
Net decrease in cash and cash equivalents (13 ) (13 )
Cash and cash equivalents at beginning of period 19
25
Cash and cash equivalents at end of period $ 6
$ 12
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures $ 89
$ 47
Transfer of ownership interest of certain equity method investees to parent —
149



Duke Energy	Large accelerated filerx	Accelerated filer ¨	Non-accelerated filer ¨	~~PART I~~Smaller reporting company ¨	Emerging growth company ¨
Duke Energy Carolinas	Large accelerated filer ¨	~~PIEDMONT NATURAL GAS COMPANY, INC.~~Accelerated filer ¨	~~Condensed Consolidated Statements of Changes in Equity~~Non-accelerated filerx	~~(Unaudited)~~Smaller reporting company ¨	Emerging growth company ¨
Progress Energy	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨
Duke Energy Progress	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨
Duke Energy Florida	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨
Duke Energy Ohio	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨
Duke Energy Indiana	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨
Piedmont	Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filerx	Smaller reporting company ¨	Emerging growth company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

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

Balance at December 31, 2017 $ 860
$ 802
$ 1,662
Net income —
81
81
Contribution from parent 300
—
300
Balance at September 30, 2018 $ 1,160
$ 883
$ 2,043



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



SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Registrant	Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Duke Energy	Common Stock, $0.001 par value	DUK	New York Stock Exchange LLC
Duke Energy	5.125% Junior Subordinated Debentures due January 15, 2073	DUKH	New York Stock Exchange LLC
Duke Energy	5.625% Junior Subordinated Debentures due September 15, 2078	DUKB	New York Stock Exchange LLC
Duke Energy	Depositary Shares, each representing a 1/1,000th interest in a share of 5.75% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share	DUK PR A	New York Stock Exchange LLC

Number of shares of Common stock outstanding at April 30, 2019:



Registrant	Description	Shares
Duke Energy	Common stock, $0.001 par value	728,046,950

TABLE OF CONTENTS



	Cautionary Statement Regarding Forward-Looking Information

PART II. FINANCIAL INFORMATION
Item 1.	~~DUKE ENERGY CORPORATION – DUKE ENERGY CAROLINAS,~~Financial Statements

	Duke Energy Corporation Financial Statements	9

	Duke Energy Carolinas, LLC ~~– PROGRESS ENERGY, INC. –~~Financial Statements	~~DUKE ENERGY PROGRESS,~~14

	Progress Energy, Inc. Financial Statements	18

	Duke Energy Progress, LLC ~~– DUKE ENERGY FLORIDA,~~Financial Statements	22

	Duke Energy Florida, LLC ~~– DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA,~~Financial Statements	26

	Duke Energy Ohio, Inc. Financial Statements	30

	Duke Energy Indiana, LLC ~~– PIEDMONT NATURAL GAS COMPANY, INC.~~Financial Statements	34

	Piedmont Natural Gas Company, Inc. Financial Statements	38

	Combined Notes to Condensed Consolidated Financial Statements
	Note 1 – Organization and Basis of Presentation	42
	Note 2 – Business Segments	44
	Note 3 – Regulatory Matters	46
	Note 4 – Commitments and Contingencies	54
	Note 5 – Leases	58
	Note 6 – Debt and Credit Facilities	62
	Note 7 – Asset Retirement Obligations	64
	Note 8 – Goodwill	65
	Note 9 – Related Party Transactions	66
	Note 10 – Derivatives and Hedging	67
	Note 11 – Investments in Debt and Equity Securities	72
	Note 12 – Fair Value Measurements	77
	Note 13 – Variable Interest Entities	82
	Note 14 – Revenue	86
	Note 15 – Stockholders' Equity	89
	Note 16 – Employee Benefit Plans	90
	Note 17 – Income Taxes	91
	Note 18 – Subsequent Events	92

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	93

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	113

Item 4.	Controls and Procedures	113

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	114

Item 1A.	Risk Factors	114

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	114

Item 6.	Exhibits	115

	Signatures	118



FORWARD LOOKING STATEMENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, including those related to climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;

The extent and timing of costs and liabilities to comply with federal and state laws, regulations and legal requirements related to coal ash remediation, including amounts for required closure of certain ash impoundments, are uncertain and difficult to estimate;

The ability to recover eligible costs, including amounts associated with coal ash impoundment retirement obligations and costs related to significant weather events, and to earn an adequate return on investment through rate case proceedings and the regulatory process;

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

Costs and effects of legal and administrative proceedings, settlements, investigations and claims;

Industrial, commercial and residential growth or decline in service territories or customer bases resulting from sustained downturns of the economy and the economic health of our service territories or variations in customer usage patterns, including energy efficiency efforts and use of alternative energy sources, such as self-generation and distributed generation technologies;

Federal and state regulations, laws and other efforts designed to promote and expand the use of energy efficiency measures and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in customers leaving the electric distribution system, excess generation resources as well as stranded costs;

Advancements in technology;

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

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

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

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

Operational interruptions to our natural gas distribution and transmission activities;

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

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

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);



FORWARD LOOKING STATEMENTS

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 U.S. 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.



GLOSSARY OF TERMS

Glossary of Terms

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



Term or Acronym	Definition

2013 Settlement	Revised and Restated Stipulation and Settlement Agreement approved in November 2013 among Duke Energy Florida, the Florida OPC and other customer advocates

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

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

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

AFS	Available for Sale

AFUDC	Allowance for funds used during construction

the Agents	Wells Fargo Securities, LLC, Citigroup Global Market Inc., J.P. Morgan Securities, LLC

AMI	Advanced Metering Infrastructure

AMT	Alternative Minimum Tax

AOCI	Accumulated Other Comprehensive Income (Loss)

ARO	Asset retirement obligations

ATM	At-the-market

Beckjord	Beckjord Generating Station

Belews Creek	Belews Creek Steam Station

Bison	Bison Insurance Company Limited

Cardinal	Cardinal Pipeline Company, LLC

CC	Combined Cycle

CCR	Coal Combustion Residuals

Citrus County CC	Citrus County Combined Cycle Facility

Coal Ash Act	North Carolina Coal Ash Management Act of 2014

the Company	Duke Energy Corporation and its subsidiaries

Constitution	Constitution Pipeline Company, LLC

CPCN	Certificate of Public Convenience and Necessity

CRC	Cinergy Receivables Company LLC

Crystal River Unit 3	Crystal River Unit 3 Nuclear Plant

CWA	Clean Water Act

D.C. Circuit Court	U.S. Court of Appeals for the District of Columbia Circuit

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

DRIP	Dividend Reinvestment Program

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



GLOSSARY OF TERMS



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

the EDA	Equity Distribution Agreement

EDIT	Excess deferred income tax

EPA	U.S. Environmental Protection Agency

EPC	Engineering, Procurement and Construction agreement

EPS	Earnings Per Share

ESP	Electric Security Plan

ETR	Effective tax rate

Exchange Act	Securities Exchange Act of 1934

FASB	Financial Accounting Standards Board

FERC	Federal Energy Regulatory Commission

FES	FirstEnergy Solutions Corp.

Fluor	Fluor Enterprises, Inc.

FPSC	Florida Public Service Commission

FTR	Financial transmission rights

FV-NI	Fair value through net income

GAAP	Generally accepted accounting principles in the U.S.

GAAP Reported Earnings	Net Income Attributable to Duke Energy Corporation

GAAP Reported EPS	Diluted EPS Attributable to Duke Energy Corporation common stockholders

GWh	Gigawatt-hours

Hardy Storage	Hardy Storage Company, LLC

ICPA	Inter-Company Power Agreement

IGCC	Integrated Gasification Combined Cycle

IMR	Integrity Management Rider

IRP	Integrated Resource Plan

IRS	Internal Revenue Service

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

IURC	Indiana Utility Regulatory Commission

JAAR	Joint Asset Agency Rider

JDA	Joint Dispatch Agreement

KPSC	Kentucky Public Service Commission

Lee Nuclear Station	William States Lee III Nuclear Station

MGP	Manufactured gas plant

MISO	Midcontinent Independent System Operator, Inc.

MMBtu	Million British Thermal Unit

MW	Megawatt

MWh	Megawatt-hour

NAV	Net asset value



GLOSSARY OF TERMS



NCDEQ	North Carolina Department of Environmental Quality (formerly the North Carolina Department of Environment and Natural Resources)

NCUC	North Carolina Utilities Commission

NDTF	Nuclear decommissioning trust funds

NMC	National Methanol Company

NPDES	National Pollutant Discharge Elimination System

NPNS	Normal purchase/normal sale

NRC	U.S. Nuclear Regulatory Commission

OPEB	Other Post-Retirement Benefit Obligations

ORS	South Carolina Office of Regulatory Staff

OTTI	Other-than-temporary impairment

OVEC	Ohio Valley Electric Corporation

Piedmont	Piedmont Natural Gas Company, Inc.

Piedmont Term Loan	Term loan facility with commitments totaling $350M entered in June 2017

Pine Needle	Pine Needle LNG Company, LLC

Pioneer	Pioneer Transmission, LLC

PJM	PJM Interconnection, LLC

PMPA	Piedmont Municipal Power Agency

PPAs	Purchase Power Agreements

Progress Energy	Progress Energy, Inc.

PSCSC	Public Service Commission of South Carolina

PUCO	Public Utilities Commission of Ohio

REC	Renewable Energy Certificate

REC Solar	REC Solar Corp.

ROU assets	Right-of-use assets

RRBA	Roanoke River Basin Association

SELC	Southern Environmental Law Center

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

TDSIC	Transmission, Distribution and Storage System Improvement Charge

TPUC	Tennessee Public Utility Commission

U.S.	United States

VIE	Variable Interest Entity

WNA	Weather normalization adjustment

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



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)	2019			2018
Operating Revenues
Regulated electric	$	5,285		$	5,284
Regulated natural gas	728			700
Nonregulated electric and other	150			151
Total operating revenues	6,163			6,135
Operating Expenses
Fuel used in electric generation and purchased power	1,609			1,676
Cost of natural gas	327			313
Operation, maintenance and other	1,419			1,464
Depreciation and amortization	1,089			967
Property and other taxes	343			316
Impairment charges	—			43
Total operating expenses	4,787			4,779
Losses on Sales of Other Assets and Other, net	(3		)	(100		)
Operating Income	1,373			1,256
Other Income and Expenses
Equity in earnings (losses) of unconsolidated affiliates	43			(24		)
Other income and expenses, net	115			86
Total other income and expenses	158			62
Interest Expense	543			515
Income Before Income Taxes	988			803
Income Tax Expense	95			181
Net Income	893			622
Less: Net (Loss) Income Attributable to Noncontrolling Interests	(7		)	2
Net Income Attributable to Duke Energy Corporation	$	900		$	620

Earnings Per Share – Basic and Diluted
Net income attributable to Duke Energy Corporation common stockholders
Basic and Diluted	$	1.24		$	0.88
Weighted average shares outstanding
Basic and Diluted	727			701

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
Net Income	$	893		$	622
Other Comprehensive Income, net of tax
Pension and OPEB adjustments	—			1
Net unrealized (losses) gains on cash flow hedges	(17		)	12
Reclassification into earnings from cash flow hedges	1			1
Unrealized gains (losses) on available-for-sale securities	4			(3		)
Other Comprehensive (Loss) Income, net of tax	(12		)	11
Comprehensive Income	881			633
Less: Comprehensive (Loss) Income Attributable to Noncontrolling Interests	(7		)	2
Comprehensive Income Attributable to Duke Energy Corporation	$	888		$	631

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	March 31, 2019			December 31, 2018
ASSETS
Current Assets
Cash and cash equivalents	$	377		$	442
Receivables (net of allowance for doubtful accounts of $19 at 2019 and $16 at 2018)	775			962
Receivables of VIEs (net of allowance for doubtful accounts of $56 at 2019 and $55 at 2018)	1,981			2,172
Inventory	3,102			3,084
Regulatory assets (includes $52 at 2019 and 2018 related to VIEs)	1,957			2,005
Other (includes $152 at 2019 and $162 at 2018 related to VIEs)	976			1,049
Total current assets	9,168			9,714
Property, Plant and Equipment
Cost	139,377			134,458
Accumulated depreciation and amortization	(43,992		)	(43,126		)
Generation facilities to be retired, net	336			362
Net property, plant and equipment	95,721			91,694
Operating Lease Right-of-Use Assets, net	1,698			—
Other Noncurrent Assets
Goodwill	19,303			19,303
Regulatory assets (includes $1,032 at 2019 and $1,041 at 2018 related to VIEs)	13,301			13,617
Nuclear decommissioning trust funds	7,374			6,720
Investments in equity method unconsolidated affiliates	1,602			1,409
Other (includes $280 at 2019 and $261 at 2018 related to VIEs)	2,969			2,935
Total other noncurrent assets	44,549			43,984
Total Assets	$	151,136		$	145,392
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	2,538		$	3,487
Notes payable and commercial paper	3,029			3,410
Taxes accrued	470			577
Interest accrued	544			559
Current maturities of long-term debt (includes $227 at 2019 and 2018 related to VIEs)	2,501			3,406
Asset retirement obligations	779			919
Regulatory liabilities	611			598
Other	1,810			2,085
Total current liabilities	12,282			15,041
Long-Term Debt (includes $4,065 at 2019 and $3,998 at 2018 related to VIEs)	53,681			51,123
Operating Lease Liabilities	1,488			—
Other Noncurrent Liabilities
Deferred income taxes	8,040			7,806
Asset retirement obligations	12,256			9,548
Regulatory liabilities	15,212			14,834
Accrued pension and other post-retirement benefit costs	974			988
Investment tax credits	571			568
Other (includes $212 at 2019 and 2018 related to VIEs)	1,587			1,650
Total other noncurrent liabilities	38,640			35,394
Commitments and Contingencies
Equity
Preferred stock, $0.001 par value, 40 million depositary shares authorized and outstanding at 2019	974			—
Common stock, $0.001 par value, 2 billion shares authorized; 728 million shares outstanding at 2019 and 727 million shares outstanding at 2018	1			1
Additional paid-in capital	40,823			40,795
Retained earnings	3,360			3,113
Accumulated other comprehensive loss	(128		)	(92		)
Total Duke Energy Corporation stockholders' equity	45,030			43,817
Noncontrolling interests	15			17
Total equity	45,045			43,834
Total Liabilities and Equity	$	151,136		$	145,392

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	893		$	622
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	1,238			1,089
Equity component of AFUDC	(31		)	(55		)
Losses on sales of other assets	3			100
Impairment charges	—			43
Deferred income taxes	97			199
Equity in (earnings) losses of unconsolidated affiliates	(43		)	24
Accrued pension and other post-retirement benefit costs	2			15
Contributions to qualified pension plans	—			(141		)
Payments for asset retirement obligations	(152		)	(122		)
Payment for disposal of other assets	—			(105		)
Other rate case adjustments	—			37
Provision for rate refunds	35			158
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	10			4
Receivables	388			64
Inventory	(31		)	101
Other current assets	98			27
Increase (decrease) in
Accounts payable	(636		)	(327		)
Taxes accrued	(107		)	(107		)
Other current liabilities	(407		)	(171		)
Other assets	(158		)	(59		)
Other liabilities	40			(5		)
Net cash provided by operating activities	1,239			1,391
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,536		)	(2,087		)
Contributions to equity method investments	(94		)	(74		)
Purchases of debt and equity securities	(860		)	(958		)
Proceeds from sales and maturities of debt and equity securities	851			930
Other	(74		)	(75		)
Net cash used in investing activities	(2,713		)	(2,264		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the:
Issuance of long-term debt	2,737			1,240
Issuance of preferred stock	974			—
Issuance of common stock	13			21
Payments for the redemption of long-term debt	(1,201		)	(487		)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days	135			135
Payments for the redemption of short-term debt with original maturities greater than 90 days	(239		)	(50		)
Notes payable and commercial paper	(304		)	706
Dividends paid	(649		)	(599		)
Other	(33		)	(19		)
Net cash provided by financing activities	1,433			947
Net (decrease) increase in cash, cash equivalents and restricted cash	(41		)	74
Cash, cash equivalents and restricted cash at beginning of period	591			505
Cash, cash equivalents and restricted cash at end of period	$	550		$	579
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	811		$	799
Non-cash dividends	27			26

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



											Accumulated Other Comprehensive
											(Loss) Income
														Net Unrealized						Total
											Net Gains			(Losses) Gains						Duke Energy
			Common			Additional					(Losses) on			on Available-			Pension and			Corporation
	Preferred		Stock	Common		Paid-in		Retained			Cash Flow			for-Sale-			OPEB			Stockholders'			Noncontrolling			Total
(in millions)	Stock		Shares	Stock		Capital		Earnings			Hedges			Securities			Adjustments			Equity			Interests			Equity
Balance at December 31, 2017	$	—	700	$	1	$	38,792	$	3,013		$	(10	)	$	12		$	(69	)	$	41,739		$	(2	)	$	41,737
Net income	—		—	—		—		620			—			—			—			620			2			622
Other comprehensive income (loss)	—		—	—		—		—			13			(3		)	1			11			—			11
Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		47		—			—			—			—			47			—			47
Common stock dividends	—		—	—		—		(625		)	—			—			—			(625		)	—			(625		)
Distributions to noncontrolling interest in subsidiaries	—		—	—		—		—			—			—			—			—			(1		)	(1		)
Other^(a)	—		—	—		—		13			—			(13		)	—			—			7			7
Balance at March 31, 2018	$	—	701	$	1	$	38,839	$	3,021		$	3		$	(4	)	$	(68	)	$	41,792		$	6		$	41,798

Balance at December 31, 2018	$	—	727	$	1	$	40,795	$	3,113		$	(14	)	$	(3	)	$	(75	)	$	43,817		$	17		$	43,834
Net income (loss)	—		—	—		—		900			—			—			—			900			(7		)	893
Other comprehensive (loss) income	—		—	—		—		—			(16		)	4			—			(12		)	—			(12		)
Preferred stock issuances, net of issuance costs^(b)	974		—	—		—		—			—			—			—			974			—			974
Common stock issuances, including dividend reinvestment and employee benefits	—		1	—		28		—			—			—			—			28			—			28
Common stock dividends	—		—	—		—		(676		)	—			—			—			(676		)	—			(676		)
Other^(c)	—		—	—		—		23			(6		)	(1		)	(17		)	(1		)	5			4
Balance at March 31, 2019	$	974	728	$	1	$	40,823	$	3,360		$	(36	)	$	—		$	(92	)	$	45,030		$	15		$	45,045


(a)	Amounts in Retained Earnings and Accumulated Other Comprehensive (Loss) Income represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement.


(b)	Duke Energy issued 40 million depositary shares of preferred stock in the first quarter of 2019.


(c)	Amounts in Retained Earnings and Accumulated Other Comprehensive (Loss) Income primarily represent impacts to accumulated other comprehensive income as a result of the adoption of Accounting Standards Update 2018-02: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019		2018
Operating Revenues	$	1,744	$	1,763
Operating Expenses
Fuel used in electric generation and purchased power	472		473
Operation, maintenance and other	440		451
Depreciation and amortization	317		272
Property and other taxes	80		72
Impairment charges	—		13
Total operating expenses	1,309		1,281
Operating Income	435		482
Other Income and Expenses, net	31		39
Interest Expense	110		107
Income Before Income Taxes	356		414
Income Tax Expense	63		91
Net Income	$	293	$	323
Other Comprehensive Income, net of tax
Reclassification into earnings from cash flow hedges	—		1
Comprehensive Income	$	293	$	324

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	March 31, 2019			December 31, 2018
ASSETS
Current Assets
Cash and cash equivalents	$	—		$	33
Receivables (net of allowance for doubtful accounts of $2 at 2019 and 2018)	166			219
Receivables of VIEs (net of allowance for doubtful accounts of $7 at 2019 and 2018)	630			699
Receivables from affiliated companies	88			182
Inventory	1,007			948
Regulatory assets	560			520
Other	31			72
Total current assets	2,482			2,673
Property, Plant and Equipment
Cost	46,929			44,741
Accumulated depreciation and amortization	(15,899		)	(15,496		)
Net property, plant and equipment	31,030			29,245
Operating Lease Right-of-Use Assets, net	146			—
Other Noncurrent Assets
Regulatory assets	3,429			3,457
Nuclear decommissioning trust funds	3,913			3,558
Other	1,027			1,027
Total other noncurrent assets	8,369			8,042
Total Assets	$	42,027		$	39,960
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	643		$	988
Accounts payable to affiliated companies	248			230
Notes payable to affiliated companies	745			439
Taxes accrued	80			171
Interest accrued	134			102
Current maturities of long-term debt	7			6
Asset retirement obligations	209			290
Regulatory liabilities	200			199
Other	415			571
Total current liabilities	2,681			2,996
Long-Term Debt	10,658			10,633
Long-Term Debt Payable to Affiliated Companies	300			300
Operating Lease Liabilities	123			—
Other Noncurrent Liabilities
Deferred income taxes	3,769			3,689
Asset retirement obligations	5,219			3,659
Regulatory liabilities	6,325			5,999
Accrued pension and other post-retirement benefit costs	97			99
Investment tax credits	235			231
Other	645			671
Total other noncurrent liabilities	16,290			14,348
Commitments and Contingencies
Equity
Member's equity	11,982			11,689
Accumulated other comprehensive loss	(7		)	(6		)
Total equity	11,975			11,683
Total Liabilities and Equity	$	42,027		$	39,960

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	293		$	323
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	388			347
Equity component of AFUDC	(9		)	(21		)
Impairment charges	—			13
Deferred income taxes	64			80
Accrued pension and other post-retirement benefit costs	(2		)	1
Contributions to qualified pension plans	—			(46		)
Payments for asset retirement obligations	(65		)	(55		)
Provision for rate refunds	19			61
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	1			—
Receivables	124			19
Receivables from affiliated companies	94			(11		)
Inventory	(59		)	(9		)
Other current assets	(35		)	(144		)
Increase (decrease) in
Accounts payable	(266		)	(76		)
Accounts payable to affiliated companies	18			50
Taxes accrued	(91		)	(129		)
Other current liabilities	(70		)	(23		)
Other assets	(29		)	12
Other liabilities	(7		)	(43		)
Net cash provided by operating activities	368			349
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(721		)	(621		)
Purchases of debt and equity securities	(405		)	(494		)
Proceeds from sales and maturities of debt and equity securities	405			494
Other	(9		)	(21		)
Net cash used in investing activities	(730		)	(642		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	25			991
Payments for the redemption of long-term debt	(1		)	(401		)
Notes payable to affiliated companies	306			(59		)
Distributions to parent	—			(250		)
Other	(1		)	(1		)
Net cash provided by financing activities	329			280
Net decrease in cash and cash equivalents	(33		)	(13		)
Cash and cash equivalents at beginning of period	33			16
Cash and cash equivalents at end of period	$	—		$	3
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	221		$	267

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY CAROLINAS, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



				Accumulated Other
				Comprehensive
				Loss
				Net Losses on
	Member's			Cash Flow			Total
(in millions)	Equity			Hedges			Equity
Balance at December 31, 2017	$	11,368		$	(7	)	$	11,361
Net income	323			—			323
Other comprehensive income	—			1			1
Distributions to parent	(250		)	—			(250		)
Balance at March 31, 2018	$	11,441		$	(6	)	$	11,435

Balance at December 31, 2018	$	11,689		$	(6	)	$	11,683
Net income	293			—			293
Other	—			(1		)	(1		)
Balance at March 31, 2019	$	11,982		$	(7	)	$	11,975

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
Operating Revenues	$	2,572		$	2,576
Operating Expenses
Fuel used in electric generation and purchased power	925			976
Operation, maintenance and other	567			623
Depreciation and amortization	455			384
Property and other taxes	137			123
Impairment charges	—			29
Total operating expenses	2,084			2,135
Gains on Sales of Other Assets and Other, net	—			6
Operating Income	488			447
Other Income and Expenses, net	31			35
Interest Expense	219			209
Income Before Income Taxes	300			273
Income Tax Expense	52			36
Net Income	248			237
Less: Net (Loss) Income Attributable to Noncontrolling Interests	(1		)	2
Net Income Attributable to Parent	$	249		$	235

Net Income	$	248		$	237
Other Comprehensive Income, net of tax
Pension and OPEB adjustments	1			—
Net unrealized gains (losses) on cash flow hedges	2			2
Other Comprehensive Income, net of tax	3			2
Comprehensive Income	251			239
Less: Comprehensive Income Attributable to Noncontrolling Interests	(1		)	2
Comprehensive Income Attributable to Parent	$	252		$	237

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	March 31, 2019			December 31, 2018
ASSETS
Current Assets
Cash and cash equivalents	$	45		$	67
Receivables (net of allowance for doubtful accounts of $5 at 2019 and 2018)	128			220
Receivables of VIEs (net of allowance for doubtful accounts of $8 at 2019 and 2018)	817			909
Receivables from affiliated companies	46			168
Notes receivable from affiliated companies	31			—
Inventory	1,464			1,459
Regulatory assets (includes $52 at 2019 and 2018 related to VIEs)	1,076			1,137
Other (includes $12 at 2019 and $39 at 2018 related to VIEs)	143			125
Total current assets	3,750			4,085
Property, Plant and Equipment
Cost	52,309			50,260
Accumulated depreciation and amortization	(16,646		)	(16,398		)
Generation facilities to be retired, net	336			362
Net property, plant and equipment	35,999			34,224
Operating Lease Right-of-Use Assets, net	835			—
Other Noncurrent Assets
Goodwill	3,655			3,655
Regulatory assets (includes $1,032 at 2019 and $1,041 at 2018 related to VIEs)	6,358			6,564
Nuclear decommissioning trust funds	3,461			3,162
Other	1,029			974
Total other noncurrent assets	14,503			14,355
Total Assets	$	55,087		$	52,664
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	781		$	1,172
Accounts payable to affiliated companies	266			360
Notes payable to affiliated companies	1,605			1,235
Taxes accrued	135			109
Interest accrued	213			246
Current maturities of long-term debt (includes $54 at 2019 and $53 at 2018 related to VIEs)	825			1,672
Asset retirement obligations	456			514
Regulatory liabilities	259			280
Other	778			821
Total current liabilities	5,318			6,409
Long-Term Debt (includes $1,657 at 2019 and $1,636 at 2018 related to VIEs)	18,276			17,089
Long-Term Debt Payable to Affiliated Companies	150			150
Operating Lease Liabilities	748			—
Other Noncurrent Liabilities
Deferred income taxes	4,064			3,941
Asset retirement obligations	6,050			4,897
Regulatory liabilities	5,116			5,049
Accrued pension and other post-retirement benefit costs	516			521
Other	341			351
Total other noncurrent liabilities	16,087			14,759
Commitments and Contingencies
Equity
Common stock, $0.01 par value, 100 shares authorized and outstanding at 2019 and 2018	—			—
Additional paid-in capital	9,143			9,143
Retained earnings	5,386			5,131
Accumulated other comprehensive loss	(23		)	(20		)
Total Progress Energy, Inc. stockholders' equity	14,506			14,254
Noncontrolling interests	2			3
Total equity	14,508			14,257
Total Liabilities and Equity	$	55,087		$	52,664

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	248		$	237
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion (including amortization of nuclear fuel)	546			439
Equity component of AFUDC	(15		)	(26		)
Gains on sales of other assets	—			(6		)
Impairment charges	—			29
Deferred income taxes	82			71
Accrued pension and other post-retirement benefit costs	4			6
Contributions to qualified pension plans	—			(45		)
Payments for asset retirement obligations	(75		)	(55		)
Other rate case adjustments	—			37
Provision for rate refunds	6			33
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	1			4
Receivables	187			(33		)
Receivables from affiliated companies	122			29
Inventory	(18		)	55
Other current assets	35			(60		)
Increase (decrease) in
Accounts payable	(196		)	(53		)
Accounts payable to affiliated companies	(94		)	33
Taxes accrued	26			8
Other current liabilities	(196		)	(82		)
Other assets	(112		)	(86		)
Other liabilities	(10		)	(8		)
Net cash provided by operating activities	541			527
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(1,012		)	(762		)
Purchases of debt and equity securities	(409		)	(406		)
Proceeds from sales and maturities of debt and equity securities	405			411
Notes receivable from affiliated companies	(31		)	127
Other	(45		)	(40		)
Net cash used in investing activities	(1,092		)	(670		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,295			—
Payments for the redemption of long-term debt	(1,132		)	(80		)
Notes payable to affiliated companies	370			177
Other	1			(2		)
Net cash provided by financing activities	534			95
Net decrease in cash, cash equivalents and restricted cash	(17		)	(48		)
Cash, cash equivalents and restricted cash at beginning of period	112			87
Cash, cash equivalents and restricted cash at end of period	$	95		$	39
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	310		$	316

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PROGRESS ENERGY, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



						Accumulated Other Comprehensive (Loss) Income
									Net Unrealized						Total Progress
	Additional					Net Losses on			Gains (losses) on			Pension and			Energy, Inc.
	Paid-in			Retained		Cash Flow			Available-for-			OPEB			Stockholders'			Noncontrolling			Total
(in millions)	Capital			Earnings		Hedges			Sale Securities			Adjustments			Equity			Interests			Equity
Balance at December 31, 2017	$	9,143		$	4,350	$	(18	)	$	5		$	(12	)	$	13,468		$	(3	)	$	13,465
Net income	—			235		—			—			—			235			2			237
Other comprehensive income	—			—		2			—			—			2			—			2
Other^(a)	(1		)	6		—			(6		)	—			(1		)	—			(1		)
Balance at March 31, 2018	$	9,142		$	4,591	$	(16	)	$	(1	)	$	(12	)	$	13,704		$	(1	)	$	13,703

Balance at December 31, 2018	$	9,143		$	5,131	$	(12	)	$	(1	)	$	(7	)	$	14,254		$	3		$	14,257
Net income	—			249		—			—			—			249			(1		)	248
Other comprehensive income	—			—		2			—			1			3			—			3
Other^(b)	—			6		(4		)	—			(2		)	—			—			—
Balance at March 31, 2019	$	9,143		$	5,386	$	(14	)	$	(1	)	$	(8	)	$	14,506		$	2		$	14,508


(a)	Amounts in Retained Earnings and Accumulated Other Comprehensive Loss represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement.


(b)	Amounts in Retained Earnings and Accumulated Other Comprehensive (Loss) Income primarily represent impacts to accumulated other comprehensive income as a result of the adoption of Accounting Standards Update 2018-02: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019		2018
Operating Revenues	$	1,484	$	1,460
Operating Expenses
Fuel used in electric generation and purchased power	515		509
Operation, maintenance and other	335		381
Depreciation and amortization	290		235
Property and other taxes	44		35
Impairment charges	—		32
Total operating expenses	1,184		1,192
Gains on Sales of Other Assets and Other, net	—		1
Operating Income	300		269
Other Income and Expenses, net	24		18
Interest Expense	77		81
Income Before Income Taxes	247		206
Income Tax Expense	44		29
Net Income and Comprehensive Income	$	203	$	177

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	March 31, 2019			December 31, 2018
ASSETS
Current Assets
Cash and cash equivalents	$	30		$	23
Receivables (net of allowance for doubtful accounts of $2 at 2019 and 2018)	42			75
Receivables of VIEs (net of allowance for doubtful accounts of $5 at 2019 and 2018)	495			547
Receivables from affiliated companies	28			23
Notes receivable from affiliated companies	38			—
Inventory	959			954
Regulatory assets	622			703
Other	45			62
Total current assets	2,259			2,387
Property, Plant and Equipment
Cost	33,188			31,459
Accumulated depreciation and amortization	(11,635		)	(11,423		)
Generation facilities to be retired, net	336			362
Net property, plant and equipment	21,889			20,398
Operating Lease Right-of-Use Assets, net	388			—
Other Noncurrent Assets
Regulatory assets	4,041			4,111
Nuclear decommissioning trust funds	2,744			2,503
Other	627			612
Total other noncurrent assets	7,412			7,226
Total Assets	$	31,948		$	30,011
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	363		$	660
Accounts payable to affiliated companies	221			278
Notes payable to affiliated companies	—			294
Taxes accrued	49			53
Interest accrued	87			116
Current maturities of long-term debt	5			603
Asset retirement obligations	452			509
Regulatory liabilities	176			178
Other	346			408
Total current liabilities	1,699			3,099
Long-Term Debt	8,893			7,451
Long-Term Debt Payable to Affiliated Companies	150			150
Operating Lease Liabilities	361			—
Other Noncurrent Liabilities
Deferred income taxes	2,172			2,119
Asset retirement obligations	5,471			4,311
Regulatory liabilities	4,093			3,955
Accrued pension and other post-retirement benefit costs	235			237
Investment tax credits	141			142
Other	89			106
Total other noncurrent liabilities	12,201			10,870
Commitments and Contingencies
Equity
Member's Equity	8,644			8,441
Total Liabilities and Equity	$	31,948		$	30,011

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	203		$	177
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including amortization of nuclear fuel)	336			284
Equity component of AFUDC	(14		)	(14		)
Gains on sales of other assets	—			(1		)
Impairment charges	—			32
Deferred income taxes	33			42
Accrued pension and other post-retirement benefit costs	—			4
Contributions to qualified pension plans	—			(25		)
Payments for asset retirement obligations	(68		)	(44		)
Other rate case adjustments	—			37
Provision for rate refunds	6			33
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	(3		)	2
Receivables	87			(31		)
Receivables from affiliated companies	(5		)	(2		)
Inventory	(5		)	15
Other current assets	96			(88		)
Increase (decrease) in
Accounts payable	(196		)	(39		)
Accounts payable to affiliated companies	(57		)	29
Taxes accrued	(4		)	(28		)
Other current liabilities	(109		)	(64		)
Other assets	(45		)	18
Other liabilities	(9		)	(5		)
Net cash provided by operating activities	246			332
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(548		)	(424		)
Purchases of debt and equity securities	(315		)	(284		)
Proceeds from sales and maturities of debt and equity securities	308			281
Notes receivable from affiliated companies	(38		)	—
Other	(20		)	(30		)
Net cash used in investing activities	(613		)	(457		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	1,270			—
Payments for the redemption of long-term debt	(601		)	—
Notes payable to affiliated companies	(294		)	114
Other	(1		)	(1		)
Net cash provided by financing activities	374			113
Net increase (decrease) in cash and cash equivalents	7			(12		)
Cash and cash equivalents at beginning of period	23			20
Cash and cash equivalents at end of period	$	30		$	8
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	117		$	137

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY PROGRESS, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Member's
(in millions)	Equity
Balance at December 31, 2017	$	7,949
Net income	177
Balance at March 31, 2018	$	8,126

Balance at December 31, 2018	$	8,441
Net income	203
Balance at March 31, 2019	$	8,644

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019		2018
Operating Revenues	$	1,086	$	1,115
Operating Expenses
Fuel used in electric generation and purchased power	410		467
Operation, maintenance and other	230		237
Depreciation and amortization	165		150
Property and other taxes	93		88
Total operating expenses	898		942
Operating Income	188		173
Other Income and Expenses, net	13		21
Interest Expense	82		71
Income Before Income Taxes	119		123
Income Tax Expense	23		20
Net Income	$	96	$	103
Other Comprehensive Income, net of tax
Unrealized gains on available-for-sale securities	1		—
Other Comprehensive Income, net of tax	$	1	$	—
Comprehensive Income	$	97	$	103

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	March 31, 2019			December 31, 2018
ASSETS
Current Assets
Cash and cash equivalents	$	8		$	36
Receivables (net of allowance for doubtful accounts of $3 at 2019 and 2018)	85			143
Receivables of VIEs (net of allowance for doubtful accounts of $3 at 2019 and 2018)	322			362
Receivables from affiliated companies	34			28
Inventory	505			504
Regulatory assets (includes $52 at 2019 and 2018 related to VIEs)	454			434
Other (includes $12 at 2019 and $39 at 2018 related to VIEs)	55			46
Total current assets	1,463			1,553
Property, Plant and Equipment
Cost	19,111			18,792
Accumulated depreciation and amortization	(5,003		)	(4,968		)
Net property, plant and equipment	14,108			13,824
Operating Lease Right-of-Use Assets, net	447			—
Other Noncurrent Assets
Regulatory assets (includes $1,032 at 2019 and $1,041 at 2018 related to VIEs)	2,316			2,454
Nuclear decommissioning trust funds	717			659
Other	318			311
Total other noncurrent assets	3,351			3,424
Total Assets	$	19,369		$	18,801
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	417		$	511
Accounts payable to affiliated companies	29			91
Notes payable to affiliated companies	399			108
Taxes accrued	94			74
Interest accrued	74			75
Current maturities of long-term debt (includes $54 at 2019 and $53 at 2018 related to VIEs)	470			270
Asset retirement obligations	4			5
Regulatory liabilities	83			102
Other	426			406
Total current liabilities	1,996			1,642
Long-Term Debt (includes $1,332 at 2019 and $1,336 at 2018 related to VIEs)	6,795			7,051
Operating Lease Liabilities	387			—
Other Noncurrent Liabilities
Deferred income taxes	2,051			1,986
Asset retirement obligations	579			586
Regulatory liabilities	1,023			1,094
Accrued pension and other post-retirement benefit costs	251			254
Other	95			93
Total other noncurrent liabilities	3,999			4,013
Commitments and Contingencies
Equity
Member's equity	6,193			6,097
Accumulated other comprehensive loss	(1		)	(2		)
Total equity	6,192			6,095
Total Liabilities and Equity	$	19,369		$	18,801

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	96		$	103
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	207			152
Equity component of AFUDC	(1		)	(12		)
Deferred income taxes	45			29
Accrued pension and other post-retirement benefit costs	3			1
Contributions to qualified pension plans	—			(20		)
Payments for asset retirement obligations	(7		)	(11		)
(Increase) decrease in
Net realized and unrealized mark-to-market and hedging transactions	2			2
Receivables	55			(2		)
Receivables from affiliated companies	(6		)	—
Inventory	(13		)	39
Other current assets	(35		)	42
Increase (decrease) in
Accounts payable	—			(13		)
Accounts payable to affiliated companies	(62		)	8
Taxes accrued	20			38
Other current liabilities	(84		)	(17		)
Other assets	(66		)	(107		)
Other liabilities	(1		)	(5		)
Net cash provided by operating activities	153			227
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(422		)	(338		)
Purchases of debt and equity securities	(95		)	(122		)
Proceeds from sales and maturities of debt and equity securities	97			129
Notes receivable from affiliated companies	—			160
Other	(25		)	(10		)
Net cash used in investing activities	(445		)	(181		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	25			—
Payments for the redemption of long-term debt	(81		)	(80		)
Notes payable to affiliated companies	291			—
Other	2			—
Net cash provided by (used in) financing activities	237			(80		)
Net decrease in cash, cash equivalents and restricted cash	(55		)	(34		)
Cash, cash equivalents and restricted cash at beginning of period	75			53
Cash, cash equivalents and restricted cash at end of period	$	20		$	19
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	193		$	179

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY FLORIDA, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



			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, 2017	$	5,614	$	4		$	5,618
Net income	103		—			103
Other^(a)	6		(6		)	—
Balance at March 31, 2018	$	5,723	$	(2	)	$	5,721

Balance at December 31, 2018	$	6,097	$	(2	)	$	6,095
Net income	96		—			96
Other comprehensive income	—		1			1
Balance at March 31, 2019	$	6,193	$	(1	)	$	6,192


(a)	Amounts in Member's Equity and Accumulated Other Comprehensive Income (Loss) represent a cumulative-effect adjustment due to implementation of a new accounting standard related to Financial Instruments Classification and Measurement.

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019		2018
Operating Revenues
Regulated electric	$	355	$	336
Regulated natural gas	176		174
Nonregulated electric and other	—		14
Total operating revenues	531		524
Operating Expenses
Fuel used in electric generation and purchased power – regulated	93		92
Fuel used in electric generation and purchased power – nonregulated	—		15
Cost of natural gas	54		54
Operation, maintenance and other	132		131
Depreciation and amortization	64		70
Property and other taxes	84		77
Total operating expenses	427		439
Losses on Sales of Other Assets and Other, net	—		(106		)
Operating Income (Loss)	104		(21		)
Other Income and Expenses, net	9		6
Interest Expense	30		22
Income (Loss) Before Income Taxes	83		(37		)
Income Tax Expense (Benefit)	14		(12		)
Net Income (Loss) and Comprehensive Income	$	69	$	(25	)

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	March 31, 2019			December 31, 2018
ASSETS
Current Assets
Cash and cash equivalents	$	17		$	21
Receivables (net of allowance for doubtful accounts of $3 at 2019 and $2 at 2018)	99			102
Receivables from affiliated companies	79			114
Notes receivable from affiliated companies	463			—
Inventory	111			126
Regulatory assets	59			33
Other	25			24
Total current assets	853			420
Property, Plant and Equipment
Cost	9,542			9,360
Accumulated depreciation and amortization	(2,739		)	(2,717		)
Net property, plant and equipment	6,803			6,643
Operating Lease Right-of-Use Assets, net	22			—
Other Noncurrent Assets
Goodwill	920			920
Regulatory assets	501			531
Other	45			41
Total other noncurrent assets	1,466			1,492
Total Assets	$	9,144		$	8,555
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	288		$	316
Accounts payable to affiliated companies	70			78
Notes payable to affiliated companies	38			274
Taxes accrued	157			202
Interest accrued	43			22
Current maturities of long-term debt	551			551
Asset retirement obligations	6			6
Regulatory liabilities	51			57
Other	69			74
Total current liabilities	1,273			1,580
Long-Term Debt	2,384			1,589
Long-Term Debt Payable to Affiliated Companies	25			25
Operating Lease Liabilities	21			—
Other Noncurrent Liabilities
Deferred income taxes	842			817
Asset retirement obligations	87			87
Regulatory liabilities	839			840
Accrued pension and other post-retirement benefit costs	80			79
Other	79			93
Total other noncurrent liabilities	1,927			1,916
Commitments and Contingencies
Equity
Common stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2019 and 2018	762			762
Additional paid-in capital	2,776			2,776
Accumulated deficit	(24		)	(93		)
Total equity	3,514			3,445
Total Liabilities and Equity	$	9,144		$	8,555

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	69		$	(25	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	65			71
Equity component of AFUDC	(3		)	(4		)
Losses on sales of other assets	—			106
Deferred income taxes	20			(15		)
Accrued pension and other post-retirement benefit costs	—			1
Payments for asset retirement obligations	(1		)	(1		)
Provision for rate refunds	4			16
(Increase) decrease in
Receivables	5			(1		)
Receivables from affiliated companies	35			56
Inventory	15			25
Other current assets	(6		)	19
Increase (decrease) in
Accounts payable	(5		)	(27		)
Accounts payable to affiliated companies	(8		)	(95		)
Taxes accrued	(45		)	(45		)
Other current liabilities	14			20
Other assets	(10		)	—
Other liabilities	(4		)	(13		)
Net cash provided by operating activities	145			88
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(233		)	(188		)
Notes receivable from affiliated companies	(463		)	14
Other	(11		)	(14		)
Net cash used in investing activities	(707		)	(188		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt	794			—
Notes payable to affiliated companies	(236		)	101
Other	—			(1		)
Net cash provided by financing activities	558			100
Net decrease in cash and cash equivalents	(4		)	—
Cash and cash equivalents at beginning of period	21			12
Cash and cash equivalents at end of period	$	17		$	12
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	68		$	64

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY OHIO, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



			Additional
	Common		Paid-in		Accumulated			Total
(in millions)	Stock		Capital		Deficit			Equity
Balance at December 31, 2017	$	762	$	2,670	$	(269	)	$	3,163
Net loss	—		—		(25		)	(25		)
Balance at March 31, 2018	$	762	$	2,670	$	(294	)	$	3,138

Balance at December 31, 2018	$	762	$	2,776	$	(93	)	$	3,445
Net income	—		—		69			69
Balance at March 31, 2019	$	762	$	2,776	$	(24	)	$	3,514

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
Operating Revenues	$	768		$	731
Operating Expenses
Fuel used in electric generation and purchased power	257			232
Operation, maintenance and other	189			181
Depreciation and amortization	131			130
Property and other taxes	19			20
Total operating expenses	596			563
Losses on Sales of Other Assets and Other, net	(3		)	—
Operating Income	169			168
Other Income and Expenses, net	19			7
Interest Expense	43			40
Income Before Income Taxes	145			135
Income Tax Expense	35			35
Net Income and Comprehensive Income	$	110		$	100

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	March 31, 2019			December 31, 2018
ASSETS
Current Assets
Cash and cash equivalents	$	20		$	24
Receivables (net of allowance for doubtful accounts of $2 at 2019 and 2018)	50			52
Receivables from affiliated companies	102			122
Inventory	435			422
Regulatory assets	151			175
Other	23			35
Total current assets	781			830
Property, Plant and Equipment
Cost	15,633			15,443
Accumulated depreciation and amortization	(5,021		)	(4,914		)
Net property, plant and equipment	10,612			10,529
Operating Lease Right-of-Use Assets, net	61			—
Other Noncurrent Assets
Regulatory assets	981			982
Other	201			194
Total other noncurrent assets	1,182			1,176
Total Assets	$	12,636		$	12,535
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	198		$	200
Accounts payable to affiliated companies	72			83
Notes payable to affiliated companies	136			167
Taxes accrued	63			43
Interest accrued	53			58
Current maturities of long-term debt	3			63
Asset retirement obligations	108			109
Regulatory liabilities	27			25
Other	92			107
Total current liabilities	752			855
Long-Term Debt	3,569			3,569
Long-Term Debt Payable to Affiliated Companies	150			150
Operating Lease Liabilities	57			—
Other Noncurrent Liabilities
Deferred income taxes	1,050			1,009
Asset retirement obligations	611			613
Regulatory liabilities	1,709			1,722
Accrued pension and other post-retirement benefit costs	113			115
Investment tax credits	147			147
Other	29			16
Total other noncurrent liabilities	3,659			3,622
Commitments and Contingencies
Equity
Member's Equity	4,449			4,339
Total Liabilities and Equity	$	12,636		$	12,535

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	110		$	100
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	132			131
Equity component of AFUDC	(4		)	(4		)
Losses on sale of other assets	3			—
Deferred income taxes	28			17
Accrued pension and other post-retirement benefit costs	1			2
Contributions to qualified pension plans	—			(8		)
Payments for asset retirement obligations	(11		)	(11		)
Provision for rate refunds	—			26
(Increase) decrease in
Receivables	4			—
Receivables from affiliated companies	20			26
Inventory	(13		)	(3		)
Other current assets	19			(23		)
Increase (decrease) in
Accounts payable	8			21
Accounts payable to affiliated companies	(11		)	(5		)
Taxes accrued	20			(1		)
Other current liabilities	(15		)	(10		)
Other assets	12			(1		)
Other liabilities	5			—
Net cash provided by operating activities	308			257
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(208		)	(231		)
Purchases of debt and equity securities	(6		)	(6		)
Proceeds from sales and maturities of debt and equity securities	4			3
Other	(11		)	(4		)
Net cash used in investing activities	(221		)	(238		)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments for the redemption of long-term debt	(60		)	(12		)
Notes payable to affiliated companies	(31		)	—
Other	—			(1		)
Net cash used in financing activities	(91		)	(13		)
Net (decrease) increase in cash and cash equivalents	(4		)	6
Cash and cash equivalents at beginning of period	24			9
Cash and cash equivalents at end of period	$	20		$	15
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	76		$	64

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

DUKE ENERGY INDIANA, LLC

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Member's
(in millions)	Equity
Balance at December 31, 2017	$	4,121
Net income	100
Balance at March 31, 2018	$	4,221

Balance at December 31, 2018	$	4,339
Net income	110
Balance at March 31, 2019	$	4,449

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019		2018
Operating Revenues	$	579	$	553
Operating Expenses
Cost of natural gas	273		259
Operation, maintenance and other	80		82
Depreciation and amortization	42		39
Property and other taxes	12		12
Total operating expenses	407		392
Operating Income	172		161
Other Income and Expenses
Equity in earnings of unconsolidated affiliates	2		2
Other income and expenses, net	4		3
Total other income and expenses	6		5
Interest Expense	22		21
Income Before Income Taxes	156		145
Income Tax Expense	34		35
Net Income and Comprehensive Income	$	122	$	110

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)



(in millions)	March 31, 2019			December 31, 2018
ASSETS
Current Assets
Receivables (net of allowance for doubtful accounts of $4 at 2019 and $2 at 2018)	$	241		$	266
Receivables from affiliated companies	10			22
Inventory	25			70
Regulatory assets	28			54
Other	19			19
Total current assets	323			431
Property, Plant and Equipment
Cost	7,676			7,486
Accumulated depreciation and amortization	(1,587		)	(1,575		)
Net property, plant and equipment	6,089			5,911
Operating Lease Right-of-Use Assets, net	27			—
Other Noncurrent Assets
Goodwill	49			49
Regulatory assets	289			303
Investments in equity method unconsolidated affiliates	64			64
Other	51			52
Total other noncurrent assets	453			468
Total Assets	$	6,892		$	6,810
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$	161		$	203
Accounts payable to affiliated companies	34			38
Notes payable to affiliated companies	201			198
Taxes accrued	35			84
Interest accrued	25			31
Current maturities of long-term debt	350			350
Regulatory liabilities	75			37
Other	49			58
Total current liabilities	930			999
Long-Term Debt	1,788			1,788
Operating Lease Liabilities	26			—
Other Noncurrent Liabilities
Deferred income taxes	575			551
Asset retirement obligations	19			19
Regulatory liabilities	1,179			1,181
Accrued pension and other post-retirement benefit costs	4			4
Other	158			177
Total other noncurrent liabilities	1,935			1,932
Commitments and Contingencies
Equity
Common stock, no par value: 100 shares authorized and outstanding at 2019 and 2018	1,160			1,160
Retained earnings	1,053			931
Total equity	2,213			2,091
Total Liabilities and Equity	$	6,892		$	6,810

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended
	March 31,
(in millions)	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	122		$	110
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	42			39
Deferred income taxes	23			(7		)
Equity in earnings from unconsolidated affiliates	(2		)	(2		)
Accrued pension and other post-retirement benefit costs	(2		)	(1		)
Provision for rate refunds	7			23
(Increase) decrease in
Receivables	27			22
Receivables from affiliated companies	12			—
Inventory	45			37
Other current assets	22			79
Increase (decrease) in
Accounts payable	(44		)	(15		)
Accounts payable to affiliated companies	(4		)	19
Taxes accrued	(49		)	46
Other current liabilities	15			18
Other assets	(1		)	4
Other liabilities	(5		)	(1		)
Net cash provided by operating activities	208			371
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(209		)	(121		)
Other	(2		)	—
Net cash used in investing activities	(211		)	(121		)
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable to affiliated companies	3			(257		)
Net cash provided by (used in) financing activities	3			(257		)
Net decrease in cash and cash equivalents	—			(7		)
Cash and cash equivalents at beginning of period	—			19
Cash and cash equivalents at end of period	$	—		$	12
Supplemental Disclosures:
Significant non-cash transactions:
Accrued capital expenditures	$	92		$	52

See Notes to Condensed Consolidated Financial Statements



FINANCIAL STATEMENTS

PIEDMONT NATURAL GAS COMPANY, INC.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Common		Retained		Total
(in millions)	Stock		Earnings		Equity
Balance at December 31, 2017	$	860	$	802	$	1,662
Net income	—		110		110
Balance at March 31, 2018	$	860	$	912	$	1,772

Balance at December 31, 2018	$	1,160	$	931	$	2,091
Net income	—		122		122
Balance at March 31, 2019	$	1,160	$	1,053	$	2,213

See Notes to Condensed Consolidated Financial Statements

~~Index to Combined Notes to Condensed Consolidated Financial Statements~~

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

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



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

Index to Combined Notes to Condensed Consolidated Financial Statements

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

Applicable Notes

Registrant

Duke Energy

•

Duke Energy Carolinas

•

Progress Energy

•

Duke Energy Progress

•

Duke Energy Florida

•

Duke Energy Ohio

•

Duke Energy Indiana

•

Piedmont

•

Tables within the notes may not sum across due to (i) Progress Energy's consolidation of Duke Energy Progress, Duke Energy Florida and other subsidiaries that are not registrants and (ii) subsidiaries that are not registrants but included in the consolidated Duke Energy balances.

1. ORGANIZATION AND BASIS OF PRESENTATION

~~NATURE OF OPERATIONS AND BASIS OF CONSOLIDATION~~

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

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

Duke Energy Carolinas is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Carolinas is subject to the regulatory provisions of the North Carolina Utilities Commission (NCUC), Public Service Commission of South Carolina (PSCSC), U.S. Nuclear Regulatory Commission (NRC) and FERC.

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

Duke Energy Progress is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. Duke Energy Progress is subject to the regulatory provisions of the NCUC, PSCSC, NRC and FERC.

Duke Energy Florida is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Florida. Duke Energy Florida is subject to the regulatory provisions of the Florida Public Service Commission (FPSC), NRC and FERC.

Duke Energy Ohio is a regulated public utility primarily engaged in the transmission and distribution of electricity in portions of Ohio and Kentucky, the generation and sale of electricity in portions of Kentucky and the transportation and sale of natural gas in portions of Ohio and Kentucky. Duke Energy Ohio conducts competitive auctions for retail electricity supply in Ohio whereby the energy price is recovered from retail customers and recorded in Operating Revenues on the Condensed Consolidated Statements of Operations and Comprehensive Income. Operations in Kentucky are conducted through its wholly owned subsidiary, Duke Energy Kentucky, Inc. (Duke Energy Kentucky). References herein to Duke Energy Ohio collectively include Duke Energy Ohio and its subsidiaries, unless otherwise noted. Duke Energy Ohio is subject to the regulatory provisions of the Public Utilities Commission of Ohio (PUCO), Kentucky Public Service Commission (KPSC) and FERC.

Duke Energy Indiana is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of Indiana. Duke Energy Indiana is subject to the regulatory provisions of the Indiana Utility Regulatory Commission (IURC) and FERC.

Piedmont is a regulated public utility primarily engaged in the distribution of natural gas in portions of North Carolina, South Carolina and Tennessee. Piedmont is subject to the regulatory provisions of the NCUC, PSCSC, Tennessee Public Utility Commission (TPUC) and FERC.

~~PART I~~

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

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

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

BASIS OF PRESENTATION

These Condensed Consolidated Financial Statements have been prepared in accordance with ~~generally accepted accounting principles in the U.S. (GAAP)~~GAAP for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these Condensed Consolidated Financial Statements do not include all information and notes required by GAAP for annual financial ~~statements. Since the interim Condensed Consolidated Financial Statements~~statements and Notes do not include all information and notes required by GAAP in the U.S. for annual financial statements, the Condensed Consolidated Financial Statements and other information included in this quarterly report should be read in conjunction with the Consolidated Financial Statements ~~and Notes~~ in the Duke Energy Registrants’ combined Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2017.~~2018.

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

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

In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

~~Certain prior year amounts have been reclassified to conform to~~BASIS OF CONSOLIDATION

These Condensed Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the ~~current year presentation.~~

~~REVENUE~~

accounts of the Duke Energy ~~recognizes revenue as customers obtain control of promised goods~~Registrants and ~~services in an amount that reflects consideration expected in exchange for those goods~~subsidiaries or ~~services. Generally,~~VIEs where the delivery of electricity and natural gas results in the transfer of control to customers at the time the commodity is delivered and the amount of revenue recognized is equal to the amount billed to each customer, including estimated volumes delivered when billingsrespective Duke Energy Registrants have ~~not yet occurred.~~control. See Note 13 for ~~further information.~~

~~OTHER CURRENT ASSETS~~

~~Duke Energy recorded a receivable related to the Tax Act in Other within Current Assets in September 2018. As a result, Income taxes receivable exceeds five percent of Total current assets~~additional information on VIEs. These Condensed Consolidated Financial Statements also reflect the Duke Energy ~~Condensed Consolidated Balance Sheets~~Registrants’ proportionate share of certain jointly owned generation and ~~is $655 million and $260 million as of September 30, 2018, and December 31, 2017, respectively. See Note 17 for further information.~~transmission facilities.



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Duke Energy, Progress Energy and Duke Energy Florida have restricted cash balances related primarily to collateral assets, escrow deposits and ~~variable interest entities (VIEs).~~VIEs. See Note 1213 for additional information. Restricted cash amounts are included in Other within Current Assets and Other Noncurrent ~~Assets.~~Assets on the Condensed Consolidated Balance Sheets. The following table presents the components of cash, cash equivalents and restricted cash included in the Condensed Consolidated Balance Sheets.

September 30, 2018 December 31, 2017
Duke
Duke
Duke
Progress
Energy
Duke
Progress
Energy
Energy
Energy
Florida
Energy
Energy
Florida
Current Assets
Cash and cash equivalents $ 303
$ 43
$ 20
$ 358
$ 40
$ 13
Other 139
14
14
138
40
40
Other Noncurrent Assets
Other 7
6
—
9
7
—
Total cash, cash equivalents and restricted cash $ 449
$ 63
$ 34
$ 505
$ 87
$ 53

~~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)~~



	March 31, 2019						December 31, 2018
					Duke						Duke
	Duke		Progress		Energy		Duke		Progress		Energy
	Energy		Energy		Florida		Energy		Energy		Florida
Current Assets
Cash and cash equivalents	$	377	$	45	$	8	$	442	$	67	$	36
Other	134		12		12		141		39		39
Other Noncurrent Assets
Other	39		38		—		8		6		—
Total cash, cash equivalents and restricted cash	$	550	$	95	$	20	$	591	$	112	$	75

INVENTORY

Inventory is used for operations and is recorded primarily using the average cost method. Inventory related to regulated operations is valued at historical cost. Inventory related to nonregulated operations is valued at the lower of cost or market. Materials and supplies are recorded as inventory when purchased and subsequently charged to expense or capitalized to property, plant and equipment when installed. Inventory, including excess or obsolete inventory, is written-down to the lower of cost or market value. Once inventory has been written-down, it creates a new cost basis for the inventory that is not subsequently written-up. Provisions for inventory write-offs were not material at ~~September 30, 2018,~~March 31, 2019, and December 31, ~~2017.~~2018. The components of inventory are presented in the tables below.


	September 30, 2018																March 31, 2019
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,283	$	758	$	1,071	$	748	$	323	$	87	$	294	$	1	$	2,231	$	738	$	1,033	$	720	$	313	$	79	$	321	$	2
Coal	515		176		187		99		88		14		138		—		572		228		218		127		91		13		113		—
Natural gas, oil and other fuel	342		42		215		109		106		34		2		50		299		41		213		112		101		19		1		23
Total inventory	$	3,140	$	976	$	1,473	$	956	$	517	$	135	$	434	$	51	$	3,102	$	1,007	$	1,464	$	959	$	505	$	111	$	435	$	25


	December 31, 2017																December 31, 2018
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Materials and supplies	$	2,293	$	744	$	1,118	$	774	$	343	$	82	$	309	$	2	$	2,238	$	731	$	1,049	$	734	$	315	$	84	$	312	$	2
Coal	603		192		255		139		116		17		139		—		491		175		192		106		86		14		109		—
Natural gas, oil and other fuel	354		35		219		104		115		34		2		64		355		42		218		114		103		28		1		68
Total inventory	$	3,250	$	971	$	1,592	$	1,017	$	574	$	133	$	450	$	66	$	3,084	$	948	$	1,459	$	954	$	504	$	126	$	422	$	70

~~EXCISE TAXES~~

Certain excise taxes levied by state or local governments are required to be paid even if not collected from the customer. These taxes are recognized on a gross basis. Otherwise, excise taxes are accounted for on a net basis.

~~Excise taxes accounted for on a gross basis within both Operating Revenues and Property and other taxes on the Condensed Consolidated Statements of Operations were as follows.~~

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2018
2017
2018
2017
Duke Energy $ 114

$ 107

$ 308

$ 289
Duke Energy Carolinas 10
9
27
27
Progress Energy 71
67
181
168
Duke Energy Progress 5
5
15
14
Duke Energy Florida 66
62
166
154
Duke Energy Ohio 26
24
81
75
Duke Energy Indiana 6
6
17
16
Piedmont 1
1
2
3

NEW ACCOUNTING STANDARDS

~~The~~Except as noted below, the new accounting standards adopted for 2018 and ~~2017~~2019 had no material impact on the presentation or results of operations, cash flows or financial position of the Duke Energy Registrants. While immaterial, adoption of the following accounting standards had the most significant impact on the Duke Energy results of operations, cash flows and financial position for the nine months ended September 30, 2018.

~~Revenue from Contracts with Customers.~~ In May 2014, the Financial Accounting Standards Board (FASB) issued revised accounting guidance for revenue recognition from contracts with customers. The core principle of this guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration expected in exchange for those goods or services. The amendments also required disclosure of sufficient information to allow users to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The majority of Duke Energy’s revenue is in scope of the new guidance. Other revenue arrangements, such as alternative revenue programs and certain purchase power agreements (PPAs) and lighting agreements accounted for as leases, are excluded from the scope of this guidance and, therefore, are accounted for and evaluated for separate presentation and disclosure under other relevant accounting guidance.

~~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 elected the modified retrospective method of adoption effective January 1, 2018. Under the modified retrospective method of adoption, prior year reported results are not restated. Adoption of this standard did not result in a material change in the timing or pattern of revenue recognition and a cumulative-effect adjustment was not recorded at January 1, 2018. Duke Energy utilized certain practical expedients including applying this guidance to open contracts at the date of adoption, expensing costs to obtain a contract where the amortization period of the asset would have been one year or less, ignoring the effects of a significant financing when the period between transfer of the good or service and payment is one year or less and recognizing revenues for certain contracts under the invoice practical expedient, which allows revenue recognition to be consistent with invoiced amounts (including unbilled estimates) provided certain criteria are met, including consideration of whether the invoiced amounts reasonably represent the value provided to customers.

In preparation for adoption, Duke Energy identified material revenue streams and reviewed representative contracts and tariffs, including those associated with certain long-term customer contracts such as wholesale contracts, PPAs and other customer arrangements. Duke Energy also monitored the activities of the power and utilities industry revenue recognition task force and has reviewed published positions on specific industry issues to evaluate the impact, if any, on Duke Energy’s specific contracts and conclusions.

Duke Energy applied the available practical expedient to portfolios of tariffs and contracts with similar characteristics. The vast majority of sales, including energy provided to retail customers, are from tariff offerings that provide natural gas or electricity without a defined contractual term ("at-will"). In most circumstances, revenue from contracts with customers is equivalent to the electricity or natural gas supplied and billed in that period (including unbilled estimates). As such, adoption of the new rules did not result in a shift in the timing or pattern of revenue recognition for such sales. While there have been changes to the captions and descriptions of revenues in Duke Energy’s financial statements, the most significant impact as a result of adopting the standard are additional disclosures around the nature, amount, timing and uncertainty of revenues and cash flows arising from contracts with customers. See Note 13 for further information.

~~Financial Instruments Classification and Measurement.~~ On January 1, 2018, Duke Energy adopted FASB guidance, which revised the classification and measurement of certain financial instruments. The adopted guidance changes the presentation of realized and unrealized gains and losses in certain equity securities that were previously recorded in accumulated other comprehensive income (AOCI). These gains and losses are now recorded in net income. An entity's equity investments that are accounted for under the equity method of accounting are not included within the scope of the new guidance. This guidance had a minimal impact on the Duke Energy Registrant's Condensed Consolidated Statements of Operations and Comprehensive Income as changes in the fair value of most of the Duke Energy Registrants' equity securities are deferred as regulatory assets or liabilities pursuant to accounting guidance for regulated operations. The resulting adjustment of unrealized gains and losses in AOCI to retained earnings was immaterial. The primary impact to Duke Energy as a result of implementing this guidance is adding disclosure requirements to present separately the financial assets and financial liabilities by measurement category and form of financial asset. See Notes 10 and 11 for further information.

~~Statement of Cash Flows.~~ In November 2016, the FASB issued revised accounting guidance to reduce diversity in practice for the presentation and classification of restricted cash on the Condensed Consolidated Statements of Cash Flows. Under the updated guidance, restricted cash and restricted cash equivalents are included within beginning-of-period and end-of-period cash and cash equivalents on the Condensed Consolidated Statements of Cash Flows. Duke Energy adopted this guidance on January 1, 2018. The guidance has been applied using a retrospective transition method to each period presented. The adoption by Duke Energy of the revised guidance resulted in a change to the amount of Cash, cash equivalents and restricted cash explained when reconciling the beginning-of-period and end-of-period total amounts shown on the Condensed Consolidated Statements of Cash Flows. In addition, a reconciliation has been provided of Cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sums to the total of the same such amounts in the Condensed Consolidated Statements of Cash Flows. Prior to adoption, the Duke Energy Registrants reflected changes in noncurrent restricted cash within Cash Flows from Investing Activities and changes in current restricted cash within Cash Flows from Operating Activities on the Condensed Consolidated Statements of Cash Flows.

In August 2016, the FASB issued accounting guidance addressing diversity in practice for eight separate cash flow issues. The guidance requires entities to classify distributions received from equity method investees using either the cumulative earnings approach or the nature of the distribution approach. Duke Energy adopted this guidance on January 1, 2018, and elected the nature of distribution approach. This approach requires all distributions received to be categorized based on legal documentation describing the nature of the activities generating the distribution. Cash inflows resulting in a return on investment (surplus) will be reflected in Cash Flows from Operating Activities on the Condensed Consolidated Statements of Cash Flows, whereas cash inflows resulting in a return of investment (capital) will be reflected in Cash Flows from Investing Activities on the Condensed Consolidated Statements of Cash Flows. The guidance has been applied using the retrospective transition method to each period presented. There are no changes to the Condensed Consolidated Statements of Cash Flows for the periods presented as a result of this accounting change.

~~Retirement Benefits.~~ In March 2017, the FASB issued revised accounting guidance for the presentation of net periodic costs related to benefit plans. Previous guidance required the aggregation of all the components of net periodic costs on the Condensed Consolidated Statement of Operations and did not require the disclosure of the location of net periodic costs on the Condensed Consolidated Statement of Operations. Under the amended guidance, the service cost component of net periodic costs is included within Operating Income within the same line as other compensation expenses. All other components of net periodic costs are outside of Operating Income. In addition, the updated guidance permits only the service cost component of net periodic costs to be capitalized to Inventory or Property, Plant and Equipment. This represents a change from previous guidance, which permitted all components of net periodic costs to be eligible for capitalization.

Duke Energy adopted this guidance on January 1, 2018. Under previous guidance, Duke Energy presented the total non-capitalized net periodic costs within Operation, maintenance and other on the Condensed Consolidated Statements of Operations. The adoption of this guidance resulted in a retrospective change to reclassify the presentation of the non-service cost (benefit) components of net periodic costs to Other income and expenses. Duke Energy utilized the practical expedient for retrospective presentation. The change in components of net periodic costs eligible for capitalization is applicable prospectively. Since Duke Energy’s service cost component is greater than the total net periodic costs, the change results in increased capitalization of net periodic costs, higher Operation, maintenance and other and higher Other income and expenses. The resulting prospective impact to Duke Energy is an immaterial increase in Net Income. See Note 15 for further information.

~~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)~~

For Duke Energy, the retrospective change resulted in higher Operation, maintenance and other and higher Other income and expenses, net, of $156 million, $131 million and $96 million for the years ended December 31, 2017, 2016 and 2015, respectively. There was no change to Net Income for these prior periods.

~~The following new Accounting Standards Updates (ASUs) have been issued, but have not yet been adopted by Duke Energy, as of September 30, 2018.~~

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

~~For~~ This resulted in a material impact on the presentation for the statement of financial position of the Duke Energy ~~this guidance is~~Registrants for the period ended March 31, 2019, and an immaterial impact to the Duke Energy results of operations and cash flows for the three months ended March 31, 2019.

Duke Energy elected the modified retrospective method of adoption effective ~~for interim and annual periods beginning~~ January 1, 2019. ~~The guidance will be applied using a~~Under the modified retrospective ~~approach. Upon~~method of adoption, agreements considered leases for the use of certain aircraft, space on communication towers, industrial equipment, fleet vehicles, fuel transportation (barges and railcars), land and office space will be recognized on the balance sheet.prior year reported results are not restated. For adoption, Duke Energy ~~expects~~has elected to ~~elect certain of~~apply the following practical ~~expedients upon adoption:~~expedients:



FINANCIAL STATEMENTS	ORGANIZATION AND BASIS OF PRESENTATION



Practical Expedient	Description	~~Election~~
Package of transition practical expedients (for leases commenced prior to adoption date and must be adopted as a package)	Do not need to 1) reassess whether any expired or existing contracts are/or contain leases, 2) reassess the lease classification for any expired or existing leases and 3) reassess initial direct costs for any existing leases.	~~Duke Energy plans to elect this practical expedient.~~
Short-term lease expedient (elect by class of underlying asset)	Elect as an accounting policy to not apply the recognition requirements to short-term leases by asset class.	~~Duke Energy plans to elect this practical expedient for all asset classes.~~
Lease and non-lease components (elect by class of underlying asset)	Elect as an accounting policy to not separate non-lease components from lease components and instead account for each lease and associated non-lease component as a single lease component by asset class.	~~Duke Energy is currently assessing the election of this practical expedient.~~
Hindsight expedient (when determining lease term)	Elect to use hindsight to determine the lease term.	~~Duke Energy plans to elect this practical expedient.~~
Existing and expired land easements not previously accounted for as leases	Elect to not evaluate existing or expired easements under the new guidance and carry forward current accounting treatment.	~~Duke Energy plans to elect this practical expedient.~~
Comparative reporting requirements for initial adoption	Elect to apply transition requirements at adoption date, recognize cumulative effect adjustment to retained earnings in period of adoption and not apply ~~ASC 842~~the new requirements to comparative periods, including disclosures.	~~Duke Energy plans to elect this practical expedient.~~
Lessor expedient (elect by class of underlying asset)	Elect as an accounting policy to aggregate non-lease components with the related lease component when specified conditions are met by asset class. Account for the combined component based on its predominant characteristic (revenue or operating lease).	~~Duke Energy is currently assessing the election of this practical expedient.~~

Duke Energy ~~is currently evaluating~~evaluated the financial statement impact of adopting ~~this~~the standard and ~~is continuing to monitor~~monitored industry implementation ~~issues, including~~issues. Under agreements considered leases, ~~within asset retirement obligations, pipeline laterals and renewable energy PPAs. In arrangements~~ where Duke Energy is the lessee, ~~it expects an increase in assets~~for the use of certain aircraft, space on communication towers, industrial equipment, fleet vehicles, fuel transportation (barges and ~~liabilities~~railcars), land, office space and PPAs are now recognized on ~~its~~the balance ~~sheet along with the addition of required disclosures of key lease information. However, the ultimate lessee impact of the new standard has not yet been determined.~~sheet. The Duke Energy ~~does~~Registrants did not ~~expect~~have a material change to ~~its~~the financial statements from the adoption of the new standard for contracts where it is the lessor. ~~System enhancements, including additional processes and controls, will be required~~See Note 5 for further information.

No new accounting standards that have been issued but not yet adopted are expected to ~~facilitate~~have a material impact on the ~~identification, tracking and reporting of potential leases based upon requirements of the new lease standard.~~ Duke Energy ~~is implementing a third-party software tool to help with the adoption and ongoing accounting under the new standard.~~Registrants as of March 31, 2019.

2. BUSINESS SEGMENTS

Operating segments are determined based on information used by the chief operating decision-maker in deciding how to allocate resources and evaluate the performance of the business. Duke Energy evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests. Segment income includes intercompany revenues and expenses that are eliminated on the Condensed Consolidated Financial Statements. Certain governance costs are allocated to each segment. In addition, direct interest expense and income taxes are included in segment income.

Duke Energy

Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables.

~~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 Electric Utilities and Infrastructure segment includes Duke Energy's regulated electric utilities in the Carolinas, Florida and the Midwest. The regulated electric utilities conduct operations through the Subsidiary Registrants that are substantially all regulated and, accordingly, qualify for regulatory accounting treatment. Electric Utilities and Infrastructure also includes Duke Energy's electric transmission infrastructure investments.

The Gas Utilities and Infrastructure segment includes Piedmont, Duke Energy's natural gas local distribution companies in Ohio and Kentucky, and Duke Energy's natural gas storage and midstream pipeline investments. ~~Gas Utilities and Infrastructure's operations are substantially all regulated and, accordingly, qualify for regulatory accounting treatment.~~

The Commercial Renewables segment is primarily comprised of nonregulated ~~utility scale~~utility-scale wind and solar generation assets located throughout the U.S. On April 24, 2019, Duke Energy executed an agreement to sell a minority interest in a portion of certain renewable assets. The portion of Duke Energy’s commercial renewables energy portfolio to be sold includes 49 percent of 37 operating wind, solar and battery storage assets and 33 percent of 11 operating solar assets across the U.S. The sale will result in pretax proceeds to Duke Energy of $415 million. Duke Energy will retain control of these assets, and, therefore, no gain or loss is expected to be recognized in the Condensed Consolidated Statements of Operations upon closing of the transaction. The sale is subject to customary closing conditions, including approvals from the FERC, the Public Utility Commission of Texas and the Committee on Foreign Investment in the U.S. The transaction is expected to close in the second half of 2019.

The remainder of Duke Energy’s operations is presented as Other, which is primarily comprised of interest expense on holding company debt, unallocated corporate costs, ~~and~~ Duke Energy’s wholly owned captive insurance company, Bison, ~~Insurance Company Limited (Bison). Other also includes~~and Duke Energy's ~~17.5 percent~~ interest in ~~National Methanol Company (NMC), a large regional producer of methyl tertiary butyl ether located in Saudi Arabia. The investment in NMC is accounted for under the equity method of accounting.~~NMC.

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


	Three Months Ended September 30, 2018																		Three Months Ended March 31, 2019
	Electric		Gas					Total											Electric		Gas				Total
	Utilities and		Utilities and		Commercial			Reportable											Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables			Segments		Other			Eliminations			Consolidated			Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	6,253	$	232	$	127		$	6,612	$	16		$	—		$	6,628		$	5,321	$	732	$	106	$	6,159	$	4		$	—		$	6,163
Intersegment revenues	7		24		—			31		18			(49		)	—			8		24		—		32		17			(49		)	—
Total revenues	$	6,260	$	256	$	127		$	6,643	$	34		$	(49	)	$	6,628		$	5,329	$	756	$	106	$	6,191	$	21		$	(49	)	$	6,163
Segment income (loss)^(c)	$	1,167	$	17	$	(62	)	$	1,122	$	(44	)	$	—		$	1,078		$	750	$	226	$	13	$	989	$	(89	)	$	—		$	900
Add back noncontrolling interests																(16		)
Income from discontinued operations, net of tax																4
Add back noncontrolling interest component																																	(7		)
Net income																$	1,066																$	893
Segment assets	$	123,847	$	11,806	$	4,212		$	139,865	$	3,115		$	185		$	143,165		$	130,406	$	12,639	$	4,378	$	147,423	$	3,536		$	177		$	151,136

Three Months Ended September 30, 2017
Electric
Gas
Total

Utilities and
Utilities and
Commercial
Reportable

(in millions) Infrastructure
Infrastructure
Renewables
Segments
Other
Eliminations
Consolidated
Unaffiliated revenues $ 6,122
$ 249
$ 95
$ 6,466
$ 16
$ —
$ 6,482
Intersegment revenues 7
23
—
30
19
(49 ) —
Total revenues $ 6,129
$ 272
$ 95
$ 6,496
$ 35
$ (49 ) $ 6,482
Segment income (loss)^(b)(d)(e)
$ 1,020
$ 19
$ (49 ) $ 990
$ (34 ) $ —
$ 956
Add back noncontrolling interests 1
Loss from discontinued operations, net of tax (2 )
Net income $ 955



FINANCIAL STATEMENTS	BUSINESS SEGMENTS



	Three Months Ended March 31, 2018
	Electric		Gas				Total
	Utilities and		Utilities and		Commercial		Reportable
(in millions)	Infrastructure		Infrastructure		Renewables		Segments		Other			Eliminations			Total
Unaffiliated revenues	$	5,315	$	702	$	101	$	6,118	$	17		$	—		$	6,135
Intersegment revenues	8		25		—		33		18			(51		)	—
Total revenues	$	5,323	$	727	$	101	$	6,151	$	35		$	(51	)	$	6,135
Segment income (loss)^(a)(b)(c)	$	750	$	116	$	20	$	886	$	(266	)	$	—		$	620
Add back noncontrolling interest component															2
Net income															$	622


(a)	~~All segments include adjustments to the December 31, 2017 estimate of the income tax effects of the Tax Act. See Note 17 for additional information.~~


~~(b)~~	~~Other includes costs to achieve the Piedmont acquisition.~~


~~(c)~~	~~Commercial Renewables includes an impairment charge related to goodwill. See Note 7 for additional information.~~


~~(d)~~	~~Electric Utilities and Infrastructure includes an impairment charge related to the unrecovered Levy Nuclear Project costs at Duke Energy Florida.~~


~~(e)~~	~~Commercial Renewables includes impairment charges related to certain wind projects.~~

~~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)~~

Nine Months Ended September 30, 2018
Electric
Gas
Total

Utilities and
Utilities and
Commercial
Reportable

(in millions) Infrastructure
Infrastructure
Renewables
Segments
Other
Eliminations
Consolidated
Unaffiliated revenues $ 16,783
$ 1,229
$ 347
$ 18,359
$ 47
$ —
$ 18,406
Intersegment revenues 23
72
—
95
54
(149 ) —
Total revenues $ 16,806
$ 1,301
$ 347
$ 18,454
$ 101
$ (149 ) $ 18,406
Segment income (loss)^{(a)(b)(c)(d)(e)(f)}
$ 2,492
$ 161
$ (4 ) $ 2,649
$ (446 ) $ —
$ 2,203
Add back noncontrolling interests (12 )
Loss from discontinued operations, net of tax (1 )
Net income $ 2,190

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)^(c)(g)(h)
$ 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


~~(a)~~	~~All segments include adjustments to the December 31, 2017 estimate of the income tax effects of the Tax Act. See Note 17 for additional information.~~


~~(b)~~	Electric Utilities and Infrastructure includes regulatory and legislative impairment charges related to rate case orders, settlements or other actions of regulators or legislative bodies. See Note 3 for additional information.


~~(c)~~	~~Other includes costs to achieve the Piedmont acquisition.~~


~~(d)~~(b)	Gas Utilities and Infrastructure includes an impairment of the investment in ~~Constitution Pipeline Company, LLC (Constitution).~~Constitution. See Note 3 for additional information.


~~(e)~~(c)	Other includes the loss on the sale of ~~the retired~~ Beckjord ~~Generating Station (Beckjord)~~ described below, costs to achieve the Piedmont acquisition and a valuation allowance recorded against the ~~alternative minimum tax credits subject to sequestration. See Note 17 for additional information on the valuation allowance.~~


~~(f)~~	~~Commercial Renewables includes an impairment charge related to goodwill. See Note 7 for additional information.~~


~~(g)~~	~~Electric Utilities and Infrastructure includes an impairment charge related to the unrecovered Levy Nuclear Project costs at Duke Energy Florida.~~


~~(h)~~	~~Commercial Renewables includes impairment charges related to certain wind projects.~~AMT credits.

In February 2018, Duke Energy sold Beckjord, a nonregulated facility retired during 2014, and recorded a pretax loss of $106 million within ~~Gains (Losses)~~Losses on Sales of Other Assets and Other, net and $1 million within Operation, maintenance and other on Duke Energy's Condensed Consolidated Statements of Operations for the ~~nine~~three months ended ~~September 30,~~March 31, 2018. The sale included the transfer of coal ash basins and other real property and indemnification from any and all potential future claims related to the property, whether arising under environmental laws or otherwise.

Duke Energy Ohio

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

Electric Utilities and Infrastructure transmits and distributes electricity in portions of Ohio and generates, distributes and sells electricity in portions of Northern Kentucky. Gas Utilities and Infrastructure transports and sells natural gas in portions of Ohio and Northern Kentucky. Both reportable operating segments conduct operations primarily through Duke Energy Ohio and its wholly owned subsidiary, Duke Energy Kentucky.

~~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 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 8 for additional information on related party transactions.

Three Months Ended September 30, 2018
Electric
Gas
Total

Utilities and
Utilities and
Reportable

(in millions) Infrastructure
Infrastructure
Segments
Other
Eliminations
Consolidated
Total revenues $ 373
$ 84
$ 457
$ 12
$ —
$ 469
Segment income/Net income $ 85
$ 12
$ 97
$ 3
$ —
$ 100
Segment assets $ 5,484
$ 2,775
$ 8,259
$ 39
$ (2 ) $ 8,296
Other.

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



	Three Months Ended March 31, 2019
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Eliminations			Total
Total revenues	$	355	$	176	$	531	$	—		$	—		$	531
Segment income/Net (loss) income	$	36	$	35	$	71	$	(2	)	$	—		$	69
Segment assets	$	6,058	$	3,051	$	9,109	$	37		$	(2	)	$	9,144



	Three Months Ended March 31, 2018
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Total
Total revenues	$	336	$	174	$	510	$	14		$	524
Segment income/Net loss^(a)	$	33	$	34	$	67	$	(92	)	$	(25	)


(a)	Other includes the loss on the sale of Beckjord described above.

Nine Months Ended September 30, 2018
Electric
Gas
Total

Utilities and
Utilities and
Reportable

(in millions) Infrastructure
Infrastructure
Segments
Other
Consolidated
Total revenues $ 1,055
$ 361
$ 1,416
$ 36
$ 1,452
Segment income (loss)/Net income^(a)
$ 157
$ 64
$ 221
$ (100 ) $ 121

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

~~(a) Other includes the loss on the sale of Beckjord.~~

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	REGULATORY MATTERS

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

~~Grid Improvement – South Carolina~~Hurricane Florence, Hurricane Michael and Winter Storm Diego Deferral Filings

On ~~June 22,~~December 21, 2018, Duke Energy Carolinas and Duke Energy Progress filed ~~a joint petition~~ with the ~~PSCSC seeking an accounting order authorizing deferral of certain~~NCUC petitions for approval to defer the incremental costs incurred in connection with ~~grid reliability, resiliency and modernization work that is being performed under~~ the ~~companies’ grid improvement initiative. On October 3, 2018, the PSCSC granted Duke Energy Carolinas' and Duke Energy Progress' joint petition.~~

response to Hurricane Florence, Hurricane Michael and Winter Storm ~~Damage~~

~~In September 2018, Hurricane Florence made landfall and inflicted severe damage~~Diego to a regulatory asset for recovery in the next base rate case. The NCUC issued an order requesting comments on the deferral positions. On March 5, 2019, the North Carolina Public Staff (Public Staff) filed comments. On April 2, 2019, Duke Energy Carolinas and Duke Energy Progress ~~territories~~filed reply comments, which included revised estimates of approximately $553 million in ~~North Carolina and South Carolina. Approximately 1.8 million customers were impacted. The companies incurred approximately $455 million in~~incremental operation and maintenance expenses ($35171 million and ~~$420~~$382 million for Duke Energy Carolinas and Duke Energy Progress, respectively,) and approximately ~~$85~~$96 million in capital costs ($1020 million and ~~$75~~$76 million for Duke Energy Carolinas and Duke Energy Progress, ~~respectively,) which are included in Net property, plant~~respectively). Duke Energy Carolinas and equipment on the Condensed Consolidated Balance Sheets as of September 30, 2018, resulting from the hurricane restoration efforts. Most of the operation and maintenance expenses are deferred in Regulatory assets within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of September 30, 2018. The balance of operation and maintenance expenses are included in Operation, maintenance and other on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018.

~~Given the magnitude of the storm,~~ Duke Energy Progress ~~intends to~~cannot predict the outcome of this matter. Duke Energy Progress filed a similar request ~~approval in North Carolina~~with the PSCSC on January 11, 2019, which also included a request for the continuation of prior deferrals requested for ice storms and ~~South Carolina to defer~~Hurricane Matthew, and on January 30, 2019, the ~~incremental costs incurred to~~PSCSC issued a ~~regulatory asset for recovery in~~directive approving the ~~next base rate case. These requests are expected to be filed during the fourth quarter of 2018.~~deferral request.

Duke Energy Carolinas

2017 North Carolina Rate Case

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

On February 28, 2018, Duke Energy Carolinas and the ~~North Carolina~~ Public Staff ~~(Public Staff)~~ filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included a return on equity of 9.9 percent and a capital structure of 52 percent equity and 48 percent debt. As a result of the settlement, Duke Energy Carolinas recorded a pretax charge of approximately $4 million in the first quarter of 2018 to Operation, maintenance and other on the Condensed Consolidated Statements of Operations.

On June 1, 2018, Duke Energy Carolinas and certain intervenors filed a Pilot Grid Rider Agreement and Stipulation (Grid Rider Stipulation) in which the parties agreed to the proposal Duke Energy Carolinas introduced in a post-hearing brief on April 27, 2018, along with additional commitments by Duke Energy Carolinas. Also on June 1, 2018, Duke Energy Carolinas and the Commercial Group filed a Partial Stipulation and Settlement Agreement to be considered in conjunction with the Stipulation.

~~Components of the Grid Rider Stipulation included:~~

Duke Energy Carolinas would recover grid improvement costs through a pilot, three-year Grid Rider except for costs related to targeted undergrounding of power lines, cable and conduit replacement, and power pole replacement;

~~Excluded costs were to be deferred with a return until Duke Energy Carolinas’ next base rate case proceeding; and~~

~~Costs incurred during the three-year pilot, both rider recoverable and deferred, were subject to a 4.5 percent cumulative cap of total annual electric service revenue.~~

~~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 June 22, 2018, the NCUC issued an order approving the Stipulation of Partial Settlement and requiring a revenue reduction. ~~The order also included the following material components not covered in the Stipulation:~~

~~Recovery of $554 million of deferred coal ash basin closure costs over a five-year period with a return at Duke Energy Carolinas' weighted average cost of capital (WACC);~~

~~Assessment of a $70 million management penalty ratably over a five-year period by reducing the annual recovery of the deferred coal ash costs;~~

Denial of Duke Energy Carolinas' request for recovery of future estimated ongoing annual coal ash costs of $201 million with approval to defer such costs with a return at Duke Energy Carolinas' WACC, to be considered for recovery in the next rate case;

~~Inclusion in rates of costs related to the Lee Combined Cycle Facility, two new solar facilities, and AMI deployment as requested;~~

~~Recovery of Lee Nuclear Station licensing and development cost of $347 million over a 12-year period, but denial of a return on the deferred balance of costs;~~

Reduction in revenue related to lower income tax expense resulting from the Federal Tax Cuts and Jobs Act (Tax Act), and a requirement to maintain all excess deferred income tax (EDIT) resulting from the Tax Act in a regulatory liability account pending flow back to customers as approved by the commission at the earlier of three years or Duke Energy Carolinas’ next general rate case proceeding; and

Denial of the proposed Grid Rider Stipulation related to grid improvement costs and denial of deferral accounting treatment of the costs at this time. Duke Energy Carolinas may petition for deferral of grid modernization costs outside of a general rate case proceeding if it can show financial hardship or a stipulation that includes greater consensus among intervening parties on costs being classified as grid modernization.

As a result of the Order, Duke Energy Carolinas recorded a pretax charge of approximately $150 million to Impairment charges and Operation, maintenance and other on the Condensed Consolidated Statements of Operations. The charge is primarily related to the denial of a return on the Lee Nuclear Project and for previously recognized return impacted by the coal ash management penalty described above. On July 27, 2018, NCUC approved Duke Energy Carolinas' compliance filing. As a result, revised customer rates were effective on August 1, 2018.

On July 20, 2018, the North Carolina Attorney General filed a Notice of Appeal to the North Carolina Supreme Court from the June 22, 2018, Order Accepting Stipulation, Deciding Contested Issues and Requiring Revenue Reduction issued by the NCUC. The Attorney General contends the commission’s order should be reversed and remanded, as it is in excess of the commission’s statutory authority; affected by errors of law; unsupported by competent, material and substantial evidence in view of the entire record as submitted; and arbitrary or capricious. The Sierra Club, North Carolina Sustainable Energy Association, North Carolina Justice Center, North Carolina Housing Coalition, Natural Resource Defense Council and Southern Alliance for Clean Energy ~~have~~ also filed Notices of Appeal to the North Carolina Supreme Court from the June 22, 2018, Order Accepting Stipulation, Deciding Contested Issues and Requiring Revenue Reduction. On August 8, 2018, the Public Staff filed a Notice of Cross Appeal to the North Carolina Supreme Court from the June 22, 2018, Order Accepting Stipulation, Deciding Contested Issues and Requiring Revenue Reduction issued by the NCUC. The Public Staff contends the commission’s order should be reversed and remanded, as it is affected by errors of law, and is unsupported by substantial evidence with regard to the commission’s failure to consider substantial evidence of coal ash related environmental violations. On November 29, 2018, the North Carolina Attorney General's Office filed a motion with the North Carolina Supreme Court requesting the court consolidate the Duke Energy Carolinas and Duke Energy Progress appeals and enter an order adopting the parties’ proposed briefing schedule as set out in the filing. On November 29, 2018, the North Carolina Supreme Court adopted a schedule for briefing set forth in the motion to consolidate the Duke Energy Carolinas and Duke Energy Progress appeals. On March 14, 2019, the North Carolina Attorney General’s Office filed a motion for extension of time to file its brief. On March 18, 2019, the North Carolina Supreme Court granted the North Carolina Attorney General’s motion, and the Appellant’s brief was filed on April 26, 2019. The ~~briefing will likely be delayed until the second quarter of~~Appellee response briefs are due on August 24, 2019. Duke Energy Carolinas cannot predict the outcome of this matter.

2018 South Carolina Rate Case

On ~~October~~November 8, 2018, Duke Energy Carolinas filed ~~a notice~~an application with the PSCSC for a rate increase for retail customers of approximately $168 million, which represents an approximate 10.0 percent increase in retail revenues. The rate increase is driven by capital investments and environmental compliance progress made by Duke Energy Carolinas since its previous rate case, including the further implementation of Duke Energy Carolinas’ generation modernization program, which consists of retiring, replacing and upgrading generation plants, investments in customer service technologies and continued investments in base work to maintain its transmission and distribution systems. The request included net tax benefits resulting from the Tax Act of $66 million to reflect the change in ongoing tax expense, primarily from the reduction in the federal income tax rate from 35 to 21 percent. The request also included $46 million to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change and benefits of $17 million from a reduction in North Carolina state income taxes allocable to South Carolina (EDIT Rider).



FINANCIAL STATEMENTS	REGULATORY MATTERS

Duke Energy Carolinas also requested approval of its proposed Grid Improvement Plan (GIP), adjustments to its Prepaid Advantage Program and a variety of accounting orders related to ongoing costs for environmental compliance, including recovery over a five-year period of $242 million of deferred coal ash related compliance costs, grid investments between rate changes, incremental depreciation expense, a result of new depreciation rates from the depreciation study approved in the 2017 North Carolina Rate Case above, and the balance of development costs associated with the cancellation of the ~~company’s intent~~Lee Nuclear Project. Finally, Duke Energy Carolinas sought approval to establish a reserve and accrual for end-of-life nuclear costs for nuclear fuel and materials and supplies. On March 8, 2019, the ORS moved to establish a new and separate hearing docket to review and consider the GIP proposed by Duke Energy Carolinas. Subsequently, on March 12, 2019, the ORS and Duke Energy Carolinas executed a Stipulation resolving the ORS’s motion. The Stipulation provides that costs incurred after January 1, 2019, for the GIP will be deferred with a return, subject to evaluation in a future rate proceeding, and that Duke Energy Carolinas will refile for consideration of the GIP in a new docket for resolution by January 1, 2020. The Stipulation was approved by the PSCSC’s hearing officer on March 13, 2019. An evidentiary hearing began on March 21, 2019, and concluded March 27, 2019.

On May 1, 2019, the PSCSC issued a Commission Directive on Duke Energy Carolinas’ application for a retail rate increase. The Directive granted, among other things: a retail rate increase of $107 million, excluding the EDIT Rider; a return on equity of 9.5 percent; and a capital structure of 53 percent equity and 47 percent debt. The Directive denied the recovery of coal ash costs of approximately $115 million. Based upon legal analysis and Duke Energy Carolinas' intention to file a ~~base rate~~Petition for Rehearing with the PSCSC, Duke Energy Carolinas has not recorded an adjustment ~~application no earlier than 30 days from~~for its deferred coal ash costs. The Directive also denied recovery of a return on pre-construction costs associated with the ~~notice submittal date.~~canceled Lee Nuclear Project. Duke Energy Carolinas is evaluating the financial statement impacts of this Directive and will record associated one-time costs when the final order is issued. Except for the coal ash matter, the financial statement impacts of this Directive are not material. An order and revised customer rates are expected by mid-2019. Duke Energy Carolinas cannot predict the outcome of this matter.

FERC Formula Rate Matter

On July 31, 2017, ~~Piedmont Municipal Power Agency (PMPA)~~PMPA filed a complaint with FERC ~~against Duke Energy Carolinas~~ alleging that Duke Energy Carolinas misapplied the formula rate under the PPA between the parties by including in its rates amortization expense associated with regulatory assets and recorded in a certain account without FERC approval. On February 15, 2018, FERC issued an order ruling in favor of PMPA and ordered Duke Energy Carolinas to refund to PMPA all amounts improperly collected under the PPA. Duke Energy Carolinas has issued to PMPA and similarly situated wholesale customers refunds of approximately $25 million. FERC also set the matter for settlement and hearing. PMPA and other customers filed a protest to Duke Energy Carolinas' refund report claiming that the refunds are inadequate in that (1) Duke Energy Carolinas invoked the limitations periods in the contracts to limit the time period for which the refunds were paid and the customers disagree that this limitation applies, and (2) Duke Energy Carolinas refunded only amounts recovered through a certain account and the customers have asserted that the order applies to all regulatory assets. On July 3, 2018, FERC issued an order accepting Duke Energy Carolinas' refund report and ruling that these two claims are outside the scope of FERC's February order. ~~Duke Energy Carolinas will file~~The settlement agreements and revised formula rates ~~as well as settlement agreements which are subject~~for all parties to ~~FERC approval. 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~~

proceeding were filed on December 28, 2018. On April ~~9, 2014,~~2, 2019, FERC issued an order approving the PSCSC granted Duke Energy Carolinas and North Carolina Electric Membership Corporation (NCEMC) a Certificate of Environmental Compatibility and Public Convenience and Necessity for the construction and operation of a 750-megawatt (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 its share of the cost to build the facility was approximately $650 million, including allowance for funds used during construction (AFUDC). Approximately $600 million is being recovered through base rate or deferral filings in North Carolina and South Carolina. The remaining amount will be included in future rate filings. The project commenced commercial operation on April 5, 2018. NCEMC owns approximately 13 percent of the project.

~~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 William States Lee III 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 incurring certain project development and preconstruction costs through several separately issued orders, although full cost recovery is not guaranteed. In December 2016, the NRC issued a COL for each reactor.settlement agreement as filed. Duke Energy Carolinas is working with wholesale customers that did not ~~required~~intervene in this case to ~~build~~implement the ~~nuclear reactors as a result of the COLs being issued.~~

The Duke Energy Carolinas rate case filing discussed above included a request to cancel the development of the Lee Nuclear Station project, recover incurred licensing and development costs and maintain the license issued by the NRC as an option for potential future development. The cancellation request was due to the Westinghouse bankruptcy filing and other market activity. The NCUC Order issued on June 22, 2018, approved the cancellation of the Lee Nuclear Project, allowed Duke Energy Carolinas to continue to maintain the COLs, provided for recovery of the North Carolina retail allocation of project development costs, including AFUDC accrued through December 31, 2017, over 12 years and disallowed any return on the unamortized balance during the 12-year recovery period.

Given the recent repeal of certain sections of the Base Load Review Act in South Carolina combined with the cancellation of the project, Duke Energy Carolinas determined that it was no longer probable it would be allowed a return on its share of project development costs attributable to South Carolina. As a result, Duke Energy Carolinas recorded a pretax impairment in the second quarter of $29 million within Impairment charges on the Condensed Consolidated Statements of Operations and Comprehensive Income.

~~South Carolina Petition~~

On June 22, 2018, Duke Energy Carolinas filed a petition with the PSCSC requesting an accounting order to defer certain costs incurred in connection with the addition of the William States Lee Combined Cycle Facility, the ongoing deployment of Duke Energy Carolinas new billing and Customer Information System and the addition of the Carolinas West Primary Distribution Control Center. This request totaling approximately $33 million was approved on July 25, 2018.same settlement terms.

Sale of Hydroelectric (Hydro) Plants

In May 2018, Duke Energy Carolinas entered an agreement for the sale of five hydro plants with a combined 18.7-MW generation capacity in the Western Carolinas region to Northbrook Energy. The completion of the transaction is subject to approval from FERC for the four FERC-licensed plants, as well as other state regulatory agencies and is contingent upon regulatory approval from the NCUC and PSCSC to defer the total estimated loss on the sale of approximately $40 million. On July 5, 2018, Duke Energy Carolinas filed with NCUC for approval of the sale of the five hydro plants to Northbrook, to transfer the ~~Certificates of Public Convenience and Necessity (CPCN)~~CPCNs for the four North Carolina hydro plants and to establish a regulatory asset for the North Carolina retail portion of the difference between sales proceeds and net book value. On September 4, 2018, the Public Staff filed comments supporting the CPCN transfer with conditions, specifically that the commission direct Duke Energy Carolinas and the Public Staff to further evaluate the reasonableness of Duke Energy Carolinas' expenditures at the facilities in the 36 months leading up to the agreement for the sale for consideration in the next rate case.conditions. On September 18, 2018, Duke Energy Carolinas filed reply comments opposing the Public Staff’s proposed conditions. On November 29, 2018, the NCUC issued a procedural order and held an evidentiary hearing on this ~~condition. The~~matter on February 5, 2019. On March 27, 2019, Duke Energy Carolinas and the Public Staff ~~also recommended that~~filed proposed orders with the ~~amortization period for the regulatory asset start in the month in which the asset transfer is completed, rather than be delayed until the next rate case.~~NCUC. On August 28, 2018, Duke Energy Carolinas filed with PSCSC its Application for Approval of Transfer and Sale of Hydroelectric Generation Facilities, Acceptance for Filing of a Power Purchase Agreement and an Accounting Order to Establish a Regulatory Asset. On September 10, 2018, the ~~South Carolina Office of Regulatory Staff (ORS)~~ORS provided a letter to the commission stating its position on the application and on September 18, 2018, Duke Energy Carolinas requested this matter be carried over to allow Duke Energy Carolinas time to discuss certain accounting issues with the ORS. On ~~October~~August 9, 2018, Duke Energy Carolinas and Northbrook filed a ~~Notice of~~joint Application for Transfer of Licenses with the FERC. On December 27, 2018, the FERC issued its Order Approving Transfer of Licenses (“Order”) for the four FERC-licensed hydro plants. On January 18, 2019, Duke Energy Carolinas and Northbrook Carolina Hydro II, LLC requested a six-month extension of time to comply with the requirement of the Order that Northbrook submit to FERC certified copies of all instruments of conveyance and signed acceptance sheets within 60 days of the date of the Order, given that compliance by the deadline set in the Order was not possible because the conveyance of the projects is contingent on the receipt of state regulatory approvals, which ~~provides 30 days~~were not anticipated to ~~file comments and motions~~be issued by February 25, 2019. On February 14, 2019, FERC issued an Order Granting Extensions of Time until August 26, 2019, to ~~intervene.~~comply with the requirements of the Order.

If commission approvals are not received, Duke Energy Carolinas can cancel the sales agreement and retain the hydro facilities. If commission approvals are received, the closing is expected to occur ~~during the first quarter of~~in 2019. After closing, Duke Energy Carolinas will purchase all the capacity and energy generated by these facilities at the avoided cost for five years through power purchase agreements. 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)~~



FINANCIAL STATEMENTS	REGULATORY MATTERS

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 represented an approximate 14.9 percent increase in annual base revenues. Subsequent to the filing, Duke Energy Progress adjusted the requested amount to $420 million, representing an approximate 13 percent increase. The rate increase iswas driven by capital investments subsequent to the previous base rate case, costs of complying with CCR regulations and the Coal Ash Act, costs relating to storm recovery, investments in customer service technologies and recovery of costs associated with renewable purchased power.

On December 16, 2016, Duke Energy Progress filed a petition with the NCUC requesting an accounting order to defer certain costs incurred in connection with response to Hurricane Matthew and other significant storms in 2016. The final estimate of incremental operation and maintenance and capital costs of $116 million was filed with the NCUC in September 2017. On July 10, 2017, the NCUC consolidated Duke Energy Progress' storm deferral request into the Duke Energy Progress rate case docket for decision.

On November 22, 2017, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included a return on equity of 9.9 percent and a capital structure of 52 percent equity and 48 percent debt. As a result of the settlement, in 2017 Duke Energy Progress recorded pretax charges totaling approximately $25 million to Impairment charges and Operation, maintenance and other on the Condensed Consolidated Statements of Operations, principally related to disallowances from rate base of certain projects at the Mayo and Sutton plants. On February 23, 2018, the NCUC issued an order approving the stipulation. ~~The order also included the following material components not covered in the stipulation:~~

Recovery of the remaining $234 million of deferred coal ash basin closure costs over a five-year period with a return at Duke Energy Progress' WACC, excluding $9.5 million of retail deferred coal ash basin costs related to ash hauling at Duke Energy Progress' Asheville Plant;

~~Assessment of a $30 million management penalty ratably over a five-year period by reducing the annual recovery of the deferred coal ash costs;~~

Denial of Duke Energy Progress' request for recovery of future estimated ongoing annual coal ash costs of $129 million with approval to defer such costs with a return at Duke Energy Progress' WACC, to be considered for recovery in the next rate case; and

Approval to recover $51 million of the approximately $80 million deferred storm costs over a five-year period with amortization beginning in October 2016. The order did not allow the deferral of the associated capital costs or a return on the deferred balance during the deferral period.

The order also impacted certain amounts that were similarly recorded on Duke Energy Carolinas' Condensed Consolidated Balance Sheets. As a result of the order, Duke Energy Progress and Duke Energy Carolinas recorded pretax charges of $68 million and $14 million, respectively, in the first quarter of 2018 to Impairment charges, Operation, maintenance and other and Interest Expense on the Condensed Consolidated Statements of Operations. ~~These charges primarily related to the coal ash basin disallowance and previously recognized return impacted by the coal ash management penalty and deferred storm cost adjustments.~~ Revised customer rates became effective on March 16, 2018.

On May 15, 2018, the Public Staff filed a Notice of Cross Appeal to the North Carolina Supreme Court from the February 23, 2018, Order Accepting Stipulation, Deciding Contested Issues and Granting Partial Rate Increase issued by the NCUC. The Public Staff contend the commission’s order should be reversed and remanded, as it is affected by errors of law, and is unsupported by competent, material and substantial evidence in view of the entire record as submitted. The North Carolina Attorney General and Sierra Club ~~have~~ also filed Notices of Appeal to the North Carolina Supreme Court from the February 23, 2018, Order Accepting Stipulation, Deciding Contested Issues and Granting Partial Rate Increase. On November 29, 2018, the North Carolina Attorney General's Office filed a motion with the North Carolina Supreme Court requesting the court consolidate the Duke Energy Progress and Duke Energy Carolinas appeals and enter an order adopting the parties’ proposed briefing schedule as set out in the filing. On November 29, 2018, the North Carolina Supreme Court adopted a schedule for briefing set forth in the motion to consolidate the Duke Energy Progress and Duke Energy Carolinas appeals. On March 14, 2019, the North Carolina Attorney General’s Office filed a motion for extension of time to file its brief. On March 18, 2019, the North Carolina Supreme Court granted the North Carolina Attorney General’s motion, and the Appellant’s brief was filed on April 26, 2019. The ~~briefing will likely be delayed until the second quarter of~~Appellee response briefs are due on August 24, 2019. Duke Energy Progress cannot predict the outcome of this matter.

~~2016 South Carolina Rate Case~~

In December 2016, the PSCSC approved a rate case settlement agreement among the ORS, intervenors and Duke Energy Progress. Terms of the settlement agreement included an approximate $56 million increase in revenues over a two-year period. An increase of approximately $38 million in revenues was effective January 1, 2017, and an additional increase of approximately $18.5 million in revenues was effective January 1, 2018. Duke Energy Progress amortized approximately $18.5 million from the cost of removal reserve in 2017. Other settlement terms included a rate of return on equity of 10.1 percent, recovery of coal ash costs incurred from January 1, 2015, through June 30, 2016, over a 15‑year period and ongoing deferral of allocated ash basin closure costs from July 1, 2016, until the next base rate case. The settlement also provides that Duke Energy Progress will not seek an increase in rates in South Carolina to occur prior to 2019, with limited exceptions.

2018 South Carolina Rate Case

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

Duke Energy Progress also requested approval of its proposed GIP, approval of a Prepaid Advantage Program and a variety of accounting orders related to ongoing costs for environmental compliance, including recovery over a five-year period of $51 million of deferred coal ash related compliance costs, AMI deployment, grid investments between rate changes and regulatory asset treatment related to the retirement of a generating plant located in Asheville, North Carolina. Finally, Duke Energy Progress sought approval to establish a reserve and accrual for end-of-life nuclear costs for materials and supplies and nuclear fuel. On March 8, 2019, the ORS moved to establish a new and separate hearing docket to review and consider the GIP proposed by Duke Energy Progress. Subsequently, on March 12, 2019, the ORS and Duke Energy Carolinas executed a Stipulation resolving the ORS’s motion, and Duke Energy Progress agreed to the Stipulation, as did other parties in the rate case. The Stipulation provides that costs incurred after January 1, 2019, for the GIP will be deferred with a return, with all costs subject to evaluation in a future rate proceeding, and that Duke Energy Progress will refile for consideration of the ~~company’s intent~~GIP in a new docket for resolution by January 1, 2020. The Stipulation was approved by the PSCSC’s hearing officer on March 13, 2019. An evidentiary hearing began on April 11, 2019, and concluded on April 17, 2019.

On May 8, 2019, the PSCSC issued a Commission Directive on Duke Energy Progress’ application for a retail rate increase. The Directive granted, among other things: a retail rate increase of $41 million, excluding the EDIT Rider; a return on equity of 9.5 percent and a capital structure of 53 percent equity and 47 percent debt. The Directive denied the recovery of coal ash costs of approximately $65 million. Based upon legal analysis and Duke Energy Progress' intention to file a ~~base rate~~Petition for Rehearing with the PSCSC, Duke Energy Progress has not recorded an adjustment ~~application no earlier than 30 days from~~for its deferred coal ash costs. Duke Energy Progress is evaluating the ~~notice submittal date.~~financial statement impacts of this Directive and will record associated one-time costs when the final order is issued. Except for the coal ash matter, the financial statement impacts of this Directive are not material. An order and revised customer rates are expected by mid-2019. Duke Energy Progress 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)~~



FINANCIAL STATEMENTS	REGULATORY MATTERS

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~~worked with the local natural gas distribution company to upgrade an existing natural gas pipeline to serve the natural gas plant. The lease became effective on March 2, 2019.

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, 2018, Duke Energy Progress filed an annual progress report for the construction of the combined-cycle plants with the NCUC, with an estimated cost of $893 million. Site preparation activities for the combined-cycle plants are complete and construction of these plants began in 2017, with an expected in-service date in late 2019.

On October 8, 2018, Duke Energy Progress ~~plans~~filed an application with the NCUC for a CPCN to ~~file for future approvals related~~construct the Hot Springs Microgrid Solar and Battery Storage Facility. On November 30, 2018, the NCUC issued an order scheduling hearings, requiring filing of testimony, establishing discovery guidelines and requiring public notice. On February 7, 2019, Duke Energy Progress made a joint filing with the Public Staff, which accepted the Public Staff’s proposed conditions and requested that the NCUC cancel the evidentiary hearing. On February 19, 2019, the NCUC granted the request to cancel the ~~proposed solar generation~~hearing. On March 22, 2019, Duke Energy Progress and ~~pilot battery storage project.~~the Public Staff filed a Joint Proposed Order now pending before the NCUC. Duke Energy Progress cannot predict the outcome of this matter.

The carrying value of the 376-MW Asheville coal-fired plant, including associated ash basin closure costs, of ~~$352~~$302 million and ~~$385~~$327 million is included in Generation facilities to be retired, net on Duke Energy Progress' Condensed Consolidated Balance Sheets as of ~~September 30, 2018,~~March 31, 2019, and December 31, ~~2017,~~2018, respectively. Duke Energy Progress' request for a regulatory asset at the time of retirement with amortization over a 10-year period was approved by the NCUC on February 23, 2018.

~~Shearon Harris Nuclear Plant Expansion~~

In 2006, Duke Energy Progress selected a site at Harris to evaluate for possible future nuclear expansion. On February 19, 2008, Duke Energy Progress filed its COL application with the NRC for two Westinghouse AP1000 reactors at Harris, which the NRC docketed for review. On May 2, 2013, Duke Energy Progress filed a letter with the NRC requesting the NRC to suspend its review activities associated with the COL at the Harris site. The NCUC and PSCSC approved deferral of retail costs. Total deferred costs were approximately $47 million as of December 31, 2017, and are recorded in Regulatory assets on Duke Energy Progress’ Condensed Consolidated Balance Sheets. On November 17, 2016, the FERC approved Duke Energy Progress’ rate recovery request filing for the wholesale ratepayers’ share of the abandonment costs, including a debt-only return to be recovered through revised formula rates and amortized over a 15-year period beginning May 1, 2014. As part of the settlement agreement for the 2017 North Carolina Rate Case discussed above, Duke Energy Progress will amortize the regulatory asset over an eight-year period. NCUC approved the settlement on February 23, 2018.

~~South Carolina Petitions~~

On June 22, 2018, Duke Energy Progress filed a petition with the PSCSC seeking an accounting order authorizing Duke Energy Progress to adopt new depreciation rates, effective March 16, 2018, that reflect the results of Duke Energy Progress’ most recent depreciation study. Also on June 22, 2018, Duke Energy Progress filed a petition with the PSCSC requesting an accounting order to defer certain costs incurred in connection with the deployment of AMI, the ongoing deployment of Duke Energy Progress' new billing and Customer Information System, new depreciation rates and costs incurred in connection with the return of certain excess deferred state income taxes from North Carolina. These requests totaling approximately $20 million were approved on July 25, 2018.

~~FERC Form 1 Reporting Matter~~

On October 18, 2017, Fayetteville Public Works Commission (FPWC) filed with FERC a complaint against Duke Energy Progress. In the complaint, FPWC alleges that Duke Energy Progress’ change in its method of reporting materials and supplies inventory on FERC Form 1 for 2015 constituted a change in accounting practice that Duke Energy Progress was not permitted to implement without first obtaining FERC approval. On April 23, 2018, FERC issued an order finding that Duke Energy Progress’ new reporting methodology was not proper and required Duke Energy Progress to revise its FERC Form 1s beginning in 2014 and to issue refunds to formula rate customers. Duke Energy Progress estimates that these refunds will total approximately $14 million. On May 23, 2018, Duke Energy Progress filed a request for rehearing alleging that FERC’s order is incorrect. Duke Energy Progress revised its FERC Form 1 filings in June 2018. On August 31, 2018, Duke Energy Progress filed with FERC a refund report memorializing its payment of refunds to FPWC. Duke Energy Progress cannot predict the outcome of this matter.

~~Tax Act~~

As ordered by the NCUC on October 5, 2018, Duke Energy Progress filed a proposal on October 25, 2018, to adjust rates to reflect the reduction in federal corporate income tax rate from 35 to 21 percent for taxable years beginning after December 31, 2017, as outlined in the Tax Act. Duke Energy Progress proposes that this rate decrement be effective for service rendered on and after December 1, 2018. The Public Staff is requested to file comments on the proposal no later than November 14, 2018, and other parties may also file comments on the proposals no later than November 14, 2018. Duke Energy Progress 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)~~

Duke Energy Florida

Storm Restoration Cost Recovery

In September 2017, Duke Energy Florida’s service territory suffered significant damage from Hurricane Irma, resulting in approximately ~~1.3~~1 million customers experiencing outages. In the fourth quarter of 2017, Duke Energy Florida also incurred preparation costs related to Hurricane Nate. On December 28, 2017, Duke Energy Florida filed a petition with the FPSC to recover incremental storm restoration costs for ~~hurricanes~~Hurricane Irma and Hurricane Nate and to replenish the storm reserve. On February 6, 2018, the FPSC approved a stipulation that would apply tax savings resulting from the Tax Act toward storm costs effective January 2018 in lieu of implementing a storm surcharge. Storm costs are currently expected to be fully recovered by approximately mid-2021. On May 31, 2018, Duke Energy Florida filed a petition for approval of actual storm restoration costs and associated recovery process related to ~~Hurricanes~~Hurricane Irma and Hurricane Nate. The petition ~~is seeking~~sought the approval for the recovery in the amount of $510 million in actual recoverable storm restoration costs, including the replenishment of Duke Energy Florida’s storm reserve of $132 million, and the process for recovering these recoverable storm costs. On August 20, 2018, the FPSC approved Duke Energy Florida's unopposed Motion for Continuance filed August 17, 2018, to allow for an evidentiary hearing in this matter. On January 28, 2019, Duke Energy Florida made a supplemental filing to reduce the total storm cost recovery from $510 million to $508 million. On April 3, 2019, the FPSC issued an Order abating all remaining filing dates. On April 9, 2019, Duke Energy Florida filed an unopposed motion to approve a settlement agreement resolving all outstanding issues in this docket. The ~~commission~~FPSC has scheduled the hearing to begin on May 21, ~~2019.~~2019, to consider the Storm Cost Settlement Agreement filed with the FPSC. If approved, the Storm Cost Settlement Agreement would obligate Duke Energy Florida to capitalize $18 million of storm costs and remove $6 million of operating and maintenance expense, thereby reducing the requested storm cost recovery amount by $24 million. Duke Energy Florida will also implement process changes with respect to storm cost restoration. At ~~September 30,~~March 31, 2019, and December 31, 2018, Duke Energy Florida's Condensed Consolidated Balance Sheets included approximately ~~$258~~$157 million and $217 million, respectively, of recoverable costs under the FPSC's storm rule in Regulatory assets within Current Assets and Other Noncurrent Assets related to storm ~~recovery.~~recovery for Hurricane Irma and Hurricane Nate. Duke Energy Florida cannot predict the outcome of this matter.

In October 2018, Duke Energy Florida’s service territory suffered damage when Hurricane Michael made landfall as a strong Category 5 hurricane with maximum sustained winds of 160 mph. The storm caused catastrophic damage from wind and storm surge, particularly from Panama City Beach to Mexico Beach, resulting in widespread outages and significant damage to transmission and distribution facilities across the central Florida Panhandle. In response to Hurricane Michael, Duke Energy Florida restored service to approximately 72,000 customers. Total current estimated incremental operation and maintenance and capital costs are $360 million. Approximately $70 million and $35 million of the costs are included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of March 31, 2019, and December 31, 2018, respectively. Approximately $213 million and $165 million of costs represent recoverable costs under the FPSC’s storm rule and Duke Energy Florida's Open Access Transmission Tariff formula rates and are included in Regulatory assets within Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of March 31, 2019, and December 31, 2018, respectively. Additional costs could be incurred in 2019 related to this fourth quarter 2018 storm.

Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover incremental storm restoration costs for Hurricane Michael. The estimated recovery amount is approximately $221 million to be recovered over a 12-month period beginning in July 2019, subject to true up through the Storm Surcharge consistent with the provisions of the 2017 Settlement. Concurrently, Duke Energy Florida filed for approval a stipulation that would apply tax savings resulting from the Tax Act toward storm costs in lieu of implementing a storm surcharge. Storm costs are currently expected to be fully recovered by approximately year-end 2021. Duke Energy Florida cannot predict the outcome of this matter.



FINANCIAL STATEMENTS	REGULATORY MATTERS

Tax Act

Pursuant to Duke Energy Florida's 2017 ~~Revised and Restated~~ Settlement, ~~Agreement,~~ on May 31, 2018, Duke Energy Florida filed a petition related to the Tax Act, which included revenue requirement impacts of annual tax savings of ~~$84~~$134 million and estimated annual amortization of EDIT of $67 million for a total of ~~$151~~$201 million. ~~The pretax revenue requirement impact is $201 million, of which~~Of this amount, $50 million ~~will~~would be offset ~~with~~by accelerated depreciation of Crystal River 4 and 5 coal units and an estimated $151 million ~~will~~would be offset by Hurricane Irma storm cost recovery as explained in the Storm Restoration Cost Recovery section above. On December 27, 2018, Duke Energy Florida filed actual EDIT balances and amortization based on its 2017 filed tax return. This increased the revenue requirement impact of the amortization of EDIT by $4 million, from $67 million to $71 million, which increased the total storm amortization from $151 million to $155 million. On January 8, 2019, the FPSC approved a joint motion by Duke Energy Florida and the Office of Public Counsel resolving all stipulated positions. As part of that stipulation, Duke Energy Florida agreed to seek a Private Letter Ruling (PLR) from the IRS on its treatment of cost of removal (COR) as mostly protected by tax normalization rules. If the IRS rules that COR is not protected by tax normalization rules, then Duke Energy Florida will make a final adjustment to the amortization of EDIT and an adjustment to the storm recovery amount retroactive to January 2018. The ~~petition~~IRS has communicated that it will not issue individual PLRs on the treatment of COR. Rather, the IRS is ~~subject~~drafting a notice that will request comments on a number of issues, including COR, and the IRS plans to ~~review and approval by the FPSC.~~issue industrywide guidance on those issues. Duke Energy Florida cannot predict the outcome of this matter.

~~Citrus County Combined Cycle Facility~~

On October 2, 2014, the FPSC granted Duke Energy Florida a Determination of Need for the construction of a 1,640-MW combined-cycle natural gas plant in Citrus County, Florida. On May 5, 2015, the Florida Department of Environmental Protection approved Duke Energy Florida's Site Certification Application. The project has received all required permits and approvals and construction began in October 2015. The facility is expected to be commercially available by the end of 2018 at an estimated cost of $1.5 billion, including AFUDC. Actual costs are expected to exceed this estimate by an immaterial amount after recoveries; therefore, an impairment is not expected. On April 2, 2018, Duke Energy Florida filed a petition seeking approval to include in base rates the revenue requirements associated with the new facility. The annual retail revenue requirement is approximately $200 million. On July 10, 2018, the FPSC voted to approve Duke Energy Florida's request to include the revenue requirements for the new Citrus County combined-cycle units in base rates. The first 820-MW power block came on line on October 26, 2018, and the rate increase for this unit will be effective in December 2018. The second 820-MW power block remains on track to start serving customers in December 2018. The rate increase for the second unit is expected to take place in January 2019. The plant will receive natural gas from the Sabal Trail pipeline discussed below.

Solar Base Rate Adjustment

On July 31, 2018, Duke Energy Florida petitioned the FPSC to include in base rates the revenue requirements for its first two solar generation projects, the Hamilton Project and the Columbia Project, as authorized by the 2017 ~~Second Revised and Restated Stipulation and Settlement Agreement.~~Settlement. The Hamilton Project, which was placed into service on December 22, 2018, has an annual retail revenue requirement ~~for the Hamilton Project is $15.2~~of $15 million and the increase ~~would take effect with the first billing cycle~~was effective in January 2019. The Columbia Project has a projected annual revenue requirement of $14 million and a projected in-service date in early 2020; the associated rate increase would take place with the first month’s billing cycle after the Columbia Project goes into service. At its October 30, 2018, Agenda Conference, the FPSC approved the rate increase related to the Hamilton Project to go into effect beginning with the first billing cycle in January 2019 under its file and suspend authority. ~~Rates are subject~~On April 2, 2019, the commission approved both solar projects as filed.

On March 25, 2019, Duke Energy Florida petitioned the FPSC to ~~true up pending~~include in base rates the ~~outcome~~revenue requirements for its next wave of solar generation projects, the ~~final hearing, which~~Trenton, Lake Placid and DeBary Solar Projects, as authorized by the 2017 Settlement. The annual retail revenue requirement for the Trenton and Lake Placid Projects is ~~scheduled to~~$13 million and $8 million, respectively, with projected in-service dates in the fourth quarter of 2019. The DeBary Project has a projected annual revenue requirement of $11 million and a projected in-service date in the first quarter of 2020. The associated rate increase would take place ~~on April 2, 2019.~~

with the first month’s billing cycle after each solar generation project goes into service. Duke Energy ~~Ohio~~

~~2017 Electric Security Plan Filing~~

On June 1, 2017, Duke Energy Ohio filed with the PUCO a request for a standard service offer in the form of an electric security plan (ESP). If approved by the PUCO, the term of the ESP would be from June 1, 2018, to May 31, 2025. Terms of the ESP include continuation of market-based customer rates through competitive procurement processes for generation, continuation and expansion of existing rider mechanisms and proposed new rider mechanisms relating to regulatory mandates, costs incurred to enhance the customer experience and transform the grid and a service reliability rider for vegetation management. On February 15, 2018, the procedural schedule was suspended to facilitate ongoing settlement discussions. On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this proceeding with several other cases currently pending before the PUCO, including, but not limited to, its Electric Base Rate Case. Additionally, on April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation and Recommendation (Stipulation) with the PUCO resolving certain issues in this proceeding. The Stipulation establishes a regulatory model for the next seven years via the approval of the ESP and continues the current model for procuring supply for non-shopping customers, including recovery mechanisms. The Stipulation is subject to the review and approval of PUCO. An evidentiary hearing to review the Stipulation and other issues in the cases concluded on August 6, 2018. Initial briefs were filed on September 11, 2018. Reply briefs were filed October 2, 2018. Duke Energy OhioFlorida 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)~~

~~Electric Base Rate Case~~

Duke Energy Ohio filed with the PUCO an electric distribution base rate case application and supporting testimony in March 2017. Duke Energy Ohio 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. 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. On February 15, 2018, the procedural schedule was suspended to facilitate ongoing settlement discussions. On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this proceeding with several other cases currently pending before the PUCO. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed the Stipulation with the PUCO resolving numerous issues including those in this base rate proceeding. Major components of the Stipulation related to the base distribution rate case include a $19 million decrease in annual base distribution revenue with a return on equity unchanged from the current rate of 9.84 percent based upon a capital structure of 50.75 percent equity and 49.25 percent debt. Upon approval of new rates, Duke Energy Ohio's rider for recovering its initial SmartGrid implementation ends as these costs will be recovered through base rates. The Stipulation also renews 14 existing riders, some of which were included in the company's ESP, and adds two new riders including the Enhanced Service Reliability Rider to recover vegetation management costs not included in base rates, up to $10 million per year (operation and maintenance only) and the PowerForward Rider to recover costs incurred to enhance the customer experience and further transform the grid (operation and maintenance and capital). The Stipulation is subject to the review and approval of the PUCO. An evidentiary hearing to review the Stipulation and other issues in the cases concluded on August 6, 2018. Initial briefs were filed on September 11, 2018. Reply briefs were filed October 2, 2018. In addition to the changes in revenue attributable to the Stipulation, Duke Energy Ohio’s capital-related riders, including the Distribution Capital Investments Rider, began to reflect the lower federal income tax rate associated with the Tax Act with updates to customers’ bills beginning April 1, 2018. This change reduces electric revenue by approximately $20 million on an annualized basis. Duke Energy Ohio cannot predict the outcome of this matter.

~~Ohio Valley Electric Corporation~~

On March 31, 2017, Duke Energy Ohio filed for approval to adjust its existing price stabilization rider (Rider PSR), which is currently set at zero dollars, to pass through net costs related to its contractual entitlement to capacity and energy from the generating assets owned by OVEC. 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 to dismiss or stay the proceeding and Duke Energy Ohio has opposed these filings. On April 13, 2018, Duke Energy Ohio filed a Motion to consolidate this proceeding with several other cases currently pending before the PUCO. Also on April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation with the PUCO resolving numerous issues including those related to Rider PSR. The Stipulation, if approved, would activate Rider PSR for recovery of net costs incurred since January 1, 2018. The Stipulation is subject to the review and approval of PUCO. An evidentiary hearing to review the Stipulation and other issues in the cases concluded on August 6, 2018. Initial briefs were filed on September 11, 2018. Reply briefs were filed October 2, 2018. See Note 12 for additional discussion of Duke Energy Ohio's ownership interest in OVEC. Duke Energy Ohio cannot predict the outcome of this matter.

Tax Act – Ohio

On July 25, 2018, Duke Energy Ohio filed an application to establish a new rider to implement the benefits of the Tax Act for electric distribution customers. Duke Energy Ohio requested commission approval to implement the rider effective October 1, 2018, as a credit to all distribution customers based upon a percent reduction to Duke Energy Ohio’s distribution rates. The new rider will flow through to customers the benefit of the lower statutory federal tax rate from 35 to 21 percent since January 1, 2018, all future benefits of the lower tax rates and a full refund of deferred income taxes collected at the higher tax rates in prior years. Deferred income taxes subject to normalization rules will be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. ~~An order is expected during the fourth quarter of 2018.~~ Duke Energy Ohio's transmission rates reflect lower federal income tax but guidance from FERC on amortization of both protected and unprotected transmission-related EDITs is still pending. On October 24, 2018, the PUCO issued a Finding and Order that, among other things, directed all ~~rate-regulated~~ utilities over which the commission has rate-making authority to file an application ~~not for an increase in rates~~ to ~~reflect~~pass the ~~impact~~benefits of the Tax Act ~~on their current rates~~to customers by January 1, 2019, unless otherwise exempted or directed by the PUCO. Duke Energy Ohio's July 25, 2018, filing for electric distribution operations is consistent with the commission's October 24, 2018, Finding and Order and no further action is needed. ~~Options for~~On February 20, 2019, the PUCO approved the application without material modification. Rates became effective March 1, 2019.

On December 21, 2018, Duke Energy Ohio filed an application to change its base rates and establish a new rider to implement the benefits of the Tax Act for natural gas customers. Duke Energy Ohio requested commission approval to implement the changes and rider effective April 1, 2019. The new rider will flow through to customers ~~are still being evaluated.~~the benefit of the lower statutory federal tax rate from 35 to 21 percent since January 1, 2018, all future benefits of the lower tax rates and a full refund of deferred income taxes collected at the higher tax rates in prior years. Deferred income taxes subject to normalization rules will be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. The PUCO has not yet ruled on the application for changes for natural gas customers. Duke Energy Ohio 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)~~

Energy Efficiency Cost Recovery

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



FINANCIAL STATEMENTS	REGULATORY MATTERS

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

2014 Electric Security Plan

In April 2015, the PUCO modified and approved Duke Energy Ohio's proposed ESP, with a three-year term and an effective date of June 1, 2015. The PUCO approved a competitive procurement process for SSO load, a distribution capital investment rider (Rider DCI) and a tracking mechanism for incremental distribution expenses caused by major storms. The PUCO also approved a placeholder tariff for a price stabilization rider, but denied Duke Energy Ohio's specific request to include Duke Energy Ohio's entitlement to generation from OVEC in the rider at this time; however, the order allows Duke Energy Ohio to submit additional information to request recovery in the future. On May 4, 2015, Duke Energy Ohio filed an application for rehearing requesting the PUCO to modify or amend certain aspects of the order. On May 28, 2015, the PUCO granted all applications for rehearing filed in the case for future consideration. On March 21, 2018, the PUCO issued an order denying Duke Energy Ohio's issues on rehearing. On April 20, 2018, Duke Energy Ohio filed a second application for rehearing based upon the commission’s March 21, 2018, Order. On May 16, 2018, the commission issued its third Entry on Rehearing granting in part, and denying in part, Duke Energy Ohio’s rehearing request.

On March 9, 2018, Duke Energy Ohio filed a motion to extend its then-current ESP, including all terms and conditions thereof, pending approval of a new ESP. On May 30, 2018, the PUCO granted the request, with modification. Specifically, the PUCO did not extend the cap applicable to Rider DCI beyond July 31, 2018. Duke Energy Ohio sought rehearing of this finding. On July 25, 2018, the PUCO granted the request and allowed a continuing cap on recovery under Rider DCI. On August 24, 2018, ~~OMA~~the Ohio Manufacturers' Association (OMA) and ~~OCC~~the Office of the Ohio Consumers' Counsel (OCC) filed an Application for Rehearing of the commission's decision. Duke Energy Ohio filed a Memorandum Contra OCC's request for rehearing of the commission's continuation of Rider DCI on September 4, 2018. On September 19, 2018, the PUCO issued an Order granting rehearing on the matter for further consideration. On April 3, 2019, the PUCO issued its Fourth Entry on Rehearing denying the rehearing of OCC and OMA and upholding its decision to continue Rider DCI. Further applications for rehearing or notices of appeal are due in 60 days. Duke Energy Ohio cannot predict the outcome of this matter.

On May 21, 2018, the ~~Ohio Manufacturers' Association (OMA)~~OMA filed a notice of appeal of PUCO's approval of Duke Energy Ohio’s ESP with the Ohio Supreme Court, challenging PUCO's approval of Duke Energy Ohio’s Price Stability Rider as a placeholder and its Rider DCI to recover incremental revenue requirement for distribution capital since Duke Energy Ohio’s last base rate case. On July 16, 2018, the ~~Office of the Ohio Consumers' Counsel (OCC)~~OCC filed its own appeal of Duke Energy Ohio’s ESP with the Ohio Supreme Court raising similar issues to that of the OMA. ~~Duke Energy Ohio's Application for Rehearing was granted on July 25, 2018.~~ Duke Energy Ohio filed a Motion to Intervene in the two Ohio Supreme Court appeals. OMA's Supreme Court brief was filed on August 20, 2018. PUCO submitted its brief on October 26, 2018, and Duke Energy Ohio filed its brief on October 29, 2018. The OCC’s Supreme Court brief was filed on October 15, 2018. Duke Energy Ohio ~~cannot predict~~filed its brief on December 20, 2018. The PUCO submitted its brief on December 21, 2018. The Ohio Supreme Court issued an order on March 13, 2019, for the ~~outcome~~appellants to show cause why the appeals should not be dismissed as moot in light of ~~this matter.~~the commission’s approval of Duke Energy Ohio’s current ESP. OCC and OMA made the requested filings on March 20, 2019, and Duke Energy Ohio filed its response on March 27, 2019. On May 8, 2019, the Ohio Supreme Court dismissed the appeals as moot.

Natural Gas Pipeline Extension

Duke Energy Ohio is proposing to install a new natural gas pipeline (the Central Corridor Project) in its Ohio service territory to increase system reliability and enable the retirement of older infrastructure. Duke Energy Ohio currently estimates the pipeline development costs and construction activities will range from $163 million to $245 million in direct costs (excluding overheads and AFUDC). Project construction activities, schedule and final costs are still subject to uncertainty due to potential additional permitting delays, construction productivity and other conditions and risks, which could result in additional project cost availability and a potential delay in the targeted in-service date. On January 20, 2017, Duke Energy Ohio filed an amended application with the Ohio Power Siting Board (OPSB) for approval of one of two proposed routes. A public hearing was held on June 15, ~~2017, and an adjudicatory hearing was scheduled to begin September 11,~~ 2017. ~~On August 24, 2017, an Attorney Examiner granted a request made by Duke Energy Ohio to delay the procedural schedule while it works through various issues related to the pipeline route.~~ In April 2018, Duke Energy Ohio filed a motion with OPSB to establish a procedural schedule and filed supplemental information supporting its application. On December 18, 2018, the OPSB established a procedural schedule that included a local public hearing on March 21, 2019. An evidentiary hearing began on April 9, 2019, and concluded on April 11, 2019. Briefs are due May 13, 2019, with reply briefs due June 10, 2019. If approved, construction of the pipeline extension is expected to be completed before the 2021/2022 winter season. Duke Energy Ohio 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)~~



FINANCIAL STATEMENTS	REGULATORY MATTERS

2012 Natural Gas Rate Case/MGP Cost Recovery

As part of its 2012 natural gas base rate case, Duke Energy ~~Kentucky Electric Rate Case~~

Ohio has approval to defer and recover costs related to environmental remediation at two sites (East End and West End) that housed former MGP operations. Duke Energy Ohio has made annual applications for recovery of these deferred costs. Duke Energy Ohio is currently recovering approximately $55 million in environmental remediation costs between 2009 through 2012 through a separate rider, Rider MGP. Duke Energy Ohio has made annual applications with the PUCO to recover its incremental remediation costs consistent with the PUCO’s directive in Duke Energy Ohio’s 2012 natural gas rate case. To date, the PUCO has not ruled on Duke Energy Ohio’s annual applications for the calendar years 2013 through 2017. On September 1,28, 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 2013 through 2017 that staff believes are not eligible for recovery. Staff interprets the PUCO’s 2012 Order granting Duke Energy ~~Kentucky filed a rate case with~~Ohio recovery of MGP remediation as limiting the ~~KPSC requesting an increase in electric base rates of approximately $49 million, which represents an approximate 15 percent increase~~recovery to work directly on the ~~average customer bill. Subsequent~~East End and West End sites. On October 30, 2018, Duke Energy Ohio filed reply comments objecting to the ~~filing,~~staff’s recommendations and explaining, among other things, the obligation Duke Energy ~~Kentucky adjusted~~Ohio has under Ohio law to remediate all areas impacted by the ~~requested amount to $30.1 million, in part to reflect~~former MGPs and not just physical property that housed the ~~benefits of~~former plants and equipment. To date, the ~~Tax Act, representing an approximate 9 percent increase~~PUCO has not issued a procedural schedule and has not ruled 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~~Duke Energy Ohio’s applications. On March 29, 2019, Duke Energy Ohio filed its annual application ~~also includes requests to implement an Environmental Surcharge Mechanism to recover environmental costs not recovered in base rates, to establish a Distribution Capital Investment Rider~~ to recover incremental costs of specific programs, to establish a FERC Transmission Cost Reconciliation Rider to recover escalating transmission costs and to modify existing Profit Sharing Mechanism to increase customers' share of proceeds fromremediation expense for the ~~benefits of owning generation and to mitigate shareholder risks associated with that generation. An evidentiary hearing concluded on March 8, 2018, and the KPSC issued an order on April 13,~~calendar year 2018. Major components of the Order include approval of an $8.4 million increase in base rates with a return on equity at 9.725 percent based upon a capital structure of 49 percent equity on a total allocable capitalization of approximately $650 million. The Order approved the Environmental Surcharge Mechanism Rider and in June 2018 recovery began of capital-related environmental costs, including costs related to ash and ash disposal, and environmental operation and maintenance expenses formerly recovered in base rates, including expenses for environmental reagents and emission allowances. The incremental revenue from this rider will be approximately $13 million on an annualized basis. The order settles all issues associated with the Tax Act as it relates to the electric business by lowering the income tax component of the revenue requirement and refunding protected EDIT under allowable normalization rules and unprotected EDIT over 10 years. The Order denied requests to implement riders for certain transmission costs and distribution capital investments. Duke Energy ~~Kentucky implemented new base rates on May 1, 2018. On May 3, 2018, Duke Energy Kentucky filed an application for rehearing on certain aspects~~Ohio cannot predict the outcome of the order; on May 23, 2018, the KPSC granted a rehearing. On October 2, 2018, the KPSC issued its rehearing order correcting certain findings in its initial order and making additional changes that are immaterial to the company's earnings. Duke Energy Kentucky does not plan any further appeals.this matter.

Duke Energy Kentucky Natural Gas Base Rate Case

On August 31, 2018, Duke Energy Kentucky filed an application with the KPSC requesting an increase in natural gas base rates of approximately ~~$10.5~~$11 million, an approximate 11.1 percent average increase across all customer classes. The increase iswas net of approximately ~~$5.2~~$5 million in annual savings as a result of the Tax Act. The drivers for this case are capital invested since ~~the~~ Duke Energy Kentucky’s last rate case in 2009. Duke Energy Kentucky is also ~~seeking~~sought implementation of a Weather Normalization Adjustment Mechanism, amortization of regulatory assets and to implement the impacts of the Tax Act, prospectively. ~~The KPSC accepted~~On January 30, 2019, Duke Energy ~~Kentucky’s filing as~~Kentucky entered into a settlement agreement with the Attorney General of ~~September 10, 2018, as meeting all filing requirements~~Kentucky, the only intervenor in the case. The settlement provided for an approximate $7 million increase in natural gas base revenue and ~~issued its first round~~approval of ~~discovery. A procedural schedule was set.~~the proposed Weather Normalization Mechanism. A hearing ~~is set to commence~~was held on February 5, 2019. ~~A ruling is expected in late first quarter~~The commission issued its Order approving the settlement without material modification on March 27, 2019. ~~Duke Energy Kentucky cannot predict the outcome of this matter.~~

~~FERC 494 Refund of Regional Transmission Enhancement Projects~~

FERC Order No. 494 Settlement Agreement (FERC 494 Settlement Agreement) was entered into by most of the PJM Interconnection, LLC (PJM) transmission owners, including Duke Energy Ohio and Duke Energy Kentucky, and the PJM state regulatory commissions approximately two years ago and was planned to be effective on January 1, 2016; however, it was not approved by FERC until May 31, 2018. The FERC 494 Settlement Agreement was due to the Seventh Circuit Court of Appeals finding that FERC had failed to adequately justify the costs that the customers in the western part of PJM were being charged for high voltage transmission projects, or Regional Transmission Expansion Plan (RTEP) projects (500 kV and above) built in the east. These costs were being allocated to all PJM customers on a load-ratio share basis but the court determined that these costs were not justifiable to customers in the west, including Duke Energy Ohio and Duke Energy Kentucky, that did not benefit from the RTEP projects. Costs for the periods 2012 through 2015 are expected to be refunded to Duke Energy Ohio and Duke Energy Kentucky on a monthly basis through December 2025. The refund amount for similar costs incurred beginning in 2016 through June 30, 2018, prior to the change in cost allocation by PJM was determined in the third quarter of 2018 and these amounts will be refunded over a 12-month period beginning in July 2018. These refunds, totaling approximately $47 million for Duke Energy Ohio and Duke Energy Kentucky, have been recorded to Operation, maintenance and other on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018.

Duke Energy Indiana

FERC Transmission Return on Equity Complaint

Customer groups have filed with the FERC complaints against ~~Midcontinent Independent System Operator, Inc. (MISO)~~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 claim, among other things, 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. 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.~~D.C. Circuit 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. On October 16, 2018, FERC issued an order in response to the Emera remand proceeding proposing a new method for determining whether an existing return on equity is unjust and unreasonable, and a new process for determining a just and reasonable return on equity. ~~The~~On November 14, 2018, FERC directed parties ~~involved~~to the MISO complaints to file briefs on how the new process for determining return on equity proposed in the Emera proceeding ~~are directed~~should be applied to ~~file briefs by December 15, 2018. Duke Energy Indiana is in discussions with the other MISO Transmission Owners to determine strategy in light of this order. This decision may affect the outcome of~~ the complaints ~~against Duke Energy Indiana.~~involving the MISO transmission owners’ return on equity. Initial briefs were filed on February 13, 2019, and reply briefs were filed April 10, 2019. Duke Energy Indiana currently believes these matters will not have a material impact on its results of operations, cash flows and 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)~~

~~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 alleging Duke Energy Indiana violated its obligations under a 2006 PPA by refusing to offer electricity to the market at negative prices. Damage claims continue to increase during times that BCWF is not dispatched. Under 2013 revised MISO market rules, Duke Energy Indiana is required to make a price offer to MISO for the power it proposes to sell into MISO markets and MISO determines whether BCWF is dispatched. Because market prices would have been negative due to increased market participation, Duke Energy Indiana determined it would not bid at negative prices in order to balance customer needs against BCWF's need to run. BCWF contends Duke Energy Indiana must bid at the lowest negative price to ensure dispatch, while Duke Energy Indiana contends it is not obligated to bid at any particular price, that it cannot ensure dispatch with any bid and that it has reasonably balanced the parties' interests. On July 6, 2015, the U.S. District Court for the Southern District of Indiana entered judgment against BCWF on all claims. BCWF appealed the decision and on December 9, 2016, the appeals court ruled in favor of BCWF. Duke Energy Indiana recorded an obligation and a regulatory asset related to the settlement amount in fourth quarter 2016. 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. 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. On May 21, 2018, the Indiana Court of Appeals upheld the commission's decision. The appellants have requested rehearing at the Indiana Court of Appeals. The Indiana Court of Appeals denied the request for rehearing. The appellants have requested transfer to the Indiana Supreme Court, including briefs in support from environmental groups. Duke Energy Indiana cannot predict the outcome of this matter.

Edwardsport Integrated Gasification Combined Cycle Plant

On September 20, 2018, Duke Energy Indiana, the Indiana Office of Utility Consumer Counselor, ~~(OUCC),~~ the Duke Industrial Group and Nucor Steel – Indiana entered into a settlement agreement to resolve ~~integrated gasification combined cycle (IGCC)~~IGCC ratemaking issues for calendar years 2018 and 2019. The agreement will remain in effect until new rates are established in Duke Energy Indiana's next base rate case, which is expected to be filed in mid-2019 with rates effective in mid-2020. It ~~addresses~~addressed the pending Edwardsport filing at the commission and ~~eliminates~~eliminated the need for future filings until the overall rate case. This settlement includes caps on Duke Energy Indiana’s retail operating expenses for 2018 and 2019, reduces Duke Energy Indiana's regulatory asset by $30 million (with a corresponding reduction of the amount of amortization of the regulatory asset included in rates by $10 million annually beginning with the implementation of final IGCC 17 rates), and provides funding for low- income assistance and clean energy projects. Duke Energy Indiana recognized pretax impairment and related charges of $32 million in the third quarter of 2018. The settlement is subject to IURC approval. An evidentiary hearing was held in December 2018, and an IURC Order is ~~scheduled for December 2018.~~expected in May 2019. Duke Energy Indiana cannot predict the outcome of this matter.

~~Tax Act~~

On June 27, 2018, Duke Energy Indiana, the Indiana Office of Utility Consumer Counselor, the Indiana Industrial Group and Nucor Steel – Indiana filed testimony consistent with their Stipulation and Settlement Agreement (Settlement Agreement) in the federal tax act proceeding with the IURC. The Settlement Agreement outlines how Duke Energy Indiana will implement the impacts of the Tax Act. Material components of the Settlement Agreement were as follows:

~~Riders to reflect the change in the statutory federal tax rate from 35 to 21 percent as they are filed in 2018;~~

~~Base rates to reflect the change in the statutory federal tax rate from 35 to 21 percent upon IURC approval, but no later than September 1, 2018;~~

Duke Energy Indiana to continue to defer protected federal EDIT until January 1, 2020, at which time it will be returned to customers according to the Average Rate Assumption Method (ARAM) required by the Internal Revenue Service over approximately 26 years; and

Duke Energy Indiana to begin returning unprotected federal EDIT upon IURC approval, over 10 years. In order to mitigate the negative impacts to cash flow and credit metrics, the Settlement Agreement allows Duke Energy Indiana to return $7 million per year over the first five years, with a step up to $35 million per year in the following five years.

The settlement was subject to the review and approval of the IURC. An evidentiary hearing was held on July 13, 2018. On August 22, 2018, the IURC approved the settlement and rates have been adjusted effective September 1, 2018.

Piedmont

~~South Carolina Rate Stabilization Adjustment Filing~~

On June 15, 2018, Piedmont filed with the PSCSC under the South Carolina Rate Stabilization Act its quarterly monitoring report for the 12-month period ending March 31, 2018. The filing included a revenue deficiency calculation and tariff rates in order to permit Piedmont the opportunity to earn the rate of return on common equity established in its last general rate case. The filing also incorporated the impacts of the Tax Act by lowering the income tax component of the revenue requirement, refunding protected EDIT under allowable normalization rules, unprotected EDIT and amounts over collected from the customers from January 1, 2018, through the end of the review period for this proceeding. A settlement agreement reached between Piedmont and ORS was filed with the PSCSC on September 14, 2018, and approved by the PSCSC on October 3, 2018. Terms of the settlement include implementation of rates for the 12-month period beginning November 2018 with a return on equity of 10.2 percent.

~~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)~~

~~North Carolina~~Tennessee Integrity Management Rider Filing

In ~~October~~November 2018, Piedmont filed a petition with the TPUC under the ~~Integrity Management Rider (IMR)~~IMR mechanism to collect an additional ~~$9.5~~$3 million in annual revenues, effective ~~December 2018~~January 2019, based on the eligible capital investments closed to integrity and safety projects over the ~~six-month~~12-month period ~~ended September 30,~~ending October 31, 2018. A hearing on the matter was held on March 11, 2019, and a decision is expected in May 2019.



FINANCIAL STATEMENTS	REGULATORY MATTERS

2019 North Carolina Rate Case

On April 1, 2019, Piedmont filed an application with the NCUC, its first general rate case in North Carolina in six years, for a rate increase for retail customers of approximately $83 million, which represents an approximate 9 percent increase in retail revenues. The rate increase is driven by significant infrastructure upgrade investments (plant additions) since the last general rate case, offset by savings that customers will begin receiving due to federal and state tax reform. Approximately half of the plant additions being rolled into rate base are categories of plant investment not covered under the IMR mechanism, which was originally approved as part of the 2013 North Carolina Rate Case. Piedmont anticipates the NCUC will schedule the evidentiary hearing for late summer/early fall 2019, which would enable the rate change arising from this proceeding to take effect by the end of 2019. Piedmont cannot predict the outcome of this matter.

In May 2018, Piedmont filed, and the NCUC approved, a petition under the IMR mechanism to update rates, effective June 2018, based on the eligible capital investments closed to integrity and safety projects over the six-month period ending March 31, 2018, and the decrease in the corporate federal income tax rate effective January 1, 2018. The combined effect of the update was a reduction to annual revenues of approximately $5.7 million.

OTHER REGULATORY MATTERS

~~Progress Energy Merger FERC Mitigation~~

Since December 2014, the FERC Office of Enforcement has conducted an investigation of Duke Energy’s market power filings in its application for approval of the Progress Energy merger submitted in 2012. On June 8, 2018, the FERC issued an order approving a settlement agreement under which Duke Energy paid a penalty of $3.5 million. The FERC Office of Enforcement stated in its conclusion that Duke Energy violated FERC regulations by failing to fully and accurately describe certain specific matters in its market power filings. Duke neither admitted nor denied the alleged violations.

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), an approximately 600-mile interstate natural gas pipeline running from West Virginia to North Carolina. The ACP pipeline is designed to meet, in part, the needs identified by Duke Energy Carolinas, Duke Energy Progress and Piedmont. Dominion will ~~build~~be responsible for building and ~~operate~~operating the ACP pipeline and holds a leading ownership percentage in ACP of 48 percent. Duke Energy owns a 47 percent interest, which is accounted for as an equity method investment through its Gas Utilities and Infrastructure segment. Southern Company Gas maintains a 5 percent interest. See Note 1213 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.

In 2018, the FERC issued a series of Notices to Proceed, which authorized the project to begin certain construction-related activities along the pipeline route, including supply header and compressors. On May 11, 2018, and October 19, 2018, FERC issued Notices to Proceed allowing full construction activities in all areas of West Virginia except in the Monongahela National Forest. On July 24, 2018, FERC issued a Notice to Proceed allowing full construction activities along the project route in North Carolina. On October 19, 2018, the conditions to effectiveness of the Virginia 401 water quality certification were satisfied. Immediately following receipt of the Virginia 401 certification, ACP filed a request for FERC to issue a Notice to Proceed with full construction activities in ~~Virginia, receipt of which is expected shortly.~~Virginia. We appreciate the professional and collaborative process by the permitting agencies ~~have pursued~~designed to ensure that this critical energy infrastructure project will meet the stringent environmental standards required by law and regulation.

ACP is the subject of challenges in state and federal courts and agencies, including, among others, challenges of the project’s incidental take statement (ITS), crossings of the Blue Ridge Parkway, the Appalachian Trail, and the Monongahela and George Washington National Forests, the project’s U.S. Army Corps of Engineers (USACE) 404 permit, the Virginia conditional 401 water quality certification, the FERC Environmental Impact Statement order and the FERC order approving the Certificate of Public Convenience and Necessity. Each of these challenges alleges non-compliance on the part of federal and state permitting authorities and adverse ecological consequences if the project is permitted to proceed. Since December 2018, notable developments in these challenges include a stay issued by the U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit) of the project's biological opinion and ITS (which stay has halted most project construction activity), a Fourth Circuit decision vacating the project's permits to cross the Monongahela and George Washington National Forests and the Appalachian Trail, the Fourth Circuit's remand to USACE of ACP's Huntington District 404 verification and the Fourth Circuit’s remand to the National Park Service of the ACP’s Blue Ridge Parkway right-of-way. ACP is vigorously defending these challenges and coordinating with the federal and state authorities which are the direct parties to the challenges. ~~Since July 2018, notable developments in these challenges include~~ACP and federal agencies are coordinating on a ~~stay issued by~~potential appeal of the Fourth Circuit’s recent ruling vacating the project’s permit to cross the Appalachian Trail. ACP is also evaluating possible legislative and administrative remedies. On May 9, 2019, ACP, the U.S. ~~Court~~Fish and Wildlife Service and the Department of ~~Appeals for~~Justice will present arguments before the Fourth Circuit ~~(Fourth Circuit) on construction activities through the Monongahela and George Washington National Forests, a reissuance of~~supporting the project’s ~~ITS~~stayed biological opinion and ~~Blue Ridge Parkway right-of-way and renewed challenges of these reissued permits and the USACE’s lifting of its administrative stay of ACP’s Huntington District 404 permit.~~ITS.

The ~~FERC Stop Work Order following~~delays resulting from the ~~Fourth Circuit's vacatur of the project's ITS and Blue Ridge Parkway right-of-way, together with delays in obtaining permits necessary for construction~~legal challenges described above have impacted the cost and schedule for the project. As a result, project cost estimates have increased ~~from a range of $6.0~~to $7.0 billion to ~~$6.5 billion to a range of $6.5 billion to $7.0~~$7.8 billion, excluding financing costs. ACP ~~is pursuing a phased in-service approach with customers whereby it maintains~~expects to achieve a late ~~2019~~2020 in-service date for key segments of the project, while it expects the remainder to ~~meet peak winter demand in critically constrained regions served by the project. ACP will be pursuing a mid-2020 in-service date for the remaining segments.~~extend into 2021. Abnormal weather, work delays (including delays due to judicial or regulatory action) and other conditions may result in cost or schedule modifications in the future.

~~Sabal Trail Transmission, LLC~~

On May 4, 2015, Duke Energy acquired a 7.5 percent ownership interest in Sabal Trail, which is accounted for as an equity method investment, 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 12 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. The Sabal Trail pipeline received other required regulatory approvals and the Phase 1 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. This request is required to support commissioning and testing activities at the facility. On March 16, 2018, FERC approved the Citrus lateral and it was placed in service.

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 (D.C. Circuit Court of Appeals). 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, vacated the CPCN order and remanded the case to FERC. In response to the August 2017 court decision, the FERC issued a draft Supplemental Environmental Impact Statement (SEIS) on September 27, 2017. On October 6, 2017, FERC and a group of industry intervenors, including Sabal Trail and Duke Energy Florida, filed separate petitions with the D.C. Circuit Court of Appeals requesting rehearing regarding the court's decision to vacate the CPCN order. On January 31, 2018, the D.C. Circuit Court of Appeals denied the requests for rehearing. On February 2, 2018, Sabal Trail filed a request with FERC for expedited issuance of its order on remand and reissuance of the CPCN. In the alternative, the pipeline requested that FERC issue a temporary emergency CPCN to allow for continued operations. On February 5, 2018, FERC issued the final SEIS. On February 6, 2018, FERC and the intervenors in this case each filed motions for stay with the D.C. Circuit Court to stay the court's mandate. On March 7, 2018, the D.C. Circuit Court of Appeals granted FERC and Sabal Trail’s stay request. On March 14, 2018, FERC issued its final order on remand, which recertified the project. On August 10, 2018, FERC denied requests for rehearing of the final order on remand.

Constitution Pipeline Company, LLC

Duke Energy owns a 24 percent ownership interest in Constitution, which is accounted for as an equity method investment. 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. Before the permitting delays discussed below, Duke Energy's total anticipated contributions were approximately $229 million. As a result of the permitting delays and project uncertainty, total anticipated contributions by Duke Energy can no longer be reasonably estimated. Since April 2016, with the actions of the New York State Department of Environmental Conservation (NYSDEC), Constitution stopped construction and discontinued capitalization of future development costs until the project's uncertainty is resolved.

In December 2014, Constitution received approval from the FERC to construct and operate the proposed pipeline. However, on April 22, 2016, the NYSDEC denied Constitution’s application for a necessary water quality certification for the New York portion of the Constitution pipeline. Constitution filed a series of 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~~culminating in ~~part and dismissed in part. In September 2017, Constitution filed a petition for a rehearing of portions of the decision unrelated~~an appeal to ~~the water quality certification, which was denied by the U.S. Court of Appeals. In January 2018, Constitution petitioned~~ the Supreme Court of the United States, ~~to review the U.S. Court of Appeals decision, and~~which appeal was denied on April 30, ~~2018, the Supreme Court denied Constitution's petition.~~2018. In addition, in October 2017, Constitution filed a petition for declaratory order requesting FERC to find that the NYSDEC waived its rights to issue a Section 401 water quality certification by not acting on Constitution's application within a reasonable period of time as required by ~~statute. This~~statute, which petition was ~~based~~denied on ~~precedent established by another pipeline’s successful petition with FERC following a District of Columbia~~January 11, 2018.



FINANCIAL STATEMENTS	REGULATORY MATTERS

On January 25, 2019, the D.C. Circuit Court ~~ruling. On January 11,~~rendered a decision in Hoopa Valley Tribe v. FERC that withdrawal and resubmission of an application for a Section 401 water quality certification constituted a waiver by the relevant state agency when such withdrawals and resubmissions were intended to extend the one-year limit on accepting or rejecting such an application. As Constitution had made similar arguments in its 2018 petition to FERC ~~denied Constitution's petition. In February 2018,~~for a declaratory order, on April 1, 2019, Constitution filed a ~~rehearing request~~new petition for declaratory order requesting FERC find a waiver on the part of NYSDEC in accordance with the D.C. Circuit Court’s newly established precedent. On May 1, 2019, Constitution filed its response to supplemental pleadings filed by NYSDEC and others in this proceeding. A FERC ~~of its finding that the NYSDEC did not waive the Section 401 certification requirement. On July 19, 2018, FERC denied Constitution's rehearing request.~~ response is expected later this year.

Constitution is currently unable to approximate an in-service date for the project due to the NYSDEC's denial of the water quality certification. The Constitution partners remain committed to the project and are evaluating next steps to move the project forward. On June 25, 2018, Constitution filed with FERC a Request for Extension of Time until December 2, 2020, for construction of the project. ~~Duke Energy cannot predict the outcome~~On November 5, 2018, FERC issued an Order Granting Extension of ~~this matter.~~Time.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2018, Duke Energy recorded an ~~other-than-temporary impairment (OTTI)~~OTTI of $55 million within Equity in (losses) earnings of unconsolidated affiliates on Duke Energy's Condensed Consolidated Statements of ~~Operations.~~Income. The charge ~~represents~~represented the excess carrying value over the estimated fair value of the project, which was based on a Level 3 Fair Value measurement that was determined from the income approach using discounted cash flows. The impairment was primarily due to ~~the recent~~ actions taken by the courts and regulators to uphold the NYSDEC's denial of the certification and uncertainty associated with the remaining legal and regulatory challenges.

See Note 1213 for additional information related to ownership interest and carrying value of the investment.

Potential Coal Plant Retirements

The Subsidiary Registrants periodically file ~~Integrated Resource Plans (IRP)~~IRPs with their state regulatory commissions. The IRPs provide a view of forecasted energy needs over a long term (10 to 20 years) and options being considered to meet those needs. 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 primarily because facilities do not have the requisite emission control equipment to meet ~~U.S. Environmental Protection Agency (EPA) regulations recently approved or proposed.~~

~~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~~regulatory requirements expected to ~~Condensed Consolidated Financial Statements – (Unaudited) – (Continued)~~

apply in the near future. Duke Energy continues to evaluate the potential need to retire these coal-fired generating facilities earlier than the current estimated useful lives and plans to seek regulatory recovery for amounts that would not be otherwise recovered when any of these assets are retired.

The table below contains the net carrying value of generating facilities planned for retirement or included in recent IRPs as evaluated for potential retirement due to a lack of requisite environmental control equipment. Dollar amounts in the table below are included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of ~~September 30, 2018,~~March 31, 2019, and exclude capitalized asset retirement costs.


		Remaining Net			Remaining Net
	Capacity	Book Value		Capacity	Book Value
	(in MW)	(in millions)		(in MW)	(in millions)
Duke Energy Carolinas
Allen Steam Station Units 1-3^(a)	585	$	132	585	$	159
Progress Energy and Duke Energy Florida
Crystal River Units 1 and 2^(b)	766	100
Duke Energy Indiana
Gallagher Units 2 and 4^(c)	280	123
Gallagher Units 2 and 4^(b)				280	120
Total Duke Energy	1,631	$	355	865	$	279


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


(b)	~~Duke Energy Florida expects to retire these coal units by the end of 2018 to comply with environmental regulations.~~


~~(c)~~	Duke Energy Indiana committed to either retire or stop burning coal at Gallagher Units 2 and 4 by December 31, 2022, as part of the 2016 settlement of Edwardsport IGCC matters.

Refer to the "Western Carolinas Modernization Plan" discussion above for details of Duke Energy Progress' planned retirements.

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 and other environmental matters. These regulations can be changed from time to time, imposing new obligations on the Duke Energy Registrants. The following environmental matters impact all of the Duke Energy Registrants.



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

Remediation Activities

In addition to ~~asset retirement obligations (ARO)~~AROs recorded as a result of various environmental regulations, the Duke Energy Registrants are responsible for environmental remediation at various sites. These include certain properties that are part of ongoing operations and sites formerly owned or used by Duke Energy entities. These sites are in various stages of investigation, remediation and monitoring. Managed in conjunction with relevant federal, state and local agencies, remediation activities vary based upon site conditions and location, remediation requirements, complexity and sharing of responsibility. If remediation activities involve joint and several liability provisions, strict liability, or cost recovery or contribution actions, the Duke Energy Registrants could potentially be held responsible for environmental impacts caused by other potentially responsible parties and may also benefit from insurance policies or contractual indemnities that cover some or all cleanup costs. Liabilities are recorded when losses become probable and are reasonably estimable. The total costs that may be incurred cannot be estimated because the extent of environmental impact, allocation among potentially responsible parties, remediation alternatives and/or regulatory decisions have not yet been determined at all sites. Additional costs associated with remediation activities are likely to be incurred in the future and could be significant. Costs are typically expensed as Operation, maintenance and other on the Condensed Consolidated Statements of Operations unless regulatory recovery of the costs is deemed probable.

~~PART I~~

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

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

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

The following tables contain 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, 2018																							Three Months Ended March 31, 2019
				Duke						Duke			Duke			Duke			Duke								Duke				Duke		Duke		Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy					Duke			Energy		Progress		Energy		Energy		Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont		Energy			Carolinas		Energy		Progress		Florida		Ohio			Indiana		Piedmont
Balance at beginning of period	$	81		$	10		$	15		$	3		$	12		$	47		$	5		$	2	$	77		$	11	$	11	$	4	$	6	$	48		$	5	$	2
Provisions/adjustments	7			3			2			3			(1		)	3			1			—		(2		)	2		2		1		2		(6		)	—		—
Cash reductions	(20		)	(2		)	(5		)	(1		)	(4		)	(12		)	(1		)	—		(8		)	—		—		—		—		(8		)	—		—
Balance at end of period	$	68		$	11		$	12		$	5		$	7		$	38		$	5		$	2	$	67		$	13	$	13	$	5	$	8	$	34		$	5	$	2


	Nine Months Ended September 30, 2017																						Three Months Ended March 31, 2018
				Duke						Duke		Duke			Duke			Duke								Duke					Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy		Energy			Energy			Energy					Duke			Energy		Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress		Florida			Ohio			Indiana			Piedmont		Energy			Carolinas		Energy			Progress			Florida			Ohio			Indiana		Piedmont
Balance at beginning of period	$	98		$	10		$	18		$	3	$	14		$	59		$	10		$	1	$	81		$	10	$	15		$	3		$	12		$	47		$	5	$	2
Provisions/adjustments	(1		)	2			1			—		1			(3		)	(2		)	1		4			1		3			1			1			—			1		—
Cash reductions	(13		)	(2		)	(3		)	—		(3		)	(7		)	(1		)	—		(5		)	—		(2		)	(1		)	(1		)	(3		)	—		—
Balance at end of period	$	84		$	10		$	16		$	3	$	12		$	49		$	7		$	2	$	80		$	11	$	16		$	3		$	12		$	44		$	6	$	2

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	$	57	$	45
Duke Energy Carolinas	17		12
Duke Energy Ohio	30		22
Piedmont	2		2



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

LITIGATION

Duke Energy Carolinas and Duke Energy Progress

NCDEQ Closure Litigation

The Coal Ash Act requires CCR surface impoundments in North Carolina to be closed, with the closure method and timing based on a risk ranking classification determined by legislation or state regulators. The NCDEQ previously classified the impoundments at Allen, Belews Creek, Rogers, Marshall, Mayo and Roxboro as low risk and Duke Energy expected to close those sites through a combination of a cap system and a groundwater monitoring system. However, on April 1, 2019, NCDEQ issued a closure determination requiring Duke Energy Carolinas and Duke Energy Progress to excavate all remaining coal ash impoundments at these facilities. On April 26, 2019, Duke Energy Carolinas and Duke Energy Progress filed Petitions for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ’s determination that all ash basins must be excavated. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

Coal Ash Insurance Coverage Litigation

In March 2017, Duke Energy Carolinas and Duke Energy Progress filed a civil action in North Carolina Superior Court against various insurance providers. The lawsuit seeks payment for coal ash-related liabilities covered by third-party liability insurance policies. The insurance policies were issued between 1971 and 1986 and provide third-party liability insurance for property damage. The civil action seeks damages for breach of contract and indemnification for costs arising from the Coal Ash Act and the EPA CCR rule at 15 coal-fired plants in North Carolina and South Carolina. On January 23, 2019, the court granted the parties’ joint motion for a four-month stay of the proceedings, until June 3, 2019, to allow the parties to discuss potential resolution. If the case is not fully resolved at that time, litigation will resume. The ~~parties are engaged in discovery.~~trial remains scheduled for August 2020. 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)~~SELC sent notices of intent to sue Duke Energy Carolinas and Duke Energy Progress related to alleged ~~Clean Water Act (CWA)~~CWA violations from coal ash basins at two of their coal-fired power plants in North Carolina. The NCDEQ filed enforcement actions against Duke Energy Carolinas and Duke Energy Progress alleging violations of water discharge permits and North Carolina groundwater standards. The cases have been consolidated and are being heard before a single judge in the North Carolina Superior Court.

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

The court issued orders in 2016 granting Motions for Partial Summary Judgment for seven of the 14 North Carolina plants named in the enforcement actions. 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 for the remaining seven plants. On March 15, 2017, Duke Energy Carolinas and Duke Energy Progress filed a Notice of Appeal with the North Carolina Court of Appeals to challenge the trial court’s order. The parties were unable to reach an agreement at mediation in April 2017 and submitted briefs to the trial court on remaining issues to be tried. On August 1, 2018, the Court of Appeals dismissed the appeal and the matter is proceeding before the trial court. ~~No trial date has been scheduled.~~In light of the NCDEQ's determination that all ash basins must be excavated, on April 29, 2019, the court decided to stay any activity in the case until August 2019, at which time the court will hold another status conference. Duke Energy Carolinas and Duke Energy Progress 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)~~

Federal Citizens Suits

On June 13, 2016, the ~~Roanoke River Basin Association (RRBA)~~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)~~NPDES permit provisions survived the motion to dismiss, and Duke Energy Progress filed its response on May 10, 2017. Duke Energy Progress and RRBA each filed motions for summary judgment on March 23, 2018. The court has not yet ruled on these motions.

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 at the Roxboro Plant and one claim relating to the use of nearby water bodies. Duke Energy Progress and RRBA each filed motions for summary judgment on April 17, 2018, and the court has not yet ruled on these motions.

On May 8, 2018, on motion from Duke Energy Progress, the court ordered trial in both of the above matters to be consolidated. ~~Trial is currently scheduled for July 15, 2019.~~

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.~~April 5, 2019, Duke Energy Progress filed a motion to ~~dismiss, which was granted by~~stay the case following the NCDEQ’s determination that all ash basins must be excavated. On April 19, 2019, the court ~~on March 30, 2018. RRBA had until April 30, 2018, to file~~entered an ~~appeal to~~order staying the ~~Fourth Circuit but did not do so.~~

Oncase through August ~~2, 2017, RRBA filed a federal citizen suit in the U.S. District Court for the Middle District of North Carolina challenging the closure plans~~7, 2019, at ~~the Roxboro Plant under the EPA CCR Rule. Duke Energy Progress filed a motion to dismiss on October 2, 2017,~~ which ~~was granted by~~time the court ~~on May 29, 2018. RRBA had until June 28, 2018, to file an appeal to the Fourth Circuit but did not do so.~~will hold a status conference.

On December 5, 2017, various parties filed a federal citizen suit in the U.S. District Court for the Middle District of North Carolina for alleged violations at Duke Energy Carolinas' Belews Creek ~~Steam Station (Belews Creek)~~ under the CWA. ~~Duke Energy Carolinas filed a motion to dismiss on February 5, 2018, and on August 13, 2018, the court issued an order denying Duke Energy Carolinas’ motion to dismiss.~~ Duke Energy Carolinas' answer to the complaint was filed on August 27, 2018. On October 10, 2018, Duke Energy Carolinas filed Motions to Dismiss for lack of standing, Motion for Judgment on the Pleadings and Motion to Stay Discovery. ~~A hearing on~~On January 9, 2019, the court entered an order denying Duke Energy Carolinas' motion to stay ~~is scheduled for December 12, 2018, and a scheduling conference~~discovery. There has been ~~set for January 2019.~~no ruling on the other pending motions. On April 5, 2019, Duke Energy Carolinas filed a motion to stay the case following the NCDEQ’s determination that all ash basins must be excavated. On April 19, 2019, the court entered an order staying the case through August 7, 2019, at which time the court will hold a status conference.

Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of these matters.

~~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 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. Settlement payments are being made, and, as of September 30, 2018, Duke Energy Carolinas and Duke Energy Progress have remaining reserves of $4 million and $2 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. The parties entered into a Settlement Agreement on January 24, 2018, which resulted in the dismissal of the underlying class action on January 25, 2018.

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

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 1 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. On March 6, 2018, Plaintiffs' counsel voluntarily dismissed the action without prejudice

~~It is not possible to estimate the maximum exposure of loss, if any, that may occur in connection with future claims that 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, 2018,~~March 31, 2019, there were ~~160~~139 asserted claims for non-malignant cases with cumulative relief sought of up to ~~$43~~$34 million, and 6357 asserted claims for malignant cases with cumulative relief sought of up to ~~$19~~$18 million. Based on Duke Energy Carolinas’ experience, it is expected that the ultimate resolution of most of these claims likely will be less than the amount claimed.

Duke Energy Carolinas has recognized asbestos-related reserves of ~~$461~~$617 million at ~~September 30, 2018,~~March 31, 2019, and ~~$489~~$630 million at December 31, ~~2017.~~2018. 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 ~~2037,~~2038 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 ~~2037~~2038 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 $764 million in excess of the self-insured retention. Receivables for insurance recoveries were ~~$553~~$739 million at ~~September 30, 2018,~~March 31, 2019, and ~~$585 million at~~ December 31, ~~2017.~~2018. 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.

Duke Energy Progress and Duke Energy Florida

Spent Nuclear Fuel Matters

On October 16, 2014, Duke Energy Progress and Duke Energy Florida sued the U.S. in the U.S. Court of Federal Claims. 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. Duke Energy Progress and Duke Energy Florida asserted damages for the period January 1, 2011, through December 31, 2013, of $48 million and $25 million, respectively. On November 17, 2017, the court awarded Duke Energy Progress and Duke Energy Florida $48 million and $21 million, respectively, subject to appeal. No appeals were filed and Duke Energy Progress and Duke Energy Florida recognized the recoveries in the first quarter of 2018. Claims for all periods through 2013 have been resolved. On June 22, 2018, Duke Energy Progress and Duke Energy Florida filed a complaint for damages incurred for 2014 through first quarter 2018.

Duke Energy ~~Progress~~Florida

~~Gypsum Supply Agreement Matter~~Fluor Contract Litigation

On ~~June 30, 2017, CertainTeed Gypsum NC, Inc. (CertainTeed)~~January 29, 2019, Fluor filed a ~~declaratory judgment action~~breach of contract lawsuit in the U.S. District Court for the Middle District of Florida against Duke Energy ~~Progress~~Florida related to an EPC agreement for the combined-cycle natural gas plant in ~~the North Carolina Business Court relating~~Citrus County, Florida. Fluor filed an amended complaint on February 13, 2019. Fluor’s multicount complaint seeks civil, statutory and contractual remedies related to ~~a gypsum supply agreement. In its~~Duke Energy Florida’s $67 million draw in early 2019, on Fluor’s letter of credit and offset of invoiced amounts. Duke Energy Florida moved to dismiss all counts of Fluor's amended complaint, ~~CertainTeed sought an order from~~and on April 16, 2019, the court ~~declaring that the minimum amount of gypsum~~dismissed Fluor's complaint without prejudice. On April 26, 2019, Fluor filed a second amended complaint. Duke Energy ~~Progress must provide~~Florida is attempting to ~~CertainTeed under the supply agreement is 50,000 tons per month through 2029. Subsequently, CertainTeed also sought a preliminary injunction requiring~~recover from Fluor $110 million in additional costs incurred by Duke Energy ~~Progress to provide 50,000 tons of gypsum per month through the trial date. The parties reached an agreement under which~~Florida. Duke Energy Progress delivered 50,000 tons of gypsum per month through August 2018. Trial in this matter was completed on July 16, 2018. On August 29, 2018, the court issued an order and opinion finding that Duke Energy Progress is required to supply 50,000 tons of gypsum/month, but that CertainTeed’s sole remedy for Duke Energy Progress’ long-term discontinuance under the agreement is liquidated damages. This ruling effectively limits CertainTeed’s remedies in the event that Duke Energy Progress elects to permanently discontinue gypsum supply at the Roxboro plant. The estimated maximum amount that would be owed under the liquidated damages provision is approximately $90 million. Both CertainTeed and Duke Energy Progress have filed cross-appeals, as they explore a possible resolution. Duke Energy ProgressFlorida 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)~~

~~Duke Energy Florida~~

~~Class Action Lawsuit~~

On February 22, 2016, a lawsuit was filed in the U.S. District Court for the Southern District of Florida on behalf of a putative class of Duke Energy Florida and FP&L’s customers in Florida. The suit alleges the state of Florida’s nuclear power plant cost recovery statutes (NCRS) are unconstitutional and pre-empted by federal law. Plaintiffs claim they are entitled to repayment of all money paid by customers of Duke Energy Florida and FP&L as a result 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. 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 (Eleventh Circuit). On July 11, 2018, the Eleventh Circuit affirmed the U.S. District Court's dismissal of the lawsuit. The deadline to file a petition for cert was October 9, 2018, and no petition was filed; therefore, the dismissal of the lawsuit is final.

~~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 sought recovery of $54 million in milestone payments in excess of work performed under an Engineering, Procurement and Construction agreement (EPC) for Levy as well as a determination by the court of the amounts due to Westinghouse as a result of the termination of an EPC contract. Duke Energy Florida recognized an exit obligation as a result of the termination of the EPC. On March 31, 2014, Westinghouse filed a separate lawsuit against Duke Energy Florida in U.S. District Court for the Western District of Pennsylvania alleging damages under the same EPC contract 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 would 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, granting Westinghouse a $30 million termination fee claim and dismissing Duke Energy Florida's $54 million refund claim. Westinghouse's claim for termination costs continued to trial. Following a trial on the matter, the court issued an order in December 2016 denying Westinghouse’s claim for termination costs and reaffirming its earlier ruling in favor of Westinghouse on the $30 million termination fee. Judgment was entered against Duke Energy Florida in the amount of approximately $34 million, which includes prejudgment interest. Westinghouse appealed the trial court's order to the Fourth Circuit and Duke Energy Florida cross-appealed.

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. Westinghouse and Duke Energy Florida executed a settlement agreement resolving this matter on April 5, 2018. The bankruptcy court approved the settlement and Duke Energy Florida paid approximately $34 million to Westinghouse in July 2018 pursuant to this agreement. At the request of the parties, the Fourth Circuit has dismissed the appeal.

~~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 Sixth Circuit, which affirmed the trial court's ruling on April 10, 2018. The dismissal of the lawsuit is therefore final.

Other Litigation and Legal Proceedings

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

The table below presents recorded reserves based on management’s best estimate of probable loss for legal matters, excluding asbestos-related reserves ~~and the exit obligation related to the termination of an EPC contract~~ discussed 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, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Reserves for Legal Matters
Duke Energy	$	63	$	88	$	66	$	65
Duke Energy Carolinas	11		30		8		9
Progress Energy	50		55		57		54
Duke Energy Progress	11		13		15		12
Duke Energy Florida	23		24		24		24
Piedmont	1		2		1		1

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

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 maximum potential payments. However, the Duke Energy Registrants do not believe these guarantees will have a material effect on their results of operations, cash flows or financial position.

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

5. LEASES

As described in Note 1, Duke Energy adopted the revised accounting guidance for Leaseseffective January 1, 2019, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. Adoption of the new standard resulted in the recording of ROU assets and operating lease liabilities as follows:



	As of January 1, 2019
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
ROU assets	$	1,750	$	153	$	863	$	407	$	456	$	23	$	61	$	26
Operating lease liabilities – current	205		28		96		35		61		1		4		4
Operating lease liabilities – noncurrent	1,504		127		766		371		395		22		58		25

As part of its operations, Duke Energy leases certain aircraft, space on communication towers, industrial equipment, fleet vehicles, fuel transportation (barges and railcars), land and office space under various terms and expiration dates. Additionally, Duke Energy Carolinas, Duke Energy Progress and Duke Energy Indiana have finance leases related to firm natural gas pipeline transportation capacity. Duke Energy Progress and Duke Energy Florida have entered into certain PPAs, which are classified as finance and operating leases.

Duke Energy has certain lease agreements, which include variable lease payments that are based on the usage of an asset. These variable lease payments are not included in the measurement of the ROU assets or operating lease liabilities on the Condensed Consolidated Financial Statements.

Certain Duke Energy lease agreements include options for renewal and early termination. The intent to renew a lease varies depending on the lease type and asset. Renewal options that are reasonably certain to be exercised are included in the lease measurements. The decision to terminate a lease early is dependent on various economic factors. No termination options have been in included in any of the lease measurements.

Duke Energy operates various renewable energy projects and sells the generated output to utilities, electric cooperatives, municipalities and commercial and industrial customers through long-term PPAs. In certain situations, these PPAs and the associated renewable energy projects qualify as operating leases. Rental income from these leases is accounted for as Nonregulated electric and other revenues in the Condensed Consolidated Statements of Operations. There are no minimum lease payments as all payments are contingent based on actual electricity generated by the renewable energy projects. Contingent lease payments were $64 million for the three months ended March 31, 2019. As of March 31, 2019, renewable energy projects owned by Duke Energy and accounted for as operating leases had a cost basis of $3,345 million and accumulated depreciation of $631 million. These assets are principally classified as nonregulated electric generation and transmission assets.



FINANCIAL STATEMENTS	LEASES

The following table presents the components of lease expense.



	Three Months Ended March 31, 2019
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Operating lease expense^(a)	$	72	$	12	$	42	$	19	$	23	$	3	$	5	$	1
Short-term lease expense^(a)	7		2		3		1		2		—		1		—
Variable lease expense^(a)	11		8		2		1		1		—		—		—
Finance lease expense
Amortization of leased assets^(b)	27		1		3		1		2		—		—		—
Interest on lease liabilities^(c)	17		4		6		4		2		—		—		—
Total finance lease expense	44		5		9		5		4		—		—		—
Total lease expense	$	134	$	27	$	56	$	26	$	30	$	3	$	6	$	1


(a)	Included in Operations, maintenance and other or, for barges and railcars, Fuel used in electric generation and purchased power on the Condensed Consolidated Statements of Operations.


(b)	Included in Depreciation and amortization on the Condensed Consolidated Statements of Operations.


(c)	Included in Interest Expense on the Condensed Consolidated Statements of Operations.

The following table presents rental expense for operating leases, as reported under the old lease standard. These amounts are included in Operation, maintenance and other and Fuel used in electric generation and purchased power on the Condensed Consolidated Statements of Operations.



(in millions)	Year Ended December 31, 2018
Duke Energy	$	268
Duke Energy Carolinas	49
Progress Energy	143
Duke Energy Progress	75
Duke Energy Florida	68
Duke Energy Ohio	13
Duke Energy Indiana	21
Piedmont	11

The following table presents operating lease maturities and a reconciliation of the undiscounted cash flows to operating lease liabilities.



	Twelve months ended March 31,
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
2020	$	271		$	32		$	125		$	47		$	78		$	2		$	6		$	5
2021	238			29			112			46			66			2			5			5
2022	192			19			90			35			55			2			4			5
2023	180			19			89			34			55			2			4			5
2024	169			16			89			35			54			2			4			5
Thereafter	1,057			66			530			309			221			22			67			9
Total operating lease payments	2,107			181			1,035			506			529			32			90			34
Less: present value discount	(436		)	(32		)	(198		)	(118		)	(80		)	(10		)	(29		)	(4		)
Total operating lease liabilities^(a)	$	1,671		$	149		$	837		$	388		$	449		$	22		$	61		$	30


(a)	Certain operating lease payments include renewal options that are reasonably certain to be exercised.



FINANCIAL STATEMENTS	LEASES

The following table presents future minimum lease payments under operating leases, which at inception had a non-cancelable term of more than one year, as reported under the old lease standard.



	December 31, 2018
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
2019	$	239	$	33	$	97	$	49	$	48	$	2	$	6	$	5
2020	219		29		90		46		44		2		5		5
2021	186		19		79		37		42		2		4		5
2022	170		19		76		34		42		2		4		5
2023	160		17		77		35		42		2		5		6
Thereafter	1,017		68		455		314		141		23		66		11
Total	$	1,991	$	185	$	874	$	515	$	359	$	33	$	90	$	37

The following table presents finance lease maturities and a reconciliation of the undiscounted cash flows to finance lease liabilities.



	Twelve months ended March 31,
				Duke						Duke			Duke			Duke		Duke
	Duke			Energy			Progress			Energy			Energy			Energy		Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio		Indiana
2020	$	185		$	19		$	69		$	44		$	25		$	1	$	1
2021	191			18			69			44			25			—		1
2022	194			14			69			44			25			—		1
2023	179			14			69			44			25			—		1
2024	180			14			69			44			25			—		1
Thereafter	889			195			573			558			15			—		28
Total finance lease payments	1,818			274			918			778			140			1		33
Less: amount representing interest	(729		)	(166		)	(495		)	(467		)	(28		)	—		(23		)
Total finance lease liabilities	$	1,089		$	108		$	423		$	311		$	112		$	1	$	10

The following table presents future minimum lease payments under finance leases, as reported under the old lease standard.



	December 31, 2018
				Duke						Duke			Duke			Duke		Duke
	Duke			Energy			Progress			Energy			Energy			Energy		Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio		Indiana
2019	$	170		$	20		$	45		$	20		$	25		$	2	$	1
2020	174			20			46			21			25			—		1
2021	177			15			45			20			25			—		1
2022	165			15			45			21			24			—		1
2023	165			15			45			21			24			—		1
Thereafter	577			204			230			209			21			—		27
Minimum annual payments	1,428			289			456			312			144			2		32
Less: amount representing interest	(487		)	(180		)	(205		)	(175		)	(30		)	—		(22		)
Total	$	941		$	109		$	251		$	137		$	114		$	2	$	10



FINANCIAL STATEMENTS	LEASES

The following tables contain additional information related to leases.



		March 31, 2019

				Duke				Duke		Duke		Duke		Duke
		Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Classification	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Assets
Operating	Operating Lease ROU Assets, net	$	1,698	$	146	$	835	$	388	$	447	$	22	$	61	$	27
Finance	Net property, plant and equipment	1,081		122		428		310		118		—		10		—
Total lease assets		$	2,779	$	268	$	1,263	$	698	$	565	$	22	$	71	$	27
Liabilities
Current
Operating	Other current liabilities	$	183	$	26	$	89	$	27	$	62	$	1	$	4	$	4
Finance	Current maturities of long-term debt	121		6		23		6		17		1		—		—
Noncurrent
Operating	Operating Lease Liabilities	1,488		123		748		361		387		21		57		26
Finance	Long-Term Debt	968		102		400		305		95		—		10		—
Total lease liabilities		$	2,760	$	257	$	1,260	$	699	$	561	$	23	$	71	$	30



	Three Months Ended March 31, 2019

			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Cash paid for amounts included in the measurement of lease liabilities^(a)
Operating cash flows from operating leases	$	67	$	6	$	31	$	14	$	17	$	1	$	2	$	2
Operating cash flows from finance leases	17		4		6		4		2		—		—		—
Financing cash flows from finance leases	27		1		3		1		2		—		—		—

Lease assets obtained in exchange for new lease liabilities (non-cash)
Finance	$	175	$	—	$	175	$	175	$	—	$	—	$	—	$	—
Operating^(b)	7		—		—		—		—		—		—		—


(a)	No amounts were classified as investing cash flows from operating leases for the three months ended March 31, 2019.


(b)	Does not include ROU assets recorded as a result of the adoption of the new lease standard.



FINANCIAL STATEMENTS	LEASES



	March 31, 2019

			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Weighted-average remaining lease term (years)
Operating leases	11		9		11		13		9		18		19		7
Finance leases	13		19		16		18		11		—		27		—
Weighted-average discount rate^(a)
Operating leases	3.9	%	3.7	%	3.8	%	3.9	%	3.7	%	4.2	%	4.1	%	3.6	%
Finance leases	6.9	%	12.9	%	11.4	%	12.5	%	8.3	%	3.3	%	11.7	%	—	%

(a)

The discount rate is calculated using the rate implicit in a lease if it is readily determinable. Generally, the rate used by the lessor is not provided to Duke Energy and in these cases the incremental borrowing rate is used. Duke Energy will typically use its fully collateralized incremental borrowing rate as of the commencement date to calculate and record the lease. The incremental borrowing rate is influenced by the lessee’s credit rating and lease term and as such may differ for individual leases, embedded leases or portfolios of leased assets.

6. DEBT AND CREDIT FACILITIES

SUMMARY OF SIGNIFICANT DEBT ISSUANCES

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

Nine Months Ended September 30, 2018
Duke
Duke
Duke
Duke
Maturity Interest
Duke
Energy
Energy
Energy
Energy
Issuance Date Date Rate
Energy
(Parent)
Carolinas
Progress
Florida
Unsecured Debt
March 2018^(a)
April 2025 3.950 % $ 250
$ 250
$ —
$ —
$ —
May 2018^(b)
May 2021 2.819 % 500
500
—
—
—
September 2018^(c)
September 2078 5.625 % 500
500
—
—
—
First Mortgage Bonds
March 2018^(d)
March 2023 3.050 % 500
—
500
—
—
March 2018^(d)
March 2048 3.950 % 500
—
500
—
—
June 2018^(e)
July 2028 3.800 %
600

—
—
—
600
June 2018^(e)
July 2048 4.200 %
400

—
—
—
400
August 2018^(f)
September 2023 3.375 % 300
—
—
300
—
August 2018^(f)
September 2028 3.700 % 500
—
—
500
—
Total issuances $ 4,050
$ 1,250

$ 1,000

$ 800
$ 1,000



					Three Months Ended March 31, 2019
							Duke		Duke		Duke
	Maturity	Interest			Duke		Energy		Energy		Energy
Issuance Date	Date	Rate			Energy		(Parent)		Progress		Ohio
Unsecured Debt
March 2019^(a)	March 2022	3.251	%	^(b)	$	300	$	300	$	—	$	—
March 2019^(a)	March 2022	3.227	%		300		300		—		—
First Mortgage Bonds
January 2019^(c)	February 2029	3.650	%		400		—		—		400
January 2019^(c)	February 2049	4.300	%		400		—		—		400
March 2019^(d)	March 2029	3.450	%		600		—		600		—
Total issuances					$	2,000	$	600	$	600	$	800


(a)	Debt issued to pay down short-term ~~debt.~~debt and for general corporate purposes.


(b)	~~Debt issued to pay down short-term debt.~~ Debt issuance has a floating interest rate.


(c)	~~Callable after September 2023 at par.~~ Debt issued to repay at maturity $450 million first mortgage bonds due April 2019, pay down short-term debt and for general corporate purposes.


(d)	Debt issued to ~~repay at maturity a $300 million first mortgage bond due April 2018, pay down intercompany short-term debt and for general corporate purposes.~~


~~(e)~~	~~Debt issued to repay a portion of intercompany short-term debt under money-pool borrowing arrangement and for general corporate purposes.~~


~~(f)~~	~~Debt issued to repay short-term debt and for general corporate purposes.~~fund eligible green energy projects in the Carolinas.

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	DEBT AND CREDIT FACILITIES

CURRENT MATURITIES OF LONG-TERM DEBT

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


(in millions)	Maturity Date	Interest Rate			September 30, 2018		Maturity Date	Interest Rate			March 31, 2019
Unsecured Debt
Progress Energy	March 2019	7.050	%		$	450
Duke Energy (Parent)	September 2019	5.050	%		500		September 2019	5.050	%		$	500
Piedmont	September 2019	2.848	%	^(b)	350		September 2019	3.181	%	^(b)	350
Duke Energy Kentucky							October 2019	4.650	%		100
Progress Energy							December 2019	4.875	%		350
First Mortgage Bonds
Duke Energy Carolinas	November 2018	7.000	%		500
Duke Energy Progress	January 2019	5.300	%		600
Duke Energy Ohio	April 2019	5.450	%		450		April 2019	5.450	%		450
Duke Energy Florida							January 2020	1.850	%		250
Other^(a)					605						501
Current maturities of long-term debt					$	3,455					$	2,501

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

(b) ~~Debt issuance~~Amount drawn under the Piedmont senior unsecured term loan facility has a floating interest rate.

AVAILABLE CREDIT FACILITIES

Master Credit Facility

In ~~January 2018,~~March 2019, Duke Energy ~~extended the termination date of substantially all of~~amended its existing $8 billion Master Credit Facility ~~capacity from March 16, 2022,~~to extend the termination date to March ~~16, 2023. In May 2018, Duke Energy completed the extension process with 100 percent of all commitments to the Master Credit Facility extending to March 16, 2023.~~2024. The Duke Energy Registrants, excluding Progress Energy (Parent), have borrowing capacity under the Master Credit Facility up to a specified sublimit for each borrower. Duke Energy has the unilateral ability at any time to increase or decrease the borrowing sublimits of each borrower, subject to a maximum sublimit for each borrower. The amount available under the Master Credit Facility has been reduced to backstop issuances of commercial paper, certain letters of credit and variable-rate demand tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder. Duke Energy Carolinas and Duke Energy Progress are also required to each maintain $250 million of available capacity under the Master Credit Facility as security to meet obligations under plea agreements reached with the U.S. Department of Justice in 2015 related to violations at North Carolina facilities with ash basins. The table below includes the current borrowing sublimits and available capacity under the Master Credit Facility.


	September 30, 2018																							March 31, 2019
				Duke			Duke			Duke			Duke		Duke			Duke									Duke			Duke			Duke			Duke			Duke			Duke
	Duke			Energy			Energy			Energy			Energy		Energy			Energy						Duke			Energy			Energy			Energy			Energy			Energy			Energy
(in millions)	Energy			(Parent)			Carolinas			Progress			Florida		Ohio			Indiana			Piedmont			Energy			(Parent)			Carolinas			Progress			Florida			Ohio			Indiana			Piedmont
Facility size^(a)	$	8,000		$	2,650		$	1,750		$	1,400		$	650	$	450		$	600		$	500		$	8,000		$	2,650		$	1,750		$	1,400		$	650		$	450		$	600		$	500
Reduction to backstop issuances
Commercial paper^(b)	(2,519		)	(988		)	(872		)	(150		)	—		(216		)	(293		)	—			(2,657		)	(884		)	(859		)	(150		)	(299		)	(62		)	(252		)	(151		)
Outstanding letters of credit	(55		)	(47		)	(4		)	(2		)	—		—			—			(2		)	(53		)	(45		)	(4		)	(2		)	—			—			—			(2		)
Tax-exempt bonds	(81		)	—			—			—			—		—			(81		)	—			(81		)	—			—			—			—			—			(81		)	—
Coal ash set-aside	(500		)	—			(250		)	(250		)	—		—			—			—			(500		)	—			(250		)	(250		)	—			—			—			—
Available capacity under the Master Credit Facility	$	4,845		$	1,615		$	624		$	998		$	650	$	234		$	226		$	498		$	4,709		$	1,721		$	637		$	998		$	351		$	388		$	267		$	347


(a)	Represents the sublimit of each borrower.


(b)	Duke Energy issued $625 million of commercial paper and loaned the proceeds through the money pool to Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio and Duke Energy Indiana. The balances are classified as Long-Term Debt Payable to Affiliated Companies on the Condensed Consolidated Balance Sheets.

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

Duke Energy (Parent) has a $1.0 billion revolving credit facility (the Three Year Revolver) through June 2020. As of September 30, 2018, $500 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.



	March 31, 2019
(in millions)	Facility size		Amount Drawn
Duke Energy (Parent) Three-Year Revolving Credit Facility	$	1,000	$	500
Duke Energy Progress Term Loan Facility^(a)	700		700
Piedmont Term Loan Facility	350		350


(a)	$650 million was drawn under the term loan in January and February 2019.

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	ASSET RETIREMENT OBLIGATIONS

~~Piedmont Term Loan Facility~~

In September 2018, Piedmont executed an amendment to its existing senior unsecured term loan (the Piedmont Term Loan). The amendment increased commitments from $250 million to $350 million and extended the maturity date to September 2019. As of September 30, 2018, the entire $350 million has been drawn under the Piedmont Term Loan. The balance is classified as Current maturities of long-term debt on Piedmont's Condensed Consolidated Balance Sheets.

6.7. 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. Actual closure costs incurred could be materially different from current estimates that form the basis of the recorded AROs.

The following table presents the AROs recorded on the Condensed Consolidated Balance Sheets.


	September 30, 2018																March 31, 2019
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Decommissioning of Nuclear Power Facilities^(a)	$	5,367	$	2,031	$	3,181	$	2,650	$	531	$	—	$	—	$	—
Closure of Ash Impoundments	4,575		1,623		2,175		2,154		20		52		725		—
Decommissioning of nuclear power facilities^(a)																	$	5,753	$	2,368	$	3,239	$	2,709	$	530	$	—	$	—	$	—
Closure of ash impoundments																	6,961		3,013		3,197		3,177		20		52		699		—
Other	314		58		79		37		42		46		19		15		321		47		70		37		33		41		20		19
Total ARO	$	10,256	$	3,712	$	5,435	$	4,841	$	593	$	98	$	744	$	15	$	13,035	$	5,428	$	6,506	$	5,923	$	583	$	93	$	719	$	19
Less: current portion	902		292		475		470		4		7		128		—		779		209		456		452		4		6		108		—
Total noncurrent ARO	$	9,354	$	3,420	$	4,960	$	4,371	$	589	$	91	$	616	$	15	$	12,256	$	5,219	$	6,050	$	5,471	$	579	$	87	$	611	$	19

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

ARO Liability Rollforward

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


				Duke						Duke			Duke			Duke			Duke								Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy					Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont		Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Balance at December 31, 2017^(a)	$	10,175		$	3,610		$	5,414		$	4,673		$	742		$	84		$	781		$	15
Balance at December 31, 2018^(a)																								$	10,467		$	3,949		$	5,411		$	4,820		$	591		$	93		$	722		$	19
Accretion expense^(b)	319			133			168			145			23			3			22			—		110			48			57			50			7			1			7			—
Liabilities settled^(c)	(431		)	(198		)	(186		)	(155		)	(31		)	(5		)	(42		)	—		(184		)	(76		)	(97		)	(82		)	(15		)	(1		)	(10		)	—
Liabilities incurred in the current year	34			8			—			—			—			—			25			—
Revisions in estimates of cash flows^(d)	159			159			39			178			(141		)	16			(42		)	—		2,642			1,507			1,135			1,135			—			—			—			—
Balance at September 30, 2018	$	10,256		$	3,712		$	5,435		$	4,841		$	593		$	98		$	744		$	15
Balance at March 31, 2019																								$	13,035		$	5,428		$	6,506		$	5,923		$	583		$	93		$	719		$	19


(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~~three months ended ~~September 30, 2018,~~March 31, 2019, substantially all accretion expense relates to Duke Energy's regulated 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.~~closures.

(d)

~~Primarily relates~~Relates to increases in ~~groundwater monitoring~~closure estimates for ~~closure of~~certain ash impoundments ~~partially offset by modifications to~~as a result of the ~~timing of expected~~NCDEQ's determination that all ash basins must be excavated. See Note 4 for more information. The incremental amount recorded represents the discounted cash flows ~~and~~for estimated closure costs based upon the probability weightings of the potential closure methods as evaluated on a ~~reduction for nuclear decommissioning at Crystal River Unit 3 compared to original estimates.~~site-by-site basis.

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

Nuclear Decommissioning Trust Funds

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida each maintain NDTFs that are intended to pay for the decommissioning costs of their respective nuclear power plants. The following table presents the fair value of NDTF assets legally restricted for purposes of settling AROs associated with nuclear decommissioning. Duke Energy Florida is actively decommissioning Crystal River Unit 3 and was granted an exemption from the NRC, which allows for use of the NDTF for all aspects of nuclear decommissioning. The entire balance of Duke Energy Florida's NDTF may be applied toward license termination, spent fuel and site restoration costs incurred to decommission Crystal River Unit 3 and is excluded from the table below. See Note 12 for additional information related to the fair value of the Duke Energy Registrants' NDTFs.



(in millions)	March 31, 2019		December 31, 2018
Duke Energy	$	6,102	$	5,579
Duke Energy Carolinas	3,443		3,133
Duke Energy Progress	2,659		2,446

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	GOODWILL

7.8. GOODWILL

Duke Energy

The following table presents the goodwill by reportable ~~operating~~ segment included on Duke Energy's Condensed Consolidated Balance Sheets at ~~September 30, 2018,~~March 31, 2019, and December 31, ~~2017.~~2018.

Electric Utilities
Gas Utilities
Commercial

(in millions) and Infrastructure
and Infrastructure
Renewables
Total
Goodwill balance at December 31, 2017 $ 17,379
$ 1,924
$ 122
$ 19,425
Accumulated impairment charges —
—
(29 ) $ (29 )
Goodwill balance at December 31, 2017, adjusted for accumulated impairment charges $ 17,379
$ 1,924
$ 93
$ 19,396

Goodwill balance at September 30, 2018 $ 17,379
$ 1,924
$ 122
$ 19,425
Accumulated impairment charges —
—
(122 ) (122 )
Goodwill balance at September 30, 2018, adjusted for accumulated impairment charges $ 17,379
$ 1,924
$ —
$ 19,303



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

Duke Energy Ohio

Duke Energy Ohio's Goodwill balance of $920 million, allocated $596 million to Electric Utilities and Infrastructure and $324 million to Gas Utilities and Infrastructure, is presented net of accumulated impairment charges of $216 million on the Condensed Consolidated Balance Sheets at ~~September 30, 2018,~~March 31, 2019, and December 31, ~~2017.~~2018.

Progress Energy

Progress Energy's Goodwill is included in the Electric Utilities and Infrastructure ~~operating~~ segment and there are no accumulated impairment charges.

Piedmont

Piedmont's Goodwill is included in the Gas Utilities and Infrastructure ~~operating~~ segment and there are no accumulated impairment charges.

~~Impairment Testing~~

Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont are required to perform an annual goodwill impairment test as of the same date each year and, accordingly, perform their annual impairment testing of goodwill as of August 31. Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont update their test between annual tests if events or circumstances occur that would more likely than not reduce the fair value of a reporting unit below its carrying value.

In the third quarter of 2018, based on the results of the annual quantitative goodwill impairment test, management determined that the fair value of the Commercial Renewables reporting unit was below its respective carrying value, including goodwill. Determination of the Commercial Renewables reporting unit fair value was based on an income approach, which estimates the fair value based on discounted future cash flows. The fair value of the Commercial Renewables reporting unit is impacted by several factors, including forecasted tax credit utilization, the cost of capital, current and forecasted solar and wind volumes, and legislative developments. Certain assumptions used in determining the fair value of the reporting unit in the 2018 impairment test changed from those used in the 2017 annual impairment test including the cost of capital as a result of rising interest rates and the timing of tax credit utilization due to the Tax Act and IRS (Internal Revenue Service) clarification on bonus depreciation in August 2018. Based on the quantitative impairment test, the estimated fair value of the Commercial Renewables reporting unit was below its carrying value by an immaterial amount but still more than the goodwill balance assigned to the reporting unit. As such, the entire remaining goodwill balance of approximately $93 million was impaired during the third quarter of 2018.

The fair value of all other reporting units for Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont exceeded their respective carrying values at the date of the annual impairment analysis. As such, no other impairment charges were recorded in the third quarter of 2018.

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	RELATED PARTY TRANSACTIONS

8.9. RELATED PARTY TRANSACTIONS

The Subsidiary Registrants engage in related party transactions in accordance with applicable state and federal commission regulations. Refer to the Condensed Consolidated Balance Sheets of the Subsidiary Registrants for balances due to or due from related parties. Material amounts related to transactions with related parties included on the Condensed Consolidated Statements of Operations and Comprehensive Income are presented in the following table.


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(in millions)	2018		2017		2018		2017		2019		2018
Duke Energy Carolinas
Corporate governance and shared service expenses^(a)	$	214	$	206	$	647	$	645	$	212	$	220
Indemnification coverages^(b)	6		5		17		17		5		6
JDA revenue^(c)	13		9		66		42		23		34
JDA expense^(c)	61		39		134		91		93		54
Intercompany natural gas purchases^(d)	3		3		11		5		4		4
Progress Energy
Corporate governance and shared service expenses^(a)	$	216	$	207	$	613	$	555	$	176	$	191
Indemnification coverages^(b)	8		10		25		29		9		8
JDA revenue^(c)	61		39		134		91		93		54
JDA expense^(c)	13		9		66		42		23		34
Intercompany natural gas purchases^(d)	20		19		58		57		19		19
Duke Energy Progress
Corporate governance and shared service expenses^(a)	$	138	$	112	$	382	$	321	$	106	$	118
Indemnification coverages^(b)	3		4		9		11		4		3
JDA revenue^(c)	61		39		134		91		93		54
JDA expense^(c)	13		9		66		42		23		34
Intercompany natural gas purchases^(d)	20		19		58		57		19		19
Duke Energy Florida
Corporate governance and shared service expenses^(a)	$	78	$	95	$	231	$	234	$	70	$	73
Indemnification coverages^(b)	5		6		16		18		5		5
Duke Energy Ohio
Corporate governance and shared service expenses^(a)	$	85	$	90	$	264	$	275	$	85	$	89
Indemnification coverages^(b)	1		1		3		3		1		1
Duke Energy Indiana
Corporate governance and shared service expenses^(a)	$	105	$	94	$	302	$	281	$	97	$	101
Indemnification coverages^(b)	2		2		6		6		2		2
Piedmont
Corporate governance and shared service expenses^(a)	$	39	$	11	$	115	$	25	$	32	$	36
Indemnification coverages^(b)	1		1		2		2		1		1
Intercompany natural gas sales^(d)	23		22		69		62		23		23
Natural gas storage and transportation costs^(e)									5		6

(a)

The Subsidiary Registrants are charged their proportionate share of corporate governance and other shared services costs, primarily related to human resources, employee benefits, information technology, legal and accounting fees, as well as other third-party costs. These amounts are primarily recorded in Operation, maintenance and other on the Condensed Consolidated Statements of Operations and Comprehensive Income.


(b)	The Subsidiary Registrants incur expenses related to certain indemnification coverages through Bison, Duke Energy’s wholly owned captive insurance subsidiary. These expenses are recorded in Operation, maintenance and other on the Condensed Consolidated Statements of Operations and Comprehensive Income.

(c)

Duke Energy Carolinas and Duke Energy Progress participate in a ~~Joint Dispatch Agreement (JDA),~~JDA, which allows the collective dispatch of power plants between the service territories to reduce customer rates. Revenues from the sale of power and expenses from the purchase of power pursuant to the JDA are recorded in Operating Revenues and Fuel used in electric generation and purchased power, respectively, on the Condensed Consolidated Statements of Operations and Comprehensive Income.

(d)

Piedmont provides long-term natural gas delivery service to certain Duke Energy Carolinas and Duke Energy Progress natural gas-fired generation facilities. Piedmont records the sales in Operating revenues, and Duke Energy Carolinas and Duke Energy Progress record the related purchases as a component of Fuel used in electric generation and purchased power on their respective Condensed Consolidated Statements of Operations and Comprehensive Income.


(e)	Piedmont has related party transactions as a customer of its equity method investments in Pine Needle, Hardy Storage, and Cardinal natural gas storage and transportation facilities. These ~~intercompany revenues and~~ expenses are ~~eliminated~~included in ~~consolidation.~~Cost of natural gas on Piedmont's Condensed Consolidated Statements of Operations and Comprehensive Income.



FINANCIAL STATEMENTS	RELATED PARTY TRANSACTIONS

In addition to the amounts presented above, the Subsidiary Registrants have other affiliate transactions, including rental of office space, participation in a money pool arrangement, other operational transactions and their proportionate share of certain charged expenses. These transactions of the Subsidiary Registrants ~~were not material for~~are incurred in the ~~three~~ordinary course of business and ~~nine months ended September 30, 2018, and 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)~~

are eliminated in consolidation.

As discussed in Note 1213, certain trade receivables have been sold by Duke Energy Ohio and Duke Energy Indiana to ~~Cinergy Receivables Company LLC (CRC),~~CRC, an ~~indirect~~affiliate formed by a subsidiary of Duke Energy. The proceeds obtained from the sales of receivables are largely cash but ~~also~~do include a subordinated note from CRC for a portion of the purchase price.

~~Equity Method Investments~~

Piedmont has related party transactions as a customer of its equity method investments in natural gas storage and transportation facilities. The following table presents expenses for the three and nine months ended September 30, 2018, and 2017, which are included in Cost of natural gas on Piedmont's Condensed Consolidated Statements of Operations and Comprehensive Income.

Three Months Ended September 30, Nine Months Ended September 30,
(in millions) Type of expense 2018 2017 2018 2017
Cardinal Transportation Costs $ 2
$ 2
$ 5
$ 6
Pine Needle Natural Gas Storage Costs 2
2
6
6
Hardy Storage Natural Gas Storage Costs 2
2
7
7
Total $ 6
$ 6
$ 18
$ 19

Piedmont had accounts payable to its equity method investments of $2 million at September 30, 2018, and December 31, 2017, related to these transactions. These amounts are included in Accounts payable on the Condensed Consolidated Balance Sheets.

Intercompany Income Taxes

Duke Energy and the Subsidiary Registrants file a consolidated federal income tax return and other state and jurisdictional returns. The Subsidiary Registrants have a tax sharing agreement with Duke Energy for the allocation of consolidated tax liabilities and benefits. Income taxes recorded represent amounts the Subsidiary Registrants would incur as separate C-Corporations. The following table includes the balance of intercompany income tax receivables and payables for the Subsidiary Registrants.


	Duke				Duke		Duke		Duke		Duke				Duke				Duke		Duke		Duke		Duke
	Energy		Progress		Energy		Energy		Energy		Energy				Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
September 30, 2018
March 31, 2019
Intercompany income tax receivable	$	32	$	196	$	80	$	—	$	—	$	22	$	11	$	1	$	65	$	—	$	22	$	6	$	—	$	—
Intercompany income tax payable	—		—		—		77		9		—		—		—		—		11		—		—		7		7

December 31, 2017
December 31, 2018
Intercompany income tax receivable	$	—	$	168	$	—	$	44	$	22	$	—	$	7	$	52	$	47	$	29	$	—	$	—	$	8	$	—
Intercompany income tax payable	44		—		21		—		—		35		—		—		—		—		16		3		—		45

9.10. DERIVATIVES AND HEDGING

The Duke Energy Registrants use commodity and interest rate contracts to manage commodity price risk and interest rate risk. The primary use of commodity derivatives is to hedge the generation portfolio against changes in the prices of electricity and natural gas. Piedmont enters into natural gas supply contracts to provide diversification, reliability and natural gas cost benefits to its customers. Interest rate ~~swaps~~derivatives are used to manage interest rate risk associated with borrowings.

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

INTEREST RATE RISK

The Duke Energy Registrants are exposed to changes in interest rates as a result of their issuance or anticipated issuance of variable-rate and fixed-rate debt and commercial paper. Interest rate risk is managed by limiting variable-rate exposures to a percentage of total debt and by monitoring changes in interest rates. To manage risk associated with changes in interest rates, the Duke Energy Registrants may enter into interest rate swaps, U.S. Treasury lock agreements and other financial contracts. In anticipation of certain fixed-rate debt issuances, a series of forward-starting interest rate swaps or Treasury locks may be executed to lock in components of current market interest rates. These instruments are later terminated prior to or upon the issuance of the corresponding debt.

~~PART I~~

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

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

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

Cash Flow Hedges

For a derivative designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the effective portion of the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Amounts for interest rate contracts are reclassified to earnings as interest expense over the term of the related debt. Gains and losses reclassified out of AOCI for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019, and 2018 ~~and 2017~~ were not material. Duke Energy's interest rate derivatives designated as hedges include interest rate swaps used to hedge existing debt within the Commercial Renewables ~~business.~~business and forward-starting interest rate swaps not accounted for under regulatory accounting.

Undesignated Contracts

Undesignated contracts primarily include contracts not designated as a hedge because they are accounted for under regulatory accounting or contracts that do not qualify for hedge accounting.

Duke Energy’s interest rate swaps for its regulated operations employ regulatory accounting. With regulatory accounting, the mark-to-market gains or losses on the swaps are deferred as regulatory liabilities or regulatory assets, respectively. Regulatory assets and liabilities are amortized consistent with the treatment of the related costs in the ratemaking process. The accrual of interest on the swaps is recorded as Interest Expense on the Duke Energy Registrant's Condensed Consolidated Statements of Operations and Comprehensive Income.



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

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


	September 30, 2018												March 31, 2019
			Duke				Duke		Duke		Duke				Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Energy		Carolinas		Energy		Progress		Florida		Ohio
Cash flow hedges	$	411	$	—	$	—	$	—	$	—	$	—	$	923	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	1,127		400		500		250		250		27		1,321		300		800		250		550		27
Total notional amount^(a)	$	1,538	$	400	$	500	$	250	$	250	$	27	$	2,244	$	300	$	800	$	250	$	550	$	27


	December 31, 2017												December 31, 2018
			Duke				Duke		Duke		Duke				Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Energy		Carolinas		Energy		Progress		Florida		Ohio
Cash flow hedges^(a)	$	660	$	—	$	—	$	—	$	—	$	—	$	923	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	927		400		500		250		250		27		1,721		300		1,200		650		550		27
Total notional amount(a)	$	1,587	$	400	$	500	$	250	$	250	$	27	$	2,644	$	300	$	1,200	$	650	$	550	$	27


(a)	Duke Energy includes amounts related to consolidated VIEs of ~~$411~~$422 million in cash flow hedges and ~~$200~~$194 million in undesignated contracts as of ~~September 30, 2018,~~March 31, 2019, and ~~$660 million in cash flow hedges as of~~ December 31, ~~2017.~~2018.

COMMODITY PRICE RISK

The Duke Energy Registrants are exposed to the impact of changes in the prices of electricity purchased and sold in bulk power markets and coal and natural gas purchases, including Piedmont's natural gas supply contracts. Exposure to commodity price risk is influenced by a number of factors including the term of contracts, the liquidity of markets and delivery locations. For the Subsidiary Registrants, bulk power electricity and coal and natural gas purchases flow through fuel adjustment clauses, formula-based contracts or other cost-sharing mechanisms. Differences between the costs included in rates and the incurred costs, including undesignated derivative contracts, are largely deferred as regulatory assets or regulatory liabilities. Piedmont policies allow for the use of financial instruments to hedge commodity price risks. The strategy and objective of these hedging programs are to use the financial instruments to reduce natural gas costs volatility for customers.

~~PART I~~

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

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

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

Volumes

The tables below include volumes of outstanding commodity derivatives. Amounts disclosed represent the absolute value of notional volumes of commodity contracts excluding NPNS. The Duke Energy Registrants have netted contractual amounts where offsetting purchase and sale contracts exist with identical delivery locations and times of delivery. Where all commodity positions are perfectly offset, no quantities are shown.


	September 30, 2018							March 31, 2019
		Duke		Duke	Duke	Duke			Duke		Duke	Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy		Duke	Energy	Progress	Energy	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Florida	Indiana	Piedmont	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont
Electricity (gigawatt-hours)	170	—	—	—	—	170	—
Electricity (GWh)								6,196	—	—	—	—	829	5,367	—
Natural gas (millions of dekatherms)	744	119	167	158	9	1	457	742	128	174	174	—	—	1	439


	December 31, 2017							December 31, 2018
		Duke		Duke	Duke	Duke			Duke		Duke	Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy		Duke	Energy	Progress	Energy	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Florida	Indiana	Piedmont	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont
Electricity (gigawatt-hours)	34	—	—	—	—	34	—
Electricity (GWh)								15,286	—	—	—	—	1,786	13,500	—
Natural gas (millions of dekatherms)	770	105	183	133	50	2	480	739	121	169	166	3	—	1	448

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

LOCATION AND FAIR VALUE OF DERIVATIVE ASSETS AND LIABILITIES RECOGNIZED ON THE CONDENSED CONSOLIDATED BALANCE SHEETS

The following tables show the fair value and balance sheet location of derivative instruments. Although derivatives subject to master netting arrangements are netted on the Condensed Consolidated Balance Sheets, the fair values presented below are shown gross and cash collateral on the derivatives has not been netted against the fair values shown.


Derivative Assets	September 30, 2018																March 31, 2019
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	46	$	2	$	3	$	2	$	1	$	8	$	29	$	4	$	16	$	3	$	5	$	5	$	—	$	1	$	5	$	2
Noncurrent	1		—		—		—		—		—		—		—		6		2		3		3		—		—		—		—
Total Derivative Assets – Commodity Contracts	$	47	$	2	$	3	$	2	$	1	$	8	$	29	$	4	$	22	$	5	$	8	$	8	$	—	$	1	$	5	$	2
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	6	$	5	$	—	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	6		—		—		—		—		—		—		—		2		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	1		—		—		—		—		—		—		—		1		—		—		—		—		—		—		—
Noncurrent	17		—		—		—		—		—		—		—		9		—		—		—		—		—		—		—
Total Derivative Assets – Interest Rate Contracts	$	30	$	5	$	—	$	—	$	—	$	—	$	—	$	—	$	13	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total Derivative Assets	$	77	$	7	$	3	$	2	$	1	$	8	$	29	$	4	$	35	$	5	$	8	$	8	$	—	$	1	$	5	$	2


Derivative Liabilities	September 30, 2018																March 31, 2019
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	26	$	14	$	5	$	5	$	—	$	—	$	—	$	7	$	21	$	12	$	3	$	3	$	—	$	—	$	—	$	6
Noncurrent	177		14		17		8		—		—		—		146		140		5		19		4		—		—		—		115
Total Derivative Liabilities – Commodity Contracts	$	203	$	28	$	22	$	13	$	—	$	—	$	—	$	153	$	161	$	17	$	22	$	7	$	—	$	—	$	—	$	121
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	2	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	25	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent																	9		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	7		—		6		3		3		1		—		—		42		22		19		3		17		1		—		—
Noncurrent	13		—		9		8		2		3		—		—		7		—		3		2		1		4		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	22	$	—	$	15	$	11	$	5	$	4	$	—	$	—	$	83	$	22	$	22	$	5	$	18	$	5	$	—	$	—
Total Derivative Liabilities	$	225	$	28	$	37	$	24	$	5	$	4	$	—	$	153	$	244	$	39	$	44	$	12	$	18	$	5	$	—	$	121

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING


Derivative Assets	December 31, 2017																December 31, 2018
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	34	$	2	$	2	$	1	$	1	$	1	$	27	$	2	$	35	$	2	$	2	$	2	$	—	$	6	$	23	$	3
Noncurrent	1		—		1		1		—		—		—		—		4		1		2		2		—		—		—		—
Total Derivative Assets – Commodity Contracts	$	35	$	2	$	3	$	2	$	1	$	1	$	27	$	2	$	39	$	3	$	4	$	4	$	—	$	6	$	23	$	3
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	1	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	15		—		—		—		—		—		—		—		3		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current																	2		—		—		—		—		—		—		—
Noncurrent																	12		—		—		—		—		—		—		—
Total Derivative Assets – Interest Rate Contracts	$	16	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	18	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total Derivative Assets	$	51	$	2	$	3	$	2	$	1	$	1	$	27	$	2	$	57	$	3	$	4	$	4	$	—	$	6	$	23	$	3


Derivative Liabilities	December 31, 2017																December 31, 2018
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	36	$	6	$	18	$	8	$	10	$	—	$	—	$	11	$	33	$	14	$	10	$	5	$	6	$	—	$	—	$	8
Noncurrent	146		4		10		4		—		—		—		131		158		10		15		6		—		—		—		133
Total Derivative Liabilities – Commodity Contracts	$	182	$	10	$	28	$	12	$	10	$	—	$	—	$	142	$	191	$	24	$	25	$	11	$	6	$	—	$	—	$	141
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	29	$	25	$	—	$	—	$	—	$	—	$	—	$	—	$	12	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	6		—		—		—		—		—		—		—		6		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	1		—		1		—		—		1		—		—		23		9		13		11		2		1		—		—
Noncurrent	12		—		7		6		2		4		—		—		10		—		6		5		1		4		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	48	$	25	$	8	$	6	$	2	$	5	$	—	$	—	$	51	$	9	$	19	$	16	$	3	$	5	$	—	$	—
Total Derivative Liabilities	$	230	$	35	$	36	$	18	$	12	$	5	$	—	$	142	$	242	$	33	$	44	$	27	$	9	$	5	$	—	$	141

OFFSETTING ASSETS AND LIABILITIES

The following tables present the line items on the Condensed Consolidated Balance Sheets where derivatives are reported. Substantially all of Duke Energy's outstanding derivative contracts are subject to enforceable master netting arrangements. The gross amounts offset in the tables below show the effect of these netting arrangements on financial position, and include collateral posted to offset the net position. The amounts shown are calculated by counterparty. Accounts receivable or accounts payable may also be available to offset exposures in the event of bankruptcy. These amounts are not included in the tables below.

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING


Derivative Assets	September 30, 2018																				March 31, 2019
				Duke						Duke			Duke		Duke		Duke							Duke						Duke			Duke		Duke		Duke
	Duke			Energy			Progress			Energy			Energy		Energy		Energy				Duke			Energy			Progress			Energy			Energy		Energy		Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida		Ohio		Indiana		Piedmont		Energy			Carolinas			Energy			Progress			Florida		Ohio		Indiana		Piedmont
Current
Gross amounts recognized	$	53		$	7		$	3		$	2		$	1	$	8	$	29	$	4	$	18		$	3		$	5		$	5		$	—	$	1	$	5	$	2
Gross amounts offset	(4		)	(2		)	(2		)	(2		)	—		—		—		—		(4		)	(2		)	(1		)	(1		)	—		—		—		—
Net amounts presented in Current Assets: Other	$	49		$	5		$	1		$	—		$	1	$	8	$	29	$	4	$	14		$	1		$	4		$	4		$	—	$	1	$	5	$	2
Noncurrent
Gross amounts recognized	$	24		$	—		$	—		$	—		$	—	$	—	$	—	$	—	$	17		$	2		$	3		$	3		$	—	$	—	$	—	$	—
Gross amounts offset	(1		)	—			—			—			—		—		—		—		(3		)	(1		)	(2		)	(2		)	—		—		—		—
Net amounts presented in Other Noncurrent Assets: Other	$	23		$	—		$	—		$	—		$	—	$	—	$	—	$	—	$	14		$	1		$	1		$	1		$	—	$	—	$	—	$	—


Derivative Liabilities	September 30, 2018																				March 31, 2019
				Duke						Duke			Duke		Duke		Duke							Duke						Duke			Duke		Duke		Duke
	Duke			Energy			Progress			Energy			Energy		Energy		Energy				Duke			Energy			Progress			Energy			Energy		Energy		Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida		Ohio		Indiana		Piedmont		Energy			Carolinas			Energy			Progress			Florida		Ohio		Indiana		Piedmont
Current
Gross amounts recognized	$	35		$	14		$	11		$	8		$	3	$	1	$	—	$	7	$	88		$	34		$	22		$	6		$	17	$	1	$	—	$	6
Gross amounts offset	(4		)	(2		)	(2		)	(2		)	—		—		—		—		(4		)	(2		)	(2		)	(2		)	—		—		—		—
Net amounts presented in Current Liabilities: Other	$	31		$	12		$	9		$	6		$	3	$	1	$	—	$	7	$	84		$	32		$	20		$	4		$	17	$	1	$	—	$	6
Noncurrent
Gross amounts recognized	$	190		$	14		$	26		$	16		$	2	$	3	$	—	$	146	$	156		$	5		$	22		$	6		$	1	$	4	$	—	$	115
Gross amounts offset	(1		)	—			(1		)	(1		)	—		—		—		—		(3		)	(1		)	(2		)	(2		)	—		—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	$	189		$	14		$	25		$	15		$	2	$	3	$	—	$	146	$	153		$	4		$	20		$	4		$	1	$	4	$	—	$	115


Derivative Assets	December 31, 2017																December 31, 2018
			Duke				Duke		Duke		Duke		Duke							Duke						Duke			Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke			Energy			Progress			Energy			Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy			Carolinas			Energy			Progress			Florida		Ohio		Indiana		Piedmont
Current
Gross amounts recognized	$	35	$	2	$	2	$	1	$	1	$	1	$	27	$	2	$	38		$	2		$	2		$	2		$	—	$	6	$	23	$	3
Gross amounts offset	—		—		—		—		—		—		—		—		(3		)	(2		)	(2		)	(2		)	—		—		—		—
Net amounts presented in Current Assets: Other	$	35	$	2	$	2	$	1	$	1	$	1	$	27	$	2	$	35		$	—		$	—		$	—		$	—	$	6	$	23	$	3
Noncurrent
Gross amounts recognized	$	16	$	—	$	1	$	1	$	—	$	—	$	—	$	—	$	19		$	1		$	2		$	2		$	—	$	—	$	—	$	—
Gross amounts offset	—		—		—		—		—		—		—		—		(3		)	(1		)	(2		)	(2		)	—		—		—		—
Net amounts presented in Other Noncurrent Assets: Other	$	16	$	—	$	1	$	1	$	—	$	—	$	—	$	—	$	16		$	—		$	—		$	—		$	—	$	—	$	—	$	—

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING


Derivative Liabilities	December 31, 2017																				December 31, 2018
				Duke						Duke			Duke		Duke		Duke							Duke							Duke			Duke		Duke		Duke
	Duke			Energy			Progress			Energy			Energy		Energy		Energy				Duke			Energy			Progress				Energy			Energy		Energy		Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida		Ohio		Indiana		Piedmont		Energy			Carolinas			Energy				Progress			Florida		Ohio		Indiana		Piedmont
Current
Gross amounts recognized	$	66		$	31		$	19		$	8		$	10	$	1	$	—	$	11	$	68		$	23		$	23			$	16		$	8	$	1	$	—	$	8
Gross amounts offset	(3		)	(2		)	(2		)	(2		)	—		—		—		—		(4		)	(2		)	(2		)		(2		)	—		—		—		—
Net amounts presented in Current Liabilities: Other	$	63		$	29		$	17		$	6		$	10	$	1	$	—	$	11	$	64		$	21		$	21			$	14		$	8	$	1	$	—	$	8
Noncurrent
Gross amounts recognized	$	164		$	4		$	17		$	10		$	2	$	4	$	—	$	131	$	174		$	10		$	21			$	11		$	1	$	4	$	—	$	133
Gross amounts offset	(1		)	—			(1		)	(1		)	—		—		—		—		(3		)	(1		)	(2		)		(2		)	—		—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	$	163		$	4		$	16		$	9		$	2	$	4	$	—	$	131	$	171		$	9		$	19		��	$	9		$	1	$	4	$	—	$	133

OBJECTIVE CREDIT CONTINGENT FEATURES

Certain derivative contracts contain objective credit contingent features. These features include the requirement to post cash collateral or letters of credit if specific events occur, such as a credit rating downgrade below investment grade. The following tables show information with respect to derivative contracts that are in a net liability position and contain objective credit-risk-related payment provisions.


	September 30, 2018										March 31, 2019
			Duke				Duke		Duke				Duke				Duke
	Duke		Energy		Progress		Energy		Energy		Duke		Energy		Progress		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Energy		Carolinas		Energy		Progress
Aggregate fair value of derivatives in a net liability position	$	48	$	26	$	23	$	22	$	—	$	25	$	14	$	11	$	11
Fair value of collateral already posted	—		—		—		—		—		—		—		—		—
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered	48		26		23		22		—		25		14		11		11


	December 31, 2017										December 31, 2018
			Duke				Duke		Duke				Duke				Duke
	Duke		Energy		Progress		Energy		Energy		Duke		Energy		Progress		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Energy		Carolinas		Energy		Progress
Aggregate fair value of derivatives in a net liability position	$	59	$	35	$	25	$	15	$	10	$	44	$	19	$	25	$	25
Fair value of collateral already posted	—		—		—		—		—		—		—		—		—
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered	59		35		25		15		10		44		19		25		25

The Duke Energy Registrants have elected to offset cash collateral and fair values of derivatives. For amounts to be netted, the derivative and cash collateral must be executed with the same counterparty under the same master netting arrangement.

~~10.~~11. INVESTMENTS IN DEBT AND EQUITY SECURITIES

Duke Energy’s investments in debt and equity securities are primarily comprised of investments held in (i) the ~~nuclear decommissioning trust funds (NDTF)~~NDTF at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, (ii) the grantor trusts at Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana related to ~~Other Post-Retirement Benefit Obligations (OPEB)~~OPEB plans and (iii) Bison. The Duke Energy Registrants classify investments in debt securities as ~~available-for-sale (AFS)~~AFS and investments in equity securities as ~~fair value through net income (FV-NI).~~FV-NI.

For investments in debt securities classified as AFS, the unrealized gains and losses are included in other comprehensive income until realized, at which time, they are reported through net income. For investments in equity securities classified as FV-NI, both realized and unrealized gains and losses are reported through net income. Substantially all of Duke Energy’s investments in debt and equity securities qualify for regulatory accounting, and accordingly, all associated realized and unrealized gains and losses on these investments are deferred as a regulatory asset or liability.

Duke Energy classifies the majority of investments in debt and equity securities as long term, unless otherwise noted.

~~PART I~~

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

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

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

Investment Trusts

The investments within the ~~NDTF investments and the Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana grantor trusts (Investment Trusts)~~Investment Trusts are managed by independent investment managers with discretion to buy, sell and invest pursuant to the objectives set forth by the trust agreements. The Duke Energy Registrants have limited oversight of the day-to-day management of these investments. As a result, the ability to hold investments in unrealized loss positions is outside the control of the Duke Energy Registrants. Accordingly, all unrealized losses associated with debt securities within the Investment Trusts are considered OTTIs and are recognized immediately and deferred to regulatory accounts where appropriate.



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

Other AFS Securities

Unrealized gains and losses on all other AFS securities are included in other comprehensive income until realized, unless it is determined the carrying value of an investment is other-than-temporarily impaired. The Duke Energy Registrants analyze all investment holdings each reporting period to determine whether a decline in fair value should be considered other-than-temporary. If an OTTI exists, the unrealized credit loss is included in earnings. There were no material credit losses as of ~~September 30, 2018,~~March 31, 2019, and December 31, ~~2017.~~2018.

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

DUKE ENERGY

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

September 30, 2018^(a)
December 31, 2017
Gross
Gross
Gross
Gross

Unrealized
Unrealized
Estimated
Unrealized
Unrealized
Estimated
Holding
Holding
Fair
Holding
Holding
Fair
(in millions) Gains
Losses
Value
Gains
Losses
Value
NDTF
Cash and cash equivalents $ —
$ —
$ 75
$ —
$ —
$ 115
Equity securities 3,117
48
5,272
2,805
27
4,914
Corporate debt securities 5
10
595
17
2
570
Municipal bonds —
7
346
4
3
344
U.S. government bonds 5
25
974
11
7
1,027
Other debt securities —
3
141
—
1
118
Total NDTF Investments $ 3,127
$ 93
$ 7,403
$ 2,837
$ 40
$ 7,088
Other Investments
Cash and cash equivalents $ —
$ —
$ 21
$ —
$ —
$ 15
Equity securities 51
—
115
59
—
123
Corporate debt securities —
1
64
1
—
57
Municipal bonds 1
1
85
2
1
83
U.S. government bonds —
1
59
—
—
41
Other debt securities —
1
43
—
1
44
Total Other Investments $ 52
$ 4
$ 387
$ 62
$ 2
$ 363
Total Investments $ 3,179
$ 97
$ 7,790
$ 2,899
$ 42
$ 7,451


~~(a)~~	Where regulatory accounting is applied, realized and unrealized gains and losses are deferred as regulatory assets or liabilities, and there is no impact to net income or other comprehensive income until the gain or loss is amortized or collected.

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

(in millions) September 30, 2018
Due in one year or less $ 100
Due after one through five years 492
Due after five through 10 years 561
Due after 10 years 1,154
Total $ 2,307

~~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)~~



	March 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	114	$	—	$	—	$	88
Equity securities	2,923		65		5,061		2,402		95		4,475
Corporate debt securities	17		2		624		4		13		566
Municipal bonds	5		1		317		1		4		353
U.S. government bonds	25		5		1,102		14		12		1,076
Other debt securities	1		1		145		—		2		148
Total NDTF Investments	$	2,971	$	74	$	7,363	$	2,421	$	126	$	6,706
Other Investments
Cash and cash equivalents	$	—	$	—	$	51	$	—	$	—	$	22
Equity securities	47		—		112		36		1		99
Corporate debt securities	1		—		57		—		2		60
Municipal bonds	2		1		89		—		1		85
U.S. government bonds	1		—		52		1		—		45
Other debt securities	—		1		61		—		1		58
Total Other Investments	$	51	$	2	$	422	$	37	$	5	$	369
Total Investments	$	3,022	$	76	$	7,785	$	2,458	$	131	$	7,075

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019, and 2018, ~~and from sales of AFS securities for the three and nine months ended September 30, 2017,~~ were as follows.


	Three Months Ended		Nine Months Ended		Three Months Ended
(in millions)	September 30, 2018		September 30, 2018		March 31, 2019		March 31, 2018
FV-NI:
Realized gains	$	19	$	85	$	35	$	19
Realized losses	16		60		30		13
AFS:
Realized gains	4		14		10		5
Realized losses	7		32		11		13

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



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

DUKE ENERGY CAROLINAS

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


~~(a)~~	Where regulatory accounting is applied, realized and unrealized gains and losses are deferred as regulatory assets or liabilities, and there is no impact to net income or other comprehensive income until the gain or loss is amortized or collected.

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

(in millions) September 30, 2018
Due in one year or less $ 12
Due after one through five years 161
Due after five through 10 years 289
Due after 10 years 566
Total $ 1,028

~~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)~~



	March 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	57	$	—	$	—	$	29
Equity securities	1,593		37		2,791		1,309		54		2,484
Corporate debt securities	9		2		354		2		9		341
Municipal bonds	1		—		62		—		1		81
U.S. government bonds	11		3		509		5		8		475
Other debt securities	1		1		140		—		2		143
Total NDTF Investments	$	1,615	$	43	$	3,913	$	1,316	$	74	$	3,553

Three Months Ended Nine Months Ended
(in millions) September 30, 2018 September 30, 2018
FV-NI:
Realized gains $ 11
$ 47
Realized losses 8
30
AFS:
Realized gains 4
13
Realized losses 6
24


	Three Months Ended		Nine Months Ended		Three Months Ended
(in millions)	September 30, 2017		September 30, 2017		March 31, 2019		March 31, 2018
FV-NI:
Realized gains	$	20	$	110	$	23	$	10
Realized losses	13		76		21		5
AFS:
Realized gains					9		5
Realized losses					10		10

PROGRESS ENERGY

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


	September 30, 2018^(a)						December 31, 2017						March 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross				Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair		Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value		Gains		Losses		Value		Gains		Losses		Value
NDTF											��
Cash and cash equivalents	$	—	$	—	$	57	$	—	$	—	$	83	$	—	$	—	$	57	$	—	$	—	$	59
Equity securities	1,425		19		2,382		1,274		15		2,222		1,330		28		2,270		1,093		41		1,991
Corporate debt securities	3		3		223		8		—		211		8		—		270		2		4		225
Municipal bonds	—		5		266		4		2		284		4		1		255		1		3		272
U.S. government bonds	4		11		535		8		3		524		14		2		593		9		4		601
Other debt securities	—		—		4		—		—		6		—		—		5		—		—		5
Total NDTF Investments	$	1,432	$	38	$	3,467	$	1,294	$	20	$	3,330	$	1,356	$	31	$	3,450	$	1,105	$	52	$	3,153
Other Investments
Cash and cash equivalents	$	—	$	—	$	18	$	—	$	—	$	12	$	—	$	—	$	47	$	—	$	—	$	17
Municipal bonds	1		—		48		2		—		47		2		—		49		—		—		47
Total Other Investments	$	1	$	—	$	66	$	2	$	—	$	59	$	2	$	—	$	96	$	—	$	—	$	64
Total Investments	$	1,433	$	38	$	3,533	$	1,296	$	20	$	3,389	$	1,358	$	31	$	3,546	$	1,105	$	52	$	3,217



~~(a)~~FINANCIAL STATEMENTS	Where regulatory accounting is applied, realized and unrealized gains and losses are deferred as regulatory assets or liabilities, and there is no impact to net income or other comprehensive income until the gain or loss is amortized or collected. INVESTMENTS IN DEBT AND EQUITY SECURITIES

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

(in millions) September 30, 2018
Due in one year or less $ 83
Due after one through five years 268
Due after five through 10 years 217
Due after 10 years 508
Total $ 1,076

~~PART I~~

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

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

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

Three Months Ended Nine Months Ended
(in millions) September 30, 2018 September 30, 2018
FV-NI:
Realized gains $ 8
$ 38
Realized losses 8
30
AFS:
Realized gains —
1
Realized losses 1
8


	Three Months Ended		Nine Months Ended		Three Months Ended
(in millions)	September 30, 2017		September 30, 2017		March 31, 2019		March 31, 2018
FV-NI:
Realized gains	$	16	$	58	$	12	$	9
Realized losses	12		47		9		8
AFS:
Realized gains					1		—
Realized losses					1		3

DUKE ENERGY PROGRESS

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

September 30, 2018^(a)
December 31, 2017
Gross
Gross
Gross
Gross

Unrealized
Unrealized
Estimated
Unrealized
Unrealized
Estimated
Holding
Holding
Fair
Holding
Holding
Fair
(in millions) Gains
Losses
Value
Gains
Losses
Value
NDTF
Cash and cash equivalents $ —
$ —
$ 42
$ —
$ —
$ 50
Equity securities 1,101
14
1,913
980
12
1,795
Corporate debt securities 2
2
162
6
—
149
Municipal bonds —
5
265
4
2
283
U.S. government bonds 3
8
352
5
2
310
Other debt securities —
—
2
—
—
4
Total NDTF Investments $ 1,106
$ 29
$ 2,736
$ 995
$ 16
$ 2,591
Other Investments
Cash and cash equivalents $ —
$ —
$ 8
$ —
$ —
$ 1
Total Other Investments $ —
$ —
$ 8
$ —
$ —
$ 1
Total Investments $ 1,106
$ 29
$ 2,744
$ 995
$ 16
$ 2,592


~~(a)~~	Where regulatory accounting is applied, realized and unrealized gains and losses are deferred as regulatory assets or liabilities, and there is no impact to net income or other comprehensive income until the gain or loss is amortized or collected.

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

(in millions) September 30, 2018
Due in one year or less $ 40
Due after one through five years 200
Due after five through 10 years 156
Due after 10 years 385
Total $ 781

~~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)~~



	March 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	43	$	—	$	—	$	46
Equity securities	1,022		20		1,812		833		30		1,588
Corporate debt securities	6		—		204		2		3		171
Municipal bonds	4		1		254		1		3		271
U.S. government bonds	10		1		422		6		3		415
Other debt securities	—		—		3		—		—		3
Total NDTF Investments	$	1,042	$	22	$	2,738	$	842	$	39	$	2,494
Other Investments
Cash and cash equivalents	$	—	$	—	$	3	$	—	$	—	$	6
Total Other Investments	$	—	$	—	$	3	$	—	$	—	$	6
Total Investments	$	1,042	$	22	$	2,741	$	842	$	39	$	2,500


	Three Months Ended		Nine Months Ended		Three Months Ended
(in millions)	September 30, 2018		September 30, 2018		March 31, 2019		March 31, 2018
FV-NI:
Realized gains	$	7	$	32	$	10	$	8
Realized losses	7		27		8		8
AFS:
Realized gains	—		1		1		—
Realized losses	1		6		1		2

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



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

DUKE ENERGY FLORIDA

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


	September 30, 2018^(a)						December 31, 2017						March 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross				Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair		Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value		Gains		Losses		Value		Gains		Losses		Value
NDTF
Cash and cash equivalents	$	—	$	—	$	15	$	—	$	—	$	33	$	—	$	—	$	14	$	—	$	—	$	13
Equity securities	324		5		469		294		3		427		308		8		458		260		11		403
Corporate debt securities	1		1		61		2		—		62		2		—		66		—		1		54
Municipal bonds	—		—		1		—		—		1		—		—		1		—		—		1
U.S. government bonds	1		3		183		3		1		214		4		1		171		3		1		186
Other debt securities	—		—		2		—		—		2		—		—		2		—		—		2
Total NDTF Investments^(b)(a)	$	326	$	9	$	731	$	299	$	4	$	739	$	314	$	9	$	712	$	263	$	13	$	659
Other Investments
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	—	$	1	$	—	$	—	$	1
Municipal bonds	1		—		48		2		—		47		2		—		49		—		—		47
Total Other Investments	$	1	$	—	$	48	$	2	$	—	$	48	$	2	$	—	$	50	$	—	$	—	$	48
Total Investments	$	327	$	9	$	779	$	301	$	4	$	787	$	316	$	9	$	762	$	263	$	13	$	707


(a)	Where regulatory accounting is applied, realized and unrealized gains and losses are deferred as regulatory assets or liabilities, and there is no impact to net income or other comprehensive income until the gain or loss is amortized or collected.


~~(b)~~	During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, Duke Energy Florida continued to receive reimbursements from the NDTF for costs related to ongoing decommissioning activity of the Crystal River Unit 3 nuclear plant.

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

(in millions) September 30, 2018
Due in one year or less $ 43
Due after one through five years 68
Due after five through 10 years 61
Due after 10 years 123
Total $ 295

~~PART I~~

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

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

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

Three Months Ended Nine Months Ended
(in millions) September 30, 2018 September 30, 2018
FV-NI:
Realized gains $ 1
$ 6
Realized losses 1
3
AFS:
Realized gains —
—
Realized losses —
2


	Three Months Ended		Nine Months Ended		Three Months Ended
(in millions)	September 30, 2017		September 30, 2017		March 31, 2019		March 31, 2018
FV-NI:
Realized gains	$	2	$	9	$	2	$	1
Realized losses	1		6		1		—
AFS:
Realized losses					—		1

DUKE ENERGY INDIANA

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

September 30, 2018^(a)
December 31, 2017
Gross
Gross
Gross
Gross

Unrealized
Unrealized
Estimated
Unrealized
Unrealized
Estimated
Holding
Holding
Fair
Holding
Holding
Fair
(in millions) Gains
Losses
Value
Gains
Losses
Value
Investments
Equity securities $ 40
$ —
$ 78
$ 49
$ —
$ 97
Corporate debt securities —
—
8
—
—
3
Municipal bonds —
1
32
—
1
28
Total Investments $ 40
$ 1
$ 118
$ 49
$ 1
$ 128


~~(a)~~	Realized and unrealized gains and losses where regulatory accounting is applied are deferred as regulatory assets or liabilities, and there is no impact to net income or other comprehensive income until the gain or loss is amortized or collected.

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

(in millions) September 30, 2018
Due in one year or less $ 2
Due after one through five years 20
Due after five through 10 years 5
Due after 10 years 13
Total $ 40



	March 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized		Estimated		Unrealized		Unrealized		Estimated
	Holding		Holding		Fair		Holding		Holding		Fair
(in millions)	Gains		Losses		Value		Gains		Losses		Value
Investments
Equity securities	$	37	$	—	$	76	$	29	$	—	$	67
Corporate debt securities	—		—		7		—		—		8
Municipal bonds	—		1		34		—		1		33
U.S. government bonds	—		—		1		—		—		—
Total Investments	$	37	$	1	$	118	$	29	$	1	$	108



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

DEBT SECURITY MATURITIES

The table below summarizes the maturity date for debt securities.



	March 31, 2019
			Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Indiana
Due in one year or less	$	74	$	9	$	41	$	21	$	20	$	4
Due after one through five years	537		153		341		251		90		17
Due after five through 10 years	577		287		245		196		49		4
Due after 10 years	1,259		616		545		415		130		17
Total	$	2,447	$	1,065	$	1,172	$	883	$	289	$	42

~~11.~~12. FAIR VALUE MEASUREMENTS

Fair value is the exchange price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. The fair value definition focuses on an exit price versus the acquisition cost. Fair value measurements use market data or assumptions market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs may be readily observable, corroborated by market data or generally unobservable. Valuation techniques maximize the use of observable inputs and minimize use of unobservable inputs. A midmarket pricing convention (the midpoint price between bid and ask prices) is permitted for use as a practical expedient.

~~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)~~

Fair value measurements are classified in three levels based on the fair value ~~hierarchy:~~

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

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

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

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

Fair value accounting guidance permits entities to elect to measure certain financial instruments that are not required to be accounted for at fair value, such as equity method investments or the company’s own debt, at fair value. The Duke Energy Registrants have not elected to record any of these items at fair value.

Transfers between levels represent assets or liabilities that were previously (i) categorized at a higher level for which the inputs to the estimate became less observable or (ii) classified at a lower level for which the inputs became more observable during the period. The Duke Energy Registrant’s policy is to recognize transfers between levels of the fair value hierarchy at the end of the period. There were no transfers between levels during the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, and ~~2017.~~2018.

Valuation methods of the primary fair value measurements disclosed below are as follows.

Investments in equity securities

The majority of investments in equity securities are valued using Level 1 measurements. Investments in equity securities are typically valued at the closing price in the principal active market as of the last business day of the quarter. Principal active markets for equity prices include published exchanges such as the New York Stock Exchange and Nasdaq Stock Market. Foreign equity prices are translated from their trading currency using the currency exchange rate in effect at the close of the principal active market. There was no after-hours market activity that was required to be reflected in the reported fair value measurements.

Investments in debt securities

Most investments in debt securities are valued using Level 2 measurements because the valuations use interest rate curves and credit spreads applied to the terms of the debt instrument (maturity and coupon interest rate) and consider the counterparty credit rating. If the market for a particular fixed-income security is relatively inactive or illiquid, the measurement is Level 3.

Commodity derivatives

Commodity derivatives with clearinghouses are classified as Level 1. Other commodity derivatives, including Piedmont's natural gas supply contracts, are primarily valued using internally developed discounted cash flow models that incorporate forward price, adjustments for liquidity (bid-ask spread) and credit or non-performance risk (after reflecting credit enhancements such as collateral), and are discounted to present value. Pricing inputs are derived from published exchange transaction prices and other observable data sources. In the absence of an active market, the last available price may be used. If forward price curves are not observable for the full term of the contract and the unobservable period had more than an insignificant impact on the valuation, the commodity derivative is classified as Level 3. In isolation, increases (decreases) in natural gas forward prices result in favorable (unfavorable) fair value adjustments for natural gas purchase contracts; and increases (decreases) in electricity forward prices result in unfavorable (favorable) fair value adjustments for electricity sales contracts. Duke Energy regularly evaluates and validates pricing inputs used to estimate the fair value of natural gas commodity contracts by a market participant price verification procedure. This procedure provides a comparison of internal forward commodity curves to market participant generated curves.



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

Interest rate derivatives

Most over-the-counter interest rate contract derivatives are valued using financial models that utilize observable inputs for similar instruments and are classified as Level 2. Inputs include forward interest rate curves, notional amounts, interest rates and credit quality of the counterparties.

Other fair value considerations

See Note 11 in Duke Energy's Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2017,~~2018, for a discussion of the valuation of goodwill and intangible assets.

~~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

The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Condensed Consolidated Balance Sheets. Derivative amounts in the tables below for all Duke Energy Registrants exclude cash collateral, which is disclosed in Note 9.10. See Note 1011 for additional information related to investments by major security type for the Duke Energy Registrants.


	September 30, 2018													March 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Level 3			Not Categorized		Total Fair Value			Level 1			Level 2			Level 3			Not Categorized
NDTF equity securities	$	5,272		$	5,203	$	—		$	—		$	69	$	5,061		$	4,998		$	—		$	—		$	63
NDTF debt securities	2,131			510		1,621			—			—		2,302			630			1,672			—			—
Other equity securities	115			115		—			—			—		112			112			—			—			—
Other debt securities	272			78		194			—			—		310			103			207			—			—
Derivative assets	77			4		36			37			—		35			2			27			6			—
Total assets	7,867			5,910		1,851			37			69		7,820			5,845			1,906			6			63
Derivative liabilities	(225		)	—		(72		)	(153		)	—		(244		)	(23		)	(100		)	(121		)	—
Net assets (liabilities)	$	7,642		$	5,910	$	1,779		$	(116	)	$	69	$	7,576		$	5,822		$	1,806		$	(115	)	$	63


	December 31, 2017														December 31, 2018
(in millions)	Total Fair Value			Level 1			Level 2			Level 3			Not Categorized		Total Fair Value			Level 1			Level 2			Level 3			Not Categorized
NDTF equity securities	$	4,914		$	4,840		$	—		$	—		$	74	$	4,475		$	4,410		$	—		$	—		$	65
NDTF debt securities	2,174			635			1,539			—			—		2,231			576			1,655			—			—
Other equity securities	123			123			—			—			—		99			99			—			—			—
Other debt securities	241			57			184			—			—		270			67			203			—			—
Derivative assets	51			3			20			28			—		57			4			25			28			—
Total assets	7,503			5,658			1,743			28			74		7,132			5,156			1,883			28			65
Derivative liabilities	(230		)	(2		)	(86		)	(142		)	—		(242		)	(11		)	(90		)	(141		)	—
Net assets (liabilities)	$	7,273		$	5,656		$	1,657		$	(114	)	$	74	$	6,890		$	5,145		$	1,793		$	(113	)	$	65

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


																	Derivatives (net)
	Three Months Ended September 30, 2018								Three Months Ended September 30, 2017								Three Months Ended March 31,
(in millions)	Investments		Derivatives (net)			Total			Investments		Derivatives (net)			Total			2019			2018
Balance at beginning of period	$	—	$	(97	)	$	(97	)	$	—	$	(91	)	$	(91	)	$	(113	)	$	(114	)
Purchases, sales, issuances and settlements:
Settlements	—		(14		)	(14		)	—		(12		)	(12		)	(12		)	(14		)
Total (losses) gains included on the Condensed Consolidated Balance Sheet	—		(5		)	(5		)	—		10			10
Total gains included on the Condensed Consolidated Balance Sheet																	10			4
Balance at end of period	$	—	$	(116	)	$	(116	)	$	—	$	(93	)	$	(93	)	$	(115	)	$	(124	)

Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017
(in millions) Investments
Derivatives (net)
Total
Investments
Derivatives (net)
Total
Balance at beginning of period $ —
$ (114 ) $ (114 ) $ 5
$ (166 ) $ (161 )
Total pretax realized or unrealized gains included in comprehensive income —
—
—
1
—
1
Purchases, sales, issuances and settlements:
Purchases —
56
56
—
55
55
Sales —
—
—
(6 ) —
(6 )
Settlements —
(43 ) (43 ) —
(30 ) (30 )
Total (losses) gains included on the Condensed Consolidated Balance Sheet —
(15 ) (15 ) —
48
48
Balance at end of period $ —
$ (116 ) $ (116 ) $ —
$ (93 ) $ (93 )

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

DUKE ENERGY CAROLINAS

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


	September 30, 2018										March 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Not Categorized		Total Fair Value			Level 1		Level 2			Not Categorized
NDTF equity securities	$	2,890		$	2,821	$	—		$	69	$	2,791		$	2,728	$	—		$	63
NDTF debt securities	1,046			122		924			—		1,122			212		910			—
Derivative assets	7			—		7			—		5			—		5			—
Total assets	3,943			2,943		931			69		3,918			2,940		915			63
Derivative liabilities	(28		)	—		(28		)	—		(39		)	—		(39		)	—
Net assets	$	3,915		$	2,943	$	903		$	69	$	3,879		$	2,940	$	876		$	63

December 31, 2017
(in millions) Total Fair Value
Level 1
Level 2
Not Categorized
NDTF equity securities $ 2,692
$ 2,618
$ —
$ 74
NDTF debt securities 1,066
204
862
—
Derivative assets 2
—
2
—
Total assets 3,760
2,822
864
74
Derivative liabilities (35 ) (1 ) (34 ) —
Net assets $ 3,725
$ 2,821
$ 830
$ 74

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

Investments
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2018
2017
2018
2017
Balance at beginning of period $ —
$ —
$ —
$ 3
Total pretax realized or unrealized gains included in comprehensive income —
—
—
1
Purchases, sales, issuances and settlements:
Sales —
—
—
(4 )
Balance at end of period $ —
$ —
$ —
$ —

~~PART I~~

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

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

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



	December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 2			Not Categorized
NDTF equity securities	$	2,484		$	2,419	$	—		$	65
NDTF debt securities	1,069			149		920			—
Derivative assets	3			—		3			—
Total assets	3,556			2,568		923			65
Derivative liabilities	(33		)	—		(33		)	—
Net assets	$	3,523		$	2,568	$	890		$	65

PROGRESS ENERGY

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


	September 30, 2018								December 31, 2017									March 31, 2019								December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1			Level 2			Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	2,382		$	2,382	$	—		$	2,222		$	2,222		$	—		$	2,270		$	2,270	$	—		$	1,991		$	1,991	$	—
NDTF debt securities	1,085			388		697			1,108			431			677			1,180			418		762			1,162			427		735
Other debt securities	66			18		48			59			12			47			96			47		49			64			17		47
Derivative assets	3			—		3			3			1			2			8			—		8			4			—		4
Total assets	3,536			2,788		748			3,392			2,666			726			3,554			2,735		819			3,221			2,435		786
Derivative liabilities	(37		)	—		(37		)	(36		)	(1		)	(35		)	(44		)	—		(44		)	(44		)	—		(44		)
Net assets	$	3,499		$	2,788	$	711		$	3,356		$	2,665		$	691		$	3,510		$	2,735	$	775		$	3,177		$	2,435	$	742

DUKE ENERGY PROGRESS

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


	September 30, 2018								December 31, 2017									March 31, 2019								December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1			Level 2			Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	1,913		$	1,913	$	—		$	1,795		$	1,795		$	—		$	1,812		$	1,812	$	—		$	1,588		$	1,588	$	—
NDTF debt securities	823			254		569			796			243			553			926			298		628			906			294		612
Other debt securities	8			8		—			1			1			—			3			3		—			6			6		—
Derivative assets	2			—		2			2			1			1			8			—		8			4			—		4
Total assets	2,746			2,175		571			2,594			2,040			554			2,749			2,113		636			2,504			1,888		616
Derivative liabilities	(24		)	—		(24		)	(18		)	(1		)	(17		)	(12		)	—		(12		)	(27		)	—		(27		)
Net assets	$	2,722		$	2,175	$	547		$	2,576		$	2,039		$	537		$	2,737		$	2,113	$	624		$	2,477		$	1,888	$	589



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

DUKE ENERGY FLORIDA

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


	September 30, 2018								December 31, 2017								March 31, 2019								December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	469		$	469	$	—		$	427		$	427	$	—		$	458		$	458	$	—		$	403		$	403	$	—
NDTF debt securities	262			134		128			312			188		124			254			120		134			256			133		123
Other debt securities	48			—		48			48			1		47			50			1		49			48			1		47
Derivative assets	1			—		1			1			—		1
Total assets	780			603		177			788			616		172			762			579		183			707			537		170
Derivative liabilities	(5		)	—		(5		)	(12		)	—		(12		)	(18		)	—		(18		)	(9		)	—		(9		)
Net assets	$	775		$	603	$	172		$	776		$	616	$	160		$	744		$	579	$	165		$	698		$	537	$	161

DUKE ENERGY OHIO

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

September 30, 2018 December 31, 2017
(in millions) Total Fair Value
Level 2
Level 3
Total Fair Value
Level 2
Level 3
Derivative assets $ 8
$ —
$ 8
$ 1
$ —
$ 1
Derivative liabilities (4 ) (4 ) —
(5 ) (5 ) —
Net assets (liabilities) $ 4
$ (4 ) $ 8
$ (4 ) $ (5 ) $ 1

~~PART I~~

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

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

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

~~The following table provides a reconciliation of beginning~~Sheets were not material for the three months ended March 31, 2019, and ~~ending balances of assets and liabilities measured at fair value using Level 3 measurements.~~

Derivatives (net)
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2018
2017
2018
2017
Balance at beginning of period $ 9
$ 3
$ 1
$ 5
Purchases, sales, issuances and settlements:
Purchases —
—
7
3
Settlements (1 ) (1 ) (2 ) (3 )
Total gains (losses) included on the Condensed Consolidated Balance Sheet —
—
2
(3 )
Balance at end of period $ 8
$ 2
$ 8
$ 2
2018.

DUKE ENERGY INDIANA

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


	September 30, 2018								December 31, 2017								March 31, 2019								December 31, 2018
(in millions)	Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3
Other equity securities	$	78	$	78	$	—	$	—	$	97	$	97	$	—	$	—	$	76	$	76	$	—	$	—	$	67	$	67	$	—	$	—
Other debt securities	40		—		40		—		31		—		31		—		42		—		42		—		41		—		41		—
Derivative assets	29		—		—		29		27		—		—		27		5		—		—		5		23		1		—		22
Total assets	$	147	$	78	$	40	$	29	$	155	$	97	$	31	$	27	$	123	$	76	$	42	$	5	$	131	$	68	$	41	$	22

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


	Derivatives (net)												Derivatives (net)
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(in millions)	2018			2017			2018			2017			2019			2018
Balance at beginning of period	$	44		$	51		$	27		$	16		$	22		$	27
Purchases, sales, issuances and settlements:
Purchases	—			—			49			52
Settlements	(13		)	(11		)	(41		)	(27		)	(10		)	(14		)
Total losses included on the Condensed Consolidated Balance Sheet	(2		)	(12		)	(6		)	(13		)	(7		)	(6		)
Balance at end of period	$	29		$	28		$	29		$	28		$	5		$	7

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

PIEDMONT

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

September 30, 2018
(in millions) Total Fair Value
Level 1
Level 3
Derivative assets $ 4
$ 4
$ —
Derivative liabilities (153 ) —
(153 )
Net (liabilities) assets $ (149 ) $ 4
$ (153 )


	December 31, 2017								March 31, 2019								December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 3			Total Fair Value			Level 1		Level 3			Total Fair Value			Level 1		Level 3
Other debt securities	$	1		$	1	$	—
Derivative assets	2			2		—			$	2		$	2	$	—		$	3		3		—
Total assets	3			3		—
Derivative liabilities	(142		)	—		(142		)	(121		)	—		(121		)	(141		)	—		(141		)
Net (liabilities) assets	$	(139	)	$	3	$	(142	)	$	(119	)	$	2	$	(121	)	$	(138	)	$	3	$	(141	)

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

Derivatives (net)
Three Months Ended September 30, Nine Months Ended September 30,
(in millions) 2018
2017
2018
2017
Balance at beginning of period $ (150 ) $ (145 ) $ (142 ) $ (187 )
Total (losses) gains and settlements (3 ) 22
(11 ) 64
Balance at end of period $ (153 ) $ (123 ) $ (153 ) $ (123 )

~~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)~~



	Derivatives (net)
	Three Months Ended March 31,
(in millions)	2019			2018
Balance at beginning of period	$	(141	)	$	(142	)
Total gains and settlements	20			10
Balance at end of period	$	(121	)	$	(132	)

QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS

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


	September 30, 2018											March 31, 2019
	Fair Value											Fair Value
Investment Type	(in millions)			Valuation Technique	Unobservable Input	Range						(in millions)			Valuation Technique	Unobservable Input	Range
Duke Energy Ohio
Financial Transmission Rights (FTRs)	$	8		RTO auction pricing	FTR price – per megawatt-hour (MWh)	$	1.03		-	$	4.10
FTRs												$	1		RTO auction pricing	FTR price – per MWh	$	0.17		-	$	2.40
Duke Energy Indiana
FTRs	29			RTO auction pricing	FTR price – per MWh	(2.32		)	-	8.11		5			RTO auction pricing	FTR price – per MWh	(0.42		)	-	7.85
Piedmont
Natural gas contracts	(153		)	Discounted cash flow	Forward natural gas curves – price per million British thermal unit (MMBtu)	1.74			-	3.41		(121		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	2.03			-	3.15
Duke Energy
Total Level 3 derivatives	$	(116	)									$	(115	)


	December 31, 2017											December 31, 2018
	Fair Value											Fair Value
Investment Type	(in millions)			Valuation Technique	Unobservable Input	Range						(in millions)			Valuation Technique	Unobservable Input	Range
Duke Energy Ohio
FTRs	$	1		RTO auction pricing	FTR price – per MWh	$	0.07		-	$	1.41	$	6		RTO auction pricing	FTR price – per MWh	$	1.19		-	$	4.59
Duke Energy Indiana
FTRs	27			RTO auction pricing	FTR price – per MWh	(0.77		)	-	7.44		22			RTO auction pricing	FTR price – per MWh	(2.07		)	-	8.27
Piedmont
Natural gas contracts	(142		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	2.10			-	2.88		(141		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.87			-	2.95
Duke Energy
Total Level 3 derivatives	$	(114	)									$	(113	)



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

OTHER FAIR VALUE DISCLOSURES

The fair value and book value of long-term debt, including current maturities, is summarized in the following table. Estimates determined are not necessarily indicative of amounts that could have been settled in current markets. Fair value of long-term debt uses Level 2 measurements.


	September 30, 2018				December 31, 2017				March 31, 2019				December 31, 2018
(in millions)	Book Value		Fair Value		Book Value		Fair Value		Book Value		Fair Value		Book Value		Fair Value
Duke Energy^(a)	$	53,962	$	53,949	$	52,279	$	55,331	$	56,182	$	58,242	$	54,529	$	54,534
Duke Energy Carolinas	10,395		10,887		10,103		11,372		10,965		11,951		10,939		11,471
Progress Energy	18,912		19,825		17,837		20,000		19,251		20,942		18,911		19,885
Duke Energy Progress	8,154		8,231		7,357		7,992		9,048		9,469		8,204		8,300
Duke Energy Florida	7,371		7,749		7,095		7,953		7,265		8,000		7,321		7,742
Duke Energy Ohio	2,066		2,136		2,067		2,249		2,960		3,149		2,165		2,239
Duke Energy Indiana	3,783		4,178		3,783		4,464		3,722		4,242		3,782		4,158
Piedmont	2,138		2,175		2,037		2,209		2,138		2,243		2,138		2,180


(a)	Book value of long-term debt includes ~~$1.6~~$1.5 billion as of ~~September 30, 2018,~~March 31, 2019, and ~~$1.7~~$1.6 billion as of December 31, ~~2017,~~2018, of unamortized debt discount and premium, net in purchase accounting adjustments related to the mergers with Progress Energy and Piedmont that are excluded from fair value of long-term debt.

At both ~~September 30, 2018,~~March 31, 2019, and December 31, ~~2017,~~2018, fair value of cash and cash equivalents, accounts and notes receivable, accounts payable, notes payable and commercial paper, and nonrecourse notes payable of VIEs are not materially different from their carrying amounts because of the short-term nature of these instruments and/or because the stated rates approximate market rates.

~~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)~~

~~12.~~13. VARIABLE INTEREST ENTITIES

A VIE is an entity that is evaluated for consolidation using more than a simple analysis of voting control. The analysis to determine whether an entity is a VIE considers contracts with an entity, credit support for an entity, the adequacy of the equity investment of an entity and the relationship of voting power to the amount of equity invested in an entity. This analysis is performed either upon the creation of a legal entity or upon the occurrence of an event requiring re-evaluation, such as a significant change in an entity’s assets or activities. A qualitative analysis of control determines the party that consolidates a VIE. This assessment is based on (i) what party has the power to direct the activities of the VIE that most significantly impact its economic performance and (ii) what party has rights to receive benefits or is obligated to absorb losses that could potentially be significant to the VIE. The analysis of the party that consolidates a VIE is a continual reassessment.

CONSOLIDATED VIEs

The obligations of the consolidated VIEs discussed in the following paragraphs are nonrecourse to the Duke Energy registrants. The registrants have no requirement to provide liquidity to, purchase assets of or guarantee performance of these VIEs unless noted in the following paragraphs.

No financial support was provided to any of the consolidated VIEs during the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, and the year ended December 31, ~~2017,~~2018, or is expected to be provided in the future that was not previously contractually required.

Receivables Financing – DERF / DEPR / DEFR

~~Duke Energy Receivables Finance Company, LLC (DERF), Duke Energy Progress Receivables, LLC (DEPR)~~DERF, DEPR and ~~Duke Energy Florida Receivables, LLC (DEFR)~~DEFR are bankruptcy remote, special purpose subsidiaries of Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, respectively. DERF, DEPR and DEFR are wholly owned limited liability companies with separate legal existence from their parent companies, and their assets are not generally available to creditors of their parent companies. On a revolving basis, DERF, DEPR and DEFR buy certain accounts receivable arising from the sale of electricity and related services from their parent companies.

DERF, DEPR and DEFR borrow amounts under credit facilities to buy these receivables. Borrowing availability from the credit facilities is limited to the amount of qualified receivables purchased. The sole source of funds to satisfy the related debt obligations is cash collections from the receivables. Amounts borrowed under the credit facilities are reflected on the Condensed Consolidated Balance Sheets as Long-Term Debt.

The most significant activity that impacts the economic performance of DERF, DEPR and DEFR are the decisions made to manage delinquent receivables. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are considered primary beneficiaries and consolidate DERF, DEPR and DEFR, respectively, as they make those decisions.

Receivables Financing – CRC

CRC is a bankruptcy remote, special purpose entity indirectly owned by Duke Energy. On a revolving basis, CRC buys certain accounts receivable arising from the sale of electricity, natural gas and related services from Duke Energy Ohio and Duke Energy Indiana. CRC borrows amounts under a credit facility to buy the receivables from Duke Energy Ohio and Duke Energy Indiana. Borrowing availability from the credit facility is limited to the amount of qualified receivables sold to CRC. The sole source of funds to satisfy the related debt obligation is cash collections from the receivables. Amounts borrowed under the credit facility are reflected on Duke Energy's Condensed Consolidated Balance Sheets as Long-Term Debt.

The proceeds Duke Energy Ohio and Duke Energy Indiana receive from the sale of receivables to CRC are ~~typically~~approximately 75 percent cash and 25 percent in the form of a subordinated note from CRC. The subordinated note is a retained interest in the receivables sold. Depending on collection experience, additional equity infusions to CRC may be required by Duke Energy to maintain a minimum equity balance of $3 million.

CRC is considered a VIE because (i) equity capitalization is insufficient to support its operations, (ii) power to direct the activities that most significantly impact the economic performance of the entity are not performed by the equity holder and (iii) deficiencies in net worth of CRC are funded by Duke Energy. The most significant activities that impact the economic performance of CRC are decisions made to manage delinquent receivables. Duke Energy is considered the primary beneficiary and consolidates CRC as it makes these decisions. Neither Duke Energy Ohio nor Duke Energy Indiana consolidate CRC.



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

Receivables Financing – Credit Facilities

The following table summarizes the amounts and expiration dates of the credit facilities and associated restricted receivables described above.

Duke Energy
Duke Energy
Duke Energy
Duke Energy
Carolinas
Progress
Florida
(in millions) CRC
DERF
DEPR
DEFR
Expiration date December 2020
December 2020
February 2021
April 2021
Credit facility amount $ 325
$ 450
$ 300
$ 225
Amounts borrowed at September 30, 2018 325
450
300
225
Amounts borrowed at December 31, 2017 325
450
300
225
Restricted Receivables at September 30, 2018 504
795
635
456
Restricted Receivables at December 31, 2017 545
640
459
317

~~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
			Duke Energy		Duke Energy		Duke Energy
			Carolinas		Progress		Florida
(in millions)	CRC		DERF		DEPR		DEFR
Expiration date	December 2020		December 2020		February 2021		April 2021
Credit facility amount	$	350	$	475	$	325	$	250
Amounts borrowed at March 31, 2019	350		475		325		250
Amounts borrowed at December 31, 2018	325		450		300		225
Restricted Receivables at March 31, 2019	534		630		495		317
Restricted Receivables at December 31, 2018	564		699		547		357

Nuclear Asset-Recovery Bonds – DEFPF

~~Duke Energy Florida Project Finance, LLC (DEFPF)~~DEFPF is a bankruptcy remote, wholly owned special purpose subsidiary of Duke Energy Florida. DEFPF was formed in 2016 for the sole purpose of issuing nuclear asset-recovery bonds to finance Duke Energy Florida's unrecovered regulatory asset related to Crystal River Unit 3.

In June 2016, DEFPF issued senior secured bonds and used the proceeds to acquire nuclear asset-recovery property from Duke Energy Florida. The nuclear asset-recovery property acquired includes the right to impose, bill, collect and adjust a non-bypassable nuclear asset-recovery charge from all Duke Energy Florida retail customers until the bonds are paid in full and all financing costs have been recovered. The nuclear asset-recovery bonds are secured by the nuclear asset-recovery property, and cash collections from the nuclear asset-recovery charges are the sole source of funds to satisfy the debt obligation. The bondholders have no recourse to Duke Energy Florida.

DEFPF is considered a VIE primarily because the equity capitalization is insufficient to support its operations. Duke Energy Florida has the power to direct the significant activities of the VIE as described above, and therefore Duke Energy Florida is considered the primary beneficiary and consolidates DEFPF.

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


(in millions)	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Receivables of VIEs	$	7	$	4	$	5	$	5
Regulatory Assets: Current	52		51		52		52
Current Assets: Other	14		40		12		39
Other Noncurrent Assets: Regulatory assets	1,055		1,091		1,032		1,041
Current Liabilities: Other	3		10		2		10
Current maturities of long-term debt	53		53		54		53
Long-Term Debt	1,111		1,164		1,082		1,111

Commercial Renewables

Certain of Duke Energy’s renewable energy facilities are VIEs due to Duke Energy issuing guarantees for debt service and operations and maintenance reserves in support of debt financings. Assets are restricted and cannot be pledged as collateral or sold to third parties without prior approval of debt holders. Additionally, Duke Energy has VIEs associated with tax equity arrangements entered into with third-party investors in order to finance the cost of solar energy systems eligible for tax credits. The activities that most significantly ~~impact~~impacted the economic performance of these renewable energy facilities were decisions associated with siting, negotiating PPAs ~~engineering, procurement~~ and ~~construction~~EPC agreements, and decisions associated with ongoing operations and maintenance-related activities. Duke Energy is considered the primary beneficiary and consolidates the entities as it is responsible for all of these decisions.

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


(in millions)	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Current Assets: Other	$	203		$	174		$	140		$	123
Property, plant and equipment, cost	4,025			3,923			4,018			4,007
Accumulated depreciation and amortization	(695		)	(591		)	(733		)	(698		)
Other Noncurrent Assets: Other	268			50			280			261
Current maturities of long-term debt	175			170			173			174
Long-Term Debt	1,604			1,700			1,583			1,587
Other Noncurrent Liabilities: Deferred income taxes	—			(148		)
Other Noncurrent Liabilities: Asset Retirement Obligations							107			106
Other Noncurrent Liabilities: Other	225			241			212			212

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

NON-CONSOLIDATED VIEs

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


	September 30, 2018												March 31, 2019
	Duke Energy								Duke		Duke		Duke Energy										Duke		Duke
	Pipeline		Commercial		Other				Energy		Energy		Pipeline			Commercial		Other					Energy		Energy
(in millions)	Investments^(a)		Renewables		VIEs		Total		Ohio		Indiana		Investments			Renewables		VIEs		Total			Ohio		Indiana
Receivables from affiliated companies	$	—	$	—	$	—	$	—	$	56	$	94	$	—		$	—	$	—	$	—		$	67	$	89
Investments in equity method unconsolidated affiliates	729		190		47		966		—		—		998			187		50		1,235			—		—
Total assets	$	729	$	190	$	47	$	966	$	56	$	94	$	998		$	187	$	50	$	1,235		$	67	$	89
Taxes accrued													(1		)	—		—		(1		)	—		—
Other current liabilities	—		—		3		3		—		—		—			—		2		2			—		—
Deferred income taxes	14		—		—		14		—		—		40			—		—		40			—		—
Other noncurrent liabilities	—		—		11		11		—		—		—			—		11		11			—		—
Total liabilities	$	14	$	—	$	14	$	28	$	—	$	—	$	39		$	—	$	13	$	52		$	—	$	—
Net assets	$	715	$	190	$	33	$	938	$	56	$	94	$	959		$	187	$	37	$	1,183		$	67	$	89


~~(a)~~	~~See Pipeline Investments table below for further details regarding Investments in equity method unconsolidated affiliates.~~


	December 31, 2017														December 31, 2018
	Duke Energy										Duke		Duke		Duke Energy										Duke		Duke
	Pipeline			Commercial		Other					Energy		Energy		Pipeline			Commercial		Other					Energy		Energy
(in millions)	Investments			Renewables		VIEs		Total			Ohio		Indiana		Investments			Renewables		VIEs		Total			Ohio		Indiana
Receivables from affiliated companies	$	—		$	—	$	—	$	—		$	87	$	106	$	—		$	—	$	—	$	—		$	93	$	118
Investments in equity method unconsolidated affiliates	697			180		42		919			—		—		822			190		48		1,060			—		—
Other noncurrent assets	17			—		—		17			—		—
Total assets	$	714		$	180	$	42	$	936		$	87	$	106	$	822		$	190	$	48	$	1,060		$	93	$	118
Taxes accrued	(29		)	—		—		(29		)	—		—		(1		)	—		—		(1		)	—		—
Other current liabilities	—			—		4		4			—		—		—			—		4		4			—		—
Deferred income taxes	42			—		—		42			—		—		21			—		—		21			—		—
Other noncurrent liabilities	—			—		12		12			—		—		—			—		12		12			—		—
Total liabilities	$	13		$	—	$	16	$	29		$	—	$	—	$	20		$	—	$	16	$	36		$	—	$	—
Net assets	$	701		$	180	$	26	$	907		$	87	$	106	$	802		$	190	$	32	$	1,024		$	93	$	118

The Duke Energy Registrants are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying values shown above except for the power purchase agreement with OVEC, which is discussed below, and various guarantees, ~~some~~including Duke Energy's guarantee agreement to support its share of the ACP revolving credit facility. Duke Energy's maximum exposure to loss under the terms of the guarantee is $737 million, which ~~are reflected in~~represents 47 percent of the ~~table above~~outstanding borrowings under the credit facility as ~~Other noncurrent liabilities.~~of March 31, 2019. For more information on various guarantees, refer to Note 4.

Pipeline Investments

Duke Energy has investments in various joint ventures with pipeline projects currently under construction. These entities are considered VIEs due to having insufficient equity to finance their own activities without subordinated financial support. Duke Energy does not have the power to direct the activities that most significantly impact the economic performance, the obligation to absorb losses or the right to receive benefits of these VIEs and therefore does not consolidate these entities.



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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


			VIE Investment Amount (in millions)						VIE Investment Amount (in millions)
	Ownership		September 30,		December 31,		Ownership		March 31,		December 31,
Entity Name	Interest		2018		2017		Interest		2019		2018
ACP(a)	47	%	$	704	$	397	47	%	$	973	$	797
Sabal Trail^(a)	7.5	%	—		219
Constitution^(b)	24	%	25		81
Constitution							24	%	25		25
Total			$	729	$	697			$	998	$	822

(a)

AtDuke Energy evaluated this investment for impairment as of March 31, 2019, and December 31, 2017, Sabal Trail was considered a VIE due to having insufficient equity to finance their own activities without subordinated financial support. However, Sabal Trail is now a fully operational, well capitalized entity. As a result, Sabal Trail has sufficient equity to finance its own activities,2018, and determined that fair value approximated carrying value and therefore is no ~~longer considered a VIE. Duke Energy's investment in Sabal Trail~~impairment was ~~$112 million at September 30, 2018.~~necessary.

~~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)~~


~~(b)~~	During the nine months ended September 30, 2018, Duke Energy recorded an OTTI of $55 million related to Constitution within Equity in earnings of unconsolidated affiliates on Duke Energy's Condensed Consolidated Statements of Income. See Note 3 for additional information.

In 2017, ACP executed a $3.4 billion revolving credit facility with a stated maturity date of October 2021. Duke Energy entered into a guarantee agreement to support its share of the ACP revolving credit facility. Duke Energy's maximum exposure to loss under the terms of the guarantee is $486 million, which represents 47 percent of the outstanding borrowings under the credit facility as of September 30, 2018.

Commercial Renewables

Duke Energy has investments in various renewable energy project entities. Some of these entities are VIEs due to Duke Energy issuing guarantees for debt service and operations and maintenance reserves in support of debt financings. Duke Energy does not consolidate these VIEs because power to direct and control key activities is shared jointly by Duke Energy and other owners.

~~Other VIEs~~Pioneer

Duke Energy holds a 50 percent equity interest in ~~Pioneer Transmission, LLC (Pioneer).~~Pioneer. Pioneer is considered a VIE due to having insufficient equity to finance its own activities without subordinated financial support. The activities that most significantly impact Pioneer's economic performance are decisions related to the development of new transmission facilities. The power to direct these activities is jointly and equally shared by Duke Energy and the other joint venture partner, American Electric Power; therefore, Duke Energy does not consolidate Pioneer.

OVEC

Duke Energy Ohio’s 9 percent ownership interest in OVEC is considered a non-consolidated VIE due to OVEC having insufficient equity to finance its activities without subordinated financial support. The activities that most significantly impact OVEC's economic performance include fuel strategy and supply activities and decisions associated with ongoing operations and maintenance-related activities. Duke Energy Ohio does not have the unilateral power to direct these activities, and therefore, does not consolidate OVEC.

As a counterparty to an ~~inter-company power agreement (ICPA),~~ICPA, Duke Energy Ohio has a contractual arrangement to receive entitlements to capacity and energy from OVEC’s power plants through June 2040 commensurate with its power participation ratio, which is equivalent to Duke Energy Ohio's ownership interest. Costs, including fuel, operating expenses, fixed costs, debt amortization and interest expense, are allocated to counterparties to the ICPA based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuation in power prices and changes in OVEC's cost of business. On March 31, 2018, ~~FirstEnergy Solutions (FES),~~FES, a subsidiary of FirstEnergy and an ICPA counterparty with a power participation ratio of 4.85 percent, filed for Chapter 11 bankruptcy, which could increase costs allocated to the counterparties. On July 31, 2018, the bankruptcy court rejected the FES ICPA, which means OVEC is an unsecured creditor in the FES bankruptcy proceeding. Duke Energy Ohio cannot predict the impact of the bankruptcy filing on its OVEC interests. In addition, certain proposed environmental rulemaking could result in future increased OVEC cost allocations.

CRC

See discussion under Consolidated VIEs for additional information related to CRC.

Amounts included in Receivables from affiliated companies in the above table for Duke Energy Ohio and Duke Energy Indiana reflect their retained interest in receivables sold to CRC. These subordinated notes held by Duke Energy Ohio and Duke Energy Indiana are stated at fair value. Carrying values of retained interests are determined by allocating carrying value of the receivables between assets sold and interests retained based on relative fair value. The allocated bases of the subordinated notes are not materially different than their face value because (i) the receivables generally turn over in less than two months, (ii) credit losses are reasonably predictable due to the broad customer base and lack of significant concentration and (iii) the equity in CRC is subordinate to all retained interests and thus would absorb losses first. The hypothetical effect on fair value of the retained interests assuming both a 10 percent and a 20 percent unfavorable variation in credit losses or discount rates is not material due to the short turnover of receivables and historically low credit loss history. Interest accrues to Duke Energy Ohio and Duke Energy Indiana on the retained interests using the acceptable yield method. This method generally approximates the stated rate on the notes since the allocated basis and the face value are nearly equivalent. An impairment charge is recorded against the carrying value of both retained interests and purchased beneficial interest whenever it is determined that an OTTI has occurred.

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

Duke Energy Ohio Duke Energy Indiana
2018
2017
2018
2017
Anticipated credit loss ratio 0.5 % 0.5 % 0.3 % 0.3 %
Discount rate 2.9 % 2.1 % 2.9 % 2.1 %
Receivable turnover rate 13.6 % 13.5 % 10.9 % 10.7 %

The following table shows the gross and net receivables sold.


	Duke Energy Ohio				Duke Energy Indiana				Duke Energy Ohio				Duke Energy Indiana
(in millions)	September 30, 2018		December 31, 2017		September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018		March 31, 2019		December 31, 2018
Receivables sold	$	218	$	273	$	326	$	312	$	253	$	269	$	322	$	336
Less: Retained interests	56		87		94		106		67		93		89		118
Net receivables sold	$	162	$	186	$	232	$	206	$	186	$	176	$	233	$	218

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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


	Duke Energy Ohio								Duke Energy Indiana								Duke Energy Ohio				Duke Energy Indiana
	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended				Three Months Ended				Three Months Ended
	September 30,				September 30,				September 30,				September 30,				March 31,				March 31,
(in millions)	2018		2017		2018		2017		2018		2017		2018		2017		2019		2018		2019		2018
Sales
Receivables sold	$	450	$	438	$	1,478	$	1,392	$	754	$	720	$	2,140	$	2,047	$	575	$	567	$	734	$	694
Loss recognized on sale	4		2		10		7		5		3		12		9		4		3		5		3
Cash flows
Cash proceeds from receivables sold	$	449	$	434	$	1,499	$	1,421	$	743	$	713	$	2,140	$	2,064	$	597	$	585	$	758	$	711
Collection fees received	—		1		1		1		—		—		1		1
Return received on retained interests	2		—		5		2		3		2		7		5		2		2		3		2

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

Collection fees received in connection with servicing transferred accounts receivable are included in Operation, maintenance and other on Duke Energy Ohio’s and Duke Energy Indiana’s Condensed Consolidated Statements of Operations and Comprehensive Income. The loss recognized on sales of receivables is calculated monthly by multiplying receivables sold during the month by the required discount. The required discount is derived monthly utilizing a three-year weighted average formula that considers charge-off history, late charge history and turnover history on the sold receivables, as well as a component for the time value of money. The discount rate, or component for the time value of money, is the prior month-end LIBOR plus a fixed rate of 1.00 percent.

~~13.~~14. REVENUE

As described in Note 1, Duke Energy adopted Revenue from Contracts with Customers effective January 1, 2018, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. No cumulative effect adjustment was recorded as the vast majority of Duke Energy’s revenues are at-will and without a defined contractual term. Additionally, comparative disclosures for 2018 operating results with the previous revenue recognition rules are not applicable as Duke Energy’s revenue recognition has not materially changed as a result of the new standard.

Duke Energy recognizes revenue consistent with amounts billed under tariff offerings or at contractually agreed upon rates based on actual physical delivery of electric or natural gas service, including estimated volumes delivered when billings have not yet occurred. As such, the majority of Duke Energy’s revenues have fixed pricing based on the contractual terms of the published tariffs, with variability in expected cash flows attributable to the customer’s volumetric demand and ultimate quantities of energy or natural gas supplied and used during the billing period. The stand-alone selling price of related sales are designed to support recovery of prudently incurred costs and an appropriate return on invested assets and are primarily governed by published tariff rates or contractual agreements approved by relevant regulatory bodies. As described in Note 1, certain excise taxes and franchise fees levied by state or local governments are required to be paid even if not collected from the customer. These taxes are recognized on a gross basis as part of revenues. Duke Energy elects to account for all other taxes net of revenues.

Performance obligations are satisfied over time as energy or natural gas is delivered and consumed with billings generally occurring monthly and related payments due within 30 days, depending on regulatory requirements. In no event does the timing between payment and delivery of the goods and services exceed one year. Using this output method for revenue recognition provides a faithful depiction of the transfer of electric and natural gas service as customers obtain control of the commodity and benefit from its use at delivery. Additionally, Duke Energy has an enforceable right to consideration for energy or natural gas delivered at any discrete point in time, and will recognize revenue at an amount that reflects the consideration to which Duke Energy is entitled for the energy or natural gas delivered.

As described above, the majority of Duke Energy’s tariff revenues are at-will and, as such, related contracts with customers have an expected duration of one year or less and will not have future performance obligations for disclosure. Additionally, other long-term revenue streams, including wholesale contracts, generally provide services that are part of a single performance obligation, the delivery of electricity or natural gas. As such, other than material fixed consideration under long-term contracts, related disclosures for future performance obligations are also not applicable.

Duke Energy earns substantially all of its revenues through its reportable segments, Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables.

~~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)~~

Electric Utilities and Infrastructure

Electric Utilities and Infrastructure earns the majority of its revenues through retail and wholesale electric service through the generation, transmission, distribution and sale of electricity. Duke Energy generally provides retail and wholesale electric service customers with their full electric load requirements or with supplemental load requirements when the customer has other sources of electricity.

Retail electric service is generally marketed throughout Duke Energy's electric service territory through standard service offers. The standard service offers are through tariffs determined by regulators in Duke Energy's regulated service territory. Each tariff, which is assigned to customers based on customer class, has multiple components such as an energy charge, a demand charge, a basic facilities charge and applicable riders. Duke Energy considers each of these components to be aggregated into a single performance obligation for providing electric service, or in the case of distribution only customers in Duke Energy Ohio, for delivering electricity. Electricity is considered a single performance obligation satisfied over time consistent with the series guidance and is provided and consumed over the billing period (generally one month). ~~Retail electric service is typically provided to at-will customers that can cancel service at any time, without a substantive penalty~~. Additionally, Duke Energy adheres to applicable regulatory requirements in each jurisdiction to ensure the collectability of amounts billed and appropriate mitigating procedures are followed when necessary. As such, revenue from contracts with customers for such contracts is equivalent to the electricity supplied and billed in that period (including unbilled estimates).

Wholesale electric service is generally provided under long-term contracts using cost-based pricing. FERC regulates costs that may be recovered from customers and the amount of return companies are permitted to earn. Wholesale contracts include both energy and demand charges. For full requirements contracts, Duke Energy considers both charges as a single performance obligation for providing integrated electric service. For contracts where energy and demand charges are considered separate performance obligations, energy and demand are each a distinct performance obligation under the series guidance and are satisfied as energy is delivered and stand-ready service is provided on a monthly basis. This service represents consumption over the billing period and revenue is recognized consistent with billings and unbilled estimates, which generally occur monthly. Contractual amounts owed are typically trued up annually based upon incurred costs in accordance with FERC published filings and the specific customer’s actual peak demand. Estimates of variable consideration related to potential additional billings or refunds owed are updated quarterly.

The majority of wholesale revenues are full requirements contracts where the customers purchase the substantial majority of their energy needs and do not have a fixed quantity of contractually required energy or capacity. As such, related forecasted revenues are considered optional purchases. Supplemental requirements contracts that include contracted blocks of energy and capacity at contractually fixed prices have the following estimated remaining performance obligations:


	Remaining Performance Obligations														Remaining Performance Obligations
(in millions)	2018		2019		2020		2021		2022		Thereafter		Total		2019		2020		2021		2022		2023		Thereafter		Total
Progress Energy	$	24	$	112	$	121	$	80	$	82	$	81	$	500	$	86	$	121	$	87	$	82	$	39	$	42	$	457
Duke Energy Progress	2		9		9		9		9		18		56		7		9		9		9		9		9		52
Duke Energy Florida	22		103		112		71		73		63		444		79		112		78		73		30		33		405
Duke Energy Indiana	2		9		10		5		—		—		26		7		10		5		—		—		—		22

Revenues for block sales are recognized monthly as energy is delivered and stand-ready service is provided, consistent with invoiced amounts and unbilled estimates.

Gas Utilities and Infrastructure

Gas Utilities and Infrastructure earns its ~~revenue~~revenues through retail and wholesale natural gas service through the transportation, distribution and sale of natural gas. Duke Energy generally provides retail and wholesale natural gas service customers with all natural gas load requirements. Additionally, while natural gas can be stored, substantially all natural gas provided by Duke Energy is consumed by customers simultaneously with receipt of delivery.

Retail natural gas service is marketed throughout Duke Energy's natural gas service territory using published tariff rates. The tariff rates are established by regulators in Duke Energy's service territories. Each tariff, which is assigned to customers based on customer class, have multiple components, such as a commodity charge, demand charge, customer or monthly charge and transportation costs. Duke Energy considers each of these components to be aggregated into a single performance obligation for providing natural gas service. For contracts where Duke Energy provides all of the customer’s natural gas needs, the delivery of natural gas is considered a single performance obligation satisfied over time, and revenue is recognized monthly based on billings and unbilled estimates as service is provided and the commodity is consumed over the billing period. Additionally, natural gas service is typically at-will and customers can cancel service at any time, without a substantive penalty. ~~Duke Energy also adheres to applicable regulatory requirements to ensure the collectability of amounts billed and receivable and appropriate mitigating procedures are followed when necessary~~.

Certain long-term individually negotiated contracts exist to provide natural gas service. These contracts are regulated and approved by state commissions. The negotiated contracts have multiple components, including a natural gas and a demand charge, similar to retail natural gas contracts. Duke Energy considers each of these components to be a single performance obligation for providing natural gas service. This service represents consumption over the billing period, generally one month.

~~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)~~

Fixed capacity payments under long-term contracts for the Gas Utilities and Infrastructure segment include minimum margin contracts and supply arrangements with municipalities and power generation facilities. Revenues for related sales are recognized monthly as natural gas is delivered and stand-ready service is provided, consistent with invoiced amounts and unbilled estimates. Estimated remaining performance obligations are as follows:


	Remaining Performance Obligations														Remaining Performance Obligations
(in millions)	2018		2019		2020		2021		2022		Thereafter		Total		2019		2020		2021		2022		2023		Thereafter		Total
Piedmont	$	18	$	71	$	70	$	65	$	64	$	462	$	750	$	53	$	69	$	65	$	64	$	61	$	431	$	743

Commercial Renewables

Commercial Renewables earns the majority of its revenues through long-term PPAs and generally sells all of its wind and solar facility output, electricity and ~~Renewable Energy Credits (RECs)~~RECs to customers. The majority of these PPAs have historically been accounted for as leases. For PPAs that are not accounted for as leases, the delivery of electricity and the delivery of RECs are considered separate performance obligations.

The delivery of electricity is a performance obligation satisfied over time and represents generation and consumption of the electricity over the billing period, generally one month. The delivery of RECs is a performance obligation satisfied at a point in time and represents delivery of each REC generated by the wind or solar facility. The majority of self-generated RECs are bundled with energy in Duke Energy’s contracts and, as such, related revenues are recognized as energy is generated and delivered as that pattern is consistent with Duke Energy’s performance. Commercial Renewables recognizes revenue based on the energy generated and billed for the period, generally one month, at contractual rates (including unbilled estimates) according to the invoice practical expedient. Amounts are typically due within 30 days of invoice.



FINANCIAL STATEMENTS	REVENUE

Other

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

~~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)~~

Disaggregated Revenues

For the Electric and Gas segments, revenue by customer class is most meaningful to Duke Energy as each respective customer class collectively represents unique customer expectations of service, generally has different energy and demand requirements, and operates under tailored, regulatory approved pricing structures. Additionally, each customer class is impacted differently by weather and a variety of economic factors including the level of population growth, economic investment, employment levels, and regulatory activities in each of Duke Energy’s jurisdictions. As such, analyzing revenues disaggregated by customer class allows Duke Energy to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. For the Commercial Renewables segment, the majority of revenues from contracts with customers are from selling all of the unit-contingent output at contractually defined pricing under long-term PPAs with consistent expectations regarding the timing and certainty of cash flows. Disaggregated revenues are presented as follows:

Three Months Ended September 30, 2018
Duke
Duke
Duke
Duke
Duke

(in millions) Duke
Energy
Progress
Energy
Energy
Energy
Energy

By market or type of customer Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Electric Utilities and Infrastructure
   Residential $ 2,729
$ 823
$ 1,425
$ 572
$ 853
$ 203
$ 279
$ —
   General 1,763
635
800
373
427
112
218
—
   Industrial 835
352
246
177
69
33
202
—
   Wholesale 589
132
372
335
37
3
81
—
   Other revenues 225
109
134
90
44
20
29
—
Total Electric Utilities and Infrastructure revenue from contracts with customers $ 6,141
$ 2,051
$ 2,977
$ 1,547
$ 1,430
$ 371
$ 809
$ —

Gas Utilities and Infrastructure
   Residential $ 116
$ —
$ —
$ —
$ —
$ 59
$ —
$ 57
   Commercial 66
—
—
—
—
20
—
46
   Industrial 28
—
—
—
—
3
—
24
   Power Generation —
—
—
—
—
—
—
13
   Other revenues 23
—
—
—
—
1
—
22
Total Gas Utilities and Infrastructure revenue from contracts with customers $ 233
$ —
$ —
$ —
$ —
$ 83
$ —
$ 162

Commercial Renewables
Revenue from contracts with customers $ 61
$ —
$ —
$ —
$ —
$ —
$ —
$ —

Other
Revenue from contracts with customers $ 16
$ —
$ —
$ —
$ —
$ 12
$ —
$ —

Total revenue from contracts with customers $ 6,451
$ 2,051
$ 2,977
$ 1,547
$ 1,430
$ 466
$ 809
$ 162

Other revenue sources^(a)
$ 177
$ 39
$ 68
$ 35
$ 32
$ 3
$ 10
$ 10
Total revenues $ 6,628
$ 2,090
$ 3,045
$ 1,582
$ 1,462
$ 469
$ 819
$ 172



	Three Months Ended March 31, 2019
			Duke				Duke		Duke		Duke		Duke
(in millions)	Duke		Energy		Progress		Energy		Energy		Energy		Energy
By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Electric Utilities and Infrastructure
Residential	$	2,370	$	760	$	1,114	$	536	$	578	$	189	$	306	$	—
General	1,427		496		632		306		326		103		197		—
Industrial	711		266		222		161		61		33		190		—
Wholesale	541		119		353		315		38		14		54		—
Other revenues	172		78		172		125		47		16		17		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	5,221	$	1,719	$	2,493	$	1,443	$	1,050	$	355	$	764	$	—

Gas Utilities and Infrastructure
Residential	$	414	$	—	$	—	$	—	$	—	$	112	$	—	$	302
Commercial	206		—		—		—		—		49		—		157
Industrial	48		—		—		—		—		7		—		42
Power Generation	—		—		—		—		—		—		—		13
Other revenues	63		—		—		—		—		8		—		56
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	731	$	—	$	—	$	—	$	—	$	176	$	—	$	570

Commercial Renewables
Revenue from contracts with customers	$	42	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other
Revenue from contracts with customers	$	4	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total revenue from contracts with customers	$	5,998	$	1,719	$	2,493	$	1,443	$	1,050	$	531	$	764	$	570

Other revenue sources^(a)	$	165	$	25	$	79	$	41	$	36	$	—	$	4	$	9
Total revenues	$	6,163	$	1,744	$	2,572	$	1,484	$	1,086	$	531	$	768	$	579

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	REVENUE


	Nine Months Ended September 30, 2018																Three Months Ended March 31, 2018
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
(in millions)	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Electric Utilities and Infrastructure
Residential	$	7,264	$	2,263	$	3,636	$	1,540	$	2,096	$	564	$	802	$	—	$	2,350	$	781	$	1,112	$	516	$	595	$	180	$	278	$	—
General	4,619		1,608		2,109		972		1,137		318		584		—		1,375		472		631		299		333		96		178		—
Industrial	2,235		893		678		481		197		96		567		—		664		255		208		145		62		30		173		—
Wholesale	1,737		366		1,140		1,019		121		5		226		—		633		119		446		397		50		—		68		—
Other revenues	558		261		359		222		137		57		66		—		139		67		129		85		43		14		17		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	16,413	$	5,391	$	7,922	$	4,234	$	3,688	$	1,040	$	2,245	$	—	$	5,161	$	1,694	$	2,526	$	1,442	$	1,083	$	320	$	714	$	—

Gas Utilities and Infrastructure
Residential	$	682	$	—	$	—	$	—	$	—	$	236	$	—	$	446	$	413	$	—	$	—	$	—	$	—	$	111	$	—	$	302
Commercial	354		—		—		—		—		97		—		257		201		—		—		—		—		49		—		152
Industrial	107		—		—		—		—		13		—		93		48		—		—		—		—		7		—		41
Power Generation	—		—		—		—		—		—		—		40		—		—		—		—		—		—		—		13
Other revenues	101		—		—		—		—		13		—		88		55		—		—		—		—		6		—		49
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	1,244	$	—	$	—	$	—	$	—	$	359	$	—	$	924	$	717	$	—	$	—	$	—	$	—	$	173	$	—	$	557

Commercial Renewables
Revenue from contracts with customers	$	141	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	33	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other
Revenue from contracts with customers	$	47	$	—	$	—	$	—	$	—	$	36	$	—	$	—	$	17	$	—	$	—	$	—	$	—	$	14	$	—	$	—

Total Revenue from contracts with customers	$	17,845	$	5,391	$	7,922	$	4,234	$	3,688	$	1,435	$	2,245	$	924
Total revenue from contracts with customers																	$	5,928	$	1,694	$	2,526	$	1,442	$	1,083	$	507	$	714	$	557

Other revenue sources^(a)	$	561	$	134	$	197	$	99	$	92	$	17	$	43	$	16	$	207	$	69	$	50	$	18	$	32	$	17	$	17	$	(4	)
Total revenues	$	18,406	$	5,525	$	8,119	$	4,333	$	3,780	$	1,452	$	2,288	$	940	$	6,135	$	1,763	$	2,576	$	1,460	$	1,115	$	524	$	731	$	553


(a)	Other revenue sources include revenues from leases, derivatives and alternative revenue programs that are not considered revenues from contracts with customers. Alternative revenue programs in certain jurisdictions include regulatory mechanisms that periodically adjust for over or under collection of related revenues.

~~IMPACT OF WEATHER AND THE TIMING OF BILLING PERIODS~~

~~Revenues and costs are influenced by seasonal weather patterns. Peak sales of electricity occur during the summer and winter months~~, which results in higher revenue and cash flows during these periods. By contrast, lower sales of electricity occur during the spring and fall, allowing for scheduled plant maintenance. Residential and general service customers are more impacted by weather than industrial customers. Estimated weather impacts are based on actual current period weather compared to normal weather conditions. Normal weather conditions are defined as the long-term average of actual historical weather conditions. Heating-degree days measure the variation in weather based on the extent the average daily temperature falls below a base temperature. Cooling-degree days measure the variation in weather based on the extent the average daily temperature rises above the base temperature. Each degree of temperature below the base temperature counts as one heating-degree day and each degree of temperature above the base temperature counts as one cooling-degree day.

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

~~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)~~

Gas Utilities and Infrastructure's costs and revenues are influenced by seasonal patterns due to peak natural gas sales occurring during the winter months as a result of space heating requirements. Residential customers are the most impacted by weather. There are certain regulatory mechanisms for the North Carolina, South Carolina, Tennessee and Ohio service territories that normalize the margins collected from certain customer classes during the winter. In North Carolina, rate design provides protection from both weather and other usage variations such as conservation, while South Carolina and Tennessee revenues are adjusted solely based on weather. Ohio primarily employs a fixed charge each month regardless of the season and usage.

UNBILLED REVENUE

Unbilled revenues are recognized by applying customer billing rates to the estimated volumes of energy or natural gas delivered but not yet billed. Unbilled revenues can vary significantly from period to period as a result of seasonality, weather, customer usage patterns, customer mix, average price in effect for customer classes, timing of rendering customer bills and meter reading schedules, and the impact of weather normalization or margin decoupling mechanisms.

Unbilled revenues are included within Receivables and Receivables of VIEs on the Condensed Consolidated Balance Sheets as shown in the following table.


(in millions)	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Duke Energy	$	802	$	944	$	733	$	896
Duke Energy Carolinas	278		342		281		313
Progress Energy	283		228		193		244
Duke Energy Progress	163		143		108		148
Duke Energy Florida	120		85		85		96
Duke Energy Ohio	2		4		1		2
Duke Energy Indiana	25		21		18		23
Piedmont	3		86		38		73



FINANCIAL STATEMENTS	REVENUE

Additionally, Duke Energy Ohio and Duke Energy Indiana sell, on a revolving basis, nearly all of their retail accounts receivable, including receivables for unbilled revenues, to an affiliate, CRC, and ~~accounts~~account for the transfers of receivables as sales. Accordingly, the receivables sold are not reflected on the Condensed Consolidated Balance Sheets of Duke Energy Ohio and Duke Energy Indiana. See Note 1213 for further information. These receivables for unbilled revenues are shown in the table below.


(in millions)	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Duke Energy Ohio	$	68	$	104	$	62	$	86
Duke Energy Indiana	121		132		109		128

~~14. COMMON STOCK~~15. STOCKHOLDERS' EQUITY

Basic ~~Earnings Per Share (EPS)~~EPS is computed by dividing net income attributable to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income attributable to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities, by the diluted weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common stock, such as stock options and equity forward sale agreements, were exercised or settled. Duke Energy’s participating securities are restricted stock units that are entitled to dividends declared on Duke Energy common stock during the restricted stock unit’s vesting periods.

~~PART I~~

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

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

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

The following table presents Duke Energy’s basic and diluted EPS calculations, ~~and reconciles~~ the weighted average number of common shares outstanding ~~to the diluted weighted average number of~~and common ~~shares outstanding.~~share dividends declared.


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(in millions, except per-share amounts)	2018		2017		2018		2017		2019		2018
Income from continuing operations attributable to Duke Energy common stockholders excluding impact of participating securities	$	1,077	$	954	$	2,199	$	2,356	$	898	$	619
Weighted average shares outstanding – basic	713		700		705		700
Equity Forwards	1		—		1		—
Weighted average shares outstanding – diluted	714		700		706		700
Weighted average shares outstanding – basic and diluted									727		701
Earnings per share from continuing operations attributable to Duke Energy common stockholders
Basic	$	1.51	$	1.36	$	3.12	$	3.37
Diluted	$	1.51	$	1.36	$	3.11	$	3.37
Basic and Diluted									$	1.24	$	0.88
Potentially dilutive items excluded from the calculation^(a)	2		2		2		2		2		2
Dividends declared per common share	$	0.9275	$	0.89	$	2.7075	$	2.60	$	0.9275	$	0.89


(a)	Performance stock awards were not included in the dilutive securities calculation because the performance measures related to the awards had not been met.

~~Equity Issuance~~Common Stock

On February 20, 2018, Duke Energy filed a prospectus supplement and executed an ~~Equity Distribution Agreement (the EDA)~~EDA under which it may sell up to $1 billion of its common stock through an ~~at-the-market (ATM)~~ATM offering program, including an equity forward sales component. The EDA was entered into with ~~Wells Fargo Securities, LLC, Citigroup Global Markets Inc., and J.P. Morgan Securities LLC (the Agents).~~the Agents. Under the terms of the EDA, Duke Energy may issue and sell, through any of the Agents, shares of common stock through September 23, 2019.

In June 2018, Duke Energy marketed two separate tranches, each for 1.3 million shares, of common stock. The first tranche was marketed with Wells Fargo Bank at an initial forward price of $72.02 per share and the second tranche was marketed with Citibank at an initial forward price of $78.71 per sharestock through equity forward transactions under the ATM program. ~~The Equity Forwards require~~In December 2018, Duke Energy ~~to either~~ physically ~~settle the transactions~~settled these equity forwards by ~~issuing~~delivering 2.6 million shares of common stock in exchange for net proceeds ~~at the then-applicable forward sale price specified by the agreements or net settle in whole or in part through the delivery or receipt~~ of ~~cash or shares. The settlement alternative is at Duke Energy's election.~~approximately $195 million.

Separately, in March 2018, Duke Energy marketed an equity offering of 21.3 million shares of common stock through an Underwriting Agreement with Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Barclays Capital Inc. and Goldman Sachs & Co. LLC, as representatives of several underwriters, Credit Suisse Capital LLC and J.P. Morgan Securities LLC as Forward Sellers, and Credit Suisse Capital LLC and JPMorgan Chase National Bank Associate, acting as forward purchasers.Agreement. In connection with the offering, Duke Energy entered into equity forward sale ~~agreements with Credit Suisse Securities (USA) LLC as Agent for Credit Suisse Capital LLC and J.P. Morgan Chase Bank, National Association.~~agreements. The ~~sale price was $75 per share less certain net adjustments for an initial forward price of $74.07 per share. The Equity Forwards require~~equity forwards required Duke Energy to either physically settle the transactions by issuing 21.3 million shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreements, or net settle in whole or in part through the delivery or receipt of cash or shares. ~~The settlement alternative is at Duke Energy's election.~~ In June 2018, Duke Energy physically settled one-half of the equity forwards by delivering approximately 10.6 million shares of common stock in exchange for net cash proceeds of approximately $781 million. In December 2018, Duke Energy physically settled the remaining equity forward by delivering 10.6 million shares of common stock in exchange for net cash proceeds of approximately $766 million.

~~For contracts that have not been settled, no~~In 2018, Duke Energy also issued 2.2 million shares through its DRIP with an increase in additional paid-in capital of approximately $174 million.

In March and April 2019, Duke Energy marketed two separate tranches, each for 1.1 million shares, of common stock through equity forward transactions under the ATM program. The first tranche had an initial forward price of $89.83 per share and the second tranche had an initial forward price of $88.82 per share. The equity forwards require Duke Energy to either physically settle the transaction by issuing shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreements or net settle in whole or in part through the delivery or receipt of cash or shares. The settlement alternative is at Duke Energy's election. No amounts have or will be recorded in Duke Energy's Condensed Consolidated Financial Statements with respect to ~~the equity or~~these ATM offerings until settlements of the ~~Equity Forwards~~equity forwards occur, which is expected by December 31, ~~2018. If Duke Energy had elected to net share settle these contracts as of September 30, 2018, Duke Energy would have been required to deliver 1.1 million shares.~~2019. The initial forward sale price will be subject to adjustment on a daily basis based on a floating interest rate factor and will decrease by other fixed amounts specified in the relevant forward sale ~~agreement.~~agreements. Until settlement of the ~~Equity Forwards,~~equity forwards, earnings per share dilution resulting from the agreements, if any, will be determined under the treasury stock method. ~~Share dilution occurs when the average market price of Duke Energy's stock is higher than the average forward sales price.~~

For the nine months ended September 30, 2018, Duke Energy has issued 1.7 million shares through its Dividend Reinvestment Program (DRIP) with an increase in additional paid-in capital of approximately $134 million.

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	STOCKHOLDERS' EQUITY

~~15. STOCK-BASED COMPENSATION~~Preferred Stock

~~Stock-based compensation awarded~~On March 29, 2019, Duke Energy completed the issuance of 40 million depositary shares, each representing 1/1,000th share of its Series A Cumulative Redeemable Perpetual Preferred Stock, at a price of $25 per depositary share. The transaction resulted in net proceeds of $974 million after issuance costs and the proceeds are being used for general corporate purposes and to ~~employees~~reduce short-term debt. The preferred stock has a $25 liquidation preference per depositary share and earns dividends on a cumulative basis at a rate of 5.75 percent per annum. Dividends are payable quarterly in arrears on the 16th day of March, June, September and December, beginning on June 16, 2019. Dividends issued on its preferred stock are subject to approval by the Duke Energy Board of Directors. However, the deferral of dividend payments on the preferred stock prohibits the declaration of common stock dividends. Dividends declared on preferred stock will be recorded on the income statement as a reduction of net income to arrive at net income attributable to Duke Energy common stockholders. Dividends accumulated on preferred stock will be a reduction to net income used in the calculation of basic and diluted EPS.

The Series A Preferred Stock ranks, with respect to dividends and distributions upon liquidation or ~~outside directors~~dissolution:

senior to Common Stock and to each other class or series of capital stock established after the original issue date of the Series A Preferred Stock that is ~~measured~~expressly made subordinated to the Series A Preferred Stock;

on a parity with any class or series of capital stock established after the original issue date of the Series A Preferred Stock that is not expressly made senior or subordinated to the Series A Preferred Stock;

junior to any class or series of capital stock established after the original issue date of the Series A Preferred Stock that is expressly made senior to the Series A Preferred Stock;

junior to all of existing and future indebtedness (including indebtedness outstanding under Duke Energy's credit facilities, unsecured senior notes, junior subordinated debentures and commercial paper) and other liabilities with respect to assets available to satisfy claims against Duke Energy; and

structurally subordinated to existing and future indebtedness and other liabilities of Duke Energy's subsidiaries and future preferred stock of subsidiaries.

The preferred stock has no maturity or mandatory redemption date, is not redeemable at the ~~service inception date or grant date. The fair value~~option of the ~~award~~holders and includes separate call options. The first call option allows Duke Energy to call the preferred stock at a redemption price of $25.50 per depositary share prior to June 15, 2024, in whole but not in part, at any time within 120 days after a ratings event where a rating agency amends, clarifies or changes the criteria it uses to assign equity credit for securities such as the preferred stock. The second call option allows Duke Energy to call the preferred stock, in whole or in part, at any time, on or after June 15, 2024, at a redemption price of $25 per depositary share. Duke Energy is ~~expensed~~also required to redeem all accumulated and unpaid dividends if either call option is exercised.

Holders of the preferred stock have no voting rights with respect to matters that generally require the approval of voting stockholders. The limited voting rights of holders of preferred stock include the right to vote as a single class on certain matters that may affect the preference or ~~capitalized over~~special rights of the ~~requisite service period. For awards with performance conditions,~~preferred stock, except in the ~~probability~~instance that Duke Energy elects to defer the payment of ~~vesting is assessed at each reporting period and compensation cost is adjusted based upon that assessment.~~

~~The following table presents information related~~dividends for a total of six quarterly full dividend periods. If dividends are deferred for a cumulative total of six quarterly full dividend periods, whether or not for consecutive dividend periods, holders of the preferred stock have the right to nominate two additional Board members to the Duke ~~Energy's stock–based compensation.~~

Three Months Ended Nine Months Ended
September 30, September 30,
(in millions) 2018
2017
2018
2017
Restricted stock unit awards $ 10
$ 10
$ 32
$ 30
Performance awards 13
7
27
20
Pretax stock-based compensation cost $ 23
$ 17
$ 59
$ 50
Stock-based compensation cost capitalized $ 1
$ 1
$ 3
$ 2
Stock-based compensation expense $ 22
$ 16
$ 56
$ 48
Tax benefit associated with stock-based compensation expense $ 5
$ 6
$ 13
$ 18
Energy Board of Directors.

16. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT RETIREMENT PLANS

Duke Energy ~~maintains,~~and certain subsidiaries maintain, and the Subsidiary Registrants participate in, qualified and non-qualified, non-contributory defined benefit retirement plans. Duke ~~Energy’s~~Energy's policy is to fund amounts on an actuarial basis to provide assets sufficient to meet benefit payments to be paid to plan participants. ~~The following table presents contributions made by the Duke Energy Registrants to their qualified defined benefit pension plans during the nine months ended September 30, 2018.~~

Duke
Duke
Duke
Duke
Duke
Energy
Progress
Energy
Energy
Energy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Indiana
Contributions $ 141
$ 46
$ 45
$ 25
$ 20
$ 8

~~Duke Energy and Duke Energy Ohio made contributions of $8 million and $4 million, respectively, to their qualified defined benefit pension plans during the nine months ended September 30, 2017.~~

~~Duke Energy uses a December 31 measurement date for its defined benefit retirement plan assets and obligations.~~

~~Components of Net Periodic Benefit Costs~~

The tables below present total net periodic benefit costs prior to capitalization of amounts reflected as Net property, plant and equipment on the Condensed Consolidated Balance Sheets. Only the service cost component of net periodic benefit costs is eligible to be capitalized. The remaining non-capitalized portions of net periodic benefit costs are classified as either: (1) service cost, which is recorded in Operations, maintenance and other on the Condensed Consolidated Statements of Operations; or as (2) components of non-service cost, which is recorded in Other income and expenses, net on the Condensed Consolidated Statements of Operations. See Note 1 for further information on impacts of the retirement benefits accounting standard adopted by Duke Energy on January 1, 2018.

Pension and other post-retirement benefit costs presented in the tables below for the Subsidiary Registrants are amounts allocated from Duke Energy for the employees of the respective Subsidiary Registrants. The Condensed Consolidated Statements of Operations of the Subsidiary Registrants also include allocated net periodic benefit costs for their proportionate share of pension and post-retirement benefit costs related to employees of the Duke Energy shared services affiliate. However, in the tables below these amounts are only presented in the Duke Energy column. For additional information on the corporate governance and shared service expenses allocated from the Duke Energy shared service affiliate, see Note 8.

~~PART I~~

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

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

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



FINANCIAL STATEMENTS	EMPLOYEE BENEFIT PLANS

QUALIFIED PENSION PLANS

The following tables include the components of net periodic pension costs for qualified pension plans.


	Three Months Ended September 30, 2018																								Three Months Ended March 31, 2019
				Duke						Duke			Duke			Duke			Duke									Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy						Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont			Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	47		$	15		$	13		$	7		$	5		$	2		$	2		$	2		$	37		$	12		$	11		$	6		$	4		$	1		$	2		$	1
Interest cost on projected benefit obligation	74			18			24			10			13			4			6			3			83			20			26			12			14			5			6			3
Expected return on plan assets	(140		)	(37		)	(45		)	(21		)	(23		)	(7		)	(10		)	(6		)	(143		)	(38		)	(44		)	(23		)	(22		)	(8		)	(11		)	(5		)
Amortization of actuarial loss	33			7			11			6			6			1			2			3			24			6			9			3			6			1			2			2
Amortization of prior service credit	(8		)	(2		)	(1		)	—			—			—			—			(3		)	(8		)	(2		)	(1		)	—			—			—			—			(3		)
Net periodic pension costs	$	6		$	1		$	2		$	2		$	1		$	—		$	—		$	(1	)	$	(7	)	$	(2	)	$	1		$	(2	)	$	2		$	(1	)	$	(1	)	$	(2	)


	Three Months Ended September 30, 2017																								Three Months Ended March 31, 2018
				Duke						Duke			Duke			Duke			Duke									Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy						Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont			Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	40		$	12		$	12		$	6		$	5		$	1		$	2		$	3		$	45		$	15		$	13		$	7		$	5		$	1		$	2		$	2
Interest cost on projected benefit obligation	82			20			25			12			13			4			7			3			75			18			24			11			13			5			6			3
Expected return on plan assets	(136		)	(35		)	(43		)	(21		)	(21		)	(7		)	(11		)	(6		)	(140		)	(37		)	(45		)	(21		)	(23		)	(7		)	(10		)	(6		)
Amortization of actuarial loss	36			8			14			6			7			1			3			3			33			7			11			5			6			1			2			3
Amortization of prior service credit	(6		)	(2		)	(1		)	—			—			—			—			(1		)	(8		)	(2		)	(1		)	—			—			—			—			(3		)
Other	2			—			1			—			—			—			—			—
Net periodic pension costs	$	18		$	3		$	8		$	3		$	4		$	(1	)	$	1		$	2		$	5		$	1		$	2		$	2		$	1		$	—		$	—		$	(1	)

Nine Months Ended September 30, 2018
Duke
Duke
Duke
Duke
Duke

Duke Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 137
$ 45
$ 39
$ 22
$ 16
$ 4
$ 7
$ 6
Interest cost on projected benefit obligation 224
54
70
31
38
13
18
9
Expected return on plan assets (420 ) (111 ) (133 ) (63 ) (69 ) (21 ) (31 ) (18 )
Amortization of actuarial loss 99
21
33
16
18
3
6
9
Amortization of prior service credit (24 ) (6 ) (3 ) (1 ) (1 ) —
—
(9 )
Net periodic pension costs $ 16
$ 3
$ 6
$ 5
$ 2
$ (1 ) $ —
$ (3 )

Nine Months Ended September 30, 2017
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 120
$ 36
$ 36
$ 18
$ 15
$ 3
$ 6
$ 9
Interest cost on projected benefit obligation 246
60
75
36
39
14
21
9
Expected return on plan assets (408 ) (106 ) (129 ) (63 ) (63 ) (21 ) (33 ) (18 )
Amortization of actuarial loss 108
24
42
18
21
3
9
9
Amortization of prior service credit (18 ) (6 ) (3 ) —
—
—
—
(3 )
Other 6
—
3
1
—
—
—
1
Net periodic pension costs $ 54
$ 8
$ 24
$ 10
$ 12
$ (1 ) $ 3
$ 7

NON-QUALIFIED PENSION PLANS

~~The following tables include the components of net~~Net periodic pension costs for non-qualified pension plans were not material for ~~registrants with non-qualified pension costs.~~

~~PART I~~

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

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

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

Three Months Ended September 30, 2018
Duke
Duke
Duke
Duke
Energy
Progress
Energy
Energy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Interest cost on projected benefit obligation $ 3
$ —
$ 1
$ —
$ —
Amortization of actuarial loss 2
—
—
—
—
Net periodic pension costs $ 5
$ —
$ 1
$ —
$ —

Three Months Ended September 30, 2017
Duke
Duke
Duke
Duke
Energy
Progress
Energy
Energy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Interest cost on projected benefit obligation $ 4
$ —
$ 1
$ 1
$ 1
Amortization of actuarial loss 2
—
1
—
—
Net periodic pension costs $ 6
$ —
$ 2
$ 1
$ 1

Nine Months Ended September 30, 2018
Duke
Duke
Duke
Duke
Energy
Progress
Energy
Energy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Service cost $ 1
$ 1
$ —
$ —
$ —
Interest cost on projected benefit obligation 9
—
3
1
1
Amortization of actuarial loss 6
—
—
—
—
Amortization of prior service (credit) cost (1 ) —
1
—
—
Net periodic pension costs $ 15
$ 1
$ 4
$ 1
$ 1

Nine Months Ended September 30, 2017
Duke
Duke
Duke
Duke
Energy
Progress
Energy
Energy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Interest cost on projected benefit obligation $ 10
$ 1
$ 3
$ 2
$ 2
Amortization of actuarial loss 6
—
3
—
—
Net periodic pension costs $ 16
$ 1
$ 6
$ 2
$ 2

the three months ended March 31, 2019, and 2018.

OTHER POST-RETIREMENT BENEFIT PLANS

~~Duke Energy provides, and the Subsidiary Registrants participate in, certain health care and life insurance benefits~~Net periodic costs for ~~retired employees on a contributory and non-contributory basis.~~

~~PART I~~

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

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

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

~~The following tables include the components of net periodic~~ other post-retirement benefit ~~costs.~~

Three Months Ended September 30, 2018
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 2
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Interest cost on accumulated post-retirement benefit obligation 7
2
3
2
1
—
1
—
Expected return on plan assets (4 ) (2 ) —
—
—
—
—
—
Amortization of actuarial loss 2
1
—
—
—
—
1
—
Amortization of prior service credit (5 ) (1 ) (2 ) —
(1 ) —
—
—
Net periodic other post-retirement benefit costs $ 2
$ —
$ 1
$ 2
$ —
$ —
$ 2
$ —

Three Months Ended September 30, 2017
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 1
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Interest cost on accumulated post-retirement benefit obligation 9
2
4
2
2
—
1
—
Expected return on plan assets (3 ) (2 ) —
—
—
—
—
—
Amortization of actuarial loss 2
—
5
3
2
—
—
—
Amortization of prior service credit (29 ) (2 ) (21 ) (14 ) (8 ) —
—
—
Net periodic other post-retirement benefit costs $ (20 ) $ (2 ) $ (12 ) $ (9 ) $ (4 ) $ —
$ 1
$ —

Nine Months Ended September 30, 2018
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 5
$ 1
$ —
$ —
$ —
$ —
$ —
$ —
Interest cost on accumulated post-retirement benefit obligation 21
5
9
5
4
1
3
—
Expected return on plan assets (10 ) (6 ) —
—
—
—
—
—
Amortization of actuarial loss 5
2
1
—
—
—
3
—
Amortization of prior service credit (15 ) (3 ) (6 ) —
(4 ) —
—
(1 )
Net periodic other post-retirement benefit costs $ 6
$ (1 ) $ 4
$ 5
$ —
$ 1
$ 6
$ (1 )

Nine Months Ended September 30, 2017
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Service cost $ 3
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Interest cost on accumulated post-retirement benefit obligation 27
6
11
6
6
—
1
—
Expected return on plan assets (10 ) (6 ) —
—
—
—
—
—
Amortization of actuarial loss (gain) 6
(2 ) 15
9
6
(1 ) —
—
Amortization of prior service credit (87 ) (6 ) (63 ) (41 ) (23 ) —
—
—
Net periodic other post-retirement benefit costs $ (61 ) $ (8 ) $ (37 ) $ (26 ) $ (11 ) $ (1 ) $ 1
$ —

~~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)~~

~~EMPLOYEE SAVINGS PLAN~~

~~Duke Energy sponsors,~~plans were not material for the three months ended March 31, 2019, and the Subsidiary Registrants participate in, an employee savings plan that covers substantially all employees. The following table includes employer contributions made by Duke Energy and expensed by the Subsidiary Registrants.

Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Three Months Ended September 30,
2018 $ 49
$ 15
$ 13
$ 9
$ 4
$ —
$ 3
$ 4
2017 43
14
12
9
4
1
2
2
Nine Months Ended September 30,
2018 $ 167
$ 53
$ 45
$ 31
$ 14
$ 2
$ 8
$ 10
2017 147
49
42
30
13
3
7
5
2018.

17. INCOME TAXES

~~Tax Act~~

On December 22, 2017, President Trump signed the Tax Act into law. Among other provisions, the Tax Act lowered the corporate federal income tax rate from 35 to 21 percent, limits interest deductions outside of regulated utility operations, requires the normalization of excess deferred taxes associated with property under ARAM as a prerequisite to qualifying for accelerated depreciation and repealed the federal manufacturing deduction. The Tax Act also repealed the corporate alternative minimum tax (AMT) and stipulates a refund of 50 percent of remaining AMT credit carryforwards (to the extent the credits exceed regular tax for the year) for tax years 2018, 2019 and 2020 with all remaining AMT credits to be refunded in tax year 2021. During the three months ended September 30, 2018, the company reclassified $573 million which is 50 percent of the remaining estimated AMT credit carryforwards from noncurrent deferred tax liability to a current federal income tax receivable as a result of the Tax Act. The company reclassified the estimated AMT credit carryforwards during the three months ended September 30, 2018, since the company expects to receive it as a refund from the IRS in the three months ended September 30, 2019, based on the expected filing of Duke Energy's 2018 income tax return in the second quarter of 2019.

At this time AMT credits, which are among the certain tax credits treated as refundable under the Tax Act, are subject to sequestration. In the first quarter of 2018, the company revised the December 31, 2017, estimate of the income tax effects of the Tax Act and recorded a $76 million valuation allowance against these AMT credits based on additional interpretative guidance from the Internal Revenue Service related to the Tax Act. See Note 22 to the Consolidated Financial Statements in the Annual Report on Form 10-K/A for the year ended December 31, 2017, for information on the U.S. Securities and Exchange Commission staff's guidance on accounting for the Tax Act (Staff Accounting Bulletin No. 118 (SAB 118), Income Tax Accounting Implications of the Tax Cuts and Jobs Act).

During the three months ended September 30, 2018, the company revised the December 31, 2017 estimate of the income tax effects of the Tax Act, in accordance with SAB 118, by recording a $3 million benefit for the remeasurement of its deferred tax assets and deferred tax liabilities primarily related to the guidance on bonus depreciation issued by the Internal Revenue Service in August of 2018 affecting the computation of the company's 2017 Federal income tax liability. The majority of Duke Energy’s operations are regulated and it is expected that the Subsidiary Registrants will ultimately pass on the savings associated with the amount representing the remeasurement of deferred tax balances related to regulated operations to customers. For Duke Energy's regulated operations, where the reduction is expected to be returned to customers in future rates, the remeasurement has been deferred as a regulatory liability. For the three months ended September 30, 2018, Duke Energy recorded a regulatory liability of $57 million, representing the revaluation of those deferred tax balances. The Subsidiary Registrants continue to respond to requests from regulators in various jurisdictions to determine the timing and magnitude of savings they will pass on to customers.

For the nine months ended September 30, 2018, the company has revised the December 31, 2017, estimates of the income tax effects of the Tax Act, in accordance with SAB 118, by recording an expense of $73 million. Additional tax returns will be filed in the quarter ending December 31, 2018, and Duke Energy expects to make refinements of estimates recorded in the three months ending September 30, 2018. These refinements are not expected to be material to the financial statements. Duke Energy anticipates finalizing and recording any resulting adjustments within the measurement period allowed, which will be no later than the quarter ending December 31, 2018.

~~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)~~

EFFECTIVE TAX RATES

The effective tax rates from continuing operations for each of the Duke Energy Registrants are included in the following table.


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2018		2017		2018		2017		2019		2018
Duke Energy	13.7	%	27.6	%	17.0	%	30.4	%	9.6	%	22.5	%
Duke Energy Carolinas	22.6	%	32.9	%	22.3	%	34.1	%	17.7	%	22.0	%
Progress Energy	18.8	%	29.1	%	17.0	%	31.9	%	17.3	%	13.2	%
Duke Energy Progress	20.6	%	31.7	%	18.4	%	32.4	%	17.8	%	14.1	%
Duke Energy Florida	15.0	%	34.8	%	16.3	%	36.1	%	19.3	%	16.3	%
Duke Energy Ohio	16.0	%	33.3	%	16.0	%	34.4	%	16.9	%	32.4	%
Duke Energy Indiana	22.7	%	38.3	%	24.7	%	39.0	%	24.1	%	25.9	%
Piedmont	34.4	%	47.6	%	20.6	%	36.1	%	21.8	%	24.1	%

The decrease in the effective tax rate (ETR) for Duke Energy and the Subsidiary Registrants for the three months ended September 30, 2018, is primarily due to the lower statutory federal corporate tax rate under the Tax Act. The decrease in the ETR for Duke Energy ~~and the Subsidiary Registrants for the nine months ended September 30, 2018,~~ is primarily due to a one-time valuation allowance charge in the ~~lower statutory federal corporate~~prior year, an adjustment related to the income tax ~~rate under~~recognition for equity method investments recorded in the ~~Tax Act~~first quarter of 2019 and the amortization of ~~federal and state~~ excess deferred ~~taxes, partially offset by a valuation allowance against AMT credits discussed above.~~taxes. This adjustment was immaterial and relates to prior years.

The decrease in the ETR for Duke Energy Carolinas ~~for the three and nine months ended September 30, 2018,~~ is primarily due to the ~~lower statutory federal corporate tax rate under the Tax Act and~~ amortization of ~~state~~ excess deferred ~~taxes partially offset by favorable tax return true ups in the prior year.~~taxes.

The ~~decrease~~increase in the ETR for Progress Energy ~~for the three and nine months ended September 30, 2018,~~ is primarily due to ~~the~~a reduction in AFUDC equity and lower ~~statutory federal corporate tax rate under the Tax Act and the~~ amortization of ~~federal and state~~ excess deferred ~~taxes.~~taxes in the current year.

The ~~decrease~~increase in the ETR for Duke Energy Progress ~~for the three and nine months ended September 30, 2018,~~ is primarily due to ~~the~~ lower ~~statutory federal corporate tax rate under the Tax Act and~~ amortization of ~~state~~ excess deferred ~~taxes.~~taxes in the current year.



FINANCIAL STATEMENTS	INCOME TAXES

The ~~decrease~~increase in the ETR for Duke Energy Florida ~~for the three and nine months ended September 30, 2018,~~ is primarily due to a reduction in AFUDC equity in the ~~lower statutory federal corporate tax rate under the Tax Act and the amortization of federal excess deferred taxes.~~current year.

The decrease in the ETR for Duke Energy Ohio ~~for the three and nine months ended September 30, 2018,~~ is primarily due to the ~~lower statutory federal corporate tax rate under the Tax Act and the~~ amortization of ~~federal~~ excess deferred taxes.

The decrease in the ETR for Duke Energy Indiana ~~for the three and nine months ended September 30, 2018,~~ is primarily due to the ~~lower statutory federal corporate tax rate under the Tax Act.~~amortization of excess deferred taxes.

The decrease in the ETR for Piedmont ~~for the three months ended September 30, 2018,~~ is primarily due to the lower statutory federal corporate tax rate under the Tax Act partially offset by favorable research credits in relation to pretax losses. The decrease in the ETR for Piedmont for the nine months ended September 30, 2018, is primarily due to the lower statutory federal corporate tax rate under the Tax Act.amortization of excess deferred taxes.

18. SUBSEQUENT EVENTS

For information on subsequent events related to the Commercial Renewables segment, regulatory matters, ~~and~~ commitments and contingencies and stockholders' equity, see Notes 2, 3, 4 and 4,15, respectively.

On October 10, 2018, Hurricane Michael made landfall on Florida's Panhandle as a Category 4 hurricane, the most powerful storm to hit the Florida Panhandle in recorded history. The storm caused significant damage and more than a million power outages within the service territories of Duke Energy Florida, Duke Energy Carolinas and Duke Energy Progress. Duke Energy has not completed the final accumulation of total estimated storm restoration costs incurred; however, the preliminary estimate is approximately $235 million of operation and maintenance expenses and approximately $185 million in capital costs. Given the magnitude of the storm, Duke Energy Carolinas and Duke Energy Progress intend to request approval to defer the incremental costs incurred to a regulatory asset for recovery in the next base rate cases, and Duke Energy Florida will recover these storm costs consistent with the provisions in its 2017 Second Revised and Restated Settlement Agreement.

~~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.

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, 2018,~~March 31, 2019, and with Duke Energy’s Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2017.~~2018.

Executive Overview

~~Hurricane Florence~~

In the third quarter of 2018, Hurricane Florence caused historic flooding, extensive damage and widespread power outages within the Duke Energy Progress and Duke Energy Carolinas service territories. Approximately 1.8 million customers were impacted. Current estimated restoration costs are approximately $540 million. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

~~Hurricane Michael~~NCDEQ Coal Ash Evaluation

On ~~October 10, 2018, Hurricane Michael made landfall on Florida's Panhandle as~~April 1, 2019, NCDEQ issued a Category 4 hurricane, the most powerful storm to hit the Florida Panhandle in recorded history. The storm caused significant damage and more than a million power outages within the service territories of Duke Energy Florida, Duke Energy Carolinas and Duke Energy Progress. Duke Energy has not completed the final accumulation of total estimated storm restoration costs incurred; however, the preliminary estimate is approximately $235 million of operation and maintenance expenses and approximately $185 million in capital costs. Given the magnitude of the storm,closure determination requiring Duke Energy Carolinas and Duke Energy Progress ~~intend~~ to ~~request approval~~excavate all remaining coal ash impoundments at the Allen, Belews Creek, Rogers, Marshall, Mayo and Roxboro facilities in North Carolina. Duke Energy is making strong progress to ~~defer~~permanently close every ash basin in North Carolina in ways that fully protect people and the ~~incremental~~environment, while keeping costs ~~incurred~~down as much as possible for customers. With respect to the final six sites, which NCDEQ has ruled as low risk, science and engineering support a ~~regulatory asset for recovery~~variety of closure methods including capping in place and hybrid cap-in-place as appropriate solutions that protect public health and the ~~next base rate cases,~~environment. These closure options are also consistent with how hundreds of other basins around the country are expected to be closed. Because the process by which NCDEQ arrived at its excavation decision lacked full consideration of the science and engineering, Duke Energy Carolinas and Duke Energy ~~Florida~~Progress filed Petitions for Contested Case Hearings in the Office of Administrative Hearings on April 26, 2019, to challenge NCDEQ’s determination that all ash basins must be excavated.

Duke Energy estimates the undiscounted, unadjusted cost to close the remaining impoundments by excavation, as outlined in the NCDEQ closure determination, will ~~recover these storm~~be approximately $4 billion to $5 billion more than the prior project cost estimate of $5.6 billion in the aggregate for the closure for all Duke Energy Carolinas and Duke Energy Progress impoundments. Excavation would likely extend beyond the required federal and state deadlines for impoundment closure. Duke Energy intends to seek recovery of all costs through the ratemaking process consistent with previous proceedings. For more information, see Note 4, "Commitments and Contingencies," to the ~~provisions in its 2017 Second Revised and Restated Settlement Agreement.~~Condensed Consolidated Financial Statements.

Regulatory Activity

In ~~2018,~~2019, Duke Energy advanced regulatory activity underway in multiple jurisdictions as follows:

New base rates were implemented in the Duke Energy ~~Carolinas received an order~~Ohio Electric Base Rate Case on its rate case from the North Carolina Utilities Commission (NCUC) on June 22, 2018. Major components of the order included: a return on equity of 9.9 percent, recovery of past coal ash remediation costs, recovery of Lee Nuclear Project development costs, and partial clarity on the treatment of recent federal tax reform legislation. January 2, 2019.

On ~~July 27, 2018, the NCUC approved Duke Energy Carolinas' compliance filing. As a result, revised customer rates were effective on August 1, 2018.~~

Duke Energy Progress received an order on its rate case from the NCUC on February 23, 2018. Major components of the order included: a return on equity of 9.9 percent; recovery of past coal ash remediation costs; recovery of deferred storm costs from 2016; and new rates in effect mid-March 2018.

~~Duke Energy Carolinas and~~January 11, 2019, Duke Energy Progress filed a ~~joint petition~~request with the ~~Public Service Commission~~PSCSC, which included a request for the continuation of prior deferrals requested for ice storms and hurricanes Florence, Michael and Matthew. The request was approved on January 30, 2019.

On January 30, 2019, Duke Energy Kentucky entered into a settlement agreement with the Attorney General of Kentucky related to the Natural Gas Base Rate Case. The settlement provides for an approximate $7 million increase in natural gas base revenue and approval of the proposed Weather Normalization Mechanism. The KPSC issued its Order approving the settlement without material modification on March 27, 2019.

The evidentiary hearing on the Duke Energy Carolinas 2018 South Carolina ~~(PSCSC) seeking~~Rate Case concluded on March 27, 2019. A PSCSC Commission Directive was issued on May 1, 2019. A final order and revised customer rates are expected by mid-2019.

On April 1, 2019, Piedmont filed an ~~order~~application with the NCUC, its first general rate case in North Carolina in six years. Piedmont expects new rates arising from this proceeding to ~~defer certain costs associated with grid reliability, resiliency, and modernization work that is being performed under~~take effect by the ~~grid improvement initiative. On October 3, 2018,~~end of 2019.

The evidentiary hearing on the ~~PSCSC granted~~ Duke Energy ~~Carolinas'~~Progress 2018 South Carolina Rate Case concluded on April 17, 2019. A PSCSC Commission Directive was issued on May 8, 2019. A final order and ~~Duke Energy Progress' joint petition.~~revised customer rates are expected by mid-2019.

Duke Energy ~~Carolinas also petitioned~~Florida continues to make progress on storm cost recovery related to hurricanes Irma, Nate, and Michael. The FPSC has scheduled the ~~PSCSC seeking an order~~hearing for Hurricane Irma and Hurricane Nate costs on May 21, 2019, to ~~defer certain costs associated~~consider the Storm Cost Settlement Agreement filed with the William States Lee Combined Cycle Facility, the new billing and customer information system and the addition of the Carolinas West Primary Distribution Control Center. Duke Energy Progress also petitioned the PSCSC seeking an order to adopt the new depreciation rates and to defer certain costs associated with the deployment of advanced metering infrastructure, the new billing and customer information system and the costs incurred in connection with the return of certain excess deferred state income taxes from North Carolina. These petitions were approved on July 25, 2018.

FPSC. Duke Energy Florida filed a separate petition with the ~~Florida Public Service Commission (FPSC)~~FPSC on ~~May 31, 2018, related~~April 30, 2019, to ~~approximately $200 million of customer savings associated with the Federal Tax Cuts~~recover incremental storm restoration costs for Hurricane Michael and ~~Jobs Act (Tax Act). The~~to apply tax savings ~~will offset accelerated depreciation of Crystal River Units 4 and 5 and Hurricane Irma storm cost recovery. The petition is subject to review and approval by the FPSC.~~

Duke Energy Ohio along with the Public Utilities Commission of Ohio (PUCO) Staff and certain intervenors filed a Stipulation and Recommendation (Stipulation) with PUCO on April 13, 2018, and the evidentiary hearing concluded on August 6, 2018. The Stipulation, subject to approval by the PUCO, is in connection with Duke Energy Ohio's electric rate case and other regulatory matters.

On July 25, 2018, Duke Energy Ohio filed an application to establish a new rider to implement the benefits of the Tax Act for electric distribution customers. If approved, the new rider will flow through to customers the benefit of the lower statutory federal tax rate since January 1, 2018, all future benefits of the lower tax rates and a full refund of deferred income taxes collected at the higher tax rates in prior years. Deferred income taxes subject to normalization rules will be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. An order is expected before the end of the year. Duke Energy Ohio's transmission rates reflect lower federal

~~PART I~~

income tax but guidance from FERC on amortization of both protected and unprotected transmission-related EDITs is still pending. On October 24, 2018, the PUCO issued a Finding and Order that, among other things, directed all rate-regulated utilities file an application not for an increase in rates to reflect the impact of the Tax Act on their current rates by January 1, 2019, unless otherwise exempted or directed by the PUCO. Duke Energy Ohio's July 25, 2018, filing for electric distribution operations is consistent with the commission's October 24, 2018, Finding and Order and no further action is needed. Options for Duke Energy Ohio gas customers are still being evaluated.

Duke Energy Kentucky received an order on its electric rate case from the Kentucky Public Service Commission (KPSC) on April 13, 2018. The order granted an annual revenue increase of $21 million, incorporating customer benefitsresulting from the Tax Act ~~as well as rider recovery~~toward storm costs in lieu of ~~environmental~~implementing a storm surcharge. Storm costs ~~including coal ash. Duke Energy Kentucky implemented new base rates on May 1, 2018.~~

~~On August 31, 2018, Duke Energy Kentucky filed an application with the KPSC requesting an increase in gas base rates of~~are currently expected to be fully recovered by approximately ~~$10.5 million. The KPSC accepted the filing as of September 10, 2018, and a procedural schedule was set.~~

On June 27, 2018, Duke Energy Indiana, the Indiana Office of Utility Consumers Counselor and others filed testimony consistent with their Stipulation and Settlement Agreement in the federal tax proceedings with the Indiana Utility Regulatory Commission (IURC). Major components include riders to reflect the lower federal tax rate as they are filed in 2018, base rates to reflect the lower federal tax rate upon approval, but no later than September 1, 2018, and a timeline for returning federal excess deferred income taxes to customers. On August 22, 2018, the IURC approved the settlement and rates have been adjusted effective September 1, 2018.year-end 2021.

See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters" for additional information.



MD&A	DUKE ENERGY

Results of Operations

Non-GAAP Measures

Management’s Discussion and Analysis includes financial information prepared in accordance with ~~generally accepted accounting principles (GAAP)~~GAAP in the U.S., as well as certain non-GAAP financial ~~measures.~~measures such as adjusted earnings and adjusted earnings per share 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 to Duke Energy 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.

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~~for the ~~periods presented include~~three months ended March 31, 2018 included the following ~~items, which management believes do not reflect ongoing costs:~~items:

Costs to Achieve Piedmont Merger represents charges that result from the Piedmont acquisition.

Regulatory ~~and Legislative Impacts~~Settlements represents charges related to rate case orders, settlements or other actions of ~~regulators or legislative bodies.~~regulators.

Sale of Retired Plant represents the loss associated with selling Beckjord, ~~Generating Station (Beckjord),~~ a nonregulated generating facility in Ohio.

Impairment ~~Charges~~of Equity Method Investment represents an ~~other-than-temporary impairment (OTTI)~~OTTI of an investment in ~~Constitution Pipeline Company, LLC (Constitution) and Commercial Renewables impairments.~~Constitution.

Impacts of the Tax Act represents an ~~alternative minimum tax (AMT)~~AMT valuation allowance recognized ~~and a true up of prior year tax estimates~~ related to the Tax Act.

~~PART I~~

Three Months Ended ~~September 30, 2018,~~March 31, 2019, as compared to ~~September 30, 2017~~March 31, 2018

GAAP Reported EPS was ~~$1.51~~$1.24 for the ~~third~~first quarter of ~~2018~~2019 compared to ~~$1.36~~$0.88 for the ~~third~~first quarter of ~~2017.~~2018. The increase in GAAP Reported EPS was primarily due to ~~favorable weather-normal retail sales volumes, higher income tax benefits,~~prior year regulatory settlements, impairments charges, an AMT valuation allowance and a ~~FERC approved settlement refund~~loss on sale of certain transmission costs previously billed by PJM Interconnection, LLC (PJM), and lower regulatory settlement charges compared to the prior year. These drivers were partially offset by increased operations and maintenance expense primarily related to Hurricane Florence and share dilution.a retired plant.

As discussed above, management also evaluates financial performance based on adjusted diluted EPS. Duke Energy’s ~~third~~first quarter ~~2018~~2019 adjusted diluted EPS was ~~$1.65~~$1.24 compared to ~~$1.59~~$1.28 for the ~~third~~first quarter of ~~2017.~~2018. The ~~increase~~decrease in adjusted earnings was primarily due to ~~favorable weather-normal retail sales~~unfavorable weather and volumes, higher ~~income tax benefits,~~depreciation and ~~a FERC approved settlement refund of certain transmission costs previously billed by PJM Interconnection, LLC (PJM). These drivers were~~interest expenses and share dilution from equity issuances, partially offset by ~~increased operations~~positive rate case impacts and ~~maintenance expense primarily~~an adjustment related to ~~Hurricane Florence~~the income tax recognition for equity method investments. This adjustment was immaterial and ~~share dilution.~~relates to prior years.

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

Three Months Ended September 30,
2018 2017
(in millions, except per-share amounts) Earnings EPS Earnings EPS
GAAP Reported Earnings/GAAP Reported EPS $ 1,082
$ 1.51
$ 954
$ 1.36
Adjustments:
Impairment Charges^(a)
91
0.12
56
0.08
Costs to Achieve Piedmont Merger^(b)
13
0.02
14
0.03
Impacts of the Tax Act^(c)
(3 ) —
—
—
Florida Settlement^(d)
—
—
84
0.12
Discontinued Operations (4 ) —
2
—
Adjusted Earnings/Adjusted Diluted EPS $ 1,179
$ 1.65
$ 1,110
$ 1.59



	Three Months Ended March 31,
	2019				2018
(in millions, except per-share amounts)	Earnings		EPS		Earnings		EPS
GAAP Reported Earnings/GAAP Reported EPS	$	900	$	1.24	$	620	$	0.88
Adjustments:
Costs to Achieve Piedmont Merger^(a)	—		—		13		0.02
Regulatory Settlements^(b)	—		—		66		0.09
Sale of Retired Plant^(c)	—		—		82		0.12
Impairment of Equity Method Investment^(d)	—		—		42		0.06
Impacts of the Tax Act (AMT valuation allowance)	—		—		76		0.11
Adjusted Earnings/Adjusted Diluted EPS	$	900	$	1.24	$	899	$	1.28


(a)	Net of ~~$2 million Noncontrolling Interests in 2018 and $28 million tax benefit in 2017.~~


~~(b)~~	~~Net of $3 million tax benefit in 2018 and $9 million tax benefit in 2017.~~


~~(c)~~	~~Represents a true up of prior year tax estimates related to the Tax Act.~~


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

~~Nine Months Ended September 30, 2018, as compared to September 30, 2017~~

Duke Energy's GAAP Reported EPS was $3.11 for the nine months ended September 30, 2018, compared to $3.36 for the nine months ended September 30, 2017. The decrease in GAAP Reported EPS was driven by regulatory and legislative charges related to the Duke Energy Carolinas North Carolina rate case order and the repeal of the South Carolina Base Load Review Act, a goodwill impairment at Commercial Renewables, and higher depreciation expense due to growing asset base. These drivers were partially offset by favorable weather at Electric Utilities and Infrastructure and higher income tax benefits.

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, 2018, was $3.87 compared to $3.63 for the nine months ended September 30, 2017. The increase in adjusted earnings for the nine months ended September 30, 2018, compared to the same period in 2017, was primarily due to favorable weather at Electric Utilities and Infrastructure and higher income tax benefits partially offset by higher depreciation expense due to growing asset base.

~~PART I~~

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

Nine Months Ended September 30,
2018 2017
(in millions, except per-share amounts) Earnings EPS Earnings EPS
GAAP Reported Earnings/GAAP Reported EPS $ 2,202
$ 3.11
$ 2,356
$ 3.36
Adjustments:
Regulatory and Legislative Impacts^(a)
202
0.29
—
—
Impairment Charges^(b)
133
0.19
56
0.08
Sale of Retired Plant^(c)
82
0.12
—
—
Impacts of the Tax Act^(d)
73
0.10
—
—
Costs to Achieve Piedmont Merger^(e)
41
0.06
43
0.06
Florida Settlement^(f)
—
—
84
0.12
Discontinued Operations 1
—
4
0.01
Adjusted Earnings/Adjusted Diluted EPS $ 2,734
$ 3.87
$ 2,543
$ 3.63


~~(a)~~	~~Net of $63~~$4 million tax benefit.


(b)	Net of ~~$13~~$20 million tax ~~benefit and $2 million Noncontrolling Interest in 2018 and $28 million tax benefit in 2017.~~benefit.


(c)	Net of $25 million tax benefit.


(d)	~~Represents a recognition of AMT valuation allowance and true up of prior year tax estimates related to the Tax Act.~~


~~(e)~~	Net of ~~$12~~$13 million tax ~~benefit in 2018 and $26 million tax benefit in 2017.~~


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

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. 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.

~~Tax Act~~

On December 22, 2017, President Trump signed the Tax Act into law. Among other provisions, the Tax Act lowered the corporate federal income tax rate from 35 to 21 percent, limits interest deductions outside of regulated utility operations, requires the normalization of excess deferred taxes associated with property under the average rate assumption method as a prerequisite to qualifying for accelerated depreciation and repealed the federal manufacturing deduction. The Tax Act also repealed the corporate AMT and stipulates a refund of 50 percent of remaining AMT credit carryforwards (to the extent the credits exceed regular tax for the year) for tax years 2018, 2019 and 2020 with all remaining AMT credits to be refunded in tax year 2021. The Tax Act also could be amended or subject to technical correction, which could change the financial impacts that were recorded since December 31, 2017, or are expected to be recorded in future periods. The Federal Energy Regulatory Commission (FERC) and state utility commissions will determine the regulatory treatment of the impacts of the Tax Act for the Subsidiary Registrants. Duke Energy's segments’ future results of operations, financial condition and cash flows could be adversely impacted by the Tax Act, subsequent amendments or corrections, or the actions of the FERC, state utility commissions or credit rating agencies related to the Tax Act. Duke Energy is addressing the rate treatment of the Tax Act by each state utility commission in which the Subsidiary Registrants operate. In January 2018, the Subsidiary Registrants began deferring the estimated ongoing impacts of the Tax Act that are expected to be returned to customers. See Notes 3 and 17 to the Condensed Consolidated Financial Statements, "Regulatory Matters" and “Income Taxes,” respectively, for additional information on the Tax Act.

~~PART I~~



MD&A	SEGMENT RESULTS - ELECTRIC UTILITIES AND INFRASTRUCTURE

Electric Utilities and Infrastructure


	Three Months Ended September 30,							Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2018		2017		Variance			2018		2017		Variance			2019			2018		Variance
Operating Revenues	$	6,260	$	6,129	$	131		$	16,806	$	16,234	$	572		$	5,329		$	5,323	$	6
Operating Expenses
Fuel used in electric generation and purchased power	1,935		1,872		63			5,202		4,875		327			1,630			1,685		(55		)
Operation, maintenance and other	1,431		1,332		99			4,151		3,935		216			1,282			1,325		(43		)
Depreciation and amortization	897		777		120			2,570		2,228		342			947			835		112
Property and other taxes	289		277		12			842		808		34			301			274		27
Impairment charges	31		132		(101		)	246		134		112			—			43		(43		)
Total operating expenses	4,583		4,390		193			13,011		11,980		1,031			4,160			4,162		(2		)
Gains on Sales of Other Assets and Other, net	8		—		8			9		4		5
(Losses) Gains on Sales of Other Assets and Other, net															(3		)	1		(4		)
Operating Income	1,685		1,739		(54		)	3,804		4,258		(454		)	1,166			1,162		4
Other Income and Expenses, net	107		102		5			286		324		(38		)	91			88		3
Interest Expense	322		305		17			955		925		30			338			317		21
Income Before Income Taxes	1,470		1,536		(66		)	3,135		3,657		(522		)	919			933		(14		)
Income Tax Expense	303		516		(213		)	643		1,273		(630		)	169			183		(14		)
Segment Income	$	1,167	$	1,020	$	147		$	2,492	$	2,384	$	108		$	750		$	750	$	—

Duke Energy Carolinas gigawatt-hours (GWh) sales	25,607		24,135		1,472			70,506		66,159		4,347
Duke Energy Carolinas GWh sales															21,828			22,627		(799		)
Duke Energy Progress GWh sales	19,625		18,827		798			52,747		50,026		2,721			16,348			17,226		(878		)
Duke Energy Florida GWh sales	12,375		12,132		243			31,798		31,177		621			8,321			9,119		(798		)
Duke Energy Ohio GWh sales	6,964		6,672		292			19,183		18,632		551			6,164			6,072		92
Duke Energy Indiana GWh sales	9,114		8,795		319			25,900		24,975		925			8,033			8,485		(452		)
Total Electric Utilities and Infrastructure GWh sales	73,685		70,561		3,124			200,134		190,969		9,165			60,694			63,529		(2,835		)
Net proportional megawatt (MW) capacity in operation								48,757		48,909		(152		)
Net proportional MW capacity in operation															49,725			48,831		894

Three Months Ended ~~September 30,~~March 31, 2019, as compared to March 31, 2018 ~~as Compared to September 30, 2017~~

Electric Utilities and Infrastructure’s results were impacted by ~~favorable weather-normal retail sales volumes, favorable~~a positive contribution from the 2018 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases, Duke Energy Florida's base rate adjustments due to the Citrus County CC being placed in service, lower operation, maintenance and other expense and lower income tax expense.

These drivers were offset by unfavorable weather in the current year, unfavorable weather-normal retail sales volumes, higher depreciation from a ~~positive net contribution from the Duke Energy Progress~~growing asset base and Duke Energy Carolinas North Carolina rate cases, a FERC approved settlement refund of certain transmission costs previously billed by PJM, lower income tax expense and lower regulatory charges compared to the prior year related to the unrecovered Levy Nuclear Project costs at Duke Energy Florida.

~~These drivers were partially offset by~~ higher ~~operation and maintenance expenses primarily due to the impacts of Hurricane Florence and increased depreciation and amortization.~~interest expense. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven primarily by:

a ~~$90 million increase in fuel related revenues due to higher sales volumes and increases in fuel rates billed to customers;~~

~~a $54 million increase in weather-normal retail sales volumes;~~

~~a $59~~$177 million increase in retail pricing primarily due to the prior year Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases and Duke Energy ~~Carolinas North Carolina~~Florida's base rate ~~cases;~~adjustments related to generation assets being placed into service.

Partially offset by:

a ~~$38~~$66 million ~~increase~~decrease in retail sales, net of fuel revenues, due to ~~favorable~~unfavorable weather in the current year;

a $58 million decrease in fuel related revenues due primarily to lower sales volumes and decreases in fuel rates billed to customers; and

a ~~$23 million increase in Joint Asset Agency Rider (JAAR) revenues at Duke Energy Progress in conjunction with implementation of new base rates.~~

~~Partially offset by:~~

~~a $143~~$30 million decrease in weather-normal retail ~~revenues associated with the lower statutory federal corporate tax rate under the Tax Act.~~sales volumes.

Operating Expenses. The variance was driven primarily by:

a ~~$120~~$55 million decrease in fuel used in electric generation and purchased power primarily due to lower purchased power and lower deferred fuel and capacity expenses;

a $43 million decrease in operation, maintenance and other expense primarily due to prior year impacts associated with the North Carolina rate cases; and

a $43 million decrease in impairment charges primarily due to prior year impacts associated with the Duke Energy Progress North Carolina rate case.



MD&A	SEGMENT RESULTS - ELECTRIC UTILITIES AND INFRASTRUCTURE

Partially offset by:

a $112 million increase in depreciation and amortization expense primarily due to higher amortization of deferred coal ash costs, additional plant in service and new depreciation rates associated with the prior year Duke Energy ~~Progress~~Carolinas and Duke Energy ~~Carolinas~~Progress North Carolina rate cases; and

a ~~$99~~$27 million increase in ~~operation, maintenance~~property and other ~~expense~~taxes primarily due to higher ~~storm costs due to Hurricane Florence~~property taxes for additional plant in service in the current year and ~~higher operational costs that are recoverable in rates, partially offset by~~ a ~~FERC approved settlement refund of certain transmission costs previously billed by PJM; and~~

~~PART I~~

~~a $63 million increase in fuel used in electric generation and purchased power primarily due to higher~~favorable sales and use tax credit in the prior year at Duke Energy Progress.

Interest Expense. The variance was driven primarily by higher ~~deferred fuel expenses.~~

~~Partially offset by:~~

~~a $101 million decrease~~debt outstanding in ~~impairment charges primarily due to~~ the ~~write-off~~current year and AFUDC debt return ending in the fourth quarter of ~~remaining unrecovered Levy Nuclear Project costs in 2017.~~2018 on the Citrus County CC at Duke Energy Florida.

Income Tax Expense. The variance was primarily due to ~~the~~ lower ~~statutory federal corporate tax rate under the Tax Act~~pretax income and ~~a decrease in pretax income.~~amortization of excess deferred taxes. The ~~effective tax rates (ETRs)~~ETRs for the three months ended ~~September 30,~~March 31, 2019, and 2018 ~~and 2017~~ were ~~20.6~~18.4 percent and ~~33.6~~19.6 percent, respectively. The decrease in the ETR was primarily due to the ~~lower statutory federal corporate tax rate under the Tax Act and the~~ amortization of excess deferred taxes partially offset by ~~favorable tax return true ups in the prior year. For additional information, see Note 17 to the Condensed Consolidated Financial Statements, "Income Taxes."~~

~~Nine Months Ended September 30, 2018, as Compared to September 30, 2017~~

~~Electric Utilities and Infrastructure’s results were impacted by favorable weather~~lower AFUDC equity in the current year and a positive net contribution from the Duke Energy Progress and Duke Energy Carolinas North Carolina rate cases, partially offset by higher legislative and regulatory charges compared to the prior year. ~~The following is a detailed discussion of the variance drivers by line item.~~

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

~~a $398 million increase in fuel related revenues due to higher sales volumes, changes in generation mix and increases in fuel rates billed to customers;~~

~~a $288 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year;~~

a $125 million increase in retail pricing primarily due to the Duke Energy Progress and Duke Energy Carolinas North Carolina rate cases and Duke Energy Florida base rate adjustments for the Osprey acquisition and the completion of the Hines Energy Complex Chiller Uprate Project;

~~an $80 million increase in weather-normal retail sales volumes; and~~

~~a $52 million increase in JAAR revenues at Duke Energy Progress in conjunction with implementation of new base rates.~~

~~Partially offset by:~~

~~a $401 million decrease in retail revenues associated with the lower statutory federal corporate tax rate under the Tax Act.~~

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

a $342 million increase in depreciation and amortization expense primarily due to higher amortization of deferred coal ash costs, additional plant in service and new depreciation rates per the Duke Energy Progress and Duke Energy Carolinas North Carolina rate cases;

~~a $327 million increase in fuel used in electric generation and purchased power, due to higher sales and higher deferred fuel expenses;~~

a $216 million increase in operation, maintenance and other expense primarily due to impacts associated with the Duke Energy Progress North Carolina rate case, the impacts of Hurricane Florence and higher storm cost amortization at Duke Energy Florida, partially offset by a FERC approved settlement refund of certain transmission costs previously billed by PJM; and

a $112 million increase in impairment charges primarily due to the impacts associated with the Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases, offset by the write-off of remaining unrecovered Levy Nuclear project costs at Duke Energy Florida in the prior year.

~~Other Income and Expenses, net.~~ The decrease was primarily due to lower post in-service equity returns for projects that had been completed prior to being reflected in customer rates at Duke Energy Carolinas and lower income from non-service components of employee benefit costs in the current year at Duke Energy Progress. For additional information on employee benefit costs, see Note 16 to the Condensed Consolidated Financial Statements, "Employee Benefit Plans."

~~Income Tax Expense.~~ The variance was primarily due to the lower statutory federal corporate tax rate under the Tax Act and a decrease in pretax income. The ETRs for the nine months ended September 30, 2018, and 2017 were 20.5 percent and 34.8 percent, respectively. The decrease in the ETR was primarily due to the lower statutory federal corporate tax rate under the Tax Act and the amortization of excess deferred taxes partially offset by favorable tax return true ups in the prior year.

~~PART I~~

Matters Impacting Future Electric Utilities and Infrastructure Results

On May 1, 2019, and May 8, 2019, Duke Energy Carolinas and Duke Energy Progress, respectively, received a Commission Directive from the PSCSC granting the companies’ requests for retail rate increases but denying recovery of certain coal ash costs. Duke Energy Carolinas and Duke Energy Progress intend to file a Petition for Rehearing with the PSCSC. Electric Utilities and Infrastructure's results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On May 18, 2016, the ~~North Carolina Department of Environmental Quality (NCDEQ)~~NCDEQ issued proposed risk classifications for all coal ash surface impoundments in North Carolina. All ash impoundments not previously designated as high priority by the ~~North Carolina~~ Coal Ash ~~Management~~ Act ~~of 2014 (Coal Ash Act)~~ were designated as intermediate risk. Certain impoundments classified as intermediate risk, however, ~~may be reassessed in the future~~were eligible for reassessment as low risk pursuant to legislation enacted on July 14, 2016. Electric Utilities and Infrastructure's estimated asset retirement obligations (AROs) related to the closure of North Carolina ash impoundments are based upon the mandated closure method or a probability weighting of potential closure methods for the impoundments that may be reassessed to low risk. On ~~October 12,~~November 14, 2018, NCDEQ ~~announced~~issued final low-risk classifications for these impoundments, indicating that Duke Energy ~~had~~Carolinas and Duke Energy Progress have satisfied the permanent replacement water supply and certain dam improvement requirements ~~by the October 15, 2018, deadline~~ set out in the Coal Ash Management Act. ~~However,~~On April 1, 2019, NCDEQ ~~has not yet~~ issued ~~final classifications for these impoundments. As the final risk ranking classifications~~a closure determination requiring Duke Energy Carolinas and Duke Energy Progress to excavate all remaining coal ash impoundments in North Carolina, ~~are delineated,~~even though they had been deemed low risk. On April 26, 2019, Duke Energy Carolinas and Duke Energy Progress filed a Petition for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ's determination that all ash basins must be excavated. Duke Energy Carolinas and Duke Energy Progress intend to seek recovery of all costs through the ratemaking process consistent with previous proceedings. As the 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 Electric Utilities and Infrastructure's results of operations, financial position and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, "Commitments and Contingencies," 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. In addition, the orders issued in the Duke Energy Carolinas and Duke Energy Progress North Carolinas rate cases supporting recovery of past coal ash remediation costs have been appealed by various parties. The outcome of these appeals, lawsuits and potential fines and penalties could have an adverse impact on Electric Utilities and Infrastructure's results of operations, financial position and cash flows. See Notes 3 and 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters" and “Commitments and Contingencies,” respectively, for additional information.

On June 22, 2018, Duke Energy Carolinas received an order from the NCUC, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas may petition for deferral of grid modernization costs outside of a general rate case proceeding if it can show financial hardship or a stipulation that includes greater consensus among intervening parties on costs being classified as grid modernization. While Duke Energy Progress did not request recovery of these costs in its most recent case with the NCUC, Duke Energy Progress may request recovery of certain grid modernization costs in future regulatory proceedings. Electric Utilities and Infrastructure's results of operations, financial position and cash flows could be adversely impacted if grid modernization costs are not ultimately approved for recovery and/or deferral treatment. ~~See Note 3 to~~

During the ~~Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.~~

~~On June 30, 2017, CertainTeed Gypsum NC, Inc. (CertainTeed) filed a declaratory judgment action against~~last half of 2018, Duke Energy Carolinas, Duke Energy Progress in the North Carolina Business Court relating to a gypsum supply agreement. In its complaint, CertainTeed sought an order from the court declaring that the minimum amount of gypsum Duke Energy Progress must provide to CertainTeed under the supply agreement is 50,000 tons per month through 2029. The trial for this matter concluded on July 16, 2018. On August 29, 2018, the court issued an order and opinion finding that Duke Energy Progress is required to supply 50,000 tons of gypsum per month, but that CertainTeed's sole remedy for Duke Energy Progress' long-term discontinuance under the agreement is liquidated damages. The estimated maximum amount that would be owed under the liquidated damages provision is approximately $90 million. Both CertainTeed and Duke Energy Progress have filed cross-appeals. The outcome of the cross-appeals could have an adverse impact on Electric Utilities and Infrastructure's results of operations, financial position and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for additional information.

~~In the third quarter of 2018,~~Florida’s service territories were impacted by several named storms. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused ~~historic~~ flooding, extensive damage and widespread power outages ~~within~~to the service territories of Duke Energy ~~Progress~~Carolinas and Duke Energy ~~Carolinas~~Progress. Duke Energy Florida’s service ~~territories. Approximately 1.8 million customers were impacted. Current estimated restoration costs are approximately $540 million. Most~~territory was also impacted by Hurricane Michael, a Category 5 hurricane and the most powerful storm to hit the Florida Panhandle in recorded history. A significant portion of the incremental operation and maintenance expenses ~~are deferred as of September 30, 2018. Given the magnitude of the storm,~~related to these storms have been deferred. On December 21, 2018, Duke Energy Carolinas and Duke Energy Progress ~~intends to request~~filed with the NCUC petitions for approval ~~in North Carolina and South Carolina~~ to defer the incremental storm costs incurred to a regulatory asset for recovery in the next base rate case. ~~These requests are expected to be~~Duke Energy Progress filed ~~during~~a similar request with the ~~fourth quarter~~PSCSC on January 11, 2019, which also included a request for the continuation of ~~2018. An order from regulatory authorities disallowing~~prior deferrals requested for other storms, and on January 30, 2019, the PSCSC issued a directive approving the deferral and future recovery of storm restoration costs could have an adverse impact on Electric Utilities and Infrastructure’s financial position, results of operations and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

On October 10, 2018, Hurricane Michael made landfall on Florida's Panhandle as a Category 4 hurricane, the most powerful storm to hit the Florida Panhandle in recorded history. The storm caused significant damage and more than a million power outages within the service territories ofrequest. Duke Energy Florida ~~Duke Energy Carolinas and Duke Energy Progress. Duke Energy has not completed~~filed a petition on April 30, 2019, with the final accumulation of total estimated storm restoration costs incurred; however, the preliminary estimate is approximately $235 million of operation and maintenance expenses and approximately $185 million in capital costs. Given the magnitude of the storm, Duke Energy Carolinas and Duke Energy Progress intendFPSC to ~~request approval to defer the~~recover incremental ~~costs incurred to a regulatory asset for recovery in the next base rate cases, and Duke Energy Florida will recover these~~ storm costs consistent with the provisions in its 2017 ~~Second Revised and Restated Settlement Agreement.~~Settlement. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Electric Utilities and Infrastructure's results of operations, financial position and cash flows.

Duke Energy Florida is constructing the 1,640-MW combined-cycle natural gas plant in Citrus County, Florida, and expects it to be commercially available in 2018. Actual costs are expected to exceed estimated costs by an immaterial amount after recoveries; therefore, an impairment is not expected. Failure to complete the construction and achieve commercial operations by the end of 2018 or failure to obtain recoveries from customers or vendors could materially impact Electric Utilities and Infrastructure's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, ~~“Regulatory~~"Regulatory Matters,”" for additional information.



MD&A	SEGMENT RESULTS - ELECTRIC UTILITIES AND INFRASTRUCTURE

On February 6, 2018, the FPSC approved a stipulation that would apply tax savings resulting from the Tax Act toward storm costs effective January 2018 in lieu of implementing a storm surcharge. On May 31, 2018, Duke Energy Florida filed for recovery of the storm ~~costs.~~costs relating to Hurricane Irma and Hurricane Nate, as well as the replenishment of Duke Energy Florida's storm reserve. Storm costs are currently expected to be fully recovered by approximately mid-2021. On April 9, 2019, Duke Energy Florida filed an unopposed motion to approve a settlement resolving all outstanding issues related to the May 31, 2018 filing. The commission has scheduled ~~the~~a hearing to begin on May 21, ~~2019.~~2019, to consider this Storm Cost Agreement. An order disallowing recovery of these costs could have an adverse impact on Electric Utilities and Infrastructure's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

~~PART I~~

In March 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. On April 13, 2018, Duke Energy Ohio filed a Stipulation with the PUCO to resolve issues in the electric distribution base rate case and other regulatory matters. If approved by PUCO, the Stipulation would allow for Duke Energy Ohio to recover gains and losses incurred on and after January 1, 2018, related to the Ohio Valley Electric Corporation (OVEC), through the Price Stabilization Rider. Hearings concluded on August 6, 2018. Initial briefs were filed on September 11, 2018, and reply briefs on October 2, 2018. Electric Utilities and Infrastructure's results of operations, financial position and cash flows could be adversely impacted if the Stipulation is denied by the PUCO. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Duke Energy Registrants' Annual Reports on Form ~~10-K/A~~10-K for the year ended December 31, ~~2017,~~2018, for discussion of risks associated with the Tax Act.

Gas Utilities and Infrastructure


	Three Months Ended September 30,								Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2018			2017		Variance			2018		2017		Variance			2019		2018			Variance
Operating Revenues	$	256		$	272	$	(16	)	$	1,301	$	1,243	$	58		$	756	$	727		$	29
Operating Expenses
Cost of natural gas	58			68		(10		)	460		402		58			327		313			14
Operation, maintenance and other	101			94		7			312		293		19			110		108			2
Depreciation and amortization	61			57		4			182		171		11			65		61			4
Property and other taxes	24			25		(1		)	81		81		—			33		31			2
Total operating expenses	244			244		—			1,035		947		88			535		513			22
Operating Income	12			28		(16		)	266		296		(30		)	221		214			7
Other Income and Expenses, net	29			23		6			16		62		(46		)	40		(35		)	75
Interest Expense	25			26		(1		)	78		78		—			30		27			3
Income Before Income Taxes	16			25		(9		)	204		280		(76		)	231		152			79
Income Tax (Benefit) Expense	(1		)	6		(7		)	43		101		(58		)
Income Tax Expense																5		36			(31		)
Segment Income	$	17		$	19	$	(2	)	$	161	$	179	$	(18	)	$	226	$	116		$	110

Piedmont local distribution company (LDC) throughput (dekatherms)	135,403,188			107,490,775		27,912,413			407,144,529		334,781,316		72,363,213
Piedmont LDC throughput (dekatherms)																151,665,924		154,901,379			(3,235,455		)
Duke Energy Midwest LDC throughput (Mcf)	9,370,743			9,904,644		(533,901		)	62,111,858		52,940,410		9,171,448			38,538,272		37,126,065			1,412,207

Three Months Ended ~~September 30,~~March 31, 2019, as compared to March 31, 2018 ~~as Compared to September 30, 2017~~

~~Gas Utilities and Infrastructure’s results were primarily impacted by lower revenues. The following is a detailed discussion of the variance drivers by line item.~~

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

~~an $11 million decrease due to revenues subject to refund to customers associated with the lower statutory federal corporate tax rate under the Tax Act; and~~

~~a $10 million decrease primarily due to lower natural gas costs passed through to customers from lower retail volumes sold, partially offset by higher natural gas prices.~~

~~Partially offset by:~~

a $6 million increase primarily due to residential and commercial customer revenue, net of natural gas costs passed through to customers, due to customer growth and Integrity Management Rider (IMR) rate adjustments at Piedmont.

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

~~a $10 million decrease in cost of natural gas primarily due to lower retail volumes sold, partially offset by slightly higher natural gas prices.~~

~~Partially offset by:~~

~~a $7 million increase in operations, maintenance and other primarily due to increased shared services and customer operations expense.~~

~~Other Income and Expenses, net.~~ The increase was primarily due to higher income from non-service components of employee benefit costs in the current year. For additional information on employee benefit costs, see Note 16 to the Condensed Consolidated Financial Statements, "Employee Benefit Plans."

~~PART I~~

~~Income Tax (Benefit) Expense.~~ The variance was primarily due to the lower statutory federal corporate tax rate under the Tax Act. The ETRs for the three months ended September 30, 2018, and 2017 were (6.3) percent and 24.0 percent, respectively. The decrease in the ETR was primarily due to the lower statutory corporate tax rate under the Tax Act and research credits. For additional information, see Note 17 to the Condensed Consolidated Financial Statements, "Income Taxes."

~~Nine Months Ended September 30, 2018, as Compared to September 30, 2017~~

Gas Utilities and Infrastructure’s results were primarily impacted by the prior year OTTI recorded on the Constitution ~~investment; partially offset by favorable price adjustments~~investment and ~~customer growth.~~an adjustment related to the income tax recognition for equity method investments. This adjustment was immaterial and relates to prior years. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The variance was driven by:

a ~~$58~~$14 million increase primarily due to higher natural gas ~~costs passed through to customers due to higher retail volumes sold and higher natural gas prices;~~prices associated with off-system sales;

a ~~$37~~$7 million increase primarily due to ~~residential and commercial customer revenue, net of natural gas costs passed through~~NCUC approval related to ~~customers, due to customer growth and IMR~~tax reform accounting from fixed rate ~~adjustments and new power generation customers at Piedmont; and~~contracts;

a ~~$10~~$5 million increase primarily due to ~~favorable weather in the current year~~North Carolina and ~~higher volumes sold in the Midwest.~~

~~Partially offset by:~~Tennessee IMR increases; and

a ~~$49~~$4 million ~~decrease~~increase due to ~~revenues subject to refund to customers associated with the lower statutory federal corporate tax rate under the Tax Act.~~customer growth.

Operating Expenses. The variance was driven by:

a ~~$58~~$14 million increase in cost of natural gas primarily due to ~~higher retail volumes sold and~~the impact of higher natural gas ~~prices;~~prices on off-system sales and unbilled revenue; and

a ~~$19 million increase in operations, maintenance and other primarily due to increased shared services and gas operations expense; and~~

~~an $11~~$4 million increase in depreciation and amortization expense primarily due to additional plant in service.

Other Income and Expenses, net. The ~~decrease~~increase was primarily due to the prior year OTTI recorded ~~for~~on the Constitution investment ~~in Constitution~~and higher earnings from ACP in the current ~~year, partially offset by higher income from non-service components of employee benefit costs in the current~~ year. ~~For additional information on employee benefit costs, see Note 16 to the Condensed Consolidated Financial Statements, "Employee Benefit Plans."~~

Income Tax ~~(Benefit)~~ Expense. The variance was primarily due to an adjustment related to the ~~lower statutory federal corporate~~income tax ~~rate under the Tax Act.~~recognition for equity method investments, partially offset by an increase in pretax income. This adjustment was immaterial and relates to prior years. The ETRs for the ~~nine~~three months ended ~~September 30,~~March 31, 2019, and 2018 ~~and 2017~~ were ~~21.1~~2.2 percent and ~~36.1~~23.7 percent, respectively. The decrease in the ETR was primarily due to an adjustment related to the ~~lower statutory federal corporate~~income tax ~~rate under~~recognition for equity method investments that was recorded during the ~~Tax Act.~~first quarter of 2019. This adjustment was immaterial and relates to prior years.



MD&A	SEGMENT RESULTS - GAS UTILITIES AND INFRASTRUCTURE

Matters Impacting Future Gas Utilities and Infrastructure Results

Gas Utilities and Infrastructure has a 47 percent ownership interest in ~~Atlantic Coast Pipeline, LLC (ACP),~~ACP, which is building an approximately 600-mile interstate natural gas pipeline intended to transport diverse natural gas supplies into southeastern markets. Affected states (West Virginia, Virginia and North Carolina) have issued certain necessary permits; the project remains subject to other pending federal and state approvals, which will allow full construction activities to begin. In 2018, FERC issued a series of Notices to Proceed, which authorized the project to begin certain construction-related activities along the pipeline route. Project cost estimates ~~have increased from~~are a range of ~~$6.0~~$7.0 billion to ~~$6.5 billion to a range of $6.5 billion to $7.0~~$7.8 billion, excluding financing costs. ~~The project has~~ACP expects to achieve a ~~targeted~~late 2020 in-service date ~~of late 2019~~ for key ~~portions~~segments of the project, ~~with the remaining segments targeted~~while it expects a remainder to ~~be in-service in mid-2020.~~extend into 2021. Project construction activities, schedule and final costs are subject to uncertainty due to abnormal weather, work delays (including delays due to judicial or regulatory action) and other conditions and risks that could result in potential higher project costs, a potential delay in the targeted in-service dates, permanent or temporary suspension of AFUDC and potential impairment charges. ACP and Duke Energy will continue to consider their options with respect to the foregoing in light of their existing contractual and legal obligations. See ~~Note~~Notes 3 and 13 to the Condensed Consolidated Financial Statements, "Regulatory ~~Matters,~~Matters" and "Variable Interest Entities," respectively, for additional information.

~~PART I~~

Commercial Renewables


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended March 31,
(in millions)	2018			2017			Variance			2018			2017			Variance			2019			2018			Variance
Operating Revenues	$	127		$	95		$	32		$	347		$	333		$	14		$	106		$	101		$	5
Operating Expenses
Operation, maintenance and other	85			55			30			209			191			18			66			55			11
Depreciation and amortization	40			39			1			116			116			—			40			38			2
Property and other taxes	6			9			(3		)	19			26			(7		)	6			7			(1		)
Impairment charges	93			76			17			93			76			17
Total operating expenses	224			179			45			437			409			28			112			100			12
Gains on Sales of Other Assets and Other, net	—			1			(1		)	—			5			(5		)
Operating Loss	(97		)	(83		)	(14		)	(90		)	(71		)	(19		)
Operating (Loss) Income																			(6		)	1			(7		)
Other Income and Expenses, net	2			(11		)	13			22			(12		)	34			(2		)	2			(4		)
Interest Expense	21			22			(1		)	66			64			2			21			22			(1		)
Loss Before Income Taxes	(116		)	(116		)	—			(134		)	(147		)	13			(29		)	(19		)	(10		)
Income Tax Benefit	(37		)	(65		)	28			(112		)	(146		)	34			(35		)	(39		)	4
Less: Loss Attributable to Noncontrolling Interests	(17		)	(2		)	(15		)	(18		)	(3		)	(15		)	(7		)	—			(7		)
Segment (Loss) Income	$	(62	)	$	(49	)	$	(13	)	$	(4	)	$	2		$	(6	)
Segment Income																			$	13		$	20		$	(7	)

Renewable plant production, GWh	1,897			1,760			137			6,548			6,276			272			2,068			2,180			(112		)
Net proportional MW capacity in operation										2,976			2,908			68
Net proportional MW capacity in operation^(a)																			2,996			2,943			53


(a)	Certain projects are included in tax-equity structures where investors have differing interests in the project's economic attributes. In 2019, 100 percent of the tax-equity project's capacity is included in the table above.

Three Months Ended ~~September 30,~~March 31, 2019, as compared to March 31, 2018 ~~as Compared to September 30, 2017~~

Commercial Renewables' results were unfavorably impacted by ~~the~~lower wind production and higher ~~tax benefit in 2017 from cost and property, plant and equipment impairments,~~operating expenses, partially offset by ~~the minority interest loss associated with a third-party tax equity partnership arrangement.~~results from tax-equity structures. The following is a detailed discussion of the variance drivers by line item.

Operating Revenues. The increase ~~in revenues was~~is primarily due to an increase in the number of ~~Engineering, Procurement and Construction (EPC)~~EPC agreements at REC Solar, ~~a California based provider of solar installations.~~offset by unfavorable wind portfolio revenue due to low winds.

Operating Expenses. The increase was primarily due to an increase in the number of EPC agreements at REC Solar ~~higher development expenses~~ and higher ~~goodwill impairment charges~~operating expenses in the ~~current year.~~solar portfolio.

Other Income and Expenses, net. The ~~favorable variance in other income and expenses was primarily a result of the impairment of certain cost investments~~decrease is due to mark-to-market losses in the ~~prior year.~~solar portfolio.

Income Tax Benefit. The ~~lower tax benefits in 2018 were~~variance was primarily due to a reduction in production tax credits generated in the ~~lower statutory federal corporate tax rate under the Tax Act and higher tax benefit in 2017 from cost and property, plant and equipment impairments.~~current year.

Loss Attributable to Noncontrolling Interests. The ~~variance~~increase is ~~primarily attributable to~~driven by the ~~entering into a third-party~~new tax equity ~~partnership arrangement~~structures entered into during ~~the third quarter.~~2018.

~~Nine Months Ended September 30, 2018, as Compared to September 30, 2017~~

Commercial Renewables' results were unfavorably impacted by the higher tax benefit in 2017 from cost and property, plant and equipment impairments, primarily offset by the entering into a third-party tax equity partnership arrangement, the bankruptcy court approval of the North Allegheny Wind, LLC (NAW) and FirstEnergy Solutions (FES) settlement agreement and the minority interest loss associated with a third-party tax equity partnership arrangement. The following is a detailed discussion of the variance drivers by line item.

~~Operating Revenues.~~ ~~The increase in revenues was primarily due to an increase in the number of EPC agreements at REC Solar and favorable solar portfolio revenue.~~

~~Operating Expenses.~~ The increase was primarily due to higher development expenses and goodwill impairment charges in the current year, partially offset by lower property taxes due to non-recurring property tax payments made in the prior year.

~~Other Income and Expenses, net.~~ The favorable variance in other income and expenses was primarily due to the bankruptcy court approved NAW and FES settlement agreement, which allowed retention of previously collected cash collateral under the Purchase Power Agreements (PPAs), mark-to-market gains on interest rate swaps, the impairment of certain cost investments in the prior year and lower equity losses in the current year.

~~Income Tax Benefit.The lower tax benefits in 2018 were due to the lower statutory federal corporate tax rate under the Tax Act and higher tax benefit in 2017 from cost and property, plant and equipment impairments.~~

~~Loss Attributable to Noncontrolling Interests.~~ ~~The variance is primarily attributable to the entering into a third-party tax equity partnership arrangement.~~

~~PART I~~

Matters Impacting Future Commercial Renewables ~~Result~~sResults

Persistently low market pricing for wind resources, primarily in the Electric Reliability Council of Texas West ~~market~~ and PJM ~~west~~West markets, persistently low renewable resources and the future expiration of tax incentives including investment tax credits and production tax credits could result in adverse impacts to the future results of operations, financial position and cash flows of Commercial Renewables.

~~Deterioration~~



MD&A	SEGMENT RESULTS - COMMERCIAL RENEWABLES

On April 24, 2019, Duke Energy executed an agreement to sell a minority interest in ~~credit quality resulting in bankruptcy~~a portion of ~~an offtaker~~certain renewable assets. The portion of ~~power from contracted~~Duke Energy’s commercial renewables energy portfolio to be sold includes 49 percent of 37 operating wind, orsolar and battery storage assets and 33 percent of 11 operating solar assets ~~could result in adverse impacts to~~across the future results of operations, financial position and cash flows of Commercial Renewables. On March 31, 2018, FES, a subsidiary of FirstEnergy and counterparty to two PPAs with NAW, filed for Chapter 11 bankruptcy. On June 18, 2018, The United States Bankruptcy Court’s Northern District of Ohio Eastern Division approved the Stipulation between FES and NAW. The Stipulation resulted in, among other items, the termination of the two PPAs between FES and NAW, as a result, NAW is subject to market pricing in the PJM west market.

On September 26, 2018, Duke Energy announced it is seeking a minority investor for the commercial renewables business. Duke Energy will continue to develop projects, grow its portfolio and manage its renewables assets.U.S. Duke Energy Renewable Services, an operations and maintenance business for third-party customers, and REC Solar are not included in the potential transaction. AThe sale will result in pretax proceeds to Duke Energy of ~~a minority interest~~$415 million. Duke Energy will retain control of these assets, and, therefore, no gain or loss is ~~dependent~~expected to be recognized in the Condensed Consolidated Statements of Operations upon closing of the transaction. Duke Energy will also retain the majority of the remaining tax benefits from the projects. Duke Energy will continue to develop projects, grow its portfolio and manage its renewables assets. The sale is subject to customary closing conditions, including approvals from the FERC, the Public Utility Commission of Texas and the Committee on ~~a number~~Foreign Investment in the U.S. The transaction is expected to close in the second half of ~~factors and cannot be predicted at this time.~~2019.

Other


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended March 31,
(in millions)	2018			2017			Variance			2018			2017			Variance			2019			2018			Variance
Operating Revenues	$	34		$	35		$	(1	)	$	101		$	103		$	(2	)	$	21		$	35		$	(14	)
Operating Expenses																			28			54			(26		)
Fuel used in electric generation and purchased power	14			13			1			43			42			1
Operation, maintenance and other	(8		)	20			(28		)	(2		)	47			(49		)
Depreciation and amortization	43			27			16			113			79			34
Property and other taxes	5			3			2			13			10			3
Impairment charges	—			—			—			—			7			(7		)
Total operating expenses	54			63			(9		)	167			185			(18		)
Gains (Losses) on Sales of Other Assets and Other, net	3			4			(1		)	(96		)	15			(111		)
Losses on Sales of Other Assets and Other, net																			—			(101		)	101
Operating Loss	(17		)	(24		)	7			(162		)	(67		)	(95		)	(7		)	(120		)	113
Other Income and Expenses, net	40			50			(10		)	81			100			(19		)	44			14			30
Interest Expense	163			150			13			484			423			61			171			157			14
Loss Before Income Taxes	(140		)	(124		)	(16		)	(565		)	(390		)	(175		)	(134		)	(263		)	129
Income Tax Benefit	(98		)	(93		)	(5		)	(125		)	(193		)	68
Income Tax (Benefit) Expense																			(45		)	1			(46		)
Less: Income Attributable to Noncontrolling Interests	2			3			(1		)	6			8			(2		)	—			2			(2		)
Net Loss	$	(44	)	$	(34	)	$	(10	)	$	(446	)	$	(205	)	$	(241	)	$	(89	)	$	(266	)	$	177

Three Months Ended ~~September 30,~~March 31, 2019, as compared to March 31, 2018 ~~as Compared to September 30, 2017~~

~~Other's higher net loss~~The variance was ~~primarily~~ driven by ~~insurance proceeds received in~~ the prior ~~year.~~year loss on sale of the retired Beckjord station and lower income taxes due to a 2018 adjustment to record a valuation allowance. The following is a detailed discussion of the variance drivers by line item.

Operating ~~Expenses.~~Revenues. ~~The variance was primarily driven by~~Lower operating revenues were due to amounts in the ~~reclassification~~prior year related to Duke Energy Ohio’s entitlement of ~~certain immaterial~~capacity and energy from OVEC’s power plants. In the current year, ~~costs to~~the revenues and expenses for OVEC are reflected in the Electric Utilities and Infrastructure ~~segment.~~

~~Other Income and Expenses, net.~~ ~~The variance was primarily due to insurance proceeds received in the prior year resulting from settlement of the shareholder litigation related to the Progress Energy merger.~~

~~Interest Expense.~~ ~~The variance was primarily due to an increase in long-term debt as well as higher interest rates on short-term debt.~~

~~Income Tax Benefit.~~ The variance was primarily driven by an increase in pretax losses and favorable tax return true ups, partially offset by the lower statutory corporate federal income tax rate under the Tax Act. For additional information, see Note 17 to the Condensed Consolidated Financial Statements, "Income Taxes."

~~Nine Months Ended September 30, 2018, as Compared to September 30, 2017~~

~~Other's higher net loss was driven by the loss on sale of the retired Beckjord station, higher interest expense and lower tax benefit~~segment due to the ~~Tax Act. The following is a detailed discussion of~~2018 PUCO Order that approved Duke Energy to recover or credit amounts through Rider PSR. These amounts are deemed immaterial. Therefore, the ~~variance drivers by line item.~~prior period amounts were not restated.

Operating Expenses. ~~The variance was primarily driven by~~Lower operating expenses were due to the ~~reclassification of certain immaterial~~absence in the current year of transaction and integration costs toassociated with the ~~Electric Utilities~~Piedmont acquisition and ~~Infrastructure segment.~~OVEC fuel expense.

~~PART I~~

~~Gains (Losses)~~Losses on Sales of Other Assets and Other, net. The variance was driven by the prior year loss on sale of the retired Beckjord station, a nonregulated facility retired during 2014, including the transfer of coal ash basins and other real property and indemnification from all potential future claims related to the property, whether arising under environmental laws or otherwise.

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 higher short-term interest rates and an increase in ~~long-term debt as well as higher interest rates on short-term~~outstanding debt.

Income Tax ~~Benefit.~~(Benefit) Expense. The variance was primarily ~~due to~~driven by the prior year valuation allowance against AMT credits ~~and the lower statutory corporate federal income tax rate under the Tax Act,~~ partially offset by ~~an increase~~a lower pretax loss in ~~pretax losses. For additional information, see Note 17 to~~ the ~~Condensed Consolidated Financial Statements, "Income Taxes."~~current year.

~~Matters Impacting Future Other Results~~

Included in Other is Duke Energy Ohio's 9 percent ownership interest in the 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. On March 31, 2018, FES, a subsidiary of FirstEnergy and an ICPA counterparty with a power participation ratio of 4.85 percent, filed for Chapter 11 bankruptcy, which could increase costs allocated to the counterparties. On July 31, 2018, the bankruptcy court rejected the FES ICPA, which means OVEC is an unsecured creditor in the FES bankruptcy proceeding. Duke Energy cannot predict the impact of the bankruptcy filing on its OVEC interests. In addition, certain proposed environmental rulemaking costs could result in future increased OVEC cost allocations.

In March 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. On April 13, 2018, Duke Energy Ohio filed a Stipulation with the PUCO to resolve issues in the electric distribution base rate case and other regulatory matters. If approved by PUCO, the Stipulation would allow for Duke Energy Ohio to recover gains and losses incurred on and after January 1, 2018, related to OVEC, through the Price Stabilization Rider and, as a result, Duke Energy Ohio may move its ownership interest to the Electric Utilities and Infrastructure segment. Hearings concluded on August 6, 2018. Initial briefs were filed on September 11, 2018, and reply briefs on October 2, 2018. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters” for additional information.

See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Duke Energy Registrants' Annual Reports on Form 10-K/A for the year ended December 31, 2017, for discussion of risks associated with the Tax Act.



MD&A	DUKE ENERGY CAROLINAS

DUKE ENERGY CAROLINAS

Management’s Discussion and Analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes for the ~~nine~~three months ended ~~September 30,~~March 31, 2019, and 2018 ~~and 2017~~ and the Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2017.~~2018.

Results of Operations

Nine Months Ended September 30,
(in millions) 2018
2017
Variance
Operating Revenues $ 5,525
$ 5,581
$ (56 )
Operating Expenses
Fuel used in electric generation and purchased power 1,370
1,394
(24 )
Operation, maintenance and other 1,464
1,472
(8 )
Depreciation and amortization 866
804
62
Property and other taxes 214
206
8
Impairment charges 191
—
191
Total operating expenses 4,105
3,876
229
Losses on Sales of Other Assets and Other, net (1 ) —
(1 )
Operating Income 1,419
1,705
(286 )
Other Income and Expenses, net 108
140
(32 )
Interest Expense 323
314
9
Income Before Income Taxes 1,204
1,531
(327 )
Income Tax Expense 268
522
(254 )
Net Income $ 936
$ 1,009
$ (73 )

~~PART I~~



	Three Months Ended March 31,
(in millions)	2019		2018		Variance
Operating Revenues	$	1,744	$	1,763	$	(19	)
Operating Expenses
Fuel used in electric generation and purchased power	472		473		(1		)
Operation, maintenance and other	440		451		(11		)
Depreciation and amortization	317		272		45
Property and other taxes	80		72		8
Impairment charges	—		13		(13		)
Total operating expenses	1,309		1,281		28
Operating Income	435		482		(47		)
Other Income and Expenses, net	31		39		(8		)
Interest Expense	110		107		3
Income Before Income Taxes	356		414		(58		)
Income Tax Expense	63		91		(28		)
Net Income	$	293	$	323	$	(30	)

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	~~2018~~2019
Residential sales	~~12.3~~(6.4	)%
General service sales	~~6.1~~(1.8	)%
Industrial sales	~~2.2~~(1.0	)%
Wholesale power sales	~~13.5~~(16.8	)%
Joint dispatch sales	~~7.4~~31.4	%
Total sales	~~6.6~~(3.5	)%
Average number of customers	~~1.4~~2.0	%

~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019, as compared to March 31, 2018 ~~as Compared to September 30, 2017~~

Operating Revenues. The variance was driven primarily by:

a ~~$197~~$32 million decrease in retail sales, net of fuel revenues, due to ~~revenues subject to refund to customers associated with~~unfavorable weather in the ~~lower statutory federal corporate tax rate under the Tax Act;~~current year;

a ~~$48~~$25 million decrease in rider revenues primarily related to energy efficiency programs; and

a ~~$25~~$14 million decrease in wholesale power revenues, net of sharing and fuel, primarily due to wholesale customer refunds in the current year related to a FERC order on a complaint filed by Piedmont Municipal Power Agency (PMPA), partially offset by higher revenues related to recovery of coal ash costs.weather-normal retail sales volumes.

Partially offset by:

a ~~$141 million increase in retail sales, net of fuel revenues, due to favorable weather in the current year;~~

~~a $39 million increase in weather-normal retail sales volumes; and~~

~~a $29~~$51 million increase in retail pricing due to the impacts of the prior year North Carolina rate ~~case~~.

case.

Operating Expenses. The variance was driven primarily by:

a ~~$191 million increase in impairment charges, primarily due to the impacts of the North Carolina rate order and charges related to coal ash costs in South Carolina; and~~

~~a $62~~$45 million increase in depreciation and amortization expense primarily due to additional plant in service, new depreciation rates associated with the prior year North Carolina rate case and higher amortization of deferred coal ash costs ~~partially offset by lower amortization of certain regulatory assets.~~associated with the prior year North Carolina rate case.

Partially offset by:

a ~~$24~~$13 million decrease in ~~fuel used in electric generation and purchased power primarily due~~impairment charges related to ~~decreased~~prior year coal ash ~~beneficial reuse~~ costs ~~partially offset by higher sales volumes.~~in South Carolina.

Other Income and ~~Expenses.~~Expenses, net. The variance was primarily due to lower AFUDC equity ~~and a decrease in recognition of post in-service equity returns for projects that were completed prior~~related to ~~being reflected in customer rates.~~W.S. Lee CC.

Income Tax Expense. The variance was primarily due to a decrease in pretax income and the ~~lower statutory federal corporate tax rate under the Tax Act.~~amortization of excess deferred taxes. The ETRs for the ~~nine~~three months ended ~~September 30,~~March 31, 2019, and 2018 ~~and 2017~~ were ~~22.3~~17.7 percent and ~~34.1~~22.0 percent, respectively. The decrease in the ETR was primarily due to the ~~lower statutory federal corporate tax rate under the Tax Act and the~~ amortization of ~~state~~ excess deferred ~~taxes partially offset by favorable tax return true ups in~~taxes.

100



MD&A	DUKE ENERGY CAROLINAS

Matters Impacting Future Results

On May 1, 2019, Duke Energy Carolinas received a Commission Directive from the ~~prior year. For additional information, see~~PSCSC granting its request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Carolinas intends to file a Petition for Rehearing with the PSCSC. Duke Energy Carolinas' results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 173 to the Condensed Consolidated Financial Statements, ~~"Income Taxes.~~"Regulatory Matters,"

~~Matters Impacting Future Results~~ 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~~were eligible for reassessment as low risk pursuant to legislation enacted 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. On ~~October 12,~~November 14, 2018, NCDEQ ~~announced~~issued final low-risk classifications for these impoundments, indicating that Duke Energy Carolinas had satisfied the permanent replacement water supply and certain dam improvement requirements ~~by the October 15, 2018, deadline~~ set out in the Coal Ash Management Act. ~~However,~~On April 1, 2019, NCDEQ ~~has not yet~~ issued ~~final classifications for these impoundments. As the final risk ranking classifications~~a closure determination requiring Duke Energy Carolinas to excavate all remaining coal ash impoundments in North ~~Carolina are delineated,~~Carolina. On April 26, 2019, Duke Energy Carolinas filed a Petition for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ's determination that all ash basins must be excavated. Duke Energy Carolinas intends to seek recovery of all costs through the ratemaking process consistent with previous proceedings. As the 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' results of operations, financial position and cash flows.

~~PART I~~

On June 22, 2018, Duke Energy Carolinas received an order from the NCUC, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas may petition for deferral of grid modernization costs outside of a general rate case proceeding if it can show financial hardship or a stipulation that includes greater consensus among intervening parties on costs being classified as grid modernization. Duke Energy Carolinas' results of operations, financial position and cash flows could be adversely impacted if grid modernization costs are not ultimately approved for recovery and/or deferral treatment. See Note 34 to the Condensed Consolidated Financial Statements, ~~“Regulatory Matters,”~~"Commitments and Contingencies," for additional information.

On October 10, 2018, Hurricane Michael made landfall on Florida's Panhandle as a Category 4 hurricane, the most powerful storm to hit the Florida Panhandle in recorded history. The storm caused damage within the service territory of Duke Energy Carolinas. Duke Energy Carolinas has not completed the final accumulation of total estimated storm restoration costs incurred; however, the preliminary estimate is approximately $70 million of operation and maintenance expenses. Given the magnitude of the storm, Duke Energy Carolinas intends to request approval to defer the incremental costs incurred to a regulatory asset for recovery in the next base rate case. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Duke Energy Carolinas' financial position, results of operations and cash flows.

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. In addition, the order issued in the Duke Energy Carolinas North Carolinas rate case supporting recovery of past coal ash remediation costs has been appealed by various parties. The outcome of these appeals, lawsuits, fines and penalties could have an adverse impact on Duke Energy Carolinas’ results of operations, financial position and cash flows. See Notes 3 and 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters" and “Commitments and Contingencies,” respectively, for additional information.

On June 22, 2018, Duke Energy Carolinas received an order from the NCUC, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. Duke Energy Carolinas may petition for deferral of grid modernization costs outside of a general rate case proceeding if it can show financial hardship or a stipulation that includes greater consensus among intervening parties on costs being classified as grid modernization. Duke Energy Carolinas' results of operations, financial position and cash flows could be adversely impacted if grid modernization costs are not ultimately approved for recovery and/or deferral treatment.

During the last half of 2018, Duke Energy Carolinas’ service territory was impacted by several named storms. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages in the service territory. A significant portion of the incremental operation and maintenance expenses related to these storms have been deferred. On December 21, 2018, Duke Energy Carolinas filed with the NCUC a petition for approval to defer the incremental storm costs incurred to a regulatory asset for recovery in the next base rate case. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Duke Energy Carolinas' results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

101



MD&A	PROGRESS ENERGY

PROGRESS ENERGY

Results of Operations


	Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2018		2017		Variance			2019			2018		Variance
Operating Revenues	$	8,119	$	7,435	$	684		$	2,572		$	2,576	$	(4	)
Operating Expenses
Fuel used in electric generation and purchased power	3,019		2,588		431			925			976		(51		)
Operation, maintenance and other	1,913		1,697		216			567			623		(56		)
Depreciation and amortization	1,183		958		225			455			384		71
Property and other taxes	399		386		13			137			123		14
Impairment charges	34		137		(103		)	—			29		(29		)
Total operating expenses	6,548		5,766		782			2,084			2,135		(51		)
Gains on Sales of Other Assets and Other, net	23		19		4			—			6		(6		)
Operating Income	1,594		1,688		(94		)	488			447		41
Other Income and Expenses, net	128		112		16			31			35		(4		)
Interest Expense	626		595		31			219			209		10
Income Before Income Taxes	1,096		1,205		(109		)	300			273		27
Income Tax Expense	186		384		(198		)	52			36		16
Net Income	910		821		89			248			237		11
Less: Net Income Attributable to Noncontrolling Interests	6		7		(1		)
Less: Net (Loss) Income Attributable to Noncontrolling Interests								(1		)	2		(3		)
Net Income Attributable to Parent	$	904	$	814	$	90		$	249		$	235	$	14

~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019, as compared to March 31, 2018 ~~as Compared to September 30, 2017~~

Operating Revenues. The variance was driven primarily by:

a ~~$467~~$51 million ~~increase~~decrease in fuel ~~related~~and capacity revenues primarily due to ~~higher sales volumes, increases~~a decrease in demand and a decrease in fuel and capacity rates billed to customers ~~and increased demand~~ at Duke Energy Florida;

a ~~$103~~$36 million ~~increase~~decrease in retail sales, net of fuel revenues, due to ~~favorable~~unfavorable weather in the current ~~year~~year; and ~~impacts of lost revenue resulting from Hurricane Irma in the prior year at Duke Energy Florida;~~

~~an $89 million increase in JAAR revenues, primarily due to the implementation of new base rates and weather normalized volumes at Duke Energy Progress;~~

a ~~$79~~$14 million decrease in weather-normal retail sales volumes.

Partially offset by:

a $111 million increase in retail pricing primarily due to the impacts of the prior year Duke Energy Progress North Carolina ~~and South Carolina~~ rate ~~cases; and~~

~~PART I~~

~~a $73 million increase in wholesale power revenues, net of fuel, primarily due~~case, Duke Energy Florida's base rate adjustments related to the ~~recovery of coal ash costs~~Citrus County CC being placed into service and ~~higher peak demand at Duke Energy Progress.~~

~~Partially offset by:~~

~~a $98 million decrease in retail sales due to revenues subject to refund to customers associated with~~annual increases from the ~~lower statutory federal corporate tax rate under the Tax Act at Duke Energy Progress; and~~

~~a $35 million decrease in rider revenues in conjunction with implementation of new base rate and impacts of Hurricane Florence at Duke Energy Progress.~~2017 Settlement Agreement.

Operating Expenses. The variance was driven primarily by:

a ~~$431~~$56 million ~~increase~~decrease in operation, maintenance and other expense primarily due to prior year impacts associated with the Duke Energy Progress North Carolina rate case, lower outage costs at Duke Energy Progress and lower employee benefit costs at Duke Energy Progress and Duke Energy Florida;

a $51 million decrease in fuel used in electric generation and purchased power primarily due to ~~higher sales, higher~~lower purchased power and lower deferred fuel and capacity ~~expenses,~~expenses; and ~~increased purchased power;~~

a ~~$225~~$29 million decrease in impairment charges primarily due to prior year impacts associated with the Duke Energy Progress North Carolina rate case.

Partially offset by:

a $71 million increase in depreciation and amortization expense primarily due to higher amortization of deferred coal ash costs, ~~and~~ new depreciation rates associated with the prior year Duke Energy Progress North Carolina rate case ~~at Duke Energy Progress,~~ and ~~accelerated depreciation of Crystal River Units 4~~Citrus County CC being placed in service and ~~5 and~~other additional plant in service at Duke Energy Florida;

a $216 million increase in operation, maintenance and other primarily due to impacts associated with the North Carolina rate case at Duke Energy Progress and storm cost amortization at Duke Energy Florida; and

a ~~$13~~$14 million increase in property and other taxes primarily due to higher ~~revenue related taxes.~~

~~Partially offset by:~~

~~a $103 million decrease in impairment charges primarily~~property taxes due to additional plant in service at Duke Energy Florida in the ~~write-off of remaining unrecovered Levy Nuclear Project costs~~current year and a favorable sales and use tax credit in the prior year at Duke Energy Progress.

Interest Expense. The variance was driven primarily by AFUDC debt return ending in the fourth quarter of 2018 on the Citrus County CC at Duke Energy Florida.

102



MD&A	PROGRESS ENERGY

Income Tax Expense. The ~~variance~~increase in tax expense was primarily due to an increase in pretax income and lower AFUDC equity in the ~~lower statutory federal corporate tax rate under the Tax Act.~~current year. The ETRs for the ~~nine~~three months ended ~~September 30,~~March 31, 2019, and 2018 ~~and 2017~~ were ~~17.0~~17.3 percent and ~~31.9~~13.2 percent, respectively. The ~~decrease~~increase in the ETR was primarily due to ~~the~~ lower ~~statutory federal corporate tax rate under the Tax Act~~AFUDC equity and ~~levelization for annual~~ amortization of ~~federal and state~~ excess deferred ~~taxes. For additional information, see Note 17 to~~taxes in the ~~Condensed Consolidated Financial Statements, "Income Taxes."~~current year.

Matters Impacting Future Results

On May 8, 2019, Duke Energy Progress received a Commission Directive from the PSCSC granting its request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Progress intends to file a Petition for Rehearing with the PSCSC. Progress Energy's results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for additional information.

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~~were eligible for reassessment as low risk pursuant to legislation enacted 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. On ~~October 12,~~November 14, 2018, NCDEQ ~~announced~~issued final low-risk classifications for these impoundments, indicating that Duke Energy Progress had satisfied the permanent replacement water supply and certain dam improvement requirements ~~by the October 15, 2018, deadline~~ set out in the Coal Ash Management Act. ~~However,~~On April 1, 2019, NCDEQ ~~has not yet~~ issued ~~final classifications for these impoundments. As the final risk ranking classifications~~a closure determination requiring Duke Energy Progress to excavate all remaining coal ash impoundments in North ~~Carolina are delineated,~~Carolina. On April 26, 2019, Duke Energy Progress filed a Petition for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ's determination that all ash basins must be excavated. Duke Energy Progress intends to seek recovery of all costs through the ratemaking process consistent with previous proceedings. As the 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 results of operations, financial position and cash flows.

In the third quarter of 2018, Hurricane Florence caused historic flooding, extensive damage and widespread power outages within the Duke Energy Progress service territory. Current estimated restoration costs are approximately $420 million of operations and maintenance expense and approximately $75 million in capital costs. Most of the operation and maintenance expenses are deferred as of September 30, 2018. Given the magnitude of the storm, Duke Energy Progress intends to request approval to defer the incremental costs incurred to a regulatory asset for recovery in the next base rate case. The request is expected to be filed during the fourth quarter of 2018. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Progress Energy's financial position, results of operations and cash flows. See Note 34 to the Condensed Consolidated Financial Statements, ~~"Regulatory Matters,~~"Commitments and Contingencies," for additional information.

On October 10, 2018, Hurricane Michael made landfall on Florida's Panhandle as a Category 4 hurricane, the most powerful storm to hit the Florida Panhandle in recorded history. The storm caused significant damage within the service territories of Duke Energy Florida and Duke Energy Progress. Progress Energy has not completed the final accumulation of total estimated storm restoration costs incurred; however, the preliminary estimate is approximately $165 million of operation and maintenance expenses and approximately $175 million of capital costs. Given the magnitude of the storm, Duke Energy Progress intends to request approval to defer the incremental costs incurred to a regulatory asset for recovery in the next base rate case, and Duke Energy Florida will recover these storm costs consistent with the provisions in its 2017 Second Revised and Restated Settlement Agreement. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Progress Energy's financial position, results of operations and cash flows.

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. As noted above, the order issued in the Duke Energy Progress North Carolinas rate case supporting recovery of past coal ash remediation costs has been appealed by various parties. The outcome of these appeals, lawsuits, fines and penalties could have an adverse impact on Progress Energy’s results of operations, financial position and cash flows. See Notes 3 and 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters" and “Commitments and Contingencies,” respectively, for additional information.

~~PART I~~

Duke Energy Carolinas received an order from the NCUC, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. The NCUC did allow Duke Energy Carolinas to petition for deferral of grid modernization costs outside of a general rate case proceeding if it can show financial hardship or a stipulation that includes greater consensus among intervening parties on costs being classified as grid modernization. While Duke Energy Progress did not request recovery of these costs in its most recent case with the NCUC, Duke Energy Progress may request recovery of certain grid modernization costs in future regulatory proceedings. If the NCUC were to rule similarly, Progress Energy's results of operations, financial position and cash flows could be adversely impacted if grid modernization costs are not ultimately approved for recovery and/or deferral treatment. ~~See Note 3 to~~

During the ~~Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.~~

~~On June 30, 2017, CertainTeed filed a declaratory judgment action against~~last half of 2018, Duke Energy Progress and Duke Energy Florida’s service territories were impacted by several named storms. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages to the service territory of Duke Energy Progress. Duke Energy Florida’s service territory was also impacted by Hurricane Michael, a Category 5 hurricane and the most powerful storm to hit the Florida Panhandle in recorded history. A significant portion of the ~~North Carolina Business Court relating~~incremental operation and maintenance expenses related to ~~a gypsum supply agreement. In its complaint, CertainTeed sought an order from the court declaring that the minimum amount of gypsum~~these storms have been deferred. On December 21, 2018, Duke Energy Progress ~~must provide~~filed with the NCUC a petition for approval to ~~CertainTeed under~~defer the ~~supply agreement is 50,000 tons per month through 2029. The trial~~incremental storm costs incurred to a regulatory asset for ~~this matter concluded on July 16, 2018. On August 29, 2018,~~recovery in the ~~court issued an order and opinion finding that~~next base rate case. Duke Energy Progress ~~is required to supply 50,000 tons~~filed a similar request with the PSCSC on January 11, 2019, which also included a request for the continuation of ~~gypsum per month, but that CertainTeed's sole remedy~~prior deferrals requested for other storms, and on January 30, 2019, the PSCSC issued a directive approving the deferral request. Duke Energy ~~Progress' long-term discontinuance under~~Florida anticipates filed a petition on April 30, 2019, with the ~~agreement is liquidated damages. The estimated maximum amount that would be owed under~~FPSC to recover incremental storm costs consistent with the ~~liquidated damages provision is approximately $90 million. Both CertainTeed~~provisions in its 2017 Settlement. An order from regulatory authorities disallowing the deferral and ~~Duke Energy Progress have filed cross-appeals. The outcome~~future recovery of ~~the cross-appeals~~storm restoration costs could have an adverse impact on Progress Energy's results of operations, financial position and cash flows. See Note 4 to the Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for additional information.

Duke Energy Florida is constructing the 1,640-MW combined-cycle natural gas plant in Citrus County, Florida, and expects it to be commercially available in 2018. Actual costs are expected to exceed estimated costs by an immaterial amount after recoveries; therefore, an impairment is not expected. Failure to complete the construction and achieve commercial operations by the end of 2018 or failure to obtain recoveries from customers or vendors could materially impact Progress Energy's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, ~~“Regulatory~~"Regulatory Matters,”" for additional information.

On February 6, 2018, the FPSC approved a stipulation that would apply tax savings resulting from the Tax Act toward storm costs effective January 2018 in lieu of implementing a storm surcharge. On May 31, 2018, Duke Energy Florida filed for recovery of the storm ~~costs.~~costs relating to Hurricane Irma and Hurricane Nate, as well as the replenishment of Duke Energy Florida's storm reserve. Storm costs are currently expected to be fully recovered by approximately mid-2021. On April 9, 2019, Duke Energy Florida filed an unopposed motion to approve a settlement resolving all outstanding issues related to the May 31, 2018 filing. The commission has scheduled ~~the~~a hearing to begin on May 21, ~~2019.~~2019, to consider this Storm Cost Settlement Agreement. An order disallowing recovery of these costs could have an adverse impact on Progress Energy's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

103



MD&A	DUKE ENERGY PROGRESS

DUKE ENERGY PROGRESS

Results of Operations

Nine Months Ended September 30,
(in millions) 2018
2017
Variance
Operating Revenues $ 4,333
$ 3,878
$ 455
Operating Expenses
Fuel used in electric generation and purchased power 1,452
1,214
238
Operation, maintenance and other 1,187
1,069
118
Depreciation and amortization 723
536
187
Property and other taxes 115
120
(5 )
Impairment charges 33
—
33
Total operating expenses 3,510
2,939
571
Gains on Sales of Other Assets and Other, net 9
3
6
Operating Income 832
942
(110 )
Other Income and Expenses, net 61
84
(23 )
Interest Expense 241
217
24
Income Before Income Taxes 652
809
(157 )
Income Tax Expense 120
262
(142 )
Net Income $ 532
$ 547
$ (15 )

~~PART I~~



	Three Months Ended March 31,
(in millions)	2019		2018		Variance
Operating Revenues	$	1,484	$	1,460	$	24
Operating Expenses
Fuel used in electric generation and purchased power	515		509		6
Operation, maintenance and other	335		381		(46		)
Depreciation and amortization	290		235		55
Property and other taxes	44		35		9
Impairment charges	—		32		(32		)
Total operating expenses	1,184		1,192		(8		)
Gains on Sales of Other Assets and Other, net	—		1		(1		)
Operating Income	300		269		31
Other Income and Expenses, net	24		18		6
Interest Expense	77		81		(4		)
Income Before Income Taxes	247		206		41
Income Tax Expense	44		29		15
Net Income	$	203	$	177	$	26



Increase (Decrease) over prior period	~~2018~~2019
Residential sales	~~10.1~~(10.9	)%
General service sales	~~2.1~~(5.2	)%
Industrial sales	~~0.7~~2.6	%
Wholesale power sales	~~7.2~~(9.7	)%
Joint dispatch sales	~~2.9~~10.6	%
Total sales	~~5.4~~(5.1	)%
Average number of customers	~~1.6~~1.3	%

~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019, as compared to March 31, 2018 ~~as Compared to September 30, 2017~~

Operating Revenues. The variance was driven primarily by:

a ~~$268 million increase in fuel related revenues due to higher retail sales and changes in generation mix;~~

~~a $79~~$54 million increase in pricing ~~due to the~~from impacts of the prior year North Carolina ~~and South Carolina~~ rate ~~cases;~~case; and

a ~~$73 million increase in wholesale power revenues, net of fuel, primarily due to recovery of coal ash costs and higher peak demand;~~

~~a $72 million increase in retail sales due to favorable weather conditions;~~

~~a $52~~$15 million increase in JAAR revenues in conjunction with implementation of new base ~~rates; and~~

~~a $37 million increase in weather normalized volumes.~~rates.

Partially offset by:

a ~~$98~~$19 million decrease in retail sales, net of fuel revenues, due to ~~revenues subject to refund to customers associated with~~unfavorable weather in the ~~lower statutory federal corporate tax rate under the Tax Act;~~current year;

a ~~$25~~$16 million decrease in ~~certain rider~~wholesale power revenues, ~~in conjunction with implementation~~net of ~~new base rates;~~fuel revenues, primarily due to lower peak demand; and

a ~~$10~~$14 million decrease in ~~revenues due to the impacts of Hurricane Florence.~~weather–normal retail sales volumes.

Operating Expenses. The variance was driven primarily by:

a ~~$238~~$46 million ~~increase~~decrease in ~~fuel used in electric generation~~operation, maintenance and ~~purchased power~~other expense primarily due ~~higher retail sales~~to prior year impacts associated with the North Carolina rate case and ~~changes in generation mix;~~lower employee benefit and outage costs; and

a ~~$187~~$32 million decrease in impairment charges due to prior year impacts associated with the North Carolina rate case.

Partially offset by:

a $55 million increase in depreciation and amortization expense primarily due to higher amortization of deferred coal ash costs and new depreciation rates ~~per~~associated with the prior year North Carolina rate case; and

a ~~$118~~$9 million increase in ~~operation, maintenance~~property and other ~~expense~~taxes primarily due to ~~higher storm contingency costs, impacts associated with~~a favorable sales and use tax credit in the ~~North Carolina rate case and higher operational costs that are recoverable in rates; and~~prior year.

~~a $33 million increase in impairment charges associated with the North Carolina rate case.~~

~~Other Income and Expenses.~~ The variance was primarily driven by lower income from non-service components of employment benefit costs. For additional information on employee benefit costs, see Note 16 to the Condensed Consolidated Financial Statements, "Employee Benefit Plans."

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MD&A	DUKE ENERGY PROGRESS

Income Tax Expense. The ~~variance~~increase in tax expense was primarily due to ~~the lower statutory federal corporate tax rate under the Tax Act~~.an increase in pretax income. The ETRs for the ~~nine~~three months ended ~~September 30,~~March 31, 2019, and 2018 ~~and 2017~~ were ~~18.4~~17.8 percent and ~~32.4~~14.1 percent, respectively. The ~~decrease~~increase in the ETR was primarily due to ~~the~~ lower ~~statutory federal corporate tax rate under the Tax Act and the~~ amortization of ~~state~~ excess deferred ~~taxes. For additional information, see~~taxes in the current year.

Matters Impacting Future Results

On May 8, 2019, Duke Energy Progress received a Commission Directive from the PSCSC granting its request for a retail rate increase but denying recovery of certain coal ash costs. Duke Energy Progress intends to file a Petition for Rehearing with the PSCSC. Duke Energy Progress' results of operations, financial position and cash flows could be adversely impacted if coal ash costs are not ultimately approved for recovery. See Note 173 to the Condensed Consolidated Financial Statements, ~~"Income Taxes.~~"Regulatory Matters,"

~~PART I~~

~~Matters Impacting Future Results~~ 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~~were eligible for reassessment as low risk pursuant to legislation enacted 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. On ~~October 12,~~November 14, 2018, NCDEQ ~~announced~~issued final low-risk classifications for these impoundments, indicating that Duke Energy Progress had satisfied the permanent replacement water supply and certain dam improvement requirements ~~by the October 15, 2018, deadline~~ set out in the Coal Ash Management Act. ~~However,~~On April 1, 2019, NCDEQ ~~has not yet~~ issued ~~final classifications for these impoundments. As the final risk ranking classifications~~a closure determination requiring Duke Energy Progress to excavate all remaining coal ash impoundments in North ~~Carolina are delineated,~~Carolina. On April 26, 2019, Duke Energy Progress filed a Petition for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ's determination that all ash basins must be excavated. Duke Energy Progress intends to seek recovery of all costs through the ratemaking process consistent with previous proceedings. As the 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' results of operations, financial position and cash flows.

In the third quarter of 2018, Hurricane Florence caused historic flooding, extensive damage and widespread power outages within the Duke Energy Progress service territory. Current estimated restoration costs are approximately $420 million of operations and maintenance expense and approximately $75 million in capital costs. Most of the operation and maintenance expenses are deferred as of September 30, 2018. Given the magnitude of the storm, Duke Energy Progress intends to request approval to defer the incremental costs incurred to a regulatory asset for recovery in the next base rate case. The request is expected to be filed during the fourth quarter of 2018. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Duke Energy Progress' financial position, results of operations and cash flows. See Note 34 to the Condensed Consolidated Financial Statements, ~~"Regulatory Matters,~~"Commitments and Contingencies," for additional information.

On October 10, 2018, Hurricane Michael made landfall on Florida's Panhandle as a Category 4 hurricane, the most powerful storm to hit the Florida Panhandle in recorded history. The storm caused damage within the service territory of Duke Energy Progress. Duke Energy Progress has not completed the final accumulation of total estimated storm restoration costs incurred; however, the preliminary estimate is approximately $25 million of operation and maintenance expenses. Given the magnitude of the storm, Duke Energy Progress intends to request approval to defer the incremental costs incurred to a regulatory asset for recovery in the next base rate case. An order from regulatory authorities disallowing the deferral and future recovery of storm restoration costs could have an adverse impact on Duke Energy Progress' financial position, results of operations and cash flows.

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. As noted above, the order issued in the Duke Energy Progress North Carolinas rate case supporting recovery of past coal ash remediation costs has been appealed by various parties. The outcome of these appeals, lawsuits, fines and penalties could have an adverse impact on Duke Energy Progress’ results of operations, financial position and cash flows. See Notes 3 and 4 to the Condensed Consolidated Financial Statements, "Regulatory Matters" and “Commitments and Contingencies,” respectively, for additional information.

Duke Energy Carolinas received an order from the NCUC, which denied the Grid Rider Stipulation and deferral treatment of grid improvement costs. The NCUC did allow Duke Energy Carolinas to petition for deferral of grid modernization costs outside of a general rate case proceeding if it can show financial hardship or a stipulation that includes greater consensus among intervening parties on costs being classified as grid modernization. While Duke Energy Progress did not request recovery of these costs in its most recent case with the NCUC, Duke Energy Progress may request recovery of certain grid modernization costs in future regulatory proceedings. If the NCUC were to rule similarly, Duke Energy Progress' results of operations, financial position and cash flows could be adversely impacted if grid modernization costs are not ultimately approved for recovery and/or deferral treatment. ~~See Note 3~~

During the last half of 2018, Duke Energy Progress' service territory was impacted by several named storms. Hurricane Florence, Hurricane Michael and Winter Storm Diego caused flooding, extensive damage and widespread power outages in the service territory. A significant portion of the incremental operation and maintenance expenses related to ~~the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.~~

these storms have been deferred. On ~~June 30, 2017, CertainTeed filed a declaratory judgment action against~~December 21, 2018, Duke Energy Progress filed with the NCUC a petition for approval to defer the incremental storm costs incurred to a regulatory asset for recovery in the ~~North Carolina Business Court relating to a gypsum supply agreement. In its complaint, CertainTeed sought an order from the court declaring that the minimum amount of gypsum~~next base rate case. Duke Energy Progress ~~must provide to CertainTeed under~~filed a similar request with the ~~supply agreement is 50,000 tons per month through 2029. The trial~~PSCSC on January 11, 2019, which also included a request for ~~this matter concluded~~the continuation of prior deferrals requested for other storms, and on ~~July 16, 2018. On August 29, 2018,~~January 30, 2019, the ~~court~~PSCSC issued ana directive approving the deferral request. An order from regulatory authorities disallowing the deferral and ~~opinion finding that Duke Energy Progress is required to supply 50,000 tons~~future recovery of gypsum per month, but that CertainTeed's sole remedy for Duke Energy Progress' long-term discontinuance under the agreement is liquidated damages. The estimated maximum amount that would be owed under the liquidated damages provision is approximately $90 million. Both CertainTeed and Duke Energy Progress have filed cross-appeals. The outcome of the cross-appealsstorm restoration costs could have an adverse impact on Duke ~~Energy's Progress~~Energy Progress' results of operations, financial position and cash flows. See Note 43 to the Condensed Consolidated Financial Statements, ~~“Commitments and Contingencies,”~~"Regulatory Matters," for additional information.

105

~~PART I~~



MD&A	DUKE ENERGY FLORIDA

DUKE ENERGY FLORIDA

Results of Operations


	Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2018		2017		Variance			2019		2018		Variance
Operating Revenues	$	3,780	$	3,551	$	229		$	1,086	$	1,115	$	(29	)
Operating Expenses
Fuel used in electric generation and purchased power	1,567		1,374		193			410		467		(57		)
Operation, maintenance and other	719		623		96			230		237		(7		)
Depreciation and amortization	460		423		37			165		150		15
Property and other taxes	284		265		19			93		88		5
Impairment charges	1		137		(136		)
Total operating expenses	3,031		2,822		209			898		942		(44		)
Operating Income	749		729		20			188		173		15
Other Income and Expenses, net	75		58		17			13		21		(8		)
Interest Expense	210		211		(1		)	82		71		11
Income Before Income Taxes	614		576		38			119		123		(4		)
Income Tax Expense	100		208		(108		)	23		20		3
Net Income	$	514	$	368	$	146		$	96	$	103	$	(7	)

The following table shows the percent changes in GWh sales and average number of customers. The percentages for retail customer classes represent billed sales only. 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	~~2018~~2019
Residential sales	~~2.7~~(6.9	)%
General service sales	~~1.1~~(4.9	)%
Industrial sales	~~0.2~~(10.7	)%
Wholesale and other	~~4.4~~(33.0	)%
Total sales	~~2.0~~(8.8	)%
Average number of customers	~~1.6~~1.7	%

~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019, as compared to March 31, 2018 ~~as Compared to September 30, 2017~~

Operating Revenues. The variance was driven primarily by:

a ~~$199~~$51 million ~~increase~~decrease in fuel and capacity revenues primarily due to ~~an increase~~a decrease in demand and a decrease in fuel and capacity rates billed to retail ~~customers, as well as increased demand; and~~customers;

a ~~$31~~$17 million ~~increase~~decrease in retail sales, net of fuel revenues, due to ~~favorable~~unfavorable weather in the current ~~year~~year; and ~~impacts of lost~~

a $12 million decrease in retail rider revenues primarily related to decreased revenue ~~resulting from Hurricane Irma~~requirements in the ~~prior~~current year.

Partially offset by:

a $57 million increase in retail pricing due to base rate adjustments related to the Citrus County CC being placed in service and annual increases from the 2017 Settlement Agreement.

Operating Expenses. The variance was driven primarily by:

a ~~$193~~$57 million ~~increase~~decrease in fuel used in electric generation and purchased power primarily due to ~~higher~~lower purchased power and lower deferred fuel and capacity ~~expenses, increased purchased power~~expenses; and ~~increased demand;~~

a ~~$96~~$7 million ~~increase~~decrease in operations, maintenance and other expense primarily due to ~~storm cost amortizations, partially~~lower employee benefit costs.

Partially offset ~~by lower storm restoration costs in the current year;~~by:

a ~~$37~~$15 million increase in depreciation and amortization expense primarily due to ~~accelerated depreciation of Crystal River Units 4 and 5~~the Citrus County CC being placed in service and additional plant in ~~service, partially offset by decreased ARO depreciation due to the updated Crystal River Unit 3 nuclear decommissioning cost study;~~service; and

a ~~$19~~$5 million increase in property and other taxes primarily due to higher ~~revenue related taxes.~~

~~Partially offset by:~~

~~a $136 million decrease in impairment charges primarily~~property taxes due to ~~the write-off of remaining unrecovered Levy Nuclear Project costs~~additional plant in ~~the prior year.~~service.

Other Income and ~~Expenses.~~Expenses, net. The variance was driven primarily by ~~higher~~ AFUDC equity return ending on the Citrus County ~~Combined Cycle project~~CC in the ~~current year.~~fourth quarter of 2018.

Interest Expense. The variance was driven primarily by AFUDC debt return ending on the Citrus County CC in the fourth quarter of 2018.

106

~~PART I~~



MD&A	DUKE ENERGY FLORIDA

Income Tax Expense. The ~~variance~~increase in tax expense was primarily due to lower AFUDC equity in the ~~lower statutory federal corporate tax rate under the Tax Act.~~current year. The ETRs for the ~~nine~~three months ended ~~September 30,~~March 31, 2019, and 2018 ~~and 2017~~ were ~~16.3~~19.3 percent and ~~36.1~~16.3 percent, respectively. The ~~decrease~~increase in the ETR was primarily due to lower AFUDC equity in the lower statutory federal corporate tax rate under the Tax Act and the amortization of federal excess deferred taxes. For additional information, see Note 17 to the Condensed Consolidated Financial Statements, "Income Taxes."current year.

Matters Impacting Future Results

On October 10, 2018, Hurricane Michael made landfall on Florida's Panhandle as a Category 5 hurricane, the most powerful storm to hit the Florida Panhandle in recorded history. The storm caused significant damage within the service territory of Duke Energy Florida, ~~is constructing the 1,640-MW combined-cycle natural gas plant in Citrus County, Florida, and expects it~~particularly from Panama City Beach to be commercially available in 2018. Actual costs are expected to exceed estimated costs by an immaterial amount after recoveries; therefore, an impairment is not expected. Failure to complete the construction and achieve commercial operations by the end of 2018 or failure to obtain recoveries from customers or vendors could materially impactMexico Beach. Duke Energy ~~Florida’s~~Florida has not completed the final accumulation of total estimated storm restoration costs incurred. Given the magnitude of the storm, Duke Energy Florida filed a petition on April 30, 2019, with the FPSC to recover incremental storm costs consistent with the provisions in its 2017 Settlement. An order from regulatory authorities disallowing the future recovery of storm restoration costs could have an adverse impact on Duke Energy Florida's financial position, results of operations ~~financial position~~ and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

On February 6, 2018, the FPSC approved a stipulation that would apply tax savings resulting from the Tax Act toward storm costs effective January 2018 in lieu of implementing a storm surcharge. On May 31, 2018, Duke Energy Florida filed for recovery of the storm ~~costs.~~costs relating to Hurricane Irma and Hurricane Nate, as well as the replenishment of Duke Energy Florida's storm reserve. Storm costs are currently expected to be fully recovered by approximately mid-2021. On April 9, 2019, Duke Energy Florida filed an unopposed motion to approve a settlement resolving all outstanding issues related to the May 31, 2018 filing. The commission has scheduled ~~the~~a hearing to begin on May 21, ~~2019.~~2019, to consider this Storm Cost Settlement Agreement. An order disallowing recovery of these costs could have an adverse impact on Duke Energy Florida's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

On October 10, 2018, Hurricane Michael made landfall on Florida's Panhandle as a Category 4 hurricane, the most powerful storm to hit the Florida Panhandle in recorded history. The storm caused significant damage within the service territory of Duke Energy Florida. Duke Energy Florida has not completed the final accumulation of total estimated storm restoration costs incurred; however, the preliminary estimate is approximately $140 million of operation and maintenance expenses and approximately $175 million in capital costs. Given the magnitude of the storm, Duke Energy Florida will recover these storm costs consistent with the provisions in its 2017 Second Revised and Restated Settlement Agreement. An order from regulatory authorities disallowing the future recovery of storm restoration costs could have an adverse impact on Duke Energy Florida's financial position, results of operations and cash flows.

DUKE ENERGY OHIO

Results of Operations


	Nine Months Ended September 30,									Three Months Ended March 31,
(in millions)	2018			2017			Variance			2019		2018			Variance
Operating Revenues
Regulated electric	$	1,055		$	1,036		$	19		$	355	$	336		$	19
Regulated natural gas	361			360			1			176		174			2
Nonregulated electric and other	36			30			6			—		14			(14		)
Total operating revenues	1,452			1,426			26			531		524			7
Operating Expenses
Fuel used in electric generation and purchased power – regulated	284			283			1			93		92			1
Fuel used in electric generation and purchased power – nonregulated	43			42			1			—		15			(15		)
Cost of natural gas	73			69			4			54		54			—
Operation, maintenance and other	337			388			(51		)	132		131			1
Depreciation and amortization	196			193			3			64		70			(6		)
Property and other taxes	218			204			14			84		77			7
Impairment charges	—			1			(1		)
Total operating expenses	1,151			1,180			(29		)	427		439			(12		)
(Losses) Gains on Sales of Other Assets and Other, net	(106		)	1			(107		)
Operating Income	195			247			(52		)
Losses on Sales of Other Assets and Other, net										—		(106		)	106
Operating Income (Loss)										104		(21		)	125
Other Income and Expenses, net	17			15			2			9		6			3
Interest Expense	68			67			1			30		22			8
Income From Continuing Operations Before Income Taxes	144			195			(51		)
Income Tax Expense From Continuing Operations	23			67			(44		)
Income From Continuing Operations	121			128			(7		)
Loss From Discontinued Operations, net of tax	—			(1		)	1
Net Income	$	121		$	127		$	(6	)
Income (Loss) Before Income Taxes										83		(37		)	120
Income Tax Expense (Benefit)										14		(12		)	26
Net Income (Loss)										$	69	$	(25	)	$	94

107

~~PART I~~



MD&A	DUKE ENERGY OHIO

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		Electric		Natural Gas
Increase (Decrease) over prior year	2018		2018		2019		2019
Residential sales	13.4	%	28.6	%	(1.6	)%	4.5	%
General service sales	3.6	%	24.7	%	(1.9	)%	5.5	%
Industrial sales	(1.0	)%	9.6	%	0.5	%	0.8	%
Wholesale electric power sales	(58.3	)%	n/a		42.0	%	n/a
Other natural gas sales	n/a		0.3	%	n/a		—	%
Total sales	3.0	%	17.3	%	1.5	%	3.8	%
Average number of customers	0.8	%	0.8	%	0.7	%	0.8	%

~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019, as compared to March 31, 2018 ~~as Compared to September 30, 2017~~

Operating Revenues. The variance was driven primarily by:

a ~~$39~~$19 million increase in ~~electric and natural gas retail sales, net~~base price as a result of ~~fuel revenues, due to favorable weather in the current year;~~

~~a $16 million increase in financial transmission rights revenues;~~rate case impacts;

a $5 million increase in ~~other revenues related to OVEC;~~

~~a $5 million increase in fuel revenues due to higher natural gas costs;~~weather-normal sales volumes; and

a $4 million increase in ~~rider revenue primarily due to increased rates.~~point-to-point transmission revenues.

Partially offset by:

a ~~$38~~$9 million decrease in ~~regulated~~rider revenues ~~due~~related to ~~revenues subject to refund to customers associated with~~ the ~~lower statutory federal corporate tax rate under the Tax Act; and~~implementation of new base rates;

•a $5$9 million decrease in ~~bulk power marketing sales.~~FTR revenues; and

a $3 million decrease in OVEC revenues.

Operating Expenses. The variance was driven primarily by:

a ~~$51~~$14 million decrease in ~~operations, maintenance~~fuel used in electric generation and ~~other~~purchased power expense due to prior year's outage at East Bend Station and the deferral of OVEC related purchased power costs; and

a $6 million decrease in depreciation and amortization expense primarily due to the ~~FERC approved settlement refund~~ending of ~~certain transmission costs previously billed by PJM.~~smart grid amortizations.

Partially offset by:

•a ~~$14~~$7 million increase in property and other taxes primarily due to higher property ~~taxes due to higher plant balances; and~~

•~~a $6 million increase in fuel costs primarily due to increased natural gas sales volumes.~~tax expense.

Other Income and ~~Expenses.~~Expenses, net. The variance was driven primarily by an increase in ~~AFUDC equity due to higher base spending for transmission and fossil plants and an increase due to the impairment of meters in 2017.~~intercompany money pool interest income.

~~Gains (Losses)~~Losses on Sales of Other Assets and Other, net. The ~~decrease~~increase was driven by the loss on the prior year sale of ~~Beckjord, a nonregulated facility retired during 2014, including~~Beckjord.

Interest Expense. The variance was driven primarily by higher debt outstanding in the ~~transfer of coal ash basins and other real property and indemnification from any and all potential future claims related to the property, whether arising under environmental laws or otherwise.~~current year.

Income Tax Expense. The ~~variance~~increase in tax expense was primarily due to ~~a decrease~~an increase in pretax ~~income and the lower statutory federal corporate tax rate under the Tax Act.~~income. The ETRs for the ~~nine~~three months ended ~~September 30,~~March 31, 2019, and 2018 ~~and 2017~~ were ~~16.0~~16.9 percent and ~~34.4~~32.4 percent, respectively. The decrease in the ETR was primarily due to the ~~lower statutory federal corporate tax rate under the Tax Act and the~~ amortization of ~~federal~~ excess deferred taxes. ~~For additional information, see Note 17 to the Condensed Consolidated Financial Statements, "Income Taxes."~~

Matters Impacting Future Results

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. On March 31, 2018, FES, a subsidiary of FirstEnergy and an ICPA counterparty with a power participation ratio of 4.85 percent, filed for Chapter 11 bankruptcy, which could increase costs allocated to the counterparties. On July 31, 2018, the bankruptcy court rejected the FES ICPA, which means OVEC is an unsecured creditor in the FES bankruptcy proceeding. Duke Energy Ohio cannot predict the impact of the bankruptcy filing on its OVEC interests. In addition, certain proposed environmental rulemaking costs could result in future increased OVEC cost allocations.

~~PART I~~

In March 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. On April 13, 2018, Duke Energy Ohio filed a Stipulation with the PUCO to resolve issues in the electric distribution base rate case and other regulatory matters. If approved by PUCO, the Stipulation would allow for Duke Energy Ohio to recover gains and losses incurred on and after January 1, 2018, related to OVEC, through the Price Stabilization Rider. Hearings concluded on August 6, 2018. Initial briefs were filed on September 11, 2018, and reply briefs on October 2, 2018. Duke Energy Ohio's results of operations, financial position and cash flows could be adversely impacted if the Stipulation is denied by the PUCO. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

108



MD&A	DUKE ENERGY INDIANA

DUKE ENERGY INDIANA

Results of Operations


	Nine Months Ended September 30,							Three Months Ended March 31,
(in millions)	2018		2017		Variance			2019			2018		Variance
Operating Revenues	$	2,288	$	2,302	$	(14	)	$	768		$	731	$	37
Operating Expenses
Fuel used in electric generation and purchased power	730		744		(14		)	257			232		25
Operation, maintenance and other	576		546		30			189			181		8
Depreciation and amortization	386		336		50			131			130		1
Property and other taxes	56		56		—			19			20		(1		)
Impairment charges	30		—		30
Total operating expenses	1,778		1,682		96			596			563		33
Gains on Sales of Other Assets and Other, net	—		1		(1		)
Losses on Sales of Other Assets and Other, net								(3		)	—		(3		)
Operating Income	510		621		(111		)	169			168		1
Other Income and Expenses, net	36		32		4			19			7		12
Interest Expense	125		132		(7		)	43			40		3
Income Before Income Taxes	421		521		(100		)	145			135		10
Income Tax Expense	104		203		(99		)	35			35		—
Net Income	$	317	$	318	$	(1	)	$	110		$	100	$	10



Increase (Decrease) over prior year	~~2018~~2019
Residential sales	~~14.0~~(1.3	)%
General service sales	~~3.1~~0.3	%
Industrial sales	~~0.4~~0.2	%
Wholesale power sales	(~~0.9~~38.2	)%
Total sales	~~3.7~~(5.3	)%
Average number of customers	~~1.2~~1.4	%

~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019, as compared to March 31, 2018 ~~as Compared to September 30, 2017~~

Operating Revenues. The variance was driven primarily by:

~~an $83~~a $23 million ~~decrease due to~~increase in fuel revenues ~~subject to refund to customers associated with the lower statutory federal corporate tax rate under the Tax Act; and~~

~~a $22 million decrease in wholesale power revenues, net of fuel,~~ primarily due to ~~contracts that expired in~~higher fuel rates billed to customers, partially offset by lower wholesale fuel revenues due to the ~~prior year.~~

~~PART I~~

~~Partially offset by:~~expiration of a contract with a wholesale customer; and

a ~~$53~~$19 million increase in rate rider revenues primarily related to higher rates for the Edwardsport ~~Integrated Gasification Combined Cycle (IGCC)~~IGCC plant, the TDSIC rider and ~~the Transmission, Distribution and Storage System Improvement Charge rider;~~

~~a $24 million increase in electric sales to retail customers due to favorable weather in the current year;~~

~~a $7 million increase in weather-normal sales volumes to retail customers in the current year; and~~

~~a $6 million increase in fuel and other revenues primarily due to higher Midcontinent Independent System Operator~~MISO rider ~~revenue, partially offset by a decrease in retail and wholesale fuel~~ revenues.

Operating Expenses. The variance was driven primarily by:

a ~~$50~~$25 million increase in ~~depreciation~~fuel used in electric generation and ~~amortization~~purchased power expense primarily due to ~~additional plant in service~~higher amortization of deferred fuel costs; and ~~the deferral of certain asset retirement obligations in the prior year;~~

~~a $30~~an $8 million increase in operation, maintenance and other expense primarily due to higher ~~amortizations of previously deferred expenses, higher~~ transmission costs and customer related ~~costs; and~~

~~a $30 million increase in impairment charges primarily due~~costs related to ~~the reduction of a regulatory asset pertaining to the Edwardsport IGCC settlement agreement.~~

~~Partially offset by:~~

a $14 million decrease in fuel used in electric generation and purchased power primarily due to the net benefit to expense of lower purchased power and an increase in internal generation, and lower fuel prices.energy efficiency programs.

Other Income and ~~Expenses.~~Expenses, net. The increase was primarily due to ~~higher AFUDC equity resulting from recognition of the equity portion of rider specific post-in-service carrying costs under the tax settlement approved by the IURC.~~life insurance proceeds.

~~Income Tax Expense.~~ The variance was primarily due to the lower statutory federal corporate tax rate under the Tax Act. The ETRs for the nine months ended September 30, 2018, and 2017 were 24.7 percent and 39.0 percent, respectively. The decrease in the ETR was primarily due to the lower statutory federal corporate tax rate under the Tax Act. For additional information, see Note 17 to the Condensed Consolidated Financial Statements, "Income Taxes."

109



MD&A	DUKE ENERGY INDIANA

Matters Impacting Future Results

On April 17, 2015, the ~~U.S. Environmental Protection Agency (EPA)~~EPA published in the Federal Register a rule to regulate the disposal of ~~Coal Combustion Residuals (CCR)~~CCR from electric utilities as solid waste. Duke Energy Indiana has interpreted the rule to identify the coal ash basin sites impacted and has assessed the amounts of coal ash subject to the rule and a method of compliance. Duke Energy Indiana's interpretation of the requirements of the CCR rule is subject to potential legal challenges and further regulatory approvals, which could result in additional ash basin closure requirements, higher costs of compliance and greater AROs. Additionally, Duke Energy Indiana has retired facilities that are not subject to the CCR rule. Duke Energy Indiana may incur costs at these facilities to comply with environmental regulations or to mitigate risks associated with on-site storage of coal ash. An order from regulatory authorities disallowing recovery of costs related to closure of ash basins could have an adverse impact on Duke Energy Indiana's results of operations, financial position and cash flows. See Note 3 to the Condensed Consolidated Financial Statements, “Regulatory Matters,” for additional information.

~~PART I~~

PIEDMONT

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,~~March 31, 2019, and 2018 ~~and 2017~~ and the Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2017.~~2018.

Results of Operations


	Nine Months Ended September 30,								Three Months Ended March 31,
(in millions)	2018		2017			Variance			2019		2018		Variance
Operating Revenues	$	940	$	884		$	56		$	579	$	553	$	26
Operating Expenses
Cost of natural gas	387		333			54			273		259		14
Operation, maintenance and other	252		226			26			80		82		(2		)
Depreciation and amortization	118		109			9			42		39		3
Property and other taxes	36		38			(2		)	12		12		—
Impairment charges	—		7			(7		)
Total operating expenses	793		713			80			407		392		15
Operating Income	147		171			(24		)	172		161		11
Other Income and Expenses
Equity in earnings of unconsolidated affiliates	6		8			(2		)	2		2		—
Other income and expenses, net	9		(1		)	10			4		3		1
Total other income and expenses	15		7			8			6		5		1
Interest Expense	60		59			1			22		21		1
Income Before Income Taxes	102		119			(17		)	156		145		11
Income Tax Expense	21		43			(22		)	34		35		(1		)
Net Income	$	81	$	76		$	5		$	122	$	110	$	12

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	~~2018~~2019
Residential deliveries	~~34.2~~(6.7	)%
Commercial deliveries	~~20.1~~(5.5	)%
Industrial deliveries	~~3.3~~4.2	%
Power generation deliveries	~~25.9~~(1.8	)%
For resale	~~21.8~~3.3	%
Total throughput deliveries	~~21.6~~(2.1	)%
Secondary market volumes	~~(9.8~~13.2	)%
Average number of customers	~~1.5~~1.2	%

Due to the margin decoupling mechanism in North Carolina and ~~weather normalization adjustment (WNA)~~WNA mechanisms in South Carolina and Tennessee, changes in throughput deliveries do not have a material impact on Piedmont's revenues or earnings. The margin decoupling mechanism adjusts for variations in residential and commercial use per customer, including those due to weather and conservation. The WNA mechanisms mostly offset the impact of weather on bills rendered, but do not ensure precise recovery of approved margin during periods when winter weather is significantly warmer or colder than normal.

~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019, as compared to March 31, 2018 ~~as Compared to September 30, 2017~~

Operating Revenues. The variance was driven primarily by:

a ~~$54~~$14 million increase primarily due to higher natural gas ~~costs passed through to customers due to higher retail volumes sold and higher natural gas prices; and~~prices associated with off-system sales;

a ~~$37~~$7 million increase primarily due to ~~residential~~NCUC approval related to tax reform accounting from fixed rate contracts;

110



MD&A	PIEDMONT

a $5 million increase primarily due to North Carolina and ~~commercial customer revenue, net of natural gas costs passed through to customers,~~Tennessee IMR increases; and

a $4 million increase primarily due to customer ~~growth and IMR rate adjustments; and new power generation customers.~~growth.

Partially offset by:

a ~~$34~~$5 million decrease due to ~~revenues subject to refund to customers associated with the lower statutory federal corporate tax rate under the Tax Act.~~

~~PART I~~

a reduction of rates in South Carolina.

Operating Expenses. The variance was primarily driven by:

a ~~$54~~$14 million increase in cost of natural gas primarily due to ~~higher retail volumes sold and~~the impact of higher natural gas ~~prices;~~

~~a $26 million increase in operation, maintenance~~prices on off-system sales and ~~other primarily due to increased shared services, costs to achieve merger expenses and natural gas operations; and~~

~~a $9 million increase in depreciation and amortization due to additional plant in service.~~

~~Partially offset by:~~

~~a $7 million decrease due to an impairment of software recorded in the prior year.~~

~~Other Income and Expense~~.The increase was primarily due to higher income from non-service components of employee benefit costs in the current year. For additional information on employee benefit costs, see Note 16 to the Condensed Consolidated Financial Statements, "Employee Benefit Plans."

~~Income Tax Expense.~~ The variance was primarily due to the lower statutory federal corporate tax rate under the Tax Act. The ETRs for the nine months ended September 30, 2018, and 2017 were 20.6 percent and 36.1 percent, respectively. The decrease in the ETR was primarily due to the lower statutory federal corporate tax rate under the Tax Act. For additional information, see Note 17 to the Condensed Consolidated Financial Statements, "Income Taxes."unbilled revenue.

Matters Impacting Future Results

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/A~~10-K for the year ended December 31, ~~2017,~~2018, for a summary and detailed discussion of projected primary sources and uses of cash for 2019 to 2021. There have been no material changes to Duke Energy's liquidity and capital requirements from December 31, 2018, ~~to 2020.~~except as noted below:

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

Duke Energy issued $2 billion of debt and ~~certain of its other subsidiaries in a money pool arrangement. The companies with short-term funds may provide short-term loans to affiliates participating~~drew $650 million under ~~this arrangement.~~

the Duke Energy ~~and~~Progress Term Loan Facility during the Subsidiary Registrants, excluding Progress 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 of the year due to the timing of long-term debt financings and the impact of fluctuations in cash flows from operations. From time to time, Duke Energy’s current liabilities may exceed current assets resulting from the use of short-term debt as a funding source to meet scheduled maturities of long-term debt, as well as cash needs, which can fluctuate due to the seasonality of its business.

~~Equity Issuance~~

three months ended March 31, 2019. Refer to Note ~~14 to the CondensedConsolidated Financial Statements, "Common Stock," for further information regarding Duke Energy's equity issuance.~~

~~CREDIT FACILITIES AND REGISTRATION STATEMENTS~~

~~Refer to Note 5~~6 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities," for ~~further~~ information regarding Duke Energy's debt issuances, debt maturities and available credit facilities including the Master Credit Facility.

~~Shelf Registration~~

In ~~September 2016,~~March 2019, Duke Energy filed a registration statement (Form S-3) with the U.S. Securities and Exchange Commission. Under this Form S-3, which is uncapped, the Duke Energy Registrants, excluding Progress Energy (Parent), may issue debt and other securities in the future at amounts, prices and with terms to be determined at the timeissued preferred stock for net proceeds 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.

~~PART I~~

~~DEBT MATURITIES~~

$974 million. Refer to Note 515 to the CondensedConsolidated Financial Statements, ~~"Debt and Credit Facilities,~~"Stockholders' Equity," 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, and regulatory orders can affect the timing and level of cash flows from operations.Energy's equity issuances.

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 storm restoration costs from Hurricanes Florence and Michael. 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/A for the year ended December 31, 2017, 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, and 70 percent for Piedmont. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements or sublimits thereto. As of September 30, 2018, each of the Duke Energy Registrants was in compliance with all covenants related to their debt agreements. In addition, some credit agreements may allow for acceleration of payments or termination of the agreements due to nonpayment or acceleration of other significant indebtedness of the borrower or some of its subsidiaries. None of the debt or credit agreements contain material adverse change clauses.

~~Credit Ratings~~

Credit ratings are intended to provide credit lenders a framework for comparing the credit quality of securities and are not a recommendation to buy, sell or hold. The Duke Energy Registrants’ credit ratings are dependent on the rating agencies’ assessments of their ability to meet their debt principal and interest obligations when they come due. If, as a result of market conditions or other factors, the Duke Energy Registrants are unable to maintain current balance sheet strength or if earnings and cash flow outlook materially deteriorate, credit ratings could be negatively impacted.

~~Moody’s Investors Service, Inc. (Moody’s), Standard & Poor’s Rating Services and Fitch Ratings, Inc. provide credit ratings for various Duke Energy Registrants.~~

On August 1, 2018, Moody’s revised its ratings outlook for Duke Energy Corporation and Piedmont from negative to stable and for Duke Energy Ohio from positive to stable. Moody’s also revised its ratings as follows: Progress Energy is upgraded from Baa2 to Baa1; Piedmont is downgraded from A2 to A3. On September 6, 2018, Fitch revised its ratings outlook for Duke Energy Corporation from negative to stable.

Cash Flow Information

The following table summarizes Duke Energy’s cash flows.

Nine Months Ended
September 30,
(in millions) 2018
2017
Cash flows provided by (used in):
Operating activities $ 5,667
$ 4,978
Investing activities (7,270 ) (6,331 )
Financing activities 1,547
1,239
Net decrease in cash, cash equivalents and restricted cash (56 ) (114 )
Cash, cash equivalents and restricted cash at beginning of period 505
541
Cash, cash equivalents and restricted cash at end of period $ 449
$ 427

~~PART I~~



	Three Months Ended
	March 31,
(in millions)	2019			2018
Cash flows provided by (used in):
Operating activities	$	1,239		$	1,391
Investing activities	(2,713		)	(2,264		)
Financing activities	1,433			947
Net (decrease) increase in cash, cash equivalents and restricted cash	(41		)	74
Cash, cash equivalents and restricted cash at beginning of period	591			505
Cash, cash equivalents and restricted cash at end of period	$	550		$	579

OPERATING CASH FLOWS

The following table summarizes key components of Duke Energy’s operating cash flows.


	Nine Months Ended									Three Months Ended
	September 30,									March 31,
(in millions)	2018			2017			Variance			2019			2018			Variance
Net income	$	2,190		$	2,361		$	(171	)	$	893		$	622		$	271
Non-cash adjustments to net income	5,206			3,937			1,269			1,301			1,610			(309		)
Contributions to qualified pension plans	(141		)	(8		)	(133		)	—			(141		)	141
Payments for asset retirement obligations	(389		)	(420		)	31			(152		)	(122		)	(30		)
Payment for disposal of other assets	(105		)	—			(105		)	—			(105		)	105
Working capital	(1,094		)	(892		)	(202		)	(803		)	(473		)	(330		)
Net cash provided by operating activities	$	5,667		$	4,978		$	689		$	1,239		$	1,391		$	(152	)

111



MD&A	LIQUIDITY AND CAPITAL RESOURCES

The variance was primarily due to:

a ~~$1,098~~$38 million ~~increase~~decrease in net income after adjustment for non-cash items primarily due to ~~favorable weather and increased pricing and volumes~~decreases in current year non-cash adjustments, partially offset by increases in revenues due to rate increases in the current ~~period.~~year; and

a $330 million increase in cash outflows from working capital primarily due to fluctuations in coal stock inventory and timing of payment of accruals, partially offset by current year decreases in accounts receivable due to higher miscellaneous and trade receivables at December 31, 2018.

Partially offset by:

a ~~$133~~$141 million ~~increase~~decrease in contributions to qualified pension plans; and

a $105 million payment for disposal of ~~Beckjord.~~Beckjord in the prior year.

INVESTING CASH FLOWS

The following table summarizes key components of Duke Energy’s investing cash flows.


	Nine Months Ended									Three Months Ended
	September 30,									March 31,
(in millions)	2018			2017			Variance			2019			2018			Variance
Capital, investment and acquisition expenditures	$	(7,050	)	$	(6,211	)	$	(839	)	$	(2,630	)	$	(2,161	)	$	(469	)
Other investing items	(220		)	(120		)	(100		)	(83		)	(103		)	20
Net cash used in investing activities	$	(7,270	)	$	(6,331	)	$	(939	)	$	(2,713	)	$	(2,264	)	$	(449	)

The variance relates primarily to an increase in capital expenditures due to higher overall investments in ~~regulated generation, natural gas~~the Electric Utilities and ~~commercial renewables.~~Infrastructure and Gas Utilities and Infrastructure segments.

FINANCING CASH FLOWS

The following table summarizes key components of Duke Energy’s financing cash flows.


	Nine Months Ended									Three Months Ended
	September 30,									March 31,
(in millions)	2018			2017			Variance			2019			2018			Variance
Issuances of long-term debt, net	$	1,832		$	3,675		$	(1,843	)	$	1,536		$	753		$	783
Issuances of common stock	834			—			834			13			21			(8		)
Issuances of preferred stock										974			—			974
Notes payable and commercial paper	674			(619		)	1,293			(408		)	791			(1,199		)
Dividends paid	(1,835		)	(1,825		)	(10		)	(649		)	(599		)	(50		)
Other financing items	42			8			34			(33		)	(19		)	(14		)
Net cash provided by financing activities	$	1,547		$	1,239		$	308		$	1,433		$	947		$	486

The variance was primarily due to:

~~an $834~~a $974 million increase in proceeds from the issuance of ~~common~~preferred stock; and

a ~~$1,293~~$783 million increase in proceeds from net issuances of long-term debt primarily due to the timing of issuances and redemptions of long-term debt.

Partially offset by:

a $1,199 million decrease in net proceeds from issuances of notes payable and commercial paper primarily due to ~~increased capital expenditures and~~ the ~~timing~~use of ~~debt and common stock issuances.~~

~~Partially offset by:~~

~~a $1,843 million decrease in~~ proceeds from ~~net issuances of~~the preferred stock issuance and increased long-term debt ~~primarily due~~issuances to ~~prior year financings of $820 million in the Commercial Renewables segment and the timing of issuances and redemptions of long-term debt.~~

~~PART I~~

~~Summary of Significant Debt Issuances~~

~~Refer to Note 5 to the Condensed Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding significant debt issuances.~~pay down outstanding commercial paper.

OTHER MATTERS

Environmental Regulations

The Duke Energy Registrants are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal and other environmental matters. These regulations can be changed from time to time and result in new obligations of the Duke Energy Registrants.

~~The following sections outline various proposed and recently enacted statutes and regulations that may impact the Duke Energy Registrants.~~ Refer to Note 3 to the Condensed Consolidated Financial Statements, "Regulatory Matters," for further information regarding potential plant retirements and regulatory filings related to the Duke Energy Registrants.

Coal ~~Combustion Residuals~~

In April 2015, the EPA published a rule to regulate the disposal of CCR from electric utilities as solid waste. The federal regulation classifies CCR as nonhazardous waste and allows for beneficial use of CCR with some restrictions. The regulation applies to all new and existing landfills, new and existing surface impoundments receiving CCR and existing surface impoundments that are no longer receiving CCR but contain liquid located at stations currently generating electricity (regardless of fuel source). The rule establishes requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring, protection and remedial procedures and other operational and reporting procedures to ensure the safe disposal and management of CCR. Various industry and environmental parties have appealed the EPA's CCR rule in the U.S. Court of Appeals for the District of Columbia (D.C. Circuit Court). On April 18, 2016, the EPA filed a motion with the federal court to settle five issues raised in litigation. On June 14, 2016, the court approved the motion with respect to all of those issues. Duke Energy does not expect a material impact from the settlement or that it will result in additional ARO adjustments. On September 13, 2017, EPA responded to a petition by the Utility Solid Waste Activities Group that the agency would reconsider certain provisions of the final rule, and asked the D.C. Circuit Court to suspend the litigation. The D.C. Circuit Court denied EPA’s petition to suspend the litigation and oral argument was held on November 20, 2017. On August 21, 2018, the D.C. Circuit issued its decision in the CCR rule litigation denying relief for industry petitioners' remaining claims and ruling in favor of environmental petitioners on a number of their challenges, including the regulation of inactive CCR surface impoundments at retired plants and the continued operation of unlined impoundments.

On March 15, 2018, EPA published proposed amendments to the federal CCR rule, including revisions that were required as part of a CCR litigation settlement, as well as changes that the agency considers warranted due to the passage of the Water Infrastructure Improvements for the Nation Act, which provides statutory authority for state and federal permit programs. On July 17, 2018, EPA issued a rule finalizing certain, but not all, elements included in the agency's March 15, 2018, proposal. The final rule revises certain closure deadlines and groundwater protection standards in the CCR rule. It does not change the primary requirements for groundwater monitoring, corrective action, inspections and maintenance, and closure, and thus does not materially affect Duke Energy’s coal ash basin closure plans or compliance obligations under the CCR rule.

In addition to the requirements of the federal CCR regulation, CCR landfills and surface impoundments will continue to be independently regulated by most states. Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions and via wholesale contracts, which permit recovery of necessary and prudently incurred costs associated with Duke Energy’s regulated operations. For more information, see Note 9, “Asset Retirement Obligations,” in Duke Energy’s Annual Report on Form 10-K/A for the year ended December 31, 2017.

~~Coal~~ Ash Management Act of 2014

~~Asset retirement obligations~~On March 26, 2019, NCDEQ granted Duke Energy’s application in part, extending by four months until December 1, 2019, the Coal Ash Act’s closure deadline applicable to the Sutton plant impoundments.

112



MD&A	OTHER MATTERS

AROs recorded on the Duke Energy Carolinas and Duke Energy Progress Condensed Consolidated Balance Sheets at ~~September 30, 2018,~~March 31, 2019, and December 31, ~~2017,~~2018, include the legal obligation for closure of coal ash basins and the disposal of related ash as a result of the Coal Ash Act, the EPA CCR rule and other agreements. The Coal Ash Act requires Duke Energy to undertake dam improvement projects and to provide access to a permanent alternative drinking water source to certain residents within a half-mile of coal ash basin compliance boundaries and to certain other potentially impacted residents. The legislation requires excavation of the Sutton, Riverbend and Dan River basins by August 1, 2019, and Asheville basins by August 1, 2022. Excavation at these sites may include a combination of transfer of coal ash to an engineered landfill or conversion for beneficial use. Basins at the H.F. Lee, Cape Fear and Weatherspoon sites are required to be closed through excavation no later than August 1, 2028. Excavation at these sites can include conversion of the basin to a lined industrial landfill, transfer of ash to an engineered landfill or conversion for beneficial use. The remaining basins are required to be closed no later than December 31, 2024, through conversion to a lined industrial landfill, transfer to an engineered landfill or conversion for beneficial use, unless certain dam improvement projects and alternative drinking water source projects are completed by October 15, 2018. Upon satisfactory completion of these projects, the closure deadline would be extended to December 31, 2029, and could include closure through the combination of a cap system and a groundwater monitoring. On October 12, 2018, NCDEQ announced that Duke Energy had satisfied the permanent replacement water supply requirements by the October 15, 2018, deadline set out in the Coal Ash Management Act. NCDEQ has until November 14, 2018, to issue final basin classifications.

Additionally, the Coal Ash Act requires the installation and operation of three large-scale coal ash beneficiation projects to produce reprocessed ash for use in the concrete industry. Duke Energy selected the Buck, H.F. Lee and Cape Fear plants for these projects. Closure at these sites is required to be completed no later than December 31, 2029.

~~PART I~~

The Coal Ash Act includes a variance procedure for compliance deadlines and other issues surrounding the management of CCR and CCR surface impoundments and prohibits cost recovery in customer rates for unlawful discharge of ash impoundment waters occurring after January 1, 2014. The Coal Ash Act leaves the decision on cost recovery determinations related to closure of ash impoundments to the normal ratemaking processes before utility regulatory commissions. Consistent with the requirements of the Coal Ash Act, Duke Energy has submitted comprehensive site assessments and groundwater corrective plans to NCDEQ and will submit to NCDEQ site-specific coal ash impoundment closure plans in advance of closure. NCDEQ requested that Duke Energy submit options analyses, groundwater modeling and net environmental benefits analyses for six sites potentially eligible for closure by cap in place by November 15, 2018. These plans and all associated permits must be approved by NCDEQ before closure work can begin.

For more information, see Note ~~9, “Asset~~7, "Asset Retirement Obligations,~~” in Duke Energy’s Annual Report on Form 10-K/A for the year ended December 31, 2017.~~

~~Clean Water Act 316(b)~~

~~The EPA published the final 316(b) cooling water intake structure rule on August 15, 2014, with an effective date of October 14, 2014. The rule applies~~" to 26 of the electric generating facilities the Duke Energy Registrants own and operate. The rule allows for several options to demonstrate compliance and provides flexibility to the state environmental permitting agencies to make determinations on controls, if any, that will be required for cooling water intake structures. Any required intake structure modifications and/or retrofits are expected to be installed in the 2019 to 2023 time frame. Petitions challenging the rule have been filed by several groups. Oral argument was held on September 14, 2017. On July 23, 2018, the U.S. Court of Appeals for the Second Circuit announced their decision to uphold the 316(b) rule. Duke Energy continues to work with the state environmental permitting agency to implement the rule.

~~Steam Electric Effluent Limitations Guidelines~~

On January 4, 2016, the final Steam Electric Effluent Limitations Guidelines (ELG) rule became effective. The rule establishes new requirements for wastewater streams associated with steam electric power generation and includes more stringent controls for any new coal plants that may be built in the future. As originally written, affected facilities were required to comply between 2018 and 2023, depending on the timing of Clean Water Act (CWA) discharge permits. Most of the steam electric generating facilities the Duke Energy Registrants own are affected sources. The Duke Energy Registrants are well-positioned to meet the majority of the requirements of the rule due to current efforts to convert to dry ash handling. Petitions challenging the rule have been filed by several groups. On March 16, 2015, Duke Energy Indiana filed its own legal challenge to the rule with the Seventh Circuit Court of Appeals specific to the ELG rule focused on the limits imposed on IGCC facilities (gasification wastewater). All challenges to the rule were consolidated in the Fifth Circuit Court of Appeals. On August 22, 2017, the Fifth Circuit Court of Appeals granted EPA’s Motion to Govern Further Proceedings, thereby severing and suspending the claims related to flue gas desulfurization wastewater, bottom ash transport water and gasification wastewater. Claims regarding gasification wastewater were stayed, pending the issuance of the variance to Duke Energy Indiana. Duke Energy Indiana’s federal court challenge to EPA’s Effluent Limitations Guidelines and Standards for the Steam Electric Power Generating Point Source Category remains in abeyance. After a long delay, EPA issued a variance for discharges at Edwardsport of wastewater associated with the gasification process. The variance was incorporated by the state agency into a revised wastewater discharge permit, and Duke Energy Indiana has voluntarily dismissed the federal court challenge. The litigation will continue as to claims related to other waste streams.

Separate from the litigation, EPA finalized a rule on September 18, 2017, postponing the earliest applicability date for bottom ash transport water and flue gas desulfurization wastewater from 2018 to 2020 and retaining the end applicability date of 2023. Also, as part of the rule, EPA reiterated its intent to conduct a new rulemaking to review the effluent limitation guidelines for bottom ash transport water and flue gas desulfurization wastewater. EPA projects that a new rule on these two issues will be finalized by the end of 2019.

~~The Duke Energy Registrants cannot predict the outcome of these matters.~~

~~Estimated Cost and Impacts of Rulemakings~~

Duke Energy will incur capital expenditures to comply with the environmental regulations and rules discussed above. The following table provides five-year estimated costs, excluding AFUDC, of new control equipment that may need to be installed on existing power plants primarily to comply with the Coal Ash Act requirements for conversion to dry disposal of bottom ash and fly ash, CWA 316(b) and ELGs through December 31, 2022. The table excludes ash basin closure costs recorded in Asset retirement obligations on the Condensed Consolidated ~~Balance Sheets. For more information related to AROs, see Note 9, “Asset Retirement Obligations” in Duke Energy’s Annual Report on Form 10‑K/A for the year ended December 31, 2017.~~

(in millions) Estimated Cost
Duke Energy $ 950
Duke Energy Carolinas 440
Progress Energy 370
Duke Energy Progress 270
Duke Energy Florida 100
Duke Energy Ohio 90
Duke Energy Indiana 50

The Duke Energy Registrants also expect to incur increased fuel, purchased power, operation and maintenance and other expenses, in addition to costs for replacement generation for potential coal-fired power plant retirements, as a result of these regulations. Actual compliance costs incurred may be materially different from these estimates due to reasons such as the timing and requirements of EPA regulations and the resolution of legal challenges to the rules. The Duke Energy Registrants intend to seek rate recovery of necessary and prudently incurred costs associated with regulated operations to comply with these regulations.

~~PART I~~

~~Cross-State Air Pollution Rule~~

On September 7, 2016, EPA finalized a revision to the Cross-State Air Pollution Rule (CSAPR); the revised rule is known as the CSAPR Update Rule. The CSAPR Update Rule reduces the CSAPR Phase 2 state ozone season NOX emission budgets for 22 eastern states, including Ohio, Kentucky and Indiana. In the final CSAPR Update Rule, the EPA removed Florida, South Carolina and North Carolina from the ozone season NOx program. Beginning in 2017, Duke Energy Registrants in these states will not be subject to any CSAPR ozone season NOx emission limitations. For the states that remain in the program, the reduced state ozone season NOx emission budgets took effect on May 1, 2017. In Kentucky and Indiana, where Duke Energy Registrants own and operate coal-fired electric generating units (EGUs) subject to the final rule requirements, near-term responses include changing unit dispatch to run certain generating units less frequently and/or purchasing NOx allowances from the trading market. Longer term, upgrading the performance of existing NOx controls is an option. The Indiana Utility Group and the Indiana Energy Association jointly filed a petition for reconsideration asking that the EPA correct errors it made in calculating the Indiana budget and increase the budget accordingly. EPA has yet to act on the petition. Numerous parties have filed petitions with the D.C. Circuit Court challenging various aspects of the CSAPR Update Rule. Final briefs in the case were due April 9, 2018. Oral argument was heard on October 3, 2018. The Duke Energy Registrants cannot predict the outcome of these matters.

~~Carbon Pollution Standards for New, Modified and Reconstructed Power Plants~~

~~On October 23, 2015, EPA published a final rule in the Federal Register establishing carbon dioxide (CO~~2) emissions limits for new, modified and reconstructed power plants. The requirements for new plants apply to plants that commenced construction after January 8, 2014. EPA set an emissions standard for coal units of 1,400 pounds of CO₂per gross MWh, which would require the application of partial carbon capture and storage (CCS) technology for a coal unit to be able to meet the limit. Utility-scale CCS is not currently a demonstrated and commercially available technology for coal-fired EGUs, and therefore the final standard effectively prevents the development of new coal-fired generation. EPA set a final standard of 1,000 pounds of CO2 ~~per gross MWh for new natural gas combined-cycle units.~~

On March 28, 2017, President Trump signed an executive order directing EPA to review the rule and determine whether to suspend, revise or rescind it. On the same day, the Department of Justice (DOJ) filed a motion with the D.C. Circuit Court requesting that the court stay the litigation of the rule while it is reviewed by EPA. Subsequent to the DOJ motion, the D.C. Circuit Court canceled oral argument in the case. On August 10, 2017, the court ordered that the litigation be suspended indefinitely. The rule remains in effect pending the outcome of litigation and EPA’s review. On July 24, 2018, EPA reported to the court that it plans to send a proposed revised rule to the Office of Management and Budget (OMB) for review. EPA has stated that it expects to release the proposed rule in November. The Duke Energy Registrants cannot predict the outcome of these matters but do not expect the impacts of the current final standards will be material to Duke Energy's financial position, results of operations or cash flows.

~~Clean Power Plan~~

~~On October 23, 2015, the EPA published in the Federal Register the final Clean Power Plan (CPP) rule to regulate CO~~₂ ~~emissions from existing fossil fuel-fired EGUs. The CPP established CO~~₂ emission rates and mass cap goals that apply to existing fossil fuel-fired EGUs. Petitions challenging the rule were filed by numerous groups and on February 9, 2016, the Supreme Court issued a stay of the final CPP rule, halting implementation of the CPP until legal challenges are resolved. States in which the Duke Energy Registrants operate have suspended work on the CPP in response to the stay. Oral arguments before 10 of the 11 judges on the D.C. Circuit Court were heard on September 27, 2016. The court has not issued its opinion in the case.

On March 28, 2017, President Trump signed an executive order directing EPA to review the CPP and determine whether to suspend, revise or rescind the rule. On the same day, the DOJ filed a motion with the D.C. Circuit Court requesting that the court stay the litigation of the rule while it is reviewed by EPA. On April 28, 2017, the court issued an order to suspend the litigation for 60 days and required EPA to file status reports with the court every 30 days. The court has issued subsequent orders, most recently on June 26, 2018, maintaining the case in abeyance. On October 16, 2017, EPA issued a Notice of Proposed Rulemaking (NPRM) to repeal the CPP based on a change to EPA’s legal interpretation of the section of the Clean Air Act on which the CPP was based. The comment period on EPA's NPRM ended April 26, 2018. On December 28, 2017, EPA issued an Advance Notice of Proposed Rulemaking (ANPRM) in which it sought public comment on various aspects of a potential CPP replacement rule. The comment period on the ANPRM ended February 26, 2018. On August 31, 2018, EPA published a proposed rule to replace the CPP, the Affordable Clean Energy (ACE) rule. The proposed ACE rule is based on an “inside the fence” approach under which states develop CO₂ reduction plans based on efficiency (heat rate) improvements at coal-fired power plants. The rule proposes a list of “candidate technologies” from which the states develop unit-specific emission standards. State compliance plans will be due three years after the rule is finalized. The proposal also revises EPA’s New Source Review (NSR) permitting program to remove impediments to the kinds of efficiency improvements the ACE rule would require. The Duke Energy Registrants cannot predict the outcome of these matters.

~~Section 126 Petitions~~

On November 16, 2016, the state of Maryland filed a petition with EPA under Section 126 of the Clean Air Act alleging that 19 power plants, including two that Duke Energy Registrants own and operate, contribute to violations of EPA’s National Ambient Air Quality Standards (NAAQS) for ozone in the state of Maryland. On March 12, 2018, the state of New York filed a petition with EPA, also under Section 126 of the Clean Air Act alleging that over 60 power plants, including four that Duke Energy Registrants own and operate, contribute to violations of EPA’s ozone NAAQS in the state of New York. Both Maryland and New York seek EPA orders requiring the states in which the named power plants operate impose more stringent nitrogen oxide (NO_x) emission limitations on the plants. On October 5, 2018, EPA published a final rule denying the Maryland petition. That same day, Maryland appealed EPA's denial of their Section 126 petition. Duke Energy has three units named in the petition. Any other petition to challenge this final rule must be filed within 60 days from EPA's denial. The impact of these petitions could be more stringent requirements for the operation of NO_x ~~emission controls at these plants. The Duke Energy Registrants cannot predict the outcome of these matters.~~

~~Global Climate Change~~

~~For other information on global climate change and the potential impacts on Duke Energy, see “Other Matters” in “Management’s Discussion and Analysis of~~ Financial ~~Condition and Results of Operations” in Duke Energy’s Annual Report on Form 10-K/A for the year ended December 31, 2017.~~Statements.

~~PART I~~

North Carolina Legislation

~~For other information~~Based on ~~North Carolina legislation and the potential impacts on~~an independent evaluation process, Duke Energy ~~see “Other Matters” in “Management’s Discussion~~will produce or purchase a total of 602 MW of renewable energy from projects under the North Carolina’s Competitive Procurement of Renewable Energy program. The process used was approved by the NCUC to select projects that would deliver the greatest cost and ~~Analysis of Financial Condition and Results of Operations” in~~system benefits to customers. Six Duke ~~Energy’s Annual Report on Form 10-K/A~~Energy projects, totaling about 270 MW, were selected during the competitive bidding process. Next steps include executing contracts for the ~~year ended December 31, 2017.~~

~~Liquefied Natural Gas Facility~~

~~Piedmont Natural Gas plans to build~~projects and finalizing a ~~liquefied natural gas facility in Robeson County, North Carolina. The project is expected~~report to be ~~completed in~~filed with the ~~summer of 2021 at a cost of $250 million. Construction will begin in the summer of~~NCUC around June 2019.

~~Nuclear Matters~~

For other information on nuclear matters and the potential impacts on Duke Energy, see “Other Matters” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Duke Energy’s Annual Report on Form 10-K/A for the year ended December 31, 2017.

~~New Accounting Standards~~

~~See Note 1 to the Condensed Consolidated Financial Statements, “Organization and Basis of Presentation,” for a discussion of the impact of new accounting standards.~~

Off-Balance Sheet Arrangements

During the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, there were no material changes to Duke Energy’s off-balance sheet arrangements. See Note 1213 to the Condensed Consolidated Financial Statements, "Variable Interest Entities," for a discussion of off-balance sheet arrangements regarding ACP. For additional information on Duke Energy’s off-balance sheet arrangements, see “Off-Balance Sheet Arrangements” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Duke Energy’s Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2017.~~2018.

Contractual Obligations

Duke Energy enters into contracts that require payment of cash at certain specified periods, based on certain specified minimum quantities and prices. During the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, there were no material changes in Duke Energy's contractual obligations. For an in-depth discussion of Duke Energy’s contractual obligations, see “Contractual Obligations” and “Quantitative and Qualitative Disclosures about Market Risk” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Duke Energy’s Annual Report on Form ~~10-K/A~~10-K for the year ended December 31, ~~2017.~~

~~Subsequent Events~~

~~See Note 18 to the Condensed Consolidated Financial Statements, “Subsequent Events,” for a discussion of subsequent events.~~2018.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

During the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, there were no material changes to the Duke Energy Registrants' disclosures about market risk. For an in-depth discussion of the Duke Energy Registrants' market risks, see “Quantitative and Qualitative Disclosures about Market Risk” in Item 7 of the Annual Report on Form ~~10-K/A~~10-K for the Duke Energy Registrants.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the ~~Securities~~ Exchange Act ~~of 1934 (Exchange Act) are~~is recorded, processed, summarized and reported, within the time periods specified by the ~~U.S. Securities and Exchange Commission~~SEC rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Duke Energy Registrants in the reports they file or submit under the Exchange Act ~~are~~is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated the effectiveness of their disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September 30, 2018,~~March 31, 2019, and, based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective in providing reasonable assurance of compliance.

Changes in Internal Control over Financial Reporting

~~On August 2, 2018,~~Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Duke Energy and Ernst and Young LLP (EY) announced a strategic tax relationship which resulted in approximately 45 tax team employees joining EY as part of an outsourced arrangement for managed tax services. In connection with this new strategic relationship, management will continue to enhance the design and documentation of our internal control processes to ensure suitable controls over financial reporting. During the three months ended September 30, 2018, except as noted above, there were noRegistrants have evaluated changes in ~~Duke Energy’s~~ internal control over financial reporting as(as such term is defined in ~~Rule 13a-15(f)~~Rules 13a-15 and 15d-15 under the Exchange ~~Act,~~Act) that occurred during the fiscal quarter ended March 31, 2019, and have concluded no change has materially affected, or ~~are~~is reasonably likely to materially affect, ~~our~~ internal control over financial reporting.

113

~~PART II.~~



OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

~~Methyl tertiary butyl ether (MTBE) Litigation~~

~~On June 19, 2014,~~ For additional information, see Item 3, "Legal Proceedings," in Duke Energy's Annual Report on Form 10-K for the Commonwealth of Pennsylvania filed suit against, among others, Duke Energy Merchants, alleging contamination of waters of the state by MTBE from leaking gasoline storage tanks. MTBE is a gasoline additive intended to increase the oxygen level in gasoline and make it burn cleaner. The lawsuit was moved to federal court and consolidated into an existing multidistrict litigation docket of pending MTBE cases. This suit was settled for an immaterial amount inyear ended December ~~2017 and dismissed in January~~31, 2018.

In December 2017, the state of Maryland filed a lawsuit in Baltimore City Circuit Court against Duke Energy Merchants and other defendants alleging contamination of its water supplies from MTBE. The case was removed to the U.S. District Court in Baltimore. Duke Energy cannot predict the outcome of this matter.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, careful consideration should be given to the factors discussed in Part I, “Item 1A. Risk Factors” in the Duke Energy Registrants' Annual Report on Form ~~10-K/A,~~10-K for the year ended December 31, 2018, which could materially affect the Duke Energy Registrants’ financial condition or future results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

114

~~PART II~~



EXHIBITS

ITEM 6. EXHIBITS

Exhibits filed herein are designated by an asterisk (*). All exhibits not so designated are incorporated by reference to a prior filing, as indicated. Items constituting management contracts or compensatory plans or arrangements are designated by a double asterisk (**). The company agrees to furnish upon request to the commission a copy of any omitted schedules or exhibits upon request on all items designated by a triple asterisk (***).

Duke

Exhibit

Duke

Energy

Progress

Energy

Number

Energy

Carolinas

Energy

Progress

Florida

Ohio

Indiana

Piedmont

~~4.1~~3.1

~~Twentieth Supplemental Indenture~~Certificate of Designations with respect to Series A Preferred Stock, dated March 28, 2019 (incorporated by reference to Exhibit ~~4.2~~3.1 to Registrant's ~~Registration Statement~~Current Report on Form ~~8-A~~8-K filed on ~~September 17, 2018,~~March 29, 2019, File no. ~~001-32853)~~1-32853).

*10.14.1

~~Amendment No. 1~~Eighty-Ninth Supplemental Indenture (incorporated by reference to the Term Loan Credit Agreement, dated as of September 13, 2018, among Piedmont Natural Gas Company, Inc., the lenders listed therein, U.S. Bank National Association, as Administrative Agent, and PNC Bank, National Association, Bank of New York Mellon and KeyBank, National Association, as Co-Documentation Agents.Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed on March 7, 2019, File no. 1-3382).

4.2

Twenty-First Supplemental Indenture (incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K filed on March 11, 2019, File no. 1-32853).

*1210.1

~~Computation~~Amendment No.4 and Consent, dated as of ~~Ratio of Earnings~~March 18, 2019, among Duke Energy Corporation, Duke Energy Carolinas, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, LLC, Duke Energy Kentucky, Inc., Duke Energy Progress, LLC, Duke Energy Florida, LLC, and Piedmont Natural Gas Company, Inc., the Lenders party thereto, the Issuing Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent and Swingline Lender (incorporated by reference to ~~Fixed Charges – DUKE ENERGY CORPORATION.~~Exhibit 10.1 to Registrants’ Current Report on Form 8-K filed on March 21, 2019, File nos. 1-32853. 1-4928, 1-3382, 1-3274, 1-1232, 1-3543, 1-6196).

*10.2

2019 Performance Share Award Agreement.

*10.3

2018 Restricted Stock Unit Award Agreement.

*31.1.1

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.2

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.3

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.4

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.5

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.6

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

115



EXHIBITS

*31.1.7

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.8

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.1

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

*31.2.2

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

*31.2.3

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

*31.2.4

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

*31.2.5

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

*31.2.6

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

~~PART II~~

*31.2.7

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

*31.2.8

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

*32.1.1

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.2

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.3

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.4

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.5

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.6

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.7

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.8

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.1

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.2

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

116



EXHIBITS

*32.2.3

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.4

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.5

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.6

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.7

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.8

Certification Pursuant to 18 ~~U.S.C. Section~~U.S.C.Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS

XBRL Instance Document.

*101.SCH

XBRL Taxonomy Extension Schema Document.

~~PART II~~

*101.CAL

XBRL Taxonomy Calculation Linkbase Document.

*101.LAB

XBRL Taxonomy Label Linkbase Document.

*101.PRE

XBRL Taxonomy Presentation Linkbase Document.

*101.DEF

XBRL Taxonomy Definition Linkbase Document.

The total amount of securities of the registrant or its subsidiaries authorized under any instrument with respect to long-term debt not filed as an exhibit does not exceed 10 percent of the total assets of the registrant and its subsidiaries on a consolidated basis. The registrant agrees, upon request of the SEC, to furnish copies of any or all of such instruments to it.

117

~~PART II~~



SIGNATURES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.



		DUKE ENERGY CORPORATION DUKE ENERGY CAROLINAS, LLC PROGRESS ENERGY, INC. DUKE ENERGY PROGRESS, LLC DUKE ENERGY FLORIDA, LLC DUKE ENERGY OHIO, INC. DUKE ENERGY INDIANA, LLC PIEDMONT NATURAL GAS COMPANY, INC.

Date:	~~November 2, 2018~~May 9, 2019	/s/ STEVEN K. YOUNG
		Steven K. Young Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Date:	~~November 2, 2018~~May 9, 2019	/s/ DWIGHT L. JACOBS
		Dwight L. Jacobs Senior Vice President, Chief Accounting Officer, Tax and Controller (Principal Accounting Officer)

~~141~~118



(in millions)	Estimated Cost
Duke Energy	$	950
Duke Energy Carolinas	440
Progress Energy	370
Duke Energy Progress	270
Duke Energy Florida	100
Duke Energy Ohio	90
Duke Energy Indiana	50