UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the quarterly period ended September 30, 20202021
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period from _________to_________
| Commission file number | Registrant, State of Incorporation or Organization, Address of Principal Executive Offices and Telephone Number | IRS Employer Identification Number | |||||||||
 | |||||||||||
| 1-32853 | DUKE ENERGY CORPORATION | 20-2777218 | |||||||||
(a Delaware corporation)
Charlotte,, North Carolina28202-1803
704-382-3853
| 1-4928 | DUKE ENERGY CAROLINAS, LLC | 56-0205520 | |||||||||
(a North Carolina limited liability company)
526 South Church Street
Charlotte,, North Carolina28202-1803
704-382-3853
| 1-15929 | PROGRESS ENERGY, INC. | 56-2155481 | |||||||||
(a North Carolina corporation)
410 South Wilmington Street
Raleigh,, North Carolina27601-1748
704-382-3853
| 1-3382 | DUKE ENERGY PROGRESS, LLC | 56-0165465 | |||||||||
(a North Carolina limited liability company)
410 South Wilmington Street
Raleigh,, North Carolina27601-1748
704-382-3853
| 1-3274 | DUKE ENERGY FLORIDA, LLC | 59-0247770 | |||||||||
(a Florida limited liability company)
299 First Avenue North
St. Petersburg,, Florida33701
704-382-3853
| 1-1232 | DUKE ENERGY OHIO, INC. | 31-0240030 | |||||||||
(an Ohio corporation)
139 East Fourth Street
Cincinnati,, Ohio45202
704-382-3853
| 1-3543 | DUKE ENERGY INDIANA, LLC | 35-0594457 | |||||||||
(an Indiana limited liability company)
1000 East Main Street
Plainfield,, Indiana46168
704-382-3853
| 1-6196 | PIEDMONT NATURAL GAS COMPANY, INC. | 56-0556998 | |||||||||
(a North Carolina corporation)
4720 Piedmont Row Drive
Charlotte,, North Carolina28210
704-364-3120
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange on
RegistrantTitle of each class Trading symbols which registered Duke Energy Common Stock, $0.001 par value DUK New York Stock Exchange LLC Duke Energy 5.625% Junior Subordinated Debentures due DUKB New York Stock Exchange LLC |
September 15, 2078
Duke Energy Depositary Shares, each representing a 1/1,000th DUK PR A New York Stock Exchange LLC |
interest in a share of 5.75% Series A Cumulative
Redeemable Perpetual Preferred Stock, par value
$0.001 per share
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 | ☒ | No | ☐ | Duke Energy Florida, LLC (Duke Energy Florida) | Yes | ☒ | No | ☐ | |||||||||||||||||||||||
| Duke Energy Carolinas, LLC (Duke Energy Carolinas) | Yes | ☒ | No | ☐ | Duke Energy Ohio, Inc. (Duke Energy Ohio) | Yes | ☒ | No | ☐ | |||||||||||||||||||||||
| Progress Energy, Inc. (Progress Energy) | Yes | ☒ | No | ☐ | Duke Energy Indiana, LLC (Duke Energy Indiana) | Yes | ☒ | No | ☐ | |||||||||||||||||||||||
| Duke Energy Progress, LLC (Duke Energy Progress) | Yes | ☒ | No | ☐ | Piedmont Natural Gas Company, Inc. (Piedmont) | Yes | ☒ | 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 | ☒ | No | ☐ | Duke Energy Florida | Yes | ☒ | No | ☐ | |||||||||||||||||||||||
| Duke Energy Carolinas | Yes | ☒ | No | ☐ | Duke Energy Ohio | Yes | ☒ | No | ☐ | |||||||||||||||||||||||
| Progress Energy | Yes | ☒ | No | ☐ | Duke Energy Indiana | Yes | ☒ | No | ☐ | |||||||||||||||||||||||
| Duke Energy Progress | Yes | ☒ | No | ☐ | Piedmont | Yes | ☒ | 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 | ☐ | Non-accelerated | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐ | ||||||||||||||||||||||
| Duke Energy Carolinas | Large | ☐ | Accelerated filer | ☐ | Non-accelerated | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ | ||||||||||||||||||||||
| Progress Energy | Large | ☐ | Accelerated filer | ☐ | Non-accelerated | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ | ||||||||||||||||||||||
| Duke Energy Progress | Large | ☐ | Accelerated filer | ☐ | Non-accelerated | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ | ||||||||||||||||||||||
| Duke Energy Florida | Large | ☐ | Accelerated filer | ☐ | Non-accelerated | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ | ||||||||||||||||||||||
| Duke Energy Ohio | Large | ☐ | Accelerated filer | ☐ | Non-accelerated | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ | ||||||||||||||||||||||
| Duke Energy Indiana | Large | ☐ | Accelerated filer | ☐ | Non-accelerated | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ | ||||||||||||||||||||||
| Piedmont | Large | ☐ | Accelerated filer | ☐ | Non-accelerated | ☒ | Smaller reporting company | ☐ | Emerging growth company | ☐ | ||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Duke Energy | Yes | ☐ | No | ☒ | Duke Energy Florida | Yes | ☐ | No | ☒ | |||||||||||||||||||||||
| Duke Energy Carolinas | Yes | ☐ | No | ☒ | Duke Energy Ohio | Yes | ☐ | No | ☒ | |||||||||||||||||||||||
| Progress Energy | Yes | ☐ | No | ☒ | Duke Energy Indiana | Yes | ☐ | No | ☒ | |||||||||||||||||||||||
| Duke Energy Progress | Yes | ☐ | No | ☒ | Piedmont | Yes | ☐ | No | ☒ | |||||||||||||||||||||||
Number of shares of common stock outstanding at October 31, 2020:
2021:
| Registrant | Description | Shares | ||||||
| Duke Energy | Common stock, $0.001 par value | 769,343,372 | ||||||
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
| PART I. FINANCIAL INFORMATION | ||||||||||
| Piedmont Natural Gas Company, Inc. 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 – | ||||||||||
| Note 7 | ||||||||||
| Note | ||||||||||
| Note | ||||||||||
| Note | ||||||||||
| Note | ||||||||||
| Note 12 – Revenue | ||||||||||
| Note 13 – | ||||||||||
| Note 14 | ||||||||||
| Note 15 – Income Taxes | ||||||||||
| Note 16 – | ||||||||||
| PART II. OTHER INFORMATION | ||||||||||
| FORWARD-LOOKING STATEMENTS | |||||
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions and can often be identified by terms and phrases that include “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook” or other similar terminology. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but are not limited to:
◦The impact of the COVID-19 pandemic;
◦State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, including those related to climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices;
◦The extent and timing of costs and liabilities to comply with federal and state laws, regulations and legal requirements related to coal ash remediation, including amounts for required closure of certain ash impoundments, are uncertain and difficult to estimate;
◦The ability to recover eligible costs, including amounts associated with coal ash impoundment retirement obligations and costs related to significant weather events, and to earn an adequate return on investment through rate case proceedings and the regulatory process;
◦The costs of decommissioning nuclear facilities could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process;
◦Costs and effects of legal and administrative proceedings, settlements, investigations and claims;
◦Industrial, commercial and residential growth or decline in service territories or customer bases resulting from sustained downturns of the economy and the economic health of our service territories or variations in customer usage patterns, including energy efficiency efforts and use of alternative energy sources, such as self-generation and distributed generation technologies;
◦Federal and state regulations, laws and other efforts designed to promote and expand the use of energy efficiency measures and distributed generation technologies, such as private solar and battery storage, in Duke Energy service territories could result in customers leaving the electric distribution system, excess generation resources as well as stranded costs;
◦Advancements in technology;
◦Additional competition in electric and natural gas markets and continued industry consolidation;
◦The influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts, earthquakes and tornadoes, including extreme weather associated with climate change;
◦Changing customer expectations and demands including heightened emphasis on environmental, social and governance concerns;
◦The ability to successfully operate electric generating facilities and deliver electricity to customers including direct or indirect effects to the company resulting from an incident that affects the U.S. electric grid or generating resources;
◦Operational interruptions to our natural gas distribution and transmission activities;
◦The availability of adequate interstate pipeline transportation capacity and natural gas supply;
◦The impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches, operational accidents, information technology failures or other catastrophic events, such as fires, explosions, pandemic health events or other similar occurrences;
◦The inherent risks associated with the operation of nuclear facilities, including environmental, health, safety, regulatory and financial risks, including the financial stability of third-party service providers;
◦The timing and extent of changes in commodity prices and interest rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets;
◦The results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations, compliance with debt covenants and conditions and general market and economic conditions;
◦Credit ratings of the Duke Energy Registrants may be different from what is expected;
◦Declines in the market prices of equity and fixed-income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans and nuclear decommissioning trust funds;
◦Construction and development risks associated with the completion of the Duke Energy Registrants’ capital investment projects, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner, or at all;
◦Changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants;
◦The ability to control operation and maintenance costs;
◦The level of creditworthiness of counterparties to transactions;
◦The ability to obtain adequate insurance at acceptable costs;
◦Employee workforce factors, including the potential inability to attract and retain key personnel;
| 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;
◦Asset or business acquisitions and dispositions, including our ability to successfully consummate the second closing of the minority investment in Duke Energy Indiana, may not yield the anticipated benefits;
◦The actions of activist shareholders could disrupt our operations, impact our ability to execute on our business strategy, or cause fluctuations in the trading price of our common stock; and
◦The ability to implement our business strategy, including enhancing existing technology systems.
Additional risks and uncertainties are identified and discussed in the Duke Energy Registrants' reports filed with the SEC and available at the SEC's website at sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made and the Duke Energy Registrants expressly disclaim an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
| GLOSSARY OF TERMS | |||||
Glossary of Terms
The following terms or acronyms used in this Form 10-Q are defined below:
| Term or Acronym | Definition | ||||
| 2013 Settlement | Revised and Restated Stipulation and Settlement Agreement approved in November 2013 among Duke Energy Florida, the Florida Office of Public Counsel and other customer representatives | ||||
| 2017 Settlement | Second Revised and Restated Settlement Agreement in 2017 among Duke Energy Florida, the Florida Office of Public Counsel and other customer representatives, which replaces and supplants the 2013 Settlement | ||||
| Settlement Agreement in 2021 among Duke Energy Florida, the Florida Office of Public Counsel, the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PSC Phosphate and NUCOR Steel Florida, Inc. | |||||
| ACP | Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy, Inc. and Duke Energy | ||||
| ACP pipeline | The approximately 600-mile canceled interstate natural gas pipeline | ||||
| AFS | Available for Sale | ||||
| AFUDC | Allowance for funds used during construction | ||||
| Asset retirement obligations | |||||
| Bison | Bison Insurance Company Limited | ||||
| CCR | Coal Combustion Residuals | ||||
| Coal Ash Act | North Carolina Coal Ash Management Act of 2014 | ||||
| the company | Duke Energy Corporation and its subsidiaries | ||||
| Coronavirus Disease 2019 | |||||
| CRC | Cinergy Receivables Company, LLC | ||||
| Crystal River Unit 3 | Crystal River Unit 3 Nuclear Plant | ||||
| DEFPF | Duke Energy Florida Project Finance, LLC | ||||
| DEFR | Duke Energy Florida Receivables, LLC | ||||
| DEPR | Duke Energy Progress Receivables, LLC | ||||
| DERF | Duke Energy Receivables Finance Company, LLC | ||||
| Duke Energy | Duke Energy Corporation (collectively with its subsidiaries) | ||||
| Duke Energy Ohio | Duke Energy Ohio, Inc. | ||||
| Duke Energy Progress | Duke Energy Progress, LLC | ||||
| Duke Energy Carolinas | Duke Energy Carolinas, LLC | ||||
| Duke Energy Florida | Duke Energy Florida, LLC | ||||
| Duke Energy Indiana | Duke Energy Indiana, LLC | ||||
| Duke Energy Kentucky | Duke Energy Kentucky, Inc. | ||||
| Duke Energy Registrants | Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont | ||||
| Excess deferred income tax | |||||
| Elliott Investment Management, L.P. | |||||
| EPS | Earnings Per Share | ||||
| ETR | Effective tax rate | ||||
| Exchange Act | Securities Exchange Act of 1934 | ||||
| FERC | Federal Energy Regulatory Commission | ||||
| FPSC | Florida Public Service Commission | ||||
| FTR | Financial transmission rights | ||||
| GAAP | Generally accepted accounting principles in the U.S. | ||||
| GLOSSARY OF TERMS | |||||
| GAAP Reported Earnings | Net Income Available to Duke Energy Corporation Common Stockholders | ||||
| GAAP Reported EPS | Basic Earnings Per Share Available to Duke Energy Corporation common stockholders | ||||
| IMR | Integrity Management Rider | ||||
| IRS | Internal Revenue Service | ||||
| Investment Trusts | NDTF investments and grantor trusts of Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana | ||||
| IURC | Indiana Utility Regulatory Commission | ||||
| KPSC | Kentucky Public Service Commission | ||||
| LLC | Limited Liability Company | ||||
| MGP | Manufactured gas plant | ||||
| North Carolina Utilities Commission | |||||
| NDTF | Nuclear decommissioning trust funds | ||||
| NPNS | Normal purchase/normal sale | ||||
| OPEB | Other Post-Retirement Benefit Obligations | ||||
| Ohio Valley Electric Corporation | |||||
| Piedmont | Piedmont Natural Gas Company, Inc. | ||||
| Pennsylvania-New Jersey-Maryland Interconnection | |||||
| PPA | Purchase Power Agreement | ||||
| Progress Energy | Progress Energy, Inc. | ||||
| PSCSC | Public Service Commission of South Carolina | ||||
| PUCO | Public Utilities Commission of Ohio | ||||
| RTO | Regional Transmission Organization | ||||
| Subsidiary Registrants | Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio, Duke Energy Indiana and Piedmont | ||||
| Tax Cuts and Jobs Act | |||||
| TPUC | Tennessee Public Utility Commission | ||||
| U.S. | United States | ||||
| VIE | Variable Interest Entity | ||||
| WACC | Weighted Average Cost of Capital | ||||
| FINANCIAL STATEMENTS | |||||
ITEM 1. FINANCIAL STATEMENTS
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions, except per share amounts) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Operating Revenues | |||||||||||||||||||||||
| Regulated electric | $ | 6,495 | $ | 6,315 | $ | 16,972 | $ | 16,402 | |||||||||||||||
| Regulated natural gas | 263 | 214 | 1,314 | 1,115 | |||||||||||||||||||
| Nonregulated electric and other | 193 | 192 | 573 | 574 | |||||||||||||||||||
| Total operating revenues | 6,951 | 6,721 | 18,859 | 18,091 | |||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Fuel used in electric generation and purchased power | 1,844 | 1,849 | 4,702 | 4,645 | |||||||||||||||||||
| Cost of natural gas | 75 | 41 | 430 | 299 | |||||||||||||||||||
| Operation, maintenance and other | 1,507 | 1,450 | 4,319 | 4,142 | |||||||||||||||||||
| Depreciation and amortization | 1,265 | 1,217 | 3,698 | 3,497 | |||||||||||||||||||
| Property and other taxes | 371 | 324 | 1,073 | 1,003 | |||||||||||||||||||
| Impairment of assets and other charges | 211 | 28 | 342 | 36 | |||||||||||||||||||
| Total operating expenses | 5,273 | 4,909 | 14,564 | 13,622 | |||||||||||||||||||
| Gains on Sales of Other Assets and Other, net | 9 | 2 | 11 | 10 | |||||||||||||||||||
| Operating Income | 1,687 | 1,814 | 4,306 | 4,479 | |||||||||||||||||||
| Other Income and Expenses | |||||||||||||||||||||||
| Equity in earnings (losses) of unconsolidated affiliates | 22 | (80) | 14 | (2,004) | |||||||||||||||||||
| Other income and expenses, net | 238 | 127 | 493 | 310 | |||||||||||||||||||
| Total other income and expenses | 260 | 47 | 507 | (1,694) | |||||||||||||||||||
| Interest Expense | 581 | 522 | 1,688 | 1,627 | |||||||||||||||||||
| Income Before Income Taxes | 1,366 | 1,339 | 3,125 | 1,158 | |||||||||||||||||||
| Income Tax Expense (Benefit) | 90 | 105 | 210 | (74) | |||||||||||||||||||
| Net Income | 1,276 | 1,234 | 2,915 | 1,232 | |||||||||||||||||||
| Add: Net Loss Attributable to Noncontrolling Interests | 129 | 70 | 247 | 208 | |||||||||||||||||||
| Net Income Attributable to Duke Energy Corporation | 1,405 | 1,304 | 3,162 | 1,440 | |||||||||||||||||||
| Less: Preferred Dividends | 39 | 39 | 92 | 93 | |||||||||||||||||||
| Net Income Available to Duke Energy Corporation Common Stockholders | $ | 1,366 | $ | 1,265 | $ | 3,070 | $ | 1,347 | |||||||||||||||
| Earnings Per Share – Basic and Diluted | |||||||||||||||||||||||
| Net income available to Duke Energy Corporation common stockholders | |||||||||||||||||||||||
| Basic and Diluted | $ | 1.79 | $ | 1.74 | $ | 4.00 | $ | 1.85 | |||||||||||||||
| Weighted Average Shares Outstanding | |||||||||||||||||||||||
| Basic and Diluted | 769 | 735 | 769 | 735 | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| (in millions, except per share amounts) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Operating Revenues | |||||||||||||||
| Regulated electric | $ | 6,315 | $ | 6,515 | $ | 16,402 | $ | 17,223 | |||||||
| Regulated natural gas | 214 | 223 | 1,115 | 1,231 | |||||||||||
| Nonregulated electric and other | 192 | 202 | 574 | 522 | |||||||||||
| Total operating revenues | 6,721 | 6,940 | 18,091 | 18,976 | |||||||||||
| Operating Expenses | |||||||||||||||
| Fuel used in electric generation and purchased power | 1,849 | 1,978 | 4,645 | 5,228 | |||||||||||
| Cost of natural gas | 41 | 48 | 299 | 451 | |||||||||||
| Operation, maintenance and other | 1,450 | 1,484 | 4,142 | 4,337 | |||||||||||
| Depreciation and amortization | 1,217 | 1,186 | 3,497 | 3,364 | |||||||||||
| Property and other taxes | 324 | 335 | 1,003 | 1,012 | |||||||||||
| Impairment charges | 28 | (20 | ) | 36 | (16 | ) | |||||||||
| Total operating expenses | 4,909 | 5,011 | 13,622 | 14,376 | |||||||||||
| Gains on Sales of Other Assets and Other, net | 2 | — | 10 | — | |||||||||||
| Operating Income | 1,814 | 1,929 | 4,479 | 4,600 | |||||||||||
| Other Income and Expenses | |||||||||||||||
| Equity in (losses) earnings of unconsolidated affiliates | (80 | ) | 50 | (2,004 | ) | 137 | |||||||||
| Other income and expenses, net | 127 | 104 | 310 | 308 | |||||||||||
| Total other income and expenses | 47 | 154 | (1,694 | ) | 445 | ||||||||||
| Interest Expense | 522 | 572 | 1,627 | 1,657 | |||||||||||
| Income Before Income Taxes | 1,339 | 1,511 | 1,158 | 3,388 | |||||||||||
| Income Tax Expense (Benefit) | 105 | 188 | (74 | ) | 424 | ||||||||||
| Net Income | 1,234 | 1,323 | 1,232 | 2,964 | |||||||||||
| Add: Net Loss Attributable to Noncontrolling Interests | 70 | 19 | 208 | 110 | |||||||||||
| Net Income Attributable to Duke Energy Corporation | 1,304 | 1,342 | 1,440 | 3,074 | |||||||||||
| Less: Preferred Dividends | 39 | 15 | 93 | 27 | |||||||||||
| Net Income Available to Duke Energy Corporation Common Stockholders | $ | 1,265 | $ | 1,327 | $ | 1,347 | $ | 3,047 | |||||||
| Earnings Per Share – Basic and Diluted | |||||||||||||||
| Basic and Diluted | $ | 1.74 | $ | 1.82 | $ | 1.85 | $ | 4.18 | |||||||
| Weighted Average Shares Outstanding | |||||||||||||||
| Basic and Diluted | 735 | 729 | 735 | 728 | |||||||||||
See Notes to Condensed Consolidated Financial Statements
9
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Net Income | $ | 1,276 | $ | 1,234 | $ | 2,915 | $ | 1,232 | |||||||||||||||
Other Comprehensive Income (Loss), net of tax(a) | |||||||||||||||||||||||
| Pension and OPEB adjustments | 1 | 1 | 3 | 1 | |||||||||||||||||||
| Net unrealized gains (losses) on cash flow hedges | 9 | (83) | (59) | (159) | |||||||||||||||||||
| Reclassification into earnings from cash flow hedges | 2 | 4 | 9 | 8 | |||||||||||||||||||
| Unrealized (losses) gains on available-for-sale securities | (2) | (2) | (6) | 5 | |||||||||||||||||||
| Other Comprehensive Income (Loss), net of tax | 10 | (80) | (53) | (145) | |||||||||||||||||||
| Comprehensive Income | 1,286 | 1,154 | 2,862 | 1,087 | |||||||||||||||||||
| Add: Comprehensive Loss Attributable to Noncontrolling Interests | 128 | 70 | 240 | 220 | |||||||||||||||||||
| Comprehensive Income Attributable to Duke Energy | 1,414 | 1,224 | 3,102 | 1,307 | |||||||||||||||||||
| Less: Preferred Dividends | 39 | 39 | 92 | 93 | |||||||||||||||||||
| Comprehensive Income Available to Duke Energy Corporation Common Stockholders | $ | 1,375 | $ | 1,185 | $ | 3,010 | $ | 1,214 | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Net Income | $ | 1,234 | $ | 1,323 | $ | 1,232 | $ | 2,964 | |||||||
Other Comprehensive Loss, net of tax(a) | |||||||||||||||
| Pension and OPEB adjustments | 1 | (2 | ) | 1 | 1 | ||||||||||
| Net unrealized losses on cash flow hedges | (83 | ) | (16 | ) | (159 | ) | (62 | ) | |||||||
| Reclassification into earnings from cash flow hedges | 4 | 1 | 8 | 4 | |||||||||||
| Unrealized (losses) gains on available-for-sale securities | (2 | ) | 2 | 5 | 10 | ||||||||||
| Other Comprehensive Loss, net of tax | (80 | ) | (15 | ) | (145 | ) | (47 | ) | |||||||
| Comprehensive Income | 1,154 | 1,308 | 1,087 | 2,917 | |||||||||||
| Add: Comprehensive Loss Attributable to Noncontrolling Interests | 70 | 19 | 220 | 110 | |||||||||||
| Comprehensive Income Attributable to Duke Energy | 1,224 | 1,327 | 1,307 | 3,027 | |||||||||||
| Less: Preferred Dividends | 39 | 15 | 93 | 27 | |||||||||||
| Comprehensive Income Available to Duke Energy Corporation Common Stockholders | $ | 1,185 | $ | 1,312 | $ | 1,214 | $ | 3,000 | |||||||
See Notes to Condensed Consolidated Financial Statements
10
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2021 | December 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 548 | $ | 259 | |||||||
| Receivables (net of allowance for doubtful accounts of $48 at 2021 and $29 at 2020) | 998 | 1,009 | |||||||||
| Receivables of VIEs (net of allowance for doubtful accounts of $75 at 2021 and $117 at 2020) | 2,431 | 2,144 | |||||||||
| Inventory | 2,900 | 3,167 | |||||||||
| Regulatory assets (includes $54 at 2021 and $53 at 2020 related to VIEs) | 1,791 | 1,641 | |||||||||
| Other (includes $347 at 2021 and $296 at 2020 related to VIEs) | 768 | 462 | |||||||||
| Total current assets | 9,436 | 8,682 | |||||||||
| Property, Plant and Equipment | |||||||||||
| Cost | 160,652 | 155,580 | |||||||||
| Accumulated depreciation and amortization | (50,543) | (48,827) | |||||||||
| Facilities to be retired, net | 127 | 29 | |||||||||
| Net property, plant and equipment | 110,236 | 106,782 | |||||||||
| Other Noncurrent Assets | |||||||||||
| Goodwill | 19,303 | 19,303 | |||||||||
| Regulatory assets (includes $896 at 2021 and $937 at 2020 related to VIEs) | 12,247 | 12,421 | |||||||||
| Nuclear decommissioning trust funds | 9,861 | 9,114 | |||||||||
| Operating lease right-of-use assets, net | 1,287 | 1,524 | |||||||||
| Investments in equity method unconsolidated affiliates | 951 | 961 | |||||||||
| Other (includes $134 at 2021 and $81 at 2020 related to VIEs) | 3,686 | 3,601 | |||||||||
| Total other noncurrent assets | 47,335 | 46,924 | |||||||||
| Total Assets | $ | 167,007 | $ | 162,388 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 2,888 | $ | 3,144 | |||||||
| Notes payable and commercial paper | 2,098 | 2,873 | |||||||||
| Taxes accrued | 908 | 482 | |||||||||
| Interest accrued | 558 | 537 | |||||||||
| Current maturities of long-term debt (includes $221 at 2021 and $472 at 2020 related to VIEs) | 4,873 | 4,238 | |||||||||
| Asset retirement obligations | 673 | 718 | |||||||||
| Regulatory liabilities | 1,319 | 1,377 | |||||||||
| Other | 2,239 | 2,936 | |||||||||
| Total current liabilities | 15,556 | 16,305 | |||||||||
| Long-Term Debt (includes $3,923 at 2021 and $3,535 at 2020 related to VIEs) | 57,929 | 55,625 | |||||||||
| Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes | 9,875 | 9,244 | |||||||||
| Asset retirement obligations | 12,278 | 12,286 | |||||||||
| Regulatory liabilities | 15,530 | 15,029 | |||||||||
| Operating lease liabilities | 1,093 | 1,340 | |||||||||
| Accrued pension and other post-retirement benefit costs | 988 | 969 | |||||||||
| Investment tax credits | 804 | 687 | |||||||||
| Other (includes $341 at 2021 and $316 at 2020 related to VIEs) | 1,714 | 1,719 | |||||||||
| Total other noncurrent liabilities | 42,282 | 41,274 | |||||||||
| Commitments and Contingencies | 0 | 0 | |||||||||
| Equity | |||||||||||
| Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2021 and 2020 | 973 | 973 | |||||||||
| Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2021 and 2020 | 989 | 989 | |||||||||
| Common stock, $0.001 par value, 2 billion shares authorized; 769 million shares outstanding at 2021 and 2020 | 1 | 1 | |||||||||
| Additional paid-in capital | 44,348 | 43,767 | |||||||||
| Retained earnings | 3,293 | 2,471 | |||||||||
| Accumulated other comprehensive loss | (297) | (237) | |||||||||
| Total Duke Energy Corporation stockholders' equity | 49,307 | 47,964 | |||||||||
| Noncontrolling interests | 1,933 | 1,220 | |||||||||
| Total equity | 51,240 | 49,184 | |||||||||
| Total Liabilities and Equity | $ | 167,007 | $ | 162,388 | |||||||
| (in millions) | September 30, 2020 | December 31, 2019 | |||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash and cash equivalents | $ | 308 | $ | 311 | |||
| Receivables (net of allowance for doubtful accounts of $27 at 2020 and $22 at 2019) | 719 | 1,066 | |||||
| Receivables of VIEs (net of allowance for doubtful accounts of $106 at 2020 and $54 at 2019) | 2,320 | 1,994 | |||||
| Inventory | 3,190 | 3,232 | |||||
| Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs) | 1,637 | 1,796 | |||||
| Other (includes $335 at 2020 and $242 at 2019 related to VIEs) | 505 | 764 | |||||
| Total current assets | 8,679 | 9,163 | |||||
| Property, Plant and Equipment | |||||||
| Cost | 153,916 | 147,654 | |||||
| Accumulated depreciation and amortization | (48,185 | ) | (45,773 | ) | |||
| Generation facilities to be retired, net | 29 | 246 | |||||
| Net property, plant and equipment | 105,760 | 102,127 | |||||
| Other Noncurrent Assets | |||||||
| Goodwill | 19,303 | 19,303 | |||||
| Regulatory assets (includes $951 at 2020 and $989 at 2019 related to VIEs) | 13,264 | 13,222 | |||||
| Nuclear decommissioning trust funds | 8,363 | 8,140 | |||||
| Operating lease right-of-use assets, net | 1,577 | 1,658 | |||||
| Investments in equity method unconsolidated affiliates | 924 | 1,936 | |||||
| Other (includes $90 at 2020 and $110 at 2019 related to VIEs) | 3,539 | 3,289 | |||||
| Total other noncurrent assets | 46,970 | 47,548 | |||||
| Total Assets | $ | 161,409 | $ | 158,838 | |||
| LIABILITIES AND EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 2,486 | $ | 3,487 | |||
| Notes payable and commercial paper | 3,425 | 3,135 | |||||
| Taxes accrued | 768 | 392 | |||||
| Interest accrued | 556 | 565 | |||||
| Current maturities of long-term debt (includes $466 at 2020 and $216 at 2019 related to VIEs) | 4,669 | 3,141 | |||||
| Asset retirement obligations | 742 | 881 | |||||
| Regulatory liabilities | 1,218 | 784 | |||||
| Other | 2,829 | 2,367 | |||||
| Total current liabilities | 16,693 | 14,752 | |||||
| Long-Term Debt (includes $3,628 at 2020 and $3,997 at 2019 related to VIEs) | 56,049 | 54,985 | |||||
| Other Noncurrent Liabilities | |||||||
| Deferred income taxes | 9,170 | 8,878 | |||||
| Asset retirement obligations | 12,912 | 12,437 | |||||
| Regulatory liabilities | 14,546 | 15,264 | |||||
| Operating lease liabilities | 1,379 | 1,432 | |||||
| Accrued pension and other post-retirement benefit costs | 903 | 934 | |||||
| Investment tax credits | 689 | 624 | |||||
| Other (includes $342 at 2020 and $228 at 2019 related to VIEs) | 1,773 | 1,581 | |||||
| Total other noncurrent liabilities | 41,372 | 41,150 | |||||
| Commitments and Contingencies | |||||||
| Equity | |||||||
| Preferred stock, Series A, $0.001 par value, 40 million depositary shares authorized and outstanding at 2020 and 2019 | 973 | 973 | |||||
| Preferred stock, Series B, $0.001 par value, 1 million shares authorized and outstanding at 2020 and 2019 | 989 | 989 | |||||
| Common stock, $0.001 par value, 2 billion shares authorized; 736 million shares outstanding at 2020 and 733 million shares outstanding at 2019 | 1 | 1 | |||||
| Additional paid-in capital | 41,046 | 40,881 | |||||
| Retained earnings | 3,260 | 4,108 | |||||
| Accumulated other comprehensive loss | (263 | ) | (130 | ) | |||
| Total Duke Energy Corporation stockholders' equity | 46,006 | 46,822 | |||||
| Noncontrolling interests | 1,289 | 1,129 | |||||
| Total equity | 47,295 | 47,951 | |||||
| Total Liabilities and Equity | $ | 161,409 | $ | 158,838 | |||
See Notes to Condensed Consolidated Financial Statements
11
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2021 | 2020 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 2,915 | $ | 1,232 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, amortization and accretion (including amortization of nuclear fuel) | 4,189 | 4,081 | |||||||||
| Equity in (earnings) losses of unconsolidated affiliates | (14) | 2,004 | |||||||||
| Equity component of AFUDC | (126) | (112) | |||||||||
| Impairment of assets and other charges | 342 | 36 | |||||||||
| Deferred income taxes | 206 | 210 | |||||||||
| Payments for asset retirement obligations | (389) | (463) | |||||||||
| Provision for rate refunds | (41) | (15) | |||||||||
| Refund of AMT credit carryforwards | — | 572 | |||||||||
| (Increase) decrease in | |||||||||||
| Net realized and unrealized mark-to-market and hedging transactions | 116 | 87 | |||||||||
| Receivables | (167) | 58 | |||||||||
| Inventory | 268 | 43 | |||||||||
| Other current assets | (643) | 199 | |||||||||
| Increase (decrease) in | |||||||||||
| Accounts payable | (146) | (563) | |||||||||
| Taxes accrued | 431 | 386 | |||||||||
| Other current liabilities | 10 | (284) | |||||||||
| Other assets | 199 | (338) | |||||||||
| Other liabilities | 77 | (367) | |||||||||
| Net cash provided by operating activities | 7,227 | 6,766 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Capital expenditures | (7,089) | (7,408) | |||||||||
| Contributions to equity method investments | (30) | (276) | |||||||||
| Purchases of debt and equity securities | (4,292) | (6,160) | |||||||||
| Proceeds from sales and maturities of debt and equity securities | 4,335 | 6,087 | |||||||||
| Disbursements to canceled equity method investments | (855) | — | |||||||||
| Other | (269) | (207) | |||||||||
| Net cash used in investing activities | (8,200) | (7,964) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from the: | |||||||||||
| Issuance of long-term debt | 6,379 | 6,162 | |||||||||
| Issuance of common stock | 5 | 75 | |||||||||
| Payments for the redemption of long-term debt | (3,696) | (3,468) | |||||||||
| Proceeds from the issuance of short-term debt with original maturities greater than 90 days | 109 | 2,372 | |||||||||
| Payments for the redemption of short-term debt with original maturities greater than 90 days | (997) | (1,143) | |||||||||
| Notes payable and commercial paper | 165 | (969) | |||||||||
| Contributions from noncontrolling interests | 1,556 | 402 | |||||||||
| Dividends paid | (2,340) | (2,113) | |||||||||
| Other | (21) | (93) | |||||||||
| Net cash provided by financing activities | 1,160 | 1,225 | |||||||||
| Net increase in cash, cash equivalents and restricted cash | 187 | 27 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 556 | 573 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 743 | $ | 600 | |||||||
| Supplemental Disclosures: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ | 998 | $ | 992 | |||||||
| Non-cash dividends | — | 82 | |||||||||
| Nine Months Ended | |||||||
| September 30, | |||||||
| (in millions) | 2020 | 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net (loss) income | $ | 1,232 | $ | 2,964 | |||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||
| Depreciation, amortization and accretion (including amortization of nuclear fuel) | 4,081 | 3,831 | |||||
| Equity in losses (earnings) of unconsolidated affiliates | 2,004 | (137 | ) | ||||
| Equity component of AFUDC | (112 | ) | (99 | ) | |||
| Gains on sales of other assets | (10 | ) | — | ||||
| Impairment charges | 36 | (16 | ) | ||||
| Deferred income taxes | 210 | 736 | |||||
| Contributions to qualified pension plans | — | (77 | ) | ||||
| Payments for asset retirement obligations | (463 | ) | (582 | ) | |||
| Provision for rate refunds | (15 | ) | 61 | ||||
| Refund of AMT credit carryforwards | 572 | — | |||||
| (Increase) decrease in | |||||||
| Net realized and unrealized mark-to-market and hedging transactions | 87 | (4 | ) | ||||
| Receivables | 58 | 62 | |||||
| Inventory | 43 | (3 | ) | ||||
| Other current assets | 199 | (134 | ) | ||||
| Increase (decrease) in | |||||||
| Accounts payable | (563 | ) | (538 | ) | |||
| Taxes accrued | 386 | 125 | |||||
| Other current liabilities | (284 | ) | (198 | ) | |||
| Other assets | (328 | ) | (279 | ) | |||
| Other liabilities | (367 | ) | (75 | ) | |||
| Net cash provided by operating activities | 6,766 | 5,637 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Capital expenditures | (7,408 | ) | (8,084 | ) | |||
| Contributions to equity method investments | (276 | ) | (264 | ) | |||
| Purchases of debt and equity securities | (6,160 | ) | (3,105 | ) | |||
| Proceeds from sales and maturities of debt and equity securities | 6,087 | 3,092 | |||||
| Other | (207 | ) | (272 | ) | |||
| Net cash used in investing activities | (7,964 | ) | (8,633 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from the: | |||||||
| Issuance of long-term debt | 6,162 | 6,131 | |||||
| Issuance of preferred stock | — | 1,963 | |||||
| Issuance of common stock | 75 | 41 | |||||
| Payments for the redemption of long-term debt | (3,468 | ) | (2,737 | ) | |||
| Proceeds from the issuance of short-term debt with original maturities greater than 90 days | 2,372 | 339 | |||||
| Payments for the redemption of short-term debt with original maturities greater than 90 days | (1,143 | ) | (479 | ) | |||
| Notes payable and commercial paper | (969 | ) | (879 | ) | |||
| Contributions from noncontrolling interests | 402 | 615 | |||||
| Dividends paid | (2,113 | ) | (1,990 | ) | |||
| Other | (93 | ) | (17 | ) | |||
| Net cash provided by financing activities | 1,225 | 2,987 | |||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 27 | (9 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of period | 573 | 591 | |||||
| Cash, cash equivalents and restricted cash at end of period | $ | 600 | $ | 582 | |||
| Supplemental Disclosures: | |||||||
| Significant non-cash transactions: | |||||||
| Accrued capital expenditures | $ | 992 | $ | 1,073 | |||
| Non-cash dividends | 82 | 81 | |||||
See Notes to Condensed Consolidated Financial Statements
12
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended September 30, 2019 and 2020 | Three Months Ended September 30, 2020 and 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive | Accumulated Other Comprehensive | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Loss) Income | (Loss) Income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Unrealized | Total | Net Unrealized | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Gains | (Losses) Gains | Duke Energy | Net Gains | (Losses) Gains | Duke Energy | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common | Additional | (Losses) on | on Available- | Pension and | Corporation | Common | Additional | (Losses) on | on Available- | Pension and | Corporation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred | Stock | Common | Paid-in | Retained | Cash Flow | for-Sale- | OPEB | Stockholders' | Noncontrolling | Total | Preferred | Stock | Common | Paid-in | Retained | Cash Flow | for-Sale- | OPEB | Stockholders' | Noncontrolling | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Stock | Shares | Stock | Capital | Earnings | Hedges | Securities | Adjustments | Equity | Interests | Equity | (in millions) | Stock | Shares | Stock | Capital | Earnings | Hedges | Securities | Adjustments | Equity | Interests | Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2019 | $ | 973 | 728 | $ | 1 | $ | 40,885 | $ | 3,502 | $ | (63 | ) | $ | 4 | $ | (89 | ) | $ | 45,213 | $ | 119 | $ | 45,332 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | 1,327 | — | — | — | 1,327 | (19 | ) | 1,308 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income | — | — | — | — | — | (15 | ) | 2 | (2 | ) | (15 | ) | — | (15 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock, Series B, issuances, net of issuance costs(a) | 990 | — | — | — | — | — | — | — | 990 | — | 990 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issuances, including dividend reinvestment and employee benefits | — | 1 | — | 69 | — | — | — | — | 69 | — | 69 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock dividends | — | — | — | — | (690 | ) | — | — | — | (690 | ) | — | (690 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of noncontrolling interest(b) | — | — | — | (465 | ) | — | 10 | — | — | (455 | ) | 863 | 408 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contribution from noncontrolling interests, net of transaction costs | — | — | — | — | — | — | — | — | — | 7 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | (1 | ) | — | — | — | — | (1 | ) | (1 | ) | (2 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2019 | $ | 1,963 | 729 | $ | 1 | $ | 40,488 | $ | 4,139 | $ | (68 | ) | $ | 6 | $ | (91 | ) | $ | 46,438 | $ | 969 | $ | 47,407 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2020 | $ | 1,962 | 735 | $ | 1 | $ | 40,997 | $ | 2,707 | $ | (111 | ) | $ | 10 | $ | (82 | ) | $ | 45,484 | $ | 1,127 | $ | 46,611 | Balance at June 30, 2020 | $ | 1,962 | 735 | $ | 1 | $ | 40,997 | $ | 2,707 | $ | (111) | $ | 10 | $ | (82) | $ | 45,484 | $ | 1,127 | $ | 46,611 | ||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | 1,265 | — | — | — | 1,265 | (70 | ) | 1,195 | Net income (loss) | — | — | — | — | 1,265 | — | — | — | 1,265 | (70) | 1,195 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss) income | — | — | — | — | — | (79 | ) | (2 | ) | 1 | (80 | ) | — | (80 | ) | Other comprehensive (loss) income | — | — | — | — | — | (79) | (2) | 1 | (80) | — | (80) | ||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issuances, including dividend reinvestment and employee benefits | — | 1 | — | 65 | — | — | — | — | 65 | — | 65 | Common stock issuances, including dividend reinvestment and employee benefits | — | 1 | — | 65 | — | — | — | — | 65 | — | 65 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock dividends | — | — | — | — | (712 | ) | — | — | — | (712 | ) | — | (712 | ) | Common stock dividends | — | — | — | — | (712) | — | — | — | (712) | — | (712) | |||||||||||||||||||||||||||||||||||||||||||||||
Contribution from noncontrolling interests, net of transaction costs(d) | — | — | — | (17 | ) | — | — | — | — | (17 | ) | 239 | 222 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contribution from noncontrolling interests, net of transaction costs(a) | Contribution from noncontrolling interests, net of transaction costs(a) | — | — | — | (17) | — | — | — | — | (17) | 239 | 222 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest in subsidiaries | — | — | — | — | — | — | — | — | — | (8 | ) | (8 | ) | Distributions to noncontrolling interest in subsidiaries | — | — | — | — | — | — | — | — | — | (8) | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | 1 | — | — | — | — | 1 | 1 | 2 | Other | — | — | — | 1 | — | — | — | — | 1 | 1 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 1,962 | 736 | $ | 1 | $ | 41,046 | $ | 3,260 | $ | (190 | ) | $ | 8 | $ | (81 | ) | $ | 46,006 | $ | 1,289 | $ | 47,295 | Balance at September 30, 2020 | $ | 1,962 | $ | 736 | $ | 1 | $ | 41,046 | $ | 3,260 | $ | (190) | $ | 8 | $ | (81) | $ | 46,006 | $ | 1,289 | $ | 47,295 | |||||||||||||||||||||||||||
| Balance at June 30, 2021 | Balance at June 30, 2021 | $ | 1,962 | 769 | $ | 1 | $ | 43,788 | $ | 2,687 | $ | (234) | $ | 2 | $ | (74) | $ | 48,132 | $ | 1,413 | $ | 49,545 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | Net income (loss) | — | — | — | — | 1,366 | — | — | — | 1,366 | (129) | 1,237 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | Other comprehensive income (loss) | — | — | — | — | — | 10 | (2) | 1 | 9 | 1 | 10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issuances, including dividend reinvestment and employee benefits | Common stock issuances, including dividend reinvestment and employee benefits | — | — | — | 20 | — | — | — | — | 20 | — | 20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock dividends | Common stock dividends | — | — | — | — | (760) | — | — | — | (760) | — | (760) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of noncontrolling interest(c) | Sale of noncontrolling interest(c) | — | — | — | 545 | — | — | — | — | 545 | 454 | 999 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contribution from noncontrolling interests, net of transaction costs(a) | Contribution from noncontrolling interests, net of transaction costs(a) | — | — | — | (3) | — | — | — | — | (3) | 213 | 210 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest in subsidiaries | Distributions to noncontrolling interest in subsidiaries | — | — | — | — | — | — | — | — | — | (22) | (22) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | Other | — | — | — | (2) | — | — | — | — | (2) | 3 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | Balance at September 30, 2021 | $ | 1,962 | $ | 769 | $ | 1 | $ | 44,348 | $ | 3,293 | $ | (224) | $ | — | $ | (73) | $ | 49,307 | $ | 1,933 | $ | 51,240 | ||||||||||||||||||||||||||||||||||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements
13
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Nine Months Ended September 30, 2019 and 2020 | ||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive | ||||||||||||||||||||||||||||||||
| (Loss) Income | ||||||||||||||||||||||||||||||||
| Net Unrealized | Total | |||||||||||||||||||||||||||||||
| Net | (Losses) Gains | Duke Energy | ||||||||||||||||||||||||||||||
| Common | Additional | Losses on | on Available- | Pension and | Corporation | |||||||||||||||||||||||||||
| Preferred | Stock | Common | Paid-in | Retained | Cash Flow | for-Sale- | OPEB | Stockholders' | Noncontrolling | Total | ||||||||||||||||||||||
| (in millions) | Stock | Shares | Stock | Capital | Earnings | Hedges | Securities | Adjustments | Equity | Interests | Equity | |||||||||||||||||||||
| Balance at December 31, 2018 | $ | — | 727 | $ | 1 | $ | 40,795 | $ | 3,113 | $ | (14 | ) | $ | (3 | ) | $ | (75 | ) | $ | 43,817 | $ | 17 | $ | 43,834 | ||||||||
| Net income (loss) | — | — | — | — | 3,047 | — | — | — | 3,047 | (110 | ) | 2,937 | ||||||||||||||||||||
| Other comprehensive (loss) income | — | — | — | — | — | (58 | ) | 10 | 1 | (47 | ) | — | (47 | ) | ||||||||||||||||||
Preferred stock, Series A, issuances, net of issuance costs(c) | 973 | — | — | — | — | — | — | — | 973 | — | 973 | |||||||||||||||||||||
Preferred stock, Series B, issuances, net of issuance costs(a) | 990 | — | — | — | — | — | — | — | 990 | — | 990 | |||||||||||||||||||||
| Common stock issuances, including dividend reinvestment and employee benefits | — | 2 | — | 158 | — | — | — | — | 158 | — | 158 | |||||||||||||||||||||
| Common stock dividends | — | — | — | — | (2,044 | ) | — | — | — | (2,044 | ) | — | (2,044 | ) | ||||||||||||||||||
Sale of noncontrolling interest(b) | — | — | — | (465 | ) | — | 10 | — | — | (455 | ) | 863 | 408 | |||||||||||||||||||
Contributions from noncontrolling interests, net of transaction costs(d) | — | — | — | — | — | — | — | — | — | 200 | 200 | |||||||||||||||||||||
| Distributions to noncontrolling interest in subsidiaries | — | — | — | — | — | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||||||
Other(e) | — | — | — | — | 23 | (6 | ) | (1 | ) | (17 | ) | (1 | ) | — | (1 | ) | ||||||||||||||||
| Balance at September 30, 2019 | $ | 1,963 | 729 | $ | 1 | $ | 40,488 | $ | 4,139 | $ | (68 | ) | $ | 6 | $ | (91 | ) | $ | 46,438 | $ | 969 | $ | 47,407 | |||||||||
| Balance at December 31, 2019 | $ | 1,962 | 733 | $ | 1 | $ | 40,881 | $ | 4,108 | $ | (51 | ) | $ | 3 | $ | (82 | ) | $ | 46,822 | $ | 1,129 | $ | 47,951 | |||||||||
| Net income (loss) | — | — | — | — | 1,347 | — | — | — | 1,347 | (208 | ) | 1,139 | ||||||||||||||||||||
| Other comprehensive (loss) income | — | — | — | — | — | (139 | ) | 5 | 1 | (133 | ) | (12 | ) | (145 | ) | |||||||||||||||||
| Common stock issuances, including dividend reinvestment and employee benefits | — | 3 | — | 181 | — | — | — | — | 181 | — | 181 | |||||||||||||||||||||
| Common stock dividends | — | — | — | — | (2,103 | ) | — | — | — | (2,103 | ) | — | (2,103 | ) | ||||||||||||||||||
Contributions from noncontrolling interests, net of transaction costs(d) | — | — | — | (17 | ) | — | — | — | — | (17 | ) | 402 | 385 | |||||||||||||||||||
| Distributions to noncontrolling interest in subsidiaries | — | — | — | — | — | — | — | — | — | (22 | ) | (22 | ) | |||||||||||||||||||
Other(f) | — | — | — | 1 | (92 | ) | — | — | — | (91 | ) | — | (91 | ) | ||||||||||||||||||
| Balance at September 30, 2020 | $ | 1,962 | 736 | $ | 1 | $ | 41,046 | $ | 3,260 | $ | (190 | ) | $ | 8 | $ | (81 | ) | $ | 46,006 | $ | 1,289 | $ | 47,295 | |||||||||
| Nine Months Ended September 30, 2020 and 2021 | |||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive | |||||||||||||||||||||||||||||||||||||||||
| (Loss) Income | |||||||||||||||||||||||||||||||||||||||||
| Net Unrealized | Total | ||||||||||||||||||||||||||||||||||||||||
| Net Gains | Gains (Losses) | Duke Energy | |||||||||||||||||||||||||||||||||||||||
| Common | Additional | (Losses) on | on Available- | Pension and | Corporation | ||||||||||||||||||||||||||||||||||||
| Preferred | Stock | Common | Paid-in | Retained | Cash Flow | for-Sale- | OPEB | Stockholders' | Noncontrolling | Total | |||||||||||||||||||||||||||||||
| (in millions) | Stock | Shares | Stock | Capital | Earnings | Hedges | Securities | Adjustments | Equity | Interests | Equity | ||||||||||||||||||||||||||||||
| Balance at December 31, 2019 | $ | 1,962 | 733 | $ | 1 | $ | 40,881 | $ | 4,108 | $ | (51) | $ | 3 | $ | (82) | $ | 46,822 | $ | 1,129 | $ | 47,951 | ||||||||||||||||||||
| Net income (loss) | — | — | — | — | 1,347 | — | — | — | 1,347 | (208) | 1,139 | ||||||||||||||||||||||||||||||
| Other comprehensive (loss) income | — | — | — | — | — | (139) | 5 | 1 | (133) | (12) | (145) | ||||||||||||||||||||||||||||||
| Common stock issuances, including dividend reinvestment and employee benefits | — | 3 | — | 181 | — | — | — | — | 181 | — | 181 | ||||||||||||||||||||||||||||||
| Common stock dividends | — | — | — | — | (2,103) | — | — | — | (2,103) | — | (2,103) | ||||||||||||||||||||||||||||||
Contributions from noncontrolling interests, net of transaction costs(a) | — | — | — | (17) | — | — | — | — | (17) | 402 | 385 | ||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest in subsidiaries | — | — | — | — | — | — | — | — | — | (22) | (22) | ||||||||||||||||||||||||||||||
Other(b) | — | — | — | 1 | (92) | — | — | — | (91) | — | (91) | ||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 1,962 | 736 | $ | 1 | $ | 41,046 | $ | 3,260 | $ | (190) | $ | 8 | $ | (81) | $ | 46,006 | $ | 1,289 | $ | 47,295 | ||||||||||||||||||||
| Balance at December 31, 2020 | $ | 1,962 | 769 | $ | 1 | $ | 43,767 | $ | 2,471 | $ | (167) | $ | 6 | $ | (76) | $ | 47,964 | $ | 1,220 | $ | 49,184 | ||||||||||||||||||||
| Net income (loss) | — | — | — | — | 3,070 | — | — | — | 3,070 | (247) | 2,823 | ||||||||||||||||||||||||||||||
| Other comprehensive (loss) income | — | — | — | — | — | (57) | (6) | 3 | (60) | 7 | (53) | ||||||||||||||||||||||||||||||
| Common stock issuances, including dividend reinvestment and employee benefits | — | — | — | 43 | — | — | — | — | 43 | — | 43 | ||||||||||||||||||||||||||||||
| Common stock dividends | — | — | — | — | (2,248) | — | — | — | (2,248) | — | (2,248) | ||||||||||||||||||||||||||||||
Sale of noncontrolling interest(c) | — | — | — | 545 | — | — | — | — | 545 | 454 | 999 | ||||||||||||||||||||||||||||||
Contributions from noncontrolling interests, net of transaction costs(a) | — | — | — | (6) | — | — | — | — | (6) | 531 | 525 | ||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest in subsidiaries | — | — | — | — | — | — | — | — | — | (34) | (34) | ||||||||||||||||||||||||||||||
| Other | — | — | — | (1) | — | — | — | — | (1) | 2 | 1 | ||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | 1,962 | 769 | $ | 1 | $ | 44,348 | $ | 3,293 | $ | (224) | $ | — | $ | (73) | $ | 49,307 | $ | 1,933 | $ | 51,240 | ||||||||||||||||||||
(a)Relates to tax equity financing activity in the Commercial Renewables segment.
(b)Amounts in Retained earnings primarily represent impacts due to implementation of a new accounting standard related to Current Estimated Credit Losses. See Note 1 for additional discussion.
(c)Relates to the sale of a noncontrolling interest in Duke Energy Indiana. See Note 2 for additional discussion.
See Notes to Condensed Consolidated Financial Statements
14
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Operating Revenues | $ | 2,104 | $ | 2,058 | $ | 5,430 | $ | 5,416 | |||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Fuel used in electric generation and purchased power | 452 | 497 | 1,218 | 1,326 | |||||||||||||||||||
| Operation, maintenance and other | 471 | 402 | 1,347 | 1,218 | |||||||||||||||||||
| Depreciation and amortization | 366 | 372 | 1,088 | 1,090 | |||||||||||||||||||
| Property and other taxes | 91 | 57 | 248 | 213 | |||||||||||||||||||
| Impairment of assets and other charges | 163 | 20 | 238 | 22 | |||||||||||||||||||
| Total operating expenses | 1,543 | 1,348 | 4,139 | 3,869 | |||||||||||||||||||
| (Losses) Gains on Sales of Other Assets and Other, net | (1) | 1 | 1 | 1 | |||||||||||||||||||
| Operating Income | 560 | 711 | 1,292 | 1,548 | |||||||||||||||||||
| Other Income and Expenses, net | 126 | 42 | 218 | 128 | |||||||||||||||||||
| Interest Expense | 137 | 122 | 400 | 370 | |||||||||||||||||||
| Income Before Income Taxes | 549 | 631 | 1,110 | 1,306 | |||||||||||||||||||
| Income Tax Expense | 16 | 76 | 40 | 178 | |||||||||||||||||||
| Net Income and Comprehensive Income | $ | 533 | $ | 555 | $ | 1,070 | $ | 1,128 | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Operating Revenues | $ | 2,058 | $ | 2,162 | $ | 5,416 | $ | 5,619 | |||||||
| Operating Expenses | |||||||||||||||
| Fuel used in electric generation and purchased power | 497 | 504 | 1,326 | 1,371 | |||||||||||
| Operation, maintenance and other | 402 | 443 | 1,218 | 1,324 | |||||||||||
| Depreciation and amortization | 372 | 350 | 1,090 | 1,013 | |||||||||||
| Property and other taxes | 57 | 66 | 213 | 221 | |||||||||||
| Impairment charges | 20 | 6 | 22 | 11 | |||||||||||
| Total operating expenses | 1,348 | 1,369 | 3,869 | 3,940 | |||||||||||
| Gains on Sales of Other Assets and Other, net | 1 | — | 1 | — | |||||||||||
| Operating Income | 711 | 793 | 1,548 | 1,679 | |||||||||||
| Other Income and Expenses, net | 42 | 34 | 128 | 106 | |||||||||||
| Interest Expense | 122 | 119 | 370 | 346 | |||||||||||
| Income Before Income Taxes | 631 | 708 | 1,306 | 1,439 | |||||||||||
| Income Tax Expense | 76 | 118 | 178 | 255 | |||||||||||
| Net Income and Comprehensive Income | $ | 555 | $ | 590 | $ | 1,128 | $ | 1,184 | |||||||
See Notes to Condensed Consolidated Financial Statements
15
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2021 | December 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 21 | $ | 21 | |||||||
| Receivables (net of allowance for doubtful accounts of $2 at 2021 and $1 at 2020) | 278 | 247 | |||||||||
| Receivables of VIEs (net of allowance for doubtful accounts of $40 at 2021 and $22 at 2020) | 915 | 696 | |||||||||
| Receivables from affiliated companies | 85 | 124 | |||||||||
| Inventory | 969 | 1,010 | |||||||||
| Regulatory assets | 460 | 473 | |||||||||
| Other | 104 | 20 | |||||||||
| Total current assets | 2,832 | 2,591 | |||||||||
| Property, Plant and Equipment | |||||||||||
| Cost | 51,790 | 50,640 | |||||||||
| Accumulated depreciation and amortization | (17,959) | (17,453) | |||||||||
| Facilities to be retired, net | 89 | — | |||||||||
| Net property, plant and equipment | 33,920 | 33,187 | |||||||||
| Other Noncurrent Assets | |||||||||||
| Regulatory assets | 2,743 | 2,996 | |||||||||
| Nuclear decommissioning trust funds | 5,434 | 4,977 | |||||||||
| Operating lease right-of-use assets, net | 95 | 110 | |||||||||
| Other | 1,197 | 1,187 | |||||||||
| Total other noncurrent assets | 9,469 | 9,270 | |||||||||
| Total Assets | $ | 46,221 | $ | 45,048 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 673 | $ | 1,000 | |||||||
| Accounts payable to affiliated companies | 184 | 199 | |||||||||
| Notes payable to affiliated companies | 86 | 506 | |||||||||
| Taxes accrued | 391 | 76 | |||||||||
| Interest accrued | 137 | 117 | |||||||||
| Current maturities of long-term debt | 357 | 506 | |||||||||
| Asset retirement obligations | 245 | 264 | |||||||||
| Regulatory liabilities | 503 | 473 | |||||||||
| Other | 516 | 546 | |||||||||
| Total current liabilities | 3,092 | 3,687 | |||||||||
| Long-Term Debt | 12,318 | 11,412 | |||||||||
| Long-Term Debt Payable to Affiliated Companies | 300 | 300 | |||||||||
| Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes | 3,893 | 3,842 | |||||||||
| Asset retirement obligations | 5,134 | 5,086 | |||||||||
| Regulatory liabilities | 6,867 | 6,535 | |||||||||
| Operating lease liabilities | 83 | 97 | |||||||||
| Accrued pension and other post-retirement benefit costs | 64 | 73 | |||||||||
| Investment tax credits | 288 | 236 | |||||||||
| Other | 558 | 626 | |||||||||
| Total other noncurrent liabilities | 16,887 | 16,495 | |||||||||
| Commitments and Contingencies | 0 | 0 | |||||||||
| Equity | |||||||||||
| Member's equity | 13,631 | 13,161 | |||||||||
| Accumulated other comprehensive loss | (7) | (7) | |||||||||
| Total equity | 13,624 | 13,154 | |||||||||
| Total Liabilities and Equity | $ | 46,221 | $ | 45,048 | |||||||
| (in millions) | September 30, 2020 | December 31, 2019 | |||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash and cash equivalents | $ | 23 | $ | 18 | |||
| Receivables (net of allowance for doubtful accounts of $1 at 2020 and $3 at 2019) | 177 | 324 | |||||
| Receivables of VIEs (net of allowance for doubtful accounts of $21 at 2020 and $7 at 2019) | 770 | 642 | |||||
| Receivables from affiliated companies | 64 | 114 | |||||
| Notes receivable from affiliated companies | 65 | — | |||||
| Inventory | 992 | 996 | |||||
| Regulatory assets | 495 | 550 | |||||
| Other | 44 | 21 | |||||
| Total current assets | 2,630 | 2,665 | |||||
| Property, Plant and Equipment | |||||||
| Cost | 50,622 | 48,922 | |||||
| Accumulated depreciation and amortization | (17,406 | ) | (16,525 | ) | |||
| Net property, plant and equipment | 33,216 | 32,397 | |||||
| Other Noncurrent Assets | |||||||
| Regulatory assets | 3,400 | 3,360 | |||||
| Nuclear decommissioning trust funds | 4,506 | 4,359 | |||||
| Operating lease right-of-use assets, net | 117 | 123 | |||||
| Other | 1,179 | 1,149 | |||||
| Total other noncurrent assets | 9,202 | 8,991 | |||||
| Total Assets | $ | 45,048 | $ | 44,053 | |||
| LIABILITIES AND EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 583 | $ | 954 | |||
| Accounts payable to affiliated companies | 155 | 210 | |||||
| Notes payable to affiliated companies | — | 29 | |||||
| Taxes accrued | 398 | 46 | |||||
| Interest accrued | 130 | 115 | |||||
| Current maturities of long-term debt | 751 | 458 | |||||
| Asset retirement obligations | 267 | 206 | |||||
| Regulatory liabilities | 430 | 255 | |||||
| Other | 487 | 611 | |||||
| Total current liabilities | 3,201 | 2,884 | |||||
| Long-Term Debt | 11,497 | 11,142 | |||||
| Long-Term Debt Payable to Affiliated Companies | 300 | 300 | |||||
| Other Noncurrent Liabilities | |||||||
| Deferred income taxes | 3,915 | 3,921 | |||||
| Asset retirement obligations | 5,507 | 5,528 | |||||
| Regulatory liabilities | 6,243 | 6,423 | |||||
| Operating lease liabilities | 102 | 102 | |||||
| Accrued pension and other post-retirement benefit costs | 76 | 84 | |||||
| Investment tax credits | 237 | 231 | |||||
| Other | 644 | 627 | |||||
| Total other noncurrent liabilities | 16,724 | 16,916 | |||||
| Commitments and Contingencies | |||||||
| Equity | |||||||
| Member's equity | 13,333 | 12,818 | |||||
| Accumulated other comprehensive loss | (7 | ) | (7 | ) | |||
| Total equity | 13,326 | 12,811 | |||||
| Total Liabilities and Equity | $ | 45,048 | $ | 44,053 | |||
See Notes to Condensed Consolidated Financial Statements
16
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2021 | 2020 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 1,070 | $ | 1,128 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization (including amortization of nuclear fuel) | 1,295 | 1,295 | |||||||||
| Equity component of AFUDC | (46) | (46) | |||||||||
| Loss on sales of other assets | (1) | — | |||||||||
| Impairment of assets and other charges | 238 | 22 | |||||||||
| Deferred income taxes | (146) | (103) | |||||||||
| Payments for asset retirement obligations | (132) | (127) | |||||||||
| Provision for rate refunds | (29) | (1) | |||||||||
| (Increase) decrease in | |||||||||||
| Net realized and unrealized mark-to-market and hedging transactions | (1) | — | |||||||||
| Receivables | (172) | 41 | |||||||||
| Receivables from affiliated companies | 39 | 50 | |||||||||
| Inventory | 41 | 4 | |||||||||
| Other current assets | (153) | 197 | |||||||||
| Increase (decrease) in | |||||||||||
| Accounts payable | (254) | (313) | |||||||||
| Accounts payable to affiliated companies | (15) | (55) | |||||||||
| Taxes accrued | 315 | 352 | |||||||||
| Other current liabilities | 72 | (121) | |||||||||
| Other assets | 52 | (72) | |||||||||
| Other liabilities | 167 | (23) | |||||||||
| Net cash provided by operating activities | 2,340 | 2,228 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Capital expenditures | (1,947) | (1,931) | |||||||||
| Purchases of debt and equity securities | (2,465) | (1,313) | |||||||||
| Proceeds from sales and maturities of debt and equity securities | 2,465 | 1,313 | |||||||||
| Notes receivable from affiliated companies | — | (65) | |||||||||
| Other | (122) | (105) | |||||||||
| Net cash used in investing activities | (2,069) | (2,101) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from the issuance of long-term debt | 1,367 | 965 | |||||||||
| Payments for the redemption of long-term debt | (616) | (457) | |||||||||
| Notes payable to affiliated companies | (421) | (29) | |||||||||
| Distributions to parent | (600) | (600) | |||||||||
| Other | (1) | (1) | |||||||||
| Net cash used in financing activities | (271) | (122) | |||||||||
| Net increase in cash and cash equivalents | — | 5 | |||||||||
| Cash and cash equivalents at beginning of period | 21 | 18 | |||||||||
| Cash and cash equivalents at end of period | $ | 21 | $ | 23 | |||||||
| Supplemental Disclosures: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ | 308 | $ | 295 | |||||||
| Nine Months Ended | |||||||
| September 30, | |||||||
| (in millions) | 2020 | 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net income | $ | 1,128 | $ | 1,184 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization (including amortization of nuclear fuel) | 1,295 | 1,227 | |||||
| Equity component of AFUDC | (46 | ) | (29 | ) | |||
| Gains on sales of other assets | (1 | ) | — | ||||
| Impairment charges | 22 | 11 | |||||
| Deferred income taxes | (103 | ) | 96 | ||||
| Contributions to qualified pension plans | — | (7 | ) | ||||
| Payments for asset retirement obligations | (127 | ) | (234 | ) | |||
| Provision for rate refunds | (1 | ) | 34 | ||||
| (Increase) decrease in | |||||||
| Net realized and unrealized mark-to-market and hedging transactions | — | (7 | ) | ||||
| Receivables | 41 | (80 | ) | ||||
| Receivables from affiliated companies | 50 | 74 | |||||
| Inventory | 4 | 5 | |||||
| Other current assets | 197 | (117 | ) | ||||
| Increase (decrease) in | |||||||
| Accounts payable | (313 | ) | (284 | ) | |||
| Accounts payable to affiliated companies | (55 | ) | (56 | ) | |||
| Taxes accrued | 352 | 91 | |||||
| Other current liabilities | (121 | ) | 44 | ||||
| Other assets | (71 | ) | (2 | ) | |||
| Other liabilities | (23 | ) | (44 | ) | |||
| Net cash provided by operating activities | 2,228 | 1,906 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Capital expenditures | (1,931 | ) | (1,984 | ) | |||
| Purchases of debt and equity securities | (1,313 | ) | (1,658 | ) | |||
| Proceeds from sales and maturities of debt and equity securities | 1,313 | 1,658 | |||||
| Notes receivable from affiliated companies | (65 | ) | — | ||||
| Other | (105 | ) | (80 | ) | |||
| Net cash used in investing activities | (2,101 | ) | (2,064 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from the issuance of long-term debt | 965 | 819 | |||||
| Payments for the redemption of long-term debt | (457 | ) | (5 | ) | |||
| Notes payable to affiliated companies | (29 | ) | (390 | ) | |||
| Distributions to parent | (600 | ) | (275 | ) | |||
| Other | (1 | ) | (1 | ) | |||
| Net cash (used in) provided by financing activities | (122 | ) | 148 | ||||
| Net increase (decrease) in cash and cash equivalents | 5 | (10 | ) | ||||
| Cash and cash equivalents at beginning of period | 18 | 33 | |||||
| Cash and cash equivalents at end of period | $ | 23 | $ | 23 | |||
| Supplemental Disclosures: | |||||||
| Significant non-cash transactions: | |||||||
| Accrued capital expenditures | $ | 295 | $ | 261 | |||
See Notes to Condensed Consolidated Financial Statements
17
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended September 30, 2020 and 2021 | |||||||||||||||||
| Accumulated Other | |||||||||||||||||
| Comprehensive | |||||||||||||||||
| Loss | |||||||||||||||||
| Member's | Net Losses on | Total | |||||||||||||||
| (in millions) | Equity | Cash Flow Hedges | Equity | ||||||||||||||
| Balance at June 30, 2020 | $ | 13,079 | $ | (7) | $ | 13,072 | |||||||||||
| Net income | 555 | — | 555 | ||||||||||||||
| Distributions to parent | (300) | — | (300) | ||||||||||||||
| Other | (1) | — | (1) | ||||||||||||||
| Balance at September 30, 2020 | $ | 13,333 | $ | (7) | $ | 13,326 | |||||||||||
| Balance at June 30, 2021 | $ | 13,399 | $ | (7) | $ | 13,392 | |||||||||||
| Net income | 533 | — | 533 | ||||||||||||||
| Distributions to parent | (300) | — | (300) | ||||||||||||||
| Other | (1) | — | (1) | ||||||||||||||
| Balance at September 30, 2021 | $ | 13,631 | $ | (7) | $ | 13,624 | |||||||||||
| Nine Months Ended September 30, 2020 and 2021 | |||||||||||||||||
| Accumulated Other | |||||||||||||||||
| Comprehensive | |||||||||||||||||
| Loss | |||||||||||||||||
| Member's | Net Losses on | Total | |||||||||||||||
| (in millions) | Equity | Cash Flow Hedges | Equity | ||||||||||||||
| Balance at December 31, 2019 | $ | 12,818 | $ | (7) | $ | 12,811 | |||||||||||
| Net income | 1,128 | — | 1,128 | ||||||||||||||
| Distributions to parent | (600) | — | (600) | ||||||||||||||
Other(a) | (13) | — | (13) | ||||||||||||||
| Balance at September 30, 2020 | $ | 13,333 | $ | (7) | $ | 13,326 | |||||||||||
| Balance at December 31, 2020 | $ | 13,161 | $ | (7) | $ | 13,154 | |||||||||||
| Net income | 1,070 | — | 1,070 | ||||||||||||||
| Distributions to parent | (600) | — | (600) | ||||||||||||||
| Balance at September 30, 2021 | $ | 13,631 | $ | (7) | $ | 13,624 | |||||||||||
| Three Months Ended September 30, 2019 and 2020 | |||||||||||
| Accumulated Other | |||||||||||
| Comprehensive | |||||||||||
| Loss | |||||||||||
| Member's | Net Losses on | Total | |||||||||
| (in millions) | Equity | Cash Flow Hedges | Equity | ||||||||
| Balance at June 30, 2019 | $ | 12,283 | $ | (7 | ) | $ | 12,276 | ||||
| Net income | 590 | — | 590 | ||||||||
| Distributions to parent | (275 | ) | — | (275 | ) | ||||||
| Balance at September 30, 2019 | $ | 12,598 | $ | (7 | ) | $ | 12,591 | ||||
| Balance at June 30, 2020 | $ | 13,079 | $ | (7 | ) | $ | 13,072 | ||||
| Net income | 555 | — | 555 | ||||||||
| Distributions to parent | (300 | ) | — | (300 | ) | ||||||
| Other | (1 | ) | — | (1 | ) | ||||||
| Balance at September 30, 2020 | $ | 13,333 | $ | (7 | ) | $ | 13,326 | ||||
| Nine Months Ended September 30, 2019 and 2020 | |||||||||||
| Accumulated Other | |||||||||||
| Comprehensive | |||||||||||
| Loss | |||||||||||
| Member's | Net Losses on | Total | |||||||||
| (in millions) | Equity | Cash Flow Hedges | Equity | ||||||||
| Balance at December 31, 2018 | $ | 11,689 | $ | (6 | ) | $ | 11,683 | ||||
| Net income | 1,184 | — | 1,184 | ||||||||
| Distributions to parent | (275 | ) | — | (275 | ) | ||||||
| Other | — | (1 | ) | (1 | ) | ||||||
| Balance at September 30, 2019 | $ | 12,598 | $ | (7 | ) | $ | 12,591 | ||||
| Balance at December 31, 2019 | $ | 12,818 | $ | (7 | ) | $ | 12,811 | ||||
| Net income | 1,128 | — | 1,128 | ||||||||
| Distributions to parent | (600 | ) | — | (600 | ) | ||||||
Other(a) | (13 | ) | — | (13 | ) | ||||||
| Balance at September 30, 2020 | $ | 13,333 | $ | (7 | ) | $ | 13,326 | ||||
See Notes to Condensed Consolidated Financial Statements
18
| FINANCIAL STATEMENTS | |||||
PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Operating Revenues | $ | 3,233 | $ | 3,197 | $ | 8,417 | $ | 8,117 | |||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Fuel used in electric generation and purchased power | 1,074 | 1,088 | 2,702 | 2,628 | |||||||||||||||||||
| Operation, maintenance and other | 636 | 646 | 1,863 | 1,789 | |||||||||||||||||||
| Depreciation and amortization | 504 | 472 | 1,430 | 1,356 | |||||||||||||||||||
| Property and other taxes | 144 | 147 | 419 | 419 | |||||||||||||||||||
| Impairment of assets and other charges | 42 | 1 | 79 | 1 | |||||||||||||||||||
| Total operating expenses | 2,400 | 2,354 | 6,493 | 6,193 | |||||||||||||||||||
| Gains on Sales of Other Assets and Other, net | 8 | 3 | 9 | 9 | |||||||||||||||||||
| Operating Income | 841 | 846 | 1,933 | 1,933 | |||||||||||||||||||
| Other Income and Expenses, net | 86 | 24 | 167 | 89 | |||||||||||||||||||
| Interest Expense | 200 | 194 | 592 | 599 | |||||||||||||||||||
| Income Before Income Taxes | 727 | 676 | 1,508 | 1,423 | |||||||||||||||||||
| Income Tax Expense | 94 | 70 | 174 | 190 | |||||||||||||||||||
| Net Income | 633 | 606 | $ | 1,334 | $ | 1,233 | |||||||||||||||||
| Less: Net Income Attributable to Noncontrolling Interests | 1 | 1 | 1 | 1 | |||||||||||||||||||
| Net Income Attributable to Parent | $ | 632 | $ | 605 | $ | 1,333 | $ | 1,232 | |||||||||||||||
| Net Income | $ | 633 | $ | 606 | $ | 1,334 | $ | 1,233 | |||||||||||||||
| Other Comprehensive Income, net of tax | |||||||||||||||||||||||
| Pension and OPEB adjustments | (1) | — | — | 1 | |||||||||||||||||||
| Net unrealized gains on cash flow hedges | 1 | 1 | 2 | 3 | |||||||||||||||||||
| Unrealized gains on available-for-sale securities | — | 1 | — | 1 | |||||||||||||||||||
| Other Comprehensive Income, net of tax | — | 2 | 2 | 5 | |||||||||||||||||||
| Comprehensive Income | 633 | 608 | $ | 1,336 | $ | 1,238 | |||||||||||||||||
| Less: Comprehensive Income Attributable to Noncontrolling Interests | 1 | 1 | 1 | 1 | |||||||||||||||||||
| Comprehensive Income Attributable to Parent | $ | 632 | $ | 607 | $ | 1,335 | $ | 1,237 | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Operating Revenues | $ | 3,197 | $ | 3,242 | $ | 8,117 | $ | 8,558 | |||||||
| Operating Expenses | |||||||||||||||
| Fuel used in electric generation and purchased power | 1,088 | 1,187 | 2,628 | 3,100 | |||||||||||
| Operation, maintenance and other | 646 | 640 | 1,789 | 1,813 | |||||||||||
| Depreciation and amortization | 472 | 496 | 1,356 | 1,377 | |||||||||||
| Property and other taxes | 147 | 159 | 419 | 439 | |||||||||||
| Impairment charges | 1 | (25 | ) | 1 | (25 | ) | |||||||||
| Total operating expenses | 2,354 | 2,457 | 6,193 | 6,704 | |||||||||||
| Gains on Sales of Other Assets and Other, net | 3 | 1 | 9 | — | |||||||||||
| Operating Income | 846 | 786 | 1,933 | 1,854 | |||||||||||
| Other Income and Expenses, net | 24 | 41 | 89 | 106 | |||||||||||
| Interest Expense | 194 | 212 | 599 | 650 | |||||||||||
| Income Before Income Taxes | 676 | 615 | 1,423 | 1,310 | |||||||||||
| Income Tax Expense | 70 | 94 | 190 | 212 | |||||||||||
| Net Income | 606 | 521 | 1,233 | 1,098 | |||||||||||
| Less: Net Income Attributable to Noncontrolling Interests | 1 | 0 | 1 | 0 | |||||||||||
| Net Income Attributable to Parent | $ | 605 | $ | 521 | $ | 1,232 | $ | 1,098 | |||||||
| Net Income | $ | 606 | $ | 521 | $ | 1,233 | $ | 1,098 | |||||||
| Other Comprehensive Income, net of tax | |||||||||||||||
| Pension and OPEB adjustments | — | — | 1 | 2 | |||||||||||
| Net unrealized gains on cash flow hedges | 1 | 1 | 3 | 4 | |||||||||||
| Unrealized gains on available-for-sale securities | 1 | 1 | 1 | 2 | |||||||||||
| Other Comprehensive Income, net of tax | 2 | 2 | 5 | 8 | |||||||||||
| Comprehensive Income | 608 | 523 | 1,238 | 1,106 | |||||||||||
| Less: Comprehensive Income Attributable to Noncontrolling Interests | 1 | — | 1 | 0 | |||||||||||
| Comprehensive Income Attributable to Parent | $ | 607 | $ | 523 | $ | 1,237 | $ | 1,106 | |||||||
See Notes to Condensed Consolidated Financial Statements
19
| FINANCIAL STATEMENTS | |||||
PROGRESS ENERGY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2021 | December 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 102 | $ | 59 | |||||||
| Receivables (net of allowance for doubtful accounts of $11 at 2021 and $8 at 2020) | 268 | 228 | |||||||||
| Receivables of VIEs (net of allowance for doubtful accounts of $25 at 2021 and $29 at 2020) | 981 | 901 | |||||||||
| Receivables from affiliated companies | 61 | 157 | |||||||||
| Inventory | 1,255 | 1,375 | |||||||||
| Regulatory assets (includes $54 at 2021 and $53 at 2020 related to VIEs) | 864 | 758 | |||||||||
| Other (includes $17 at 2021 and $39 at 2020 related to VIEs) | 178 | 109 | |||||||||
| Total current assets | 3,709 | 3,587 | |||||||||
| Property, Plant and Equipment | |||||||||||
| Cost | 59,976 | 57,892 | |||||||||
| Accumulated depreciation and amortization | (19,211) | (18,368) | |||||||||
| Facilities to be retired, net | 27 | 29 | |||||||||
| Net property, plant and equipment | 40,792 | 39,553 | |||||||||
| Other Noncurrent Assets | |||||||||||
| Goodwill | 3,655 | 3,655 | |||||||||
| Regulatory assets (includes $896 at 2021 and $937 at 2020 related to VIEs) | 5,785 | 5,775 | |||||||||
| Nuclear decommissioning trust funds | 4,427 | 4,137 | |||||||||
| Operating lease right-of-use assets, net | 714 | 690 | |||||||||
| Other | 1,175 | 1,227 | |||||||||
| Total other noncurrent assets | 15,756 | 15,484 | |||||||||
| Total Assets | $ | 60,257 | $ | 58,624 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 898 | $ | 919 | |||||||
| Accounts payable to affiliated companies | 221 | 289 | |||||||||
| Notes payable to affiliated companies | 3,123 | 2,969 | |||||||||
| Taxes accrued | 284 | 121 | |||||||||
| Interest accrued | 175 | 202 | |||||||||
| Current maturities of long-term debt (includes $56 at 2021 and $305 at 2020 related to VIEs) | 1,932 | 1,426 | |||||||||
| Asset retirement obligations | 234 | 283 | |||||||||
| Regulatory liabilities | 541 | 640 | |||||||||
| Other | 856 | 793 | |||||||||
| Total current liabilities | 8,264 | 7,642 | |||||||||
| Long-Term Debt (includes $1,546 at 2021 and $1,252 at 2020 related to VIEs) | 17,406 | 17,688 | |||||||||
| Long-Term Debt Payable to Affiliated Companies | 150 | 150 | |||||||||
| Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes | 4,784 | 4,396 | |||||||||
| Asset retirement obligations | 5,850 | 5,866 | |||||||||
| Regulatory liabilities | 5,335 | 5,051 | |||||||||
| Operating lease liabilities | 623 | 623 | |||||||||
| Accrued pension and other post-retirement benefit costs | 490 | 505 | |||||||||
| Other | 473 | 462 | |||||||||
| Total other noncurrent liabilities | 17,555 | 16,903 | |||||||||
| Commitments and Contingencies | 0 | 0 | |||||||||
| Equity | |||||||||||
| Common Stock, $0.01 par value, 100 shares authorized and outstanding at 2021 and 2020 | — | — | |||||||||
| Additional paid-in capital | 9,149 | 9,143 | |||||||||
| Retained earnings | 7,743 | 7,109 | |||||||||
| Accumulated other comprehensive loss | (13) | (15) | |||||||||
| Total Progress Energy, Inc. stockholders' equity | 16,879 | 16,237 | |||||||||
| Noncontrolling interests | 3 | 4 | |||||||||
| Total equity | 16,882 | 16,241 | |||||||||
| Total Liabilities and Equity | $ | 60,257 | $ | 58,624 | |||||||
| (in millions) | September 30, 2020 | December 31, 2019 | |||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash and cash equivalents | $ | 70 | $ | 48 | |||
| Receivables (net of allowance for doubtful accounts of $9 at 2020 and $7 at 2019) | 196 | 220 | |||||
| Receivables of VIEs (net of allowance for doubtful accounts of $28 at 2020 and $9 at 2019) | 1,071 | 830 | |||||
| Receivables from affiliated companies | 44 | 76 | |||||
| Notes receivable from affiliated companies | — | 164 | |||||
| Inventory | 1,378 | 1,423 | |||||
| Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs) | 775 | 946 | |||||
| Other (includes $16 at 2020 and $39 at 2019 related to VIEs) | 81 | 210 | |||||
| Total current assets | 3,615 | 3,917 | |||||
| Property, Plant and Equipment | |||||||
| Cost | 57,152 | 55,070 | |||||
| Accumulated depreciation and amortization | (18,008 | ) | (17,159 | ) | |||
| Generation facilities to be retired, net | 29 | 246 | |||||
| Net property, plant and equipment | 39,173 | 38,157 | |||||
| Other Noncurrent Assets | |||||||
| Goodwill | 3,655 | 3,655 | |||||
| Regulatory assets (includes $951 at 2020 and $989 at 2019 related to VIEs) | 6,270 | 6,346 | |||||
| Nuclear decommissioning trust funds | 3,857 | 3,782 | |||||
| Operating lease right-of-use assets, net | 710 | 788 | |||||
| Other | 1,212 | 1,049 | |||||
| Total other noncurrent assets | 15,704 | 15,620 | |||||
| Total Assets | $ | 58,492 | $ | 57,694 | |||
| LIABILITIES AND EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 795 | $ | 1,104 | |||
| Accounts payable to affiliated companies | 208 | 310 | |||||
| Notes payable to affiliated companies | 2,159 | 1,821 | |||||
| Taxes accrued | 310 | 46 | |||||
| Interest accrued | 199 | 228 | |||||
| Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs) | 1,726 | 1,577 | |||||
| Asset retirement obligations | 297 | 485 | |||||
| Regulatory liabilities | 545 | 330 | |||||
| Other | 756 | 902 | |||||
| Total current liabilities | 6,995 | 6,803 | |||||
| Long-Term Debt (includes $1,351 at 2020 and $1,632 at 2019 related to VIEs) | 17,989 | 17,907 | |||||
| Long-Term Debt Payable to Affiliated Companies | 150 | 150 | |||||
| Other Noncurrent Liabilities | |||||||
| Deferred income taxes | 4,508 | 4,462 | |||||
| Asset retirement obligations | 6,058 | 5,986 | |||||
| Regulatory liabilities | 4,809 | 5,225 | |||||
| Operating lease liabilities | 637 | 697 | |||||
| Accrued pension and other post-retirement benefit costs | 474 | 488 | |||||
| Other | 443 | 383 | |||||
| Total other noncurrent liabilities | 16,929 | 17,241 | |||||
| Commitments and Contingencies | |||||||
| Equity | |||||||
| Common Stock, $0.01 par value, 100 shares authorized and outstanding at 2020 and 2019 | — | — | |||||
| Additional paid-in capital | 9,143 | 9,143 | |||||
| Retained earnings | 7,296 | 6,465 | |||||
| Accumulated other comprehensive loss | (13 | ) | (18 | ) | |||
| Total Progress Energy, Inc. stockholders' equity | 16,426 | 15,590 | |||||
| Noncontrolling interests | 3 | 3 | |||||
| Total equity | 16,429 | 15,593 | |||||
| Total Liabilities and Equity | $ | 58,492 | $ | 57,694 | |||
See Notes to Condensed Consolidated Financial Statements
20
| FINANCIAL STATEMENTS | |||||
PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2021 | 2020 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 1,334 | $ | 1,233 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, amortization and accretion (including amortization of nuclear fuel) | 1,707 | 1,734 | |||||||||
| Equity component of AFUDC | (37) | (30) | |||||||||
| Impairment of assets and other charges | 79 | 1 | |||||||||
| Deferred income taxes | 235 | (3) | |||||||||
| Payments for asset retirement obligations | (206) | (287) | |||||||||
| Provision for rate refunds | (22) | 4 | |||||||||
| (Increase) decrease in | |||||||||||
| Net realized and unrealized mark-to-market and hedging transactions | 117 | (13) | |||||||||
| Receivables | (123) | (207) | |||||||||
| Receivables from affiliated companies | 96 | 32 | |||||||||
| Inventory | 120 | 46 | |||||||||
| Other current assets | (347) | 214 | |||||||||
| Increase (decrease) in | |||||||||||
| Accounts payable | 79 | (124) | |||||||||
| Accounts payable to affiliated companies | (68) | (102) | |||||||||
| Taxes accrued | 161 | 263 | |||||||||
| Other current liabilities | (36) | (41) | |||||||||
| Other assets | (3) | (154) | |||||||||
| Other liabilities | (139) | (102) | |||||||||
| Net cash provided by operating activities | 2,947 | 2,464 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Capital expenditures | (2,628) | (2,602) | |||||||||
| Purchases of debt and equity securities | (1,583) | (4,554) | |||||||||
| Proceeds from sales and maturities of debt and equity securities | 1,649 | 4,543 | |||||||||
| Notes receivable from affiliated companies | — | 164 | |||||||||
| Other | (131) | (114) | |||||||||
| Net cash used in investing activities | (2,693) | (2,563) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from the issuance of long-term debt | 1,190 | 1,791 | |||||||||
| Payments for the redemption of long-term debt | (977) | (1,555) | |||||||||
| Notes payable to affiliated companies | 154 | 338 | |||||||||
| Dividends to parent | (700) | (400) | |||||||||
| Other | (2) | (13) | |||||||||
| Net cash (used in) provided by financing activities | (335) | 161 | |||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (81) | 62 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 200 | 126 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 119 | $ | 188 | |||||||
| Supplemental Disclosures: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ | 290 | $ | 311 | |||||||
| Nine Months Ended | |||||||
| September 30, | |||||||
| (in millions) | 2020 | 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net income | $ | 1,233 | $ | 1,098 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation, amortization and accretion (including amortization of nuclear fuel) | 1,734 | 1,649 | |||||
| Equity component of AFUDC | (30 | ) | (48 | ) | |||
| (Gains) Losses on sales of other assets | (9 | ) | — | ||||
| Impairment charges | 1 | (25 | ) | ||||
| Deferred income taxes | (3 | ) | 342 | ||||
| Contributions to qualified pension plans | — | (57 | ) | ||||
| Payments for asset retirement obligations | (287 | ) | (309 | ) | |||
| Provision for rate refunds | 4 | 13 | |||||
| (Increase) decrease in | |||||||
| Net realized and unrealized mark-to-market and hedging transactions | (13 | ) | 9 | ||||
| Receivables | (207 | ) | (128 | ) | |||
| Receivables from affiliated companies | 32 | 135 | |||||
| Inventory | 46 | 45 | |||||
| Other current assets | 214 | 79 | |||||
| Increase (decrease) in | |||||||
| Accounts payable | (124 | ) | (64 | ) | |||
| Accounts payable to affiliated companies | (102 | ) | (6 | ) | |||
| Taxes accrued | 263 | 150 | |||||
| Other current liabilities | (41 | ) | (96 | ) | |||
| Other assets | (145 | ) | (282 | ) | |||
| Other liabilities | (102 | ) | (75 | ) | |||
| Net cash provided by operating activities | 2,464 | 2,430 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Capital expenditures | (2,602 | ) | (2,866 | ) | |||
| Purchases of debt and equity securities | (4,554 | ) | (1,304 | ) | |||
| Proceeds from sales and maturities of debt and equity securities | 4,543 | 1,300 | |||||
| Notes receivable from affiliated companies | 164 | — | |||||
| Other | (114 | ) | (130 | ) | |||
| Net cash used in investing activities | (2,563 | ) | (3,000 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from the issuance of long-term debt | 1,791 | 1,295 | |||||
| Payments for the redemption of long-term debt | (1,555 | ) | (1,263 | ) | |||
| Notes payable to affiliated companies | 338 | 554 | |||||
| Dividends to parent | (400 | ) | — | ||||
| Other | (13 | ) | 8 | ||||
| Net cash provided by financing activities | 161 | 594 | |||||
| Net increase in cash, cash equivalents and restricted cash | 62 | 24 | |||||
| Cash, cash equivalents and restricted cash at beginning of period | 126 | 112 | |||||
| Cash, cash equivalents and restricted cash at end of period | $ | 188 | $ | 136 | |||
| Supplemental Disclosures: | |||||||
| Significant non-cash transactions: | |||||||
| Accrued capital expenditures | $ | 311 | $ | 400 | |||
See Notes to Condensed Consolidated Financial Statements
21
| FINANCIAL STATEMENTS | |||||
PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended September 30, 2020 and 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||||||||||||||||||||
| Net Gains | Net Unrealized | Total Progress | |||||||||||||||||||||||||||||||||||||||||||||
| Additional | (Losses) on | Gains (Losses) on | Pension and | Energy, Inc. | |||||||||||||||||||||||||||||||||||||||||||
| Paid-in | Retained | Cash Flow | Available-for- | OPEB | Stockholders' | Noncontrolling | Total | ||||||||||||||||||||||||||||||||||||||||
| (in millions) | Capital | Earnings | Hedges | Sale Securities | Adjustments | Equity | Interests | Equity | |||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2020 | $ | 9,143 | $ | 7,090 | $ | (8) | $ | (1) | $ | (6) | $ | 16,218 | $ | 3 | $ | 16,221 | |||||||||||||||||||||||||||||||
| Net income | — | 605 | — | — | — | 605 | 1 | 606 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | 1 | 1 | — | 2 | — | 2 | |||||||||||||||||||||||||||||||||||||||
| Dividends to parent | — | (400) | — | — | — | (400) | — | (400) | |||||||||||||||||||||||||||||||||||||||
| Other | — | 1 | — | — | — | 1 | (1) | — | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 9,143 | $ | 7,296 | $ | (7) | $ | — | $ | (6) | $ | 16,426 | $ | 3 | $ | 16,429 | |||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | $ | 9,143 | $ | 7,809 | $ | (4) | $ | (2) | $ | (7) | $ | 16,939 | $ | 3 | $ | 16,942 | |||||||||||||||||||||||||||||||
| Net income | — | 632 | — | — | — | 632 | 1 | 633 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | 1 | — | (1) | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Dividends to parent | — | (700) | — | — | — | (700) | — | (700) | |||||||||||||||||||||||||||||||||||||||
| Other | 6 | 2 | — | — | — | 8 | (1) | 7 | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | 9,149 | $ | 7,743 | $ | (3) | $ | (2) | $ | (8) | $ | 16,879 | $ | 3 | $ | 16,882 | |||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2020 and 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||||||||||||||||||||
| Net Gains | Net Unrealized | Total Progress | |||||||||||||||||||||||||||||||||||||||||||||
| Additional | (Losses) on | Gains (Losses) on | Pension and | Energy, Inc. | |||||||||||||||||||||||||||||||||||||||||||
| Paid-in | Retained | Cash Flow | Available-for- | OPEB | Stockholders' | Noncontrolling | Total | ||||||||||||||||||||||||||||||||||||||||
| Capital | Earnings | Hedges | Sale Securities | Adjustments | Equity | Interests | Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2019 | $ | 9,143 | $ | 6,465 | $ | (10) | $ | (1) | $ | (7) | $ | 15,590 | $ | 3 | $ | 15,593 | |||||||||||||||||||||||||||||||
| Net income | — | 1,232 | — | — | — | 1,232 | 1 | 1,233 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | 3 | 1 | 1 | 5 | — | 5 | |||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | (1) | (1) | |||||||||||||||||||||||||||||||||||||||
| Dividends to parent | — | (400) | — | — | — | (400) | — | (400) | |||||||||||||||||||||||||||||||||||||||
| Other | — | (1) | — | — | — | (1) | — | (1) | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 9,143 | $ | 7,296 | $ | (7) | $ | — | $ | (6) | $ | 16,426 | $ | 3 | $ | 16,429 | |||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | $ | 9,143 | $ | 7,109 | $ | (5) | $ | (2) | $ | (8) | $ | 16,237 | $ | 4 | $ | 16,241 | |||||||||||||||||||||||||||||||
| Net income | — | 1,333 | — | — | — | 1,333 | 1 | 1,334 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | 2 | — | — | 2 | — | 2 | |||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | (1) | (1) | |||||||||||||||||||||||||||||||||||||||
| Dividends to parent | — | (700) | — | — | — | (700) | — | (700) | |||||||||||||||||||||||||||||||||||||||
| Other | 6 | 1 | — | — | — | 7 | (1) | 6 | |||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | 9,149 | $ | 7,743 | $ | (3) | $ | (2) | $ | (8) | $ | 16,879 | $ | 3 | $ | 16,882 | |||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2019 and 2020 | |||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||||
| Net Gains | Net Unrealized | Total Progress | |||||||||||||||||||||||||||||
| Additional | (Losses) on | Gains (Losses) on | Pension and | Energy, Inc. | |||||||||||||||||||||||||||
| Paid-in | Retained | Cash Flow | Available-for- | OPEB | Stockholders' | Noncontrolling | Total | ||||||||||||||||||||||||
| (in millions) | Capital | Earnings | Hedges | Sale Securities | Adjustments | Equity | Interests | Equity | |||||||||||||||||||||||
| Balance at June 30, 2019 | $ | 9,143 | $ | 5,715 | $ | (13 | ) | $ | — | $ | (8 | ) | $ | 14,837 | $ | 2 | $ | 14,839 | |||||||||||||
| Net income | — | 521 | — | — | — | 521 | — | 521 | |||||||||||||||||||||||
| Other comprehensive income | — | — | 1 | 1 | — | 2 | — | 2 | |||||||||||||||||||||||
| Other | — | — | — | (1 | ) | 1 | — | 1 | 1 | ||||||||||||||||||||||
| Balance at September 30, 2019 | $ | 9,143 | $ | 6,236 | $ | (12 | ) | $ | — | $ | (7 | ) | $ | 15,360 | $ | 3 | $ | 15,363 | |||||||||||||
| Balance at June 30, 2020 | $ | 9,143 | $ | 7,090 | $ | (8 | ) | $ | (1 | ) | $ | (6 | ) | $ | 16,218 | $ | 3 | $ | 16,221 | ||||||||||||
| Net income | — | 605 | — | — | — | 605 | 1 | 606 | |||||||||||||||||||||||
| Other comprehensive income | — | — | 1 | 1 | — | 2 | — | 2 | |||||||||||||||||||||||
| Dividends to parent | — | (400 | ) | — | — | — | (400 | ) | — | (400 | ) | ||||||||||||||||||||
| Other | — | 1 | — | — | — | 1 | (1 | ) | — | ||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 9,143 | $ | 7,296 | $ | (7 | ) | $ | — | $ | (6 | ) | $ | 16,426 | $ | 3 | $ | 16,429 | |||||||||||||
| Nine Months Ended September 30, 2019 and 2020 | |||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||||
| Net Gains | Net Unrealized | Total Progress | |||||||||||||||||||||||||||||
| Additional | (Losses) on | Gains (Losses) on | Pension and | Energy, Inc. | |||||||||||||||||||||||||||
| Paid-in | Retained | Cash Flow | Available-for- | OPEB | Stockholders' | Noncontrolling | Total | ||||||||||||||||||||||||
| Capital | Earnings | Hedges | Sale Securities | Adjustments | Equity | Interests | Equity | ||||||||||||||||||||||||
| Balance at December 31, 2018 | $ | 9,143 | $ | 5,131 | $ | (12 | ) | $ | (1 | ) | $ | (7 | ) | $ | 14,254 | $ | 3 | $ | 14,257 | ||||||||||||
| Net income | — | 1,098 | — | — | — | 1,098 | — | 1,098 | |||||||||||||||||||||||
| Other comprehensive income | — | — | 4 | 2 | 2 | 8 | — | 8 | |||||||||||||||||||||||
Other(a) | — | 7 | (4 | ) | (1 | ) | (2 | ) | — | — | — | ||||||||||||||||||||
| Balance at September 30, 2019 | $ | 9,143 | $ | 6,236 | $ | (12 | ) | $ | — | $ | (7 | ) | $ | 15,360 | $ | 3 | $ | 15,363 | |||||||||||||
| Balance at December 31, 2019 | $ | 9,143 | $ | 6,465 | $ | (10 | ) | $ | (1 | ) | $ | (7 | ) | $ | 15,590 | $ | 3 | $ | 15,593 | ||||||||||||
| Net income | — | 1,232 | — | — | — | 1,232 | 1 | 1,233 | |||||||||||||||||||||||
| Other comprehensive income | — | — | 3 | 1 | 1 | 5 | — | 5 | |||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||||||||
| Dividends to parent | — | (400 | ) | — | — | — | (400 | ) | — | (400 | ) | ||||||||||||||||||||
| Other | — | (1 | ) | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||||||
| Balance at September 30, 2020 | $ | 9,143 | $ | 7,296 | $ | (7 | ) | $ | — | $ | (6 | ) | $ | 16,426 | $ | 3 | $ | 16,429 | |||||||||||||
See Notes to Condensed Consolidated Financial Statements
22
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Operating Revenues | $ | 1,667 | $ | 1,626 | $ | 4,417 | $ | 4,207 | |||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Fuel used in electric generation and purchased power | 523 | 537 | 1,368 | 1,337 | |||||||||||||||||||
| Operation, maintenance and other | 368 | 348 | 1,092 | 970 | |||||||||||||||||||
| Depreciation and amortization | 290 | 289 | 811 | 833 | |||||||||||||||||||
| Property and other taxes | 39 | 38 | 129 | 129 | |||||||||||||||||||
| Impairment of assets and other charges | 42 | 5 | 60 | 5 | |||||||||||||||||||
| Total operating expenses | 1,262 | 1,217 | 3,460 | 3,274 | |||||||||||||||||||
| Gains on Sales of Other Assets and Other, net | 7 | 3 | 8 | 8 | |||||||||||||||||||
| Operating Income | 412 | 412 | 965 | 941 | |||||||||||||||||||
| Other Income and Expenses, net | 67 | 11 | 111 | 52 | |||||||||||||||||||
| Interest Expense | 79 | 66 | 226 | 203 | |||||||||||||||||||
| Income Before Income Taxes | 400 | 357 | 850 | 790 | |||||||||||||||||||
| Income Tax Expense | 25 | 11 | 50 | 79 | |||||||||||||||||||
| Net Income and Comprehensive Income | $ | 375 | $ | 346 | $ | 800 | $ | 711 | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Operating Revenues | $ | 1,626 | $ | 1,688 | $ | 4,207 | $ | 4,559 | |||||||
| Operating Expenses | |||||||||||||||
| Fuel used in electric generation and purchased power | 537 | 577 | 1,337 | 1,571 | |||||||||||
| Operation, maintenance and other | 348 | 378 | 970 | 1,070 | |||||||||||
| Depreciation and amortization | 289 | 314 | 833 | 855 | |||||||||||
| Property and other taxes | 38 | 46 | 129 | 131 | |||||||||||
| Impairment charges | 5 | — | 5 | — | |||||||||||
| Total operating expenses | 1,217 | 1,315 | 3,274 | 3,627 | |||||||||||
| Gains on Sales of Other Assets and Other, net | 3 | — | 8 | — | |||||||||||
| Operating Income | 412 | 373 | 941 | 932 | |||||||||||
| Other Income and Expenses, net | 11 | 27 | 52 | 75 | |||||||||||
| Interest Expense | 66 | 74 | 203 | 232 | |||||||||||
| Income Before Income Taxes | 357 | 326 | 790 | 775 | |||||||||||
| Income Tax Expense | 11 | 48 | 79 | 125 | |||||||||||
| Net Income and Comprehensive Income | $ | 346 | $ | 278 | $ | 711 | $ | 650 | |||||||
See Notes to Condensed Consolidated Financial Statements
23
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2021 | December 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 51 | $ | 39 | |||||||
| Receivables (net of allowance for doubtful accounts of $4 at 2021 and 2020) | 162 | 132 | |||||||||
| Receivables of VIEs (net of allowance for doubtful accounts of $17 at 2021 and $19 at 2020) | 532 | 500 | |||||||||
| Receivables from affiliated companies | 68 | 50 | |||||||||
| Inventory | 815 | 911 | |||||||||
| Regulatory assets | 499 | 492 | |||||||||
| Other | 116 | 60 | |||||||||
| Total current assets | 2,243 | 2,184 | |||||||||
| Property, Plant and Equipment | |||||||||||
| Cost | 36,666 | 35,759 | |||||||||
| Accumulated depreciation and amortization | (13,365) | (12,801) | |||||||||
| Facilities to be retired, net | 27 | 29 | |||||||||
| Net property, plant and equipment | 23,328 | 22,987 | |||||||||
| Other Noncurrent Assets | |||||||||||
| Regulatory assets | 3,955 | 3,976 | |||||||||
| Nuclear decommissioning trust funds | 3,857 | 3,500 | |||||||||
| Operating lease right-of-use assets, net | 402 | 346 | |||||||||
| Other | 772 | 740 | |||||||||
| Total other noncurrent assets | 8,986 | 8,562 | |||||||||
| Total Assets | $ | 34,557 | $ | 33,733 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 392 | $ | 454 | |||||||
| Accounts payable to affiliated companies | 113 | 215 | |||||||||
| Notes payable to affiliated companies | 117 | 295 | |||||||||
| Taxes accrued | 163 | 85 | |||||||||
| Interest accrued | 68 | 99 | |||||||||
| Current maturities of long-term debt | 1,207 | 603 | |||||||||
| Asset retirement obligations | 234 | 283 | |||||||||
| Regulatory liabilities | 439 | 530 | |||||||||
| Other | 442 | 411 | |||||||||
| Total current liabilities | 3,175 | 2,975 | |||||||||
| Long-Term Debt | 8,491 | 8,505 | |||||||||
| Long-Term Debt Payable to Affiliated Companies | 150 | 150 | |||||||||
| Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes | 2,488 | 2,298 | |||||||||
| Asset retirement obligations | 5,407 | 5,352 | |||||||||
| Regulatory liabilities | 4,685 | 4,394 | |||||||||
| Operating lease liabilities | 359 | 323 | |||||||||
| Accrued pension and other post-retirement benefit costs | 234 | 242 | |||||||||
| Investment tax credits | 129 | 132 | |||||||||
| Other | 79 | 102 | |||||||||
| Total other noncurrent liabilities | 13,381 | 12,843 | |||||||||
| Commitments and Contingencies | 0 | 0 | |||||||||
| Equity | |||||||||||
| Member's Equity | 9,360 | 9,260 | |||||||||
| Total Liabilities and Equity | $ | 34,557 | $ | 33,733 | |||||||
| (in millions) | September 30, 2020 | December 31, 2019 | |||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash and cash equivalents | $ | 43 | $ | 22 | |||
| Receivables (net of allowance for doubtful accounts of $4 at 2020 and $3 at 2019) | 103 | 123 | |||||
| Receivables of VIEs (net of allowance for doubtful accounts of $17 at 2020 and $5 at 2019) | 559 | 489 | |||||
| Receivables from affiliated companies | 45 | 52 | |||||
| Inventory | 910 | 934 | |||||
| Regulatory assets | 472 | 526 | |||||
| Other | 54 | 60 | |||||
| Total current assets | 2,186 | 2,206 | |||||
| Property, Plant and Equipment | |||||||
| Cost | 35,479 | 34,603 | |||||
| Accumulated depreciation and amortization | (12,548 | ) | (11,915 | ) | |||
| Generation facilities to be retired, net | 29 | 246 | |||||
| Net property, plant and equipment | 22,960 | 22,934 | |||||
| Other Noncurrent Assets | |||||||
| Regulatory assets | 4,449 | 4,152 | |||||
| Nuclear decommissioning trust funds | 3,189 | 3,047 | |||||
| Operating lease right-of-use assets, net | 357 | 387 | |||||
| Other | 720 | 651 | |||||
| Total other noncurrent assets | 8,715 | 8,237 | |||||
| Total Assets | $ | 33,861 | $ | 33,377 | |||
| LIABILITIES AND EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 372 | $ | 629 | |||
| Accounts payable to affiliated companies | 144 | 203 | |||||
| Notes payable to affiliated companies | 167 | 66 | |||||
| Taxes accrued | 207 | 17 | |||||
| Interest accrued | 80 | 110 | |||||
| Current maturities of long-term debt | 603 | 1,006 | |||||
| Asset retirement obligations | 297 | 485 | |||||
| Regulatory liabilities | 436 | 236 | |||||
| Other | 389 | 478 | |||||
| Total current liabilities | 2,695 | 3,230 | |||||
| Long-Term Debt | 8,605 | 7,902 | |||||
| Long-Term Debt Payable to Affiliated Companies | 150 | 150 | |||||
| Other Noncurrent Liabilities | |||||||
| Deferred income taxes | 2,426 | 2,388 | |||||
| Asset retirement obligations | 5,503 | 5,408 | |||||
| Regulatory liabilities | 4,140 | 4,232 | |||||
| Operating lease liabilities | 329 | 354 | |||||
| Accrued pension and other post-retirement benefit costs | 236 | 238 | |||||
| Investment tax credits | 133 | 137 | |||||
| Other | 88 | 92 | |||||
| Total other noncurrent liabilities | 12,855 | 12,849 | |||||
| Commitments and Contingencies | |||||||
| Equity | |||||||
| Member's Equity | 9,556 | 9,246 | |||||
| Total Liabilities and Equity | $ | 33,861 | $ | 33,377 | |||
See Notes to Condensed Consolidated Financial Statements
24
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2021 | 2020 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 800 | $ | 711 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization (including amortization of nuclear fuel) | 951 | 972 | |||||||||
| Equity component of AFUDC | (25) | (22) | |||||||||
| Impairment of assets and other charges | 60 | 5 | |||||||||
| Deferred income taxes | 22 | (33) | |||||||||
| Payments for asset retirement obligations | (129) | (249) | |||||||||
| Provision for rate refunds | (22) | 4 | |||||||||
| (Increase) decrease in | |||||||||||
| Net realized and unrealized mark-to-market and hedging transactions | 108 | — | |||||||||
| Receivables | (66) | (34) | |||||||||
| Receivables from affiliated companies | (18) | 7 | |||||||||
| Inventory | 95 | 24 | |||||||||
| Other current assets | (79) | 82 | |||||||||
| Increase (decrease) in | |||||||||||
| Accounts payable | 20 | (185) | |||||||||
| Accounts payable to affiliated companies | (102) | (59) | |||||||||
| Taxes accrued | 75 | 190 | |||||||||
| Other current liabilities | (36) | (24) | |||||||||
| Other assets | 48 | (185) | |||||||||
| Other liabilities | (32) | 21 | |||||||||
| Net cash provided by operating activities | 1,670 | 1,225 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Capital expenditures | (1,313) | (1,142) | |||||||||
| Purchases of debt and equity securities | (1,306) | (1,269) | |||||||||
| Proceeds from sales and maturities of debt and equity securities | 1,291 | 1,238 | |||||||||
| Other | (36) | (31) | |||||||||
| Net cash used in investing activities | (1,364) | (1,204) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from the issuance of long-term debt | 1,190 | 1,296 | |||||||||
| Payments for the redemption of long-term debt | (605) | (985) | |||||||||
| Notes payable to affiliated companies | (178) | 101 | |||||||||
| Distributions to parent | (700) | (400) | |||||||||
| Other | (1) | (12) | |||||||||
| Net cash used in financing activities | (294) | — | |||||||||
| Net increase in cash and cash equivalents | 12 | 21 | |||||||||
| Cash and cash equivalents at beginning of period | 39 | 22 | |||||||||
| Cash and cash equivalents at end of period | $ | 51 | $ | 43 | |||||||
| Supplemental Disclosures: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ | 82 | $ | 124 | |||||||
| Nine Months Ended | |||||||
| September 30, | |||||||
| (in millions) | 2020 | 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net income | $ | 711 | $ | 650 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization (including amortization of nuclear fuel) | 972 | 996 | |||||
| Equity component of AFUDC | (22 | ) | (44 | ) | |||
| Gains on sales of other assets | (8 | ) | — | ||||
| Impairment charges | 5 | — | |||||
| Deferred income taxes | (33 | ) | 144 | ||||
| Contributions to qualified pension plans | — | (4 | ) | ||||
| Payments for asset retirement obligations | (249 | ) | (288 | ) | |||
| Provision for rate refunds | 4 | 13 | |||||
| (Increase) decrease in | |||||||
| Net realized and unrealized mark-to-market and hedging transactions | — | (4 | ) | ||||
| Receivables | (34 | ) | (9 | ) | |||
| Receivables from affiliated companies | 7 | (11 | ) | ||||
| Inventory | 24 | 15 | |||||
| Other current assets | 82 | 65 | |||||
| Increase (decrease) in | |||||||
| Accounts payable | (185 | ) | (54 | ) | |||
| Accounts payable to affiliated companies | (59 | ) | (80 | ) | |||
| Taxes accrued | 190 | 37 | |||||
| Other current liabilities | (24 | ) | (17 | ) | |||
| Other assets | (177 | ) | (201 | ) | |||
| Other liabilities | 21 | 39 | |||||
| Net cash provided by operating activities | 1,225 | 1,247 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Capital expenditures | (1,142 | ) | (1,592 | ) | |||
| Purchases of debt and equity securities | (1,269 | ) | (656 | ) | |||
| Proceeds from sales and maturities of debt and equity securities | 1,238 | 632 | |||||
| Other | (31 | ) | (56 | ) | |||
| Net cash used in investing activities | (1,204 | ) | (1,672 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from the issuance of long-term debt | 1,296 | 1,270 | |||||
| Payments for the redemption of long-term debt | (985 | ) | (603 | ) | |||
| Notes payable to affiliated companies | 101 | (215 | ) | ||||
| Distributions to parent | (400 | ) | — | ||||
| Other | (12 | ) | (1 | ) | |||
| Net cash provided by financing activities | — | 451 | |||||
| Net increase in cash and cash equivalents | 21 | 26 | |||||
| Cash and cash equivalents at beginning of period | 22 | 23 | |||||
| Cash and cash equivalents at end of period | $ | 43 | $ | 49 | |||
| Supplemental Disclosures: | |||||||
| Significant non-cash transactions: | |||||||
| Accrued capital expenditures | $ | 124 | $ | 182 | |||
See Notes to Condensed Consolidated Financial Statements
25
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY PROGRESS, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||
| September 30, 2020 and 2021 | |||||||||||||||||||||||
| (in millions) | Member's Equity | ||||||||||||||||||||||
| Balance at June 30, 2020 | $ | 9,610 | |||||||||||||||||||||
| Net income | 346 | ||||||||||||||||||||||
| Distributions to parent | (400) | ||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 9,556 | |||||||||||||||||||||
| Balance at June 30, 2021 | $ | 9,685 | |||||||||||||||||||||
| Net income | 375 | ||||||||||||||||||||||
| Distributions to parent | (700) | ||||||||||||||||||||||
| Balance at September 30, 2021 | $ | 9,360 | |||||||||||||||||||||
| Nine Months Ended | |||||||||||||||||||||||
| September 30, 2020 and 2021 | |||||||||||||||||||||||
| (in millions) | Member's Equity | ||||||||||||||||||||||
| Balance at December 31, 2019 | $ | 9,246 | |||||||||||||||||||||
| Net income | 711 | ||||||||||||||||||||||
| Distributions to parent | (400) | ||||||||||||||||||||||
| Other | (1) | ||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 9,556 | |||||||||||||||||||||
| Balance at December 31, 2020 | $ | 9,260 | |||||||||||||||||||||
| Net income | 800 | ||||||||||||||||||||||
| Distributions to parent | (700) | ||||||||||||||||||||||
| Balance at September 30, 2021 | $ | 9,360 | |||||||||||||||||||||
| Three Months Ended | |||
| September 30, 2019 and 2020 | |||
| Member's | |||
| (in millions) | Equity | ||
| Balance at June 30, 2019 | $ | 8,813 | |
| Net income | 278 | ||
| Balance at September 30, 2019 | $ | 9,091 | |
| Balance at June 30, 2020 | $ | 9,610 | |
| Net income | 346 | ||
| Distributions to parent | (400 | ) | |
| Balance at September 30, 2020 | $ | 9,556 | |
| Nine Months Ended | |||
| September 30, 2019 and 2020 | |||
| Member's | |||
| (in millions) | Equity | ||
| Balance at December 31, 2018 | $ | 8,441 | |
| Net income | 650 | ||
| Balance at September 30, 2019 | $ | 9,091 | |
| Balance at December 31, 2019 | $ | 9,246 | |
| Net income | 711 | ||
| Distributions to parent | (400 | ) | |
| Other | (1 | ) | |
| Balance at September 30, 2020 | $ | 9,556 | |
See Notes to Condensed Consolidated Financial Statements
26
| FINANCIAL STATEMENTS | |||||
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) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Operating Revenues | $ | 1,561 | $ | 1,567 | $ | 3,987 | $ | 3,897 | |||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Fuel used in electric generation and purchased power | 552 | 551 | 1,335 | 1,291 | |||||||||||||||||||
| Operation, maintenance and other | 263 | 292 | 760 | 806 | |||||||||||||||||||
| Depreciation and amortization | 214 | 183 | 619 | 523 | |||||||||||||||||||
| Property and other taxes | 105 | 110 | 290 | 290 | |||||||||||||||||||
| Impairment of assets and other charges | — | (4) | 19 | (4) | |||||||||||||||||||
| Total operating expenses | 1,134 | 1,132 | 3,023 | 2,906 | |||||||||||||||||||
| Gains on Sales of Other Assets and Other, net | 1 | — | 1 | — | |||||||||||||||||||
| Operating Income | 428 | 435 | 965 | 991 | |||||||||||||||||||
| Other Income and Expenses, net | 18 | 11 | 54 | 36 | |||||||||||||||||||
| Interest Expense | 79 | 81 | 239 | 245 | |||||||||||||||||||
| Income Before Income Taxes | 367 | 365 | 780 | 782 | |||||||||||||||||||
| Income Tax Expense | 70 | 78 | 149 | 159 | |||||||||||||||||||
| Net Income | $ | 297 | $ | 287 | $ | 631 | $ | 623 | |||||||||||||||
| Other Comprehensive Income, net of tax | |||||||||||||||||||||||
| Unrealized gains on available-for-sale securities | — | 1 | — | 1 | |||||||||||||||||||
| Comprehensive Income | $ | 297 | $ | 288 | $ | 631 | $ | 624 | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Operating Revenues | $ | 1,567 | $ | 1,548 | $ | 3,897 | $ | 3,987 | |||||||
| Operating Expenses | |||||||||||||||
| Fuel used in electric generation and purchased power | 551 | 610 | 1,291 | 1,529 | |||||||||||
| Operation, maintenance and other | 292 | 256 | 806 | 730 | |||||||||||
| Depreciation and amortization | 183 | 182 | 523 | 522 | |||||||||||
| Property and other taxes | 110 | 113 | 290 | 309 | |||||||||||
| Impairment charges | (4 | ) | (25 | ) | (4 | ) | (25 | ) | |||||||
| Total operating expenses | 1,132 | 1,136 | 2,906 | 3,065 | |||||||||||
| Gains on Sales of Other Assets and Other, net | — | 1 | — | — | |||||||||||
| Operating Income | 435 | 413 | 991 | 922 | |||||||||||
| Other Income and Expenses, net | 11 | 14 | 36 | 39 | |||||||||||
| Interest Expense | 81 | 81 | 245 | 246 | |||||||||||
| Income Before Income Taxes | 365 | 346 | 782 | 715 | |||||||||||
| Income Tax Expense | 78 | 57 | 159 | 129 | |||||||||||
| Net Income | $ | 287 | $ | 289 | $ | 623 | $ | 586 | |||||||
| Other Comprehensive Income, net of tax | |||||||||||||||
| Unrealized gains on available-for-sale securities | 1 | 1 | 1 | 2 | |||||||||||
| Comprehensive Income | $ | 288 | $ | 290 | $ | 624 | $ | 588 | |||||||
See Notes to Condensed Consolidated Financial Statements
27
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2021 | December 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 40 | $ | 11 | |||||||
| Receivables (net of allowance for doubtful accounts of $8 at 2021 and $4 at 2020) | 104 | 94 | |||||||||
| Receivables of VIEs (net of allowance for doubtful accounts of $8 at 2021 and $10 at 2020) | 449 | 401 | |||||||||
| Receivables from affiliated companies | 3 | 3 | |||||||||
| Inventory | 439 | 464 | |||||||||
| Regulatory assets (includes $54 at 2021 and $53 at 2020 related to VIEs) | 365 | 265 | |||||||||
| Other (includes $17 at 2021 and $39 at 2020 related to VIEs) | 35 | 41 | |||||||||
| Total current assets | 1,435 | 1,279 | |||||||||
| Property, Plant and Equipment | |||||||||||
| Cost | 23,300 | 22,123 | |||||||||
| Accumulated depreciation and amortization | (5,839) | (5,560) | |||||||||
| Net property, plant and equipment | 17,461 | 16,563 | |||||||||
| Other Noncurrent Assets | |||||||||||
| Regulatory assets (includes $896 at 2021 and $937 at 2020 related to VIEs) | 1,829 | 1,799 | |||||||||
| Nuclear decommissioning trust funds | 570 | 637 | |||||||||
| Operating lease right-of-use assets, net | 312 | 344 | |||||||||
| Other | 351 | 335 | |||||||||
| Total other noncurrent assets | 3,062 | 3,115 | |||||||||
| Total Assets | $ | 21,958 | $ | 20,957 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 506 | $ | 465 | |||||||
| Accounts payable to affiliated companies | 129 | 85 | |||||||||
| Notes payable to affiliated companies | 603 | 196 | |||||||||
| Taxes accrued | 177 | 82 | |||||||||
| Interest accrued | 72 | 69 | |||||||||
| Current maturities of long-term debt (includes $56 at 2021 and $305 at 2020 related to VIEs) | 276 | 823 | |||||||||
| Regulatory liabilities | 102 | 110 | |||||||||
| Other | 403 | 374 | |||||||||
| Total current liabilities | 2,268 | 2,204 | |||||||||
| Long-Term Debt (includes $1,196 at 2021 and $1,002 at 2020 related to VIEs) | 7,273 | 7,092 | |||||||||
| Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes | 2,382 | 2,191 | |||||||||
| Asset retirement obligations | 443 | 514 | |||||||||
| Regulatory liabilities | 649 | 658 | |||||||||
| Operating lease liabilities | 265 | 300 | |||||||||
| Accrued pension and other post-retirement benefit costs | 225 | 231 | |||||||||
| Other | 265 | 209 | |||||||||
| Total other noncurrent liabilities | 4,229 | 4,103 | |||||||||
| Commitments and Contingencies | 0 | 0 | |||||||||
| Equity | |||||||||||
| Member's equity | 8,190 | 7,560 | |||||||||
| Accumulated other comprehensive loss | (2) | (2) | |||||||||
| Total equity | 8,188 | 7,558 | |||||||||
| Total Liabilities and Equity | $ | 21,958 | $ | 20,957 | |||||||
| (in millions) | September 30, 2020 | December 31, 2019 | |||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash and cash equivalents | $ | 19 | $ | 17 | |||
| Receivables (net of allowance for doubtful accounts of $5 at 2020 and $3 at 2019) | 91 | 96 | |||||
| Receivables of VIEs (net of allowance for doubtful accounts of $11 at 2020 and $4 at 2019) | 512 | 341 | |||||
| Receivables from affiliated companies | 3 | — | |||||
| Notes receivable from affiliated companies | — | 173 | |||||
| Inventory | 468 | 489 | |||||
| Regulatory assets (includes $53 at 2020 and $52 at 2019 related to VIEs) | 303 | 419 | |||||
| Other (includes $16 at 2020 and $39 at 2019 related to VIEs) | 25 | 58 | |||||
| Total current assets | 1,421 | 1,593 | |||||
| Property, Plant and Equipment | |||||||
| Cost | 21,662 | 20,457 | |||||
| Accumulated depreciation and amortization | (5,452 | ) | (5,236 | ) | |||
| Net property, plant and equipment | 16,210 | 15,221 | |||||
| Other Noncurrent Assets | |||||||
| Regulatory assets (includes $951 at 2020 and $989 at 2019 related to VIEs) | 1,821 | 2,194 | |||||
| Nuclear decommissioning trust funds | 668 | 734 | |||||
| Operating lease right-of-use assets, net | 354 | 401 | |||||
| Other | 341 | 311 | |||||
| Total other noncurrent assets | 3,184 | 3,640 | |||||
| Total Assets | $ | 20,815 | $ | 20,454 | |||
| LIABILITIES AND EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 424 | $ | 474 | |||
| Accounts payable to affiliated companies | 77 | 131 | |||||
| Notes payable to affiliated companies | 66 | — | |||||
| Taxes accrued | 260 | 43 | |||||
| Interest accrued | 73 | 75 | |||||
| Current maturities of long-term debt (includes $305 at 2020 and $54 at 2019 related to VIEs) | 623 | 571 | |||||
| Regulatory liabilities | 109 | 94 | |||||
| Other | 359 | 415 | |||||
| Total current liabilities | 1,991 | 1,803 | |||||
| Long-Term Debt (includes $1,001 at 2020 and $1,307 at 2019 related to VIEs) | 7,294 | 7,416 | |||||
| Other Noncurrent Liabilities | |||||||
| Deferred income taxes | 2,175 | 2,179 | |||||
| Asset retirement obligations | 555 | 578 | |||||
| Regulatory liabilities | 669 | 993 | |||||
| Operating lease liabilities | 308 | 343 | |||||
| Accrued pension and other post-retirement benefit costs | 207 | 218 | |||||
| Other | 205 | 136 | |||||
| Total other noncurrent liabilities | 4,119 | 4,447 | |||||
| Commitments and Contingencies | |||||||
| Equity | |||||||
| Member's equity | 7,411 | 6,789 | |||||
| Accumulated other comprehensive loss | — | (1 | ) | ||||
| Total equity | 7,411 | 6,788 | |||||
| Total Liabilities and Equity | $ | 20,815 | $ | 20,454 | |||
See Notes to Condensed Consolidated Financial Statements
28
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2021 | 2020 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 631 | $ | 623 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, amortization and accretion | 752 | 755 | |||||||||
| Equity component of AFUDC | (12) | (8) | |||||||||
| Impairment of assets and other charges | 19 | (4) | |||||||||
| Deferred income taxes | 207 | 19 | |||||||||
| Payments for asset retirement obligations | (77) | (38) | |||||||||
| (Increase) decrease in | |||||||||||
| Net realized and unrealized mark-to-market and hedging transactions | 7 | (17) | |||||||||
| Receivables | (57) | (172) | |||||||||
| Receivables from affiliated companies | — | (3) | |||||||||
| Inventory | 25 | 22 | |||||||||
| Other current assets | (247) | 41 | |||||||||
| Increase (decrease) in | |||||||||||
| Accounts payable | 59 | 63 | |||||||||
| Accounts payable to affiliated companies | 44 | (54) | |||||||||
| Taxes accrued | 95 | 217 | |||||||||
| Other current liabilities | (5) | (20) | |||||||||
| Other assets | (46) | 48 | |||||||||
| Other liabilities | (94) | (136) | |||||||||
| Net cash provided by operating activities | 1,301 | 1,336 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Capital expenditures | (1,316) | (1,460) | |||||||||
| Purchases of debt and equity securities | (277) | (3,284) | |||||||||
| Proceeds from sales and maturities of debt and equity securities | 358 | 3,305 | |||||||||
| Notes receivable from affiliated companies | — | 173 | |||||||||
| Other | (95) | (82) | |||||||||
| Net cash used in investing activities | (1,330) | (1,348) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from the issuance of long-term debt | — | 495 | |||||||||
| Payments for the redemption of long-term debt | (372) | (570) | |||||||||
| Notes payable to affiliated companies | 408 | 66 | |||||||||
| Net cash provided by (used in) financing activities | 36 | (9) | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 7 | (21) | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 50 | 56 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 57 | $ | 35 | |||||||
| Supplemental Disclosures: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ | 208 | $ | 187 | |||||||
| Nine Months Ended | |||||||
| September 30, | |||||||
| (in millions) | 2020 | 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net income | $ | 623 | $ | 586 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation, amortization and accretion | 755 | 647 | |||||
| Equity component of AFUDC | (8 | ) | (4 | ) | |||
| Impairment charges | (4 | ) | (25 | ) | |||
| Deferred income taxes | 19 | 164 | |||||
| Contributions to qualified pension plans | — | (53 | ) | ||||
| Payments for asset retirement obligations | (38 | ) | (21 | ) | |||
| (Increase) decrease in | |||||||
| Net realized and unrealized mark-to-market and hedging transactions | (17 | ) | 9 | ||||
| Receivables | (172 | ) | (119 | ) | |||
| Receivables from affiliated companies | (3 | ) | 27 | ||||
| Inventory | 22 | 29 | |||||
| Other current assets | 41 | 100 | |||||
| Increase (decrease) in | |||||||
| Accounts payable | 63 | (11 | ) | ||||
| Accounts payable to affiliated companies | (54 | ) | 67 | ||||
| Taxes accrued | 217 | 101 | |||||
| Other current liabilities | (20 | ) | (77 | ) | |||
| Other assets | 48 | (77 | ) | ||||
| Other liabilities | (136 | ) | (123 | ) | |||
| Net cash provided by operating activities | 1,336 | 1,220 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Capital expenditures | (1,460 | ) | (1,274 | ) | |||
| Purchases of debt and equity securities | (3,284 | ) | (648 | ) | |||
| Proceeds from sales and maturities of debt and equity securities | 3,305 | 668 | |||||
| Notes receivable from affiliated companies | 173 | — | |||||
| Other | (82 | ) | (73 | ) | |||
| Net cash used in investing activities | (1,348 | ) | (1,327 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from the issuance of long-term debt | 495 | 25 | |||||
| Payments for the redemption of long-term debt | (570 | ) | (210 | ) | |||
| Notes payable to affiliated companies | 66 | 248 | |||||
| Other | — | 9 | |||||
| Net cash (used in) provided by financing activities | (9 | ) | 72 | ||||
| Net decrease in cash, cash equivalents and restricted cash | (21 | ) | (35 | ) | |||
| Cash, cash equivalents and restricted cash at beginning of period | 56 | 75 | |||||
| Cash, cash equivalents and restricted cash at end of period | $ | 35 | $ | 40 | |||
| Supplemental Disclosures: | |||||||
| Significant non-cash transactions: | |||||||
| Accrued capital expenditures | $ | 187 | $ | 218 | |||
See Notes to Condensed Consolidated Financial Statements
29
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY FLORIDA, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended September 30, 2020 and 2021 | |||||||||||||||||
| Accumulated | |||||||||||||||||
| Other | |||||||||||||||||
| Comprehensive | |||||||||||||||||
| Income (Loss) | |||||||||||||||||
| Net Unrealized | |||||||||||||||||
| Losses on | |||||||||||||||||
| Member's | Available-for-Sale | Total | |||||||||||||||
| (in millions) | Equity | Securities | Equity | ||||||||||||||
| Balance at June 30, 2020 | $ | 7,125 | $ | (1) | $ | 7,124 | |||||||||||
| Net income | 287 | — | 287 | ||||||||||||||
| Other comprehensive income | — | 1 | 1 | ||||||||||||||
| Other | (1) | — | (1) | ||||||||||||||
| Balance at September 30, 2020 | $ | 7,411 | $ | — | $ | 7,411 | |||||||||||
| Balance at June 30, 2021 | $ | 7,893 | $ | (2) | $ | 7,891 | |||||||||||
| Net income | 297 | — | 297 | ||||||||||||||
| Balance at September 30, 2021 | $ | 8,190 | $ | (2) | $ | 8,188 | |||||||||||
| Nine Months Ended September 30, 2020 and 2021 | |||||||||||||||||
| Accumulated | |||||||||||||||||
| Other | |||||||||||||||||
| Comprehensive | |||||||||||||||||
| Income (Loss) | |||||||||||||||||
| Net Unrealized | |||||||||||||||||
| Losses on | |||||||||||||||||
| Member's | Available-for-Sale | Total | |||||||||||||||
| (in millions) | Equity | Securities | Equity | ||||||||||||||
| Balance at December 31, 2019 | $ | 6,789 | $ | (1) | $ | 6,788 | |||||||||||
| Net income | 623 | — | 623 | ||||||||||||||
| Other comprehensive income | — | 1 | 1 | ||||||||||||||
| Other | (1) | — | (1) | ||||||||||||||
| Balance at September 30, 2020 | $ | 7,411 | $ | — | $ | 7,411 | |||||||||||
| Balance at December 31, 2020 | $ | 7,560 | $ | (2) | $ | 7,558 | |||||||||||
| Net income | 631 | — | 631 | ||||||||||||||
| Other | (1) | — | (1) | ||||||||||||||
| Balance at September 30, 2021 | $ | 8,190 | $ | (2) | $ | 8,188 | |||||||||||
| Three Months Ended September 30, 2019 and 2020 | |||||||||||
| Accumulated | |||||||||||
| Other | |||||||||||
| Comprehensive | |||||||||||
| Income (Loss) | |||||||||||
| Net Unrealized | |||||||||||
| Gains on | |||||||||||
| Member's | Available-for-Sale | Total | |||||||||
| (in millions) | Equity | Securities | Equity | ||||||||
| Balance at June 30, 2019 | $ | 6,394 | $ | (1 | ) | $ | 6,393 | ||||
| Net income | 289 | — | 289 | ||||||||
| Other comprehensive income | — | 1 | 1 | ||||||||
| Balance at September 30, 2019 | $ | 6,683 | $ | — | $ | 6,683 | |||||
| Balance at June 30, 2020 | $ | 7,125 | $ | (1 | ) | $ | 7,124 | ||||
| Net income | 287 | — | 287 | ||||||||
| Other comprehensive income | — | 1 | 1 | ||||||||
| Other | (1 | ) | — | (1 | ) | ||||||
| Balance at September 30, 2020 | $ | 7,411 | $ | — | $ | 7,411 | |||||
| Nine Months Ended September 30, 2019 and 2020 | |||||||||||
| Accumulated | |||||||||||
| Other | |||||||||||
| Comprehensive | |||||||||||
| Income (Loss) | |||||||||||
| Net Unrealized | |||||||||||
| Gains on | |||||||||||
| Member's | Available-for-Sale | Total | |||||||||
| (in millions) | Equity | Securities | Equity | ||||||||
| Balance at December 31, 2018 | $ | 6,097 | $ | (2 | ) | $ | 6,095 | ||||
| Net income | 586 | — | 586 | ||||||||
| Other comprehensive income | — | 2 | 2 | ||||||||
| Balance at September 30, 2019 | $ | 6,683 | $ | — | $ | 6,683 | |||||
| Balance at December 31, 2019 | $ | 6,789 | $ | (1 | ) | $ | 6,788 | ||||
| Net income | 623 | — | 623 | ||||||||
| Other comprehensive income | — | 1 | 1 | ||||||||
| Other | (1 | ) | — | (1 | ) | ||||||
| Balance at September 30, 2020 | $ | 7,411 | $ | — | $ | 7,411 | |||||
See Notes to Condensed Consolidated Financial Statements
30
| FINANCIAL STATEMENTS | |||||
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) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Operating Revenues | |||||||||||||||||||||||
| Regulated electric | $ | 413 | $ | 394 | $ | 1,119 | $ | 1,070 | |||||||||||||||
| Regulated natural gas | 93 | 79 | 375 | 324 | |||||||||||||||||||
| Total operating revenues | 506 | 473 | 1,494 | 1,394 | |||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Fuel used in electric generation and purchased power | 119 | 94 | 294 | 258 | |||||||||||||||||||
| Cost of natural gas | 9 | 3 | 76 | 46 | |||||||||||||||||||
| Operation, maintenance and other | 116 | 115 | 335 | 333 | |||||||||||||||||||
| Depreciation and amortization | 79 | 72 | 228 | 208 | |||||||||||||||||||
| Property and other taxes | 91 | 83 | 266 | 244 | |||||||||||||||||||
| Impairment of assets and other charges | — | — | 5 | — | |||||||||||||||||||
| Total operating expenses | 414 | 367 | 1,204 | 1,089 | |||||||||||||||||||
| Operating Income | 92 | 106 | 290 | 305 | |||||||||||||||||||
| Other Income and Expenses, net | 4 | 4 | 14 | 11 | |||||||||||||||||||
| Interest Expense | 29 | 26 | 82 | 75 | |||||||||||||||||||
| Income Before Income Taxes | 67 | 84 | 222 | 241 | |||||||||||||||||||
| Income Tax Expense | 9 | 14 | 34 | 40 | |||||||||||||||||||
| Net Income and Comprehensive Income | $ | 58 | $ | 70 | $ | 188 | $ | 201 | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Operating Revenues | |||||||||||||||
| Regulated electric | $ | 394 | $ | 408 | $ | 1,070 | $ | 1,099 | |||||||
| Regulated natural gas | 79 | 81 | 324 | 354 | |||||||||||
| Total operating revenues | 473 | 489 | 1,394 | 1,453 | |||||||||||
| Operating Expenses | |||||||||||||||
| Fuel used in electric generation and purchased power | 94 | 114 | 258 | 293 | |||||||||||
| Cost of natural gas | 3 | 4 | 46 | 68 | |||||||||||
| Operation, maintenance and other | 115 | 123 | 333 | 378 | |||||||||||
| Depreciation and amortization | 72 | 69 | 208 | 199 | |||||||||||
| Property and other taxes | 83 | 71 | 244 | 229 | |||||||||||
| Total operating expenses | 367 | 381 | 1,089 | 1,167 | |||||||||||
| Operating Income | 106 | 108 | 305 | 286 | |||||||||||
| Other Income and Expenses, net | 4 | 4 | 11 | 19 | |||||||||||
| Interest Expense | 26 | 27 | 75 | 81 | |||||||||||
| Income Before Income Taxes | 84 | 85 | 241 | 224 | |||||||||||
| Income Tax Expense | 14 | 11 | 40 | 34 | |||||||||||
| Net Income and Comprehensive Income | $ | 70 | $ | 74 | $ | 201 | $ | 190 | |||||||
See Notes to Condensed Consolidated Financial Statements
31
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY OHIO, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2021 | December 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 16 | $ | 14 | |||||||
| Receivables (net of allowance for doubtful accounts of $4 at 2021 and 2020) | 107 | 98 | |||||||||
| Receivables from affiliated companies | 77 | 102 | |||||||||
| Inventory | 114 | 110 | |||||||||
| Regulatory assets | 61 | 39 | |||||||||
| Other | 45 | 31 | |||||||||
| Total current assets | 420 | 394 | |||||||||
| Property, Plant and Equipment | |||||||||||
| Cost | 11,531 | 11,022 | |||||||||
| Accumulated depreciation and amortization | (3,102) | (3,013) | |||||||||
| Net property, plant and equipment | 8,429 | 8,009 | |||||||||
| Other Noncurrent Assets | |||||||||||
| Goodwill | 920 | 920 | |||||||||
| Regulatory assets | 634 | 610 | |||||||||
| Operating lease right-of-use assets, net | 19 | 20 | |||||||||
| Other | 83 | 72 | |||||||||
| Total other noncurrent assets | 1,656 | 1,622 | |||||||||
| Total Assets | $ | 10,505 | $ | 10,025 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 304 | $ | 279 | |||||||
| Accounts payable to affiliated companies | 59 | 68 | |||||||||
| Notes payable to affiliated companies | 451 | 169 | |||||||||
| Taxes accrued | 210 | 247 | |||||||||
| Interest accrued | 32 | 31 | |||||||||
| Current maturities of long-term debt | 50 | 50 | |||||||||
| Asset retirement obligations | 17 | 3 | |||||||||
| Regulatory liabilities | 63 | 65 | |||||||||
| Other | 68 | 70 | |||||||||
| Total current liabilities | 1,254 | 982 | |||||||||
| Long-Term Debt | 3,017 | 3,014 | |||||||||
| Long-Term Debt Payable to Affiliated Companies | 25 | 25 | |||||||||
| Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes | 1,032 | 981 | |||||||||
| Asset retirement obligations | 95 | 108 | |||||||||
| Regulatory liabilities | 734 | 748 | |||||||||
| Operating lease liabilities | 19 | 20 | |||||||||
| Accrued pension and other post-retirement benefit costs | 114 | 113 | |||||||||
| Other | 92 | 99 | |||||||||
| Total other noncurrent liabilities | 2,086 | 2,069 | |||||||||
| Commitments and Contingencies | 0 | 0 | |||||||||
| Equity | |||||||||||
| Common Stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2021 and 2020 | 762 | 762 | |||||||||
| Additional paid-in capital | 2,776 | 2,776 | |||||||||
| Retained earnings | 585 | 397 | |||||||||
| Total equity | 4,123 | 3,935 | |||||||||
| Total Liabilities and Equity | $ | 10,505 | $ | 10,025 | |||||||
| (in millions) | September 30, 2020 | December 31, 2019 | |||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash and cash equivalents | $ | 10 | $ | 17 | |||
| Receivables (net of allowance for doubtful accounts of $5 at 2020 and $4 at 2019) | 90 | 84 | |||||
| Receivables from affiliated companies | 57 | 92 | |||||
| Inventory | 130 | 135 | |||||
| Regulatory assets | 35 | 49 | |||||
| Other | 13 | 21 | |||||
| Total current assets | 335 | 398 | |||||
| Property, Plant and Equipment | |||||||
| Cost | 10,804 | 10,241 | |||||
| Accumulated depreciation and amortization | (2,989 | ) | (2,843 | ) | |||
| Net property, plant and equipment | 7,815 | 7,398 | |||||
| Other Noncurrent Assets | |||||||
| Goodwill | 920 | 920 | |||||
| Regulatory assets | 597 | 549 | |||||
| Operating lease right-of-use assets, net | 20 | 21 | |||||
| Other | 62 | 52 | |||||
| Total other noncurrent assets | 1,599 | 1,542 | |||||
| Total Assets | $ | 9,749 | $ | 9,338 | |||
| LIABILITIES AND EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 240 | $ | 288 | |||
| Accounts payable to affiliated companies | 54 | 68 | |||||
| Notes payable to affiliated companies | 85 | 312 | |||||
| Taxes accrued | 193 | 219 | |||||
| Interest accrued | 32 | 30 | |||||
| Asset retirement obligations | 7 | 1 | |||||
| Regulatory liabilities | 66 | 64 | |||||
| Other | 73 | 75 | |||||
| Total current liabilities | 750 | 1,057 | |||||
| Long-Term Debt | 3,064 | 2,594 | |||||
| Long-Term Debt Payable to Affiliated Companies | 25 | 25 | |||||
| Other Noncurrent Liabilities | |||||||
| Deferred income taxes | 965 | 922 | |||||
| Asset retirement obligations | 84 | 79 | |||||
| Regulatory liabilities | 753 | 763 | |||||
| Operating lease liabilities | 20 | 21 | |||||
| Accrued pension and other post-retirement benefit costs | 104 | 100 | |||||
| Other | 100 | 94 | |||||
| Total other noncurrent liabilities | 2,026 | 1,979 | |||||
| Commitments and Contingencies | |||||||
| Equity | |||||||
| Common Stock, $8.50 par value, 120 million shares authorized; 90 million shares outstanding at 2020 and 2019 | 762 | 762 | |||||
| Additional paid-in capital | 2,776 | 2,776 | |||||
| Retained earnings | 346 | 145 | |||||
| Total equity | 3,884 | 3,683 | |||||
| Total Liabilities and Equity | $ | 9,749 | $ | 9,338 | |||
See Notes to Condensed Consolidated Financial Statements
32
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2021 | 2020 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 188 | $ | 201 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 231 | 211 | |||||||||
| Equity component of AFUDC | (5) | (4) | |||||||||
| Impairment of assets and other charges | 5 | — | |||||||||
| Deferred income taxes | 27 | 31 | |||||||||
| Payments for asset retirement obligations | (1) | (1) | |||||||||
| Provision for rate refunds | 12 | 10 | |||||||||
| (Increase) decrease in | |||||||||||
| Receivables | (9) | (5) | |||||||||
| Receivables from affiliated companies | (11) | 35 | |||||||||
| Inventory | (4) | 5 | |||||||||
| Other current assets | (34) | 5 | |||||||||
| Increase (decrease) in | |||||||||||
| Accounts payable | 27 | (28) | |||||||||
| Accounts payable to affiliated companies | (9) | (14) | |||||||||
| Taxes accrued | (37) | (23) | |||||||||
| Other current liabilities | (12) | 6 | |||||||||
| Other assets | (35) | (24) | |||||||||
| Other liabilities | 8 | (7) | |||||||||
| Net cash provided by operating activities | 341 | 398 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Capital expenditures | (615) | (611) | |||||||||
| Notes receivable from affiliated companies | 36 | — | |||||||||
| Other | (42) | (34) | |||||||||
| Net cash used in investing activities | (621) | (645) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from the issuance of long-term debt | — | 467 | |||||||||
| Notes payable to affiliated companies | 282 | (227) | |||||||||
| Net cash provided by financing activities | 282 | 240 | |||||||||
| Net increase (decrease) in cash and cash equivalents | 2 | (7) | |||||||||
| Cash and cash equivalents at beginning of period | 14 | 17 | |||||||||
| Cash and cash equivalents at end of period | $ | 16 | $ | 10 | |||||||
| Supplemental Disclosures: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ | 103 | $ | 92 | |||||||
| Nine Months Ended | |||||||
| September 30, | |||||||
| (in millions) | 2020 | 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net income | $ | 201 | $ | 190 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 211 | 202 | |||||
| Equity component of AFUDC | (4 | ) | (9 | ) | |||
| Deferred income taxes | 31 | 68 | |||||
| Contributions to qualified pension plans | — | (2 | ) | ||||
| Payments for asset retirement obligations | (1 | ) | (7 | ) | |||
| Provision for rate refunds | 10 | 5 | |||||
| (Increase) decrease in | |||||||
| Receivables | (5 | ) | 24 | ||||
| Receivables from affiliated companies | 35 | 51 | |||||
| Inventory | 5 | (2 | ) | ||||
| Other current assets | 5 | (15 | ) | ||||
| Increase (decrease) in | |||||||
| Accounts payable | (28 | ) | (40 | ) | |||
| Accounts payable to affiliated companies | (14 | ) | (9 | ) | |||
| Taxes accrued | (23 | ) | (40 | ) | |||
| Other current liabilities | 6 | (4 | ) | ||||
| Other assets | (24 | ) | (12 | ) | |||
| Other liabilities | (7 | ) | (22 | ) | |||
| Net cash provided by operating activities | 398 | 378 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Capital expenditures | (611 | ) | (714 | ) | |||
| Notes receivable from affiliated companies | — | (74 | ) | ||||
| Other | (34 | ) | (45 | ) | |||
| Net cash used in investing activities | (645 | ) | (833 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from the issuance of long-term debt | 467 | 1,003 | |||||
| Payments for the redemption of long-term debt | — | (451 | ) | ||||
| Notes payable to affiliated companies | (227 | ) | (107 | ) | |||
| Net cash provided by financing activities | 240 | 445 | |||||
| Net decrease in cash and cash equivalents | (7 | ) | (10 | ) | |||
| Cash and cash equivalents at beginning of period | 17 | 21 | |||||
| Cash and cash equivalents at end of period | $ | 10 | $ | 11 | |||
| Supplemental Disclosures: | |||||||
| Significant non-cash transactions: | |||||||
| Accrued capital expenditures | $ | 92 | $ | 100 | |||
See Notes to Condensed Consolidated Financial Statements
33
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY OHIO, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended September 30, 2019 and 2020 | |||||||||||||||
| Additional | Retained | ||||||||||||||
| Common | Paid-in | Earnings | Total | ||||||||||||
| (in millions) | Stock | Capital | (Deficit) | Equity | |||||||||||
| Balance at June 30, 2019 | $ | 762 | $ | 2,776 | $ | 23 | $ | 3,561 | |||||||
| Net income | — | — | 74 | 74 | |||||||||||
| Balance at September 30, 2019 | $ | 762 | $ | 2,776 | $ | 97 | $ | 3,635 | |||||||
| Balance at June 30, 2020 | $ | 762 | $ | 2,776 | $ | 276 | $ | 3,814 | |||||||
| Net income | — | — | 70 | 70 | |||||||||||
| Balance at September 30, 2020 | $ | 762 | $ | 2,776 | $ | 346 | $ | 3,884 | |||||||
| Nine Months Ended September 30, 2019 and 2020 | |||||||||||||||
| Additional | Retained | ||||||||||||||
| Common | Paid-in | Earnings | Total | ||||||||||||
| (in millions) | Stock | Capital | (Deficit) | Equity | |||||||||||
| Balance at December 31, 2018 | $ | 762 | $ | 2,776 | $ | (93 | ) | $ | 3,445 | ||||||
| Net income | — | — | 190 | 190 | |||||||||||
| Balance at September 30, 2019 | $ | 762 | $ | 2,776 | $ | 97 | $ | 3,635 | |||||||
| Balance at December 31, 2019 | $ | 762 | $ | 2,776 | $ | 145 | $ | 3,683 | |||||||
| Net income | — | — | 201 | 201 | |||||||||||
| Balance at September 30, 2020 | $ | 762 | $ | 2,776 | $ | 346 | $ | 3,884 | |||||||
| Three Months Ended September 30, 2020 and 2021 | |||||||||||||||||||||||||||||
| Additional | |||||||||||||||||||||||||||||
| Common | Paid-in | Retained | Total | ||||||||||||||||||||||||||
| (in millions) | Stock | Capital | Earnings | Equity | |||||||||||||||||||||||||
| Balance at June 30, 2020 | $ | 762 | $ | 2,776 | $ | 276 | $ | 3,814 | |||||||||||||||||||||
| Net income | — | — | 70 | 70 | |||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 762 | $ | 2,776 | $ | 346 | $ | 3,884 | |||||||||||||||||||||
| Balance at June 30, 2021 | $ | 762 | $ | 2,776 | $ | 527 | $ | 4,065 | |||||||||||||||||||||
| Net income | — | — | 58 | 58 | |||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | 762 | $ | 2,776 | $ | 585 | $ | 4,123 | |||||||||||||||||||||
| Nine Months Ended September 30, 2020 and 2021 | |||||||||||||||||||||||||||||
| Additional | |||||||||||||||||||||||||||||
| Common | Paid-in | Retained | Total | ||||||||||||||||||||||||||
| (in millions) | Stock | Capital | Earnings | Equity | |||||||||||||||||||||||||
| Balance at December 31, 2019 | $ | 762 | $ | 2,776 | $ | 145 | $ | 3,683 | |||||||||||||||||||||
| Net income | — | — | 201 | 201 | |||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 762 | $ | 2,776 | $ | 346 | $ | 3,884 | |||||||||||||||||||||
| Balance at December 31, 2020 | $ | 762 | $ | 2,776 | $ | 397 | $ | 3,935 | |||||||||||||||||||||
| Net income | — | — | 188 | 188 | |||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | 762 | $ | 2,776 | $ | 585 | $ | 4,123 | |||||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements
34
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Operating Revenues | $ | 886 | $ | 761 | $ | 2,366 | $ | 2,070 | |||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Fuel used in electric generation and purchased power | 292 | 222 | 710 | 577 | |||||||||||||||||||
| Operation, maintenance and other | 173 | 207 | 543 | 564 | |||||||||||||||||||
| Depreciation and amortization | 154 | 149 | 458 | 415 | |||||||||||||||||||
| Property and other taxes | 16 | 15 | 57 | 57 | |||||||||||||||||||
| Impairment of assets and other charges | — | — | 8 | — | |||||||||||||||||||
| Total operating expenses | 635 | 593 | 1,776 | 1,613 | |||||||||||||||||||
| Gains on Sales of Other Assets and Other, net | 1 | — | — | — | |||||||||||||||||||
| Operating Income | 252 | 168 | 590 | 457 | |||||||||||||||||||
| Other Income and Expenses, net | 12 | 9 | 31 | 28 | |||||||||||||||||||
| Interest Expense | 49 | 29 | 148 | 114 | |||||||||||||||||||
| Income Before Income Taxes | 215 | 148 | 473 | 371 | |||||||||||||||||||
| Income Tax Expense | 34 | 29 | 77 | 72 | |||||||||||||||||||
| Net Income and Comprehensive Income | $ | 181 | $ | 119 | $ | 396 | $ | 299 | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Operating Revenues | $ | 761 | $ | 807 | $ | 2,070 | $ | 2,289 | |||||||
| Operating Expenses | |||||||||||||||
| Fuel used in electric generation and purchased power | 222 | 234 | 577 | 720 | |||||||||||
| Operation, maintenance and other | 207 | 192 | 564 | 569 | |||||||||||
| Depreciation and amortization | 149 | 130 | 415 | 393 | |||||||||||
| Property and other taxes | 15 | 16 | 57 | 55 | |||||||||||
| Total operating expenses | 593 | 572 | 1,613 | 1,737 | |||||||||||
| Operating Income | 168 | 235 | 457 | 552 | |||||||||||
| Other Income and Expenses, net | 9 | 8 | 28 | 35 | |||||||||||
| Interest Expense | 29 | 40 | 114 | 111 | |||||||||||
| Income Before Income Taxes | 148 | 203 | 371 | 476 | |||||||||||
| Income Tax Expense | 29 | 47 | 72 | 113 | |||||||||||
| Net Income and Comprehensive Income | $ | 119 | $ | 156 | $ | 299 | $ | 363 | |||||||
See Notes to Condensed Consolidated Financial Statements
35
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2021 | December 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 14 | $ | 7 | |||||||
| Receivables (net of allowance for doubtful accounts of $3 at 2021 and 2020) | 81 | 55 | |||||||||
| Receivables from affiliated companies | 62 | 112 | |||||||||
| Notes receivable from affiliated companies | 252 | — | |||||||||
| Inventory | 367 | 473 | |||||||||
| Regulatory assets | 196 | 125 | |||||||||
| Other | 59 | 37 | |||||||||
| Total current assets | 1,031 | 809 | |||||||||
| Property, Plant and Equipment | |||||||||||
| Cost | 17,320 | 17,382 | |||||||||
| Accumulated depreciation and amortization | (5,550) | (5,661) | |||||||||
| Net property, plant and equipment | 11,770 | 11,721 | |||||||||
| Other Noncurrent Assets | |||||||||||
| Regulatory assets | 1,300 | 1,203 | |||||||||
| Operating lease right-of-use assets, net | 51 | 55 | |||||||||
| Other | 276 | 253 | |||||||||
| Total other noncurrent assets | 1,627 | 1,511 | |||||||||
| Total Assets | $ | 14,428 | $ | 14,041 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 239 | $ | 188 | |||||||
| Accounts payable to affiliated companies | 198 | 88 | |||||||||
| Notes payable to affiliated companies | — | 131 | |||||||||
| Taxes accrued | 83 | 62 | |||||||||
| Interest accrued | 59 | 51 | |||||||||
| Current maturities of long-term debt | 151 | 70 | |||||||||
| Asset retirement obligations | 177 | 168 | |||||||||
| Regulatory liabilities | 147 | 111 | |||||||||
| Other | 104 | 83 | |||||||||
| Total current liabilities | 1,158 | 952 | |||||||||
| Long-Term Debt | 3,791 | 3,871 | |||||||||
| Long-Term Debt Payable to Affiliated Companies | 150 | 150 | |||||||||
| Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes | 1,289 | 1,228 | |||||||||
| Asset retirement obligations | 966 | 1,008 | |||||||||
| Regulatory liabilities | 1,573 | 1,627 | |||||||||
| Operating lease liabilities | 49 | 53 | |||||||||
| Accrued pension and other post-retirement benefit costs | 172 | 171 | |||||||||
| Investment tax credits | 172 | 168 | |||||||||
| Other | 53 | 30 | |||||||||
| Total other noncurrent liabilities | 4,274 | 4,285 | |||||||||
| Commitments and Contingencies | 0 | 0 | |||||||||
| Equity | |||||||||||
| Member's Equity | 5,055 | 4,783 | |||||||||
| Total Liabilities and Equity | $ | 14,428 | $ | 14,041 | |||||||
| (in millions) | September 30, 2020 | December 31, 2019 | |||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash and cash equivalents | $ | 15 | $ | 25 | |||
| Receivables (net of allowance for doubtful accounts of $3 at 2020 and 2019) | 48 | 60 | |||||
| Receivables from affiliated companies | 84 | 79 | |||||
| Inventory | 507 | 517 | |||||
| Regulatory assets | 119 | 90 | |||||
| Other | 30 | 60 | |||||
| Total current assets | 803 | 831 | |||||
| Property, Plant and Equipment | |||||||
| Cost | 17,223 | 16,305 | |||||
| Accumulated depreciation and amortization | (5,579 | ) | (5,233 | ) | |||
| Net property, plant and equipment | 11,644 | 11,072 | |||||
| Other Noncurrent Assets | |||||||
| Regulatory assets | 1,184 | 1,082 | |||||
| Operating lease right-of-use assets, net | 55 | 57 | |||||
| Other | 228 | 234 | |||||
| Total other noncurrent assets | 1,467 | 1,373 | |||||
| Total Assets | $ | 13,914 | $ | 13,276 | |||
| LIABILITIES AND EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 172 | $ | 201 | |||
| Accounts payable to affiliated companies | 65 | 87 | |||||
| Notes payable to affiliated companies | 83 | 30 | |||||
| Taxes accrued | 110 | 49 | |||||
| Interest accrued | 63 | 58 | |||||
| Current maturities of long-term debt | 13 | 503 | |||||
| Asset retirement obligations | 170 | 189 | |||||
| Regulatory liabilities | 76 | 55 | |||||
| Other | 98 | 112 | |||||
| Total current liabilities | 850 | 1,284 | |||||
| Long-Term Debt | 3,941 | 3,404 | |||||
| Long-Term Debt Payable to Affiliated Companies | 150 | 150 | |||||
| Other Noncurrent Liabilities | |||||||
| Deferred income taxes | 1,179 | 1,150 | |||||
| Asset retirement obligations | 1,044 | 643 | |||||
| Regulatory liabilities | 1,648 | 1,685 | |||||
| Operating lease liabilities | 53 | 55 | |||||
| Accrued pension and other post-retirement benefit costs | 151 | 148 | |||||
| Investment tax credits | 168 | 164 | |||||
| Other | 56 | 18 | |||||
| Total other noncurrent liabilities | 4,299 | 3,863 | |||||
| Commitments and Contingencies | |||||||
| Equity | |||||||
| Member's Equity | 4,674 | 4,575 | |||||
| Total Liabilities and Equity | $ | 13,914 | $ | 13,276 | |||
See Notes to Condensed Consolidated Financial Statements
36
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2021 | 2020 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 396 | $ | 299 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, amortization and accretion | 460 | 416 | |||||||||
| Equity component of AFUDC | (19) | (18) | |||||||||
| Impairment of assets and other charges | 8 | — | |||||||||
| Deferred income taxes | 19 | 11 | |||||||||
| Payments for asset retirement obligations | (49) | (48) | |||||||||
| (Increase) decrease in | |||||||||||
| Receivables | (7) | 15 | |||||||||
| Receivables from affiliated companies | 17 | (5) | |||||||||
| Inventory | 106 | 10 | |||||||||
| Other current assets | (58) | 12 | |||||||||
| Increase (decrease) in | |||||||||||
| Accounts payable | 46 | (1) | |||||||||
| Accounts payable to affiliated companies | (15) | (22) | |||||||||
| Taxes accrued | 25 | 65 | |||||||||
| Other current liabilities | 23 | (2) | |||||||||
| Other assets | 11 | (41) | |||||||||
| Other liabilities | 3 | 104 | |||||||||
| Net cash provided by operating activities | 966 | 795 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Capital expenditures | (584) | (669) | |||||||||
| Purchases of debt and equity securities | (34) | (24) | |||||||||
| Proceeds from sales and maturities of debt and equity securities | 16 | 15 | |||||||||
| Notes receivable from affiliated companies | (218) | — | |||||||||
| Other | (8) | (24) | |||||||||
| Net cash used in investing activities | (828) | (702) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from the issuance of long-term debt | — | 544 | |||||||||
| Payments for the redemption of long-term debt | — | (500) | |||||||||
| Notes payable to affiliated companies | (131) | 53 | |||||||||
| Distributions to parent | — | (200) | |||||||||
| Net cash used in financing activities | (131) | (103) | |||||||||
| Net increase (decrease) in cash and cash equivalents | 7 | (10) | |||||||||
| Cash and cash equivalents at beginning of period | 7 | 25 | |||||||||
| Cash and cash equivalents at end of period | $ | 14 | $ | 15 | |||||||
| Supplemental Disclosures: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ | 105 | $ | 73 | |||||||
| Nine Months Ended | |||||||
| September 30, | |||||||
| (in millions) | 2020 | 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net income | $ | 299 | $ | 363 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation, amortization and accretion | 416 | 395 | |||||
| Equity component of AFUDC | (18 | ) | (13 | ) | |||
| Deferred income taxes | 11 | 108 | |||||
| Contributions to qualified pension plans | — | (2 | ) | ||||
| Payments for asset retirement obligations | (48 | ) | (31 | ) | |||
| (Increase) decrease in | |||||||
| Receivables | 15 | 1 | |||||
| Receivables from affiliated companies | (5 | ) | 37 | ||||
| Inventory | 10 | (56 | ) | ||||
| Other current assets | 12 | 91 | |||||
| Increase (decrease) in | |||||||
| Accounts payable | (1 | ) | 1 | ||||
| Accounts payable to affiliated companies | (22 | ) | (9 | ) | |||
| Taxes accrued | 65 | (14 | ) | ||||
| Other current liabilities | (2 | ) | (12 | ) | |||
| Other assets | (41 | ) | (75 | ) | |||
| Other liabilities | 104 | 67 | |||||
| Net cash provided by operating activities | 795 | 851 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Capital expenditures | (669 | ) | (663 | ) | |||
| Purchases of debt and equity securities | (24 | ) | (19 | ) | |||
| Proceeds from sales and maturities of debt and equity securities | 15 | 15 | |||||
| Notes receivable from affiliated companies | — | (213 | ) | ||||
| Other | (24 | ) | (33 | ) | |||
| Net cash used in investing activities | (702 | ) | (913 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from the issuance of long-term debt | 544 | 485 | |||||
| Payments for the redemption of long-term debt | (500 | ) | (60 | ) | |||
| Notes payable to affiliated companies | 53 | (167 | ) | ||||
| Distributions to parent | (200 | ) | (200 | ) | |||
| Net cash provided by (used in) financing activities | (103 | ) | 58 | ||||
| Net decrease in cash and cash equivalents | (10 | ) | (4 | ) | |||
| Cash and cash equivalents at beginning of period | 25 | 24 | |||||
| Cash and cash equivalents at end of period | $ | 15 | $ | 20 | |||
| Supplemental Disclosures: | |||||||
| Significant non-cash transactions: | |||||||
| Accrued capital expenditures | $ | 73 | $ | 82 | |||
See Notes to Condensed Consolidated Financial Statements
37
| FINANCIAL STATEMENTS | |||||
DUKE ENERGY INDIANA, LLC
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 30, 2020 and 2021 | |||||||||||||||||||||||||||||||||||
| (in millions) | Member's Equity | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2020 | $ | 4,655 | |||||||||||||||||||||||||||||||||
| Net income | 119 | ||||||||||||||||||||||||||||||||||
| Distributions to parent | (100) | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 4,674 | |||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | $ | 4,999 | |||||||||||||||||||||||||||||||||
| Net income | 181 | ||||||||||||||||||||||||||||||||||
| Distributions to parent | (125) | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | 5,055 | |||||||||||||||||||||||||||||||||
| Nine Months Ended | |||||||||||||||||||||||||||||||||||
| September 30, 2020 and 2021 | |||||||||||||||||||||||||||||||||||
| (in millions) | Member's Equity | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2019 | $ | 4,575 | |||||||||||||||||||||||||||||||||
| Net income | 299 | ||||||||||||||||||||||||||||||||||
| Distributions to parent | (200) | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 4,674 | |||||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | $ | 4,783 | |||||||||||||||||||||||||||||||||
| Net income | 396 | ||||||||||||||||||||||||||||||||||
| Distributions to parent | (125) | ||||||||||||||||||||||||||||||||||
| Other | 1 | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | 5,055 | |||||||||||||||||||||||||||||||||
| Three Months Ended | ||||
| September 30, 2019 and 2020 | ||||
| Member's | ||||
| (in millions) | Equity | |||
| Balance at June 30, 2019 | $ | 4,546 | ||
| Net income | 156 | |||
| Distributions to parent | (200 | ) | ||
| Balance at September 30, 2019 | $ | 4,502 | ||
| Balance at June 30, 2020 | $ | 4,655 | ||
| Net income | 119 | |||
| Distributions to parent | (100 | ) | ||
| Balance at September 30, 2020 | $ | 4,674 | ||
| Nine Months Ended | ||||
| September 30, 2019 and 2020 | ||||
| Member's | ||||
| (in millions) | Equity | |||
| Balance at December 31, 2018 | $ | 4,339 | ||
| Net income | 363 | |||
| Distributions to parent | (200 | ) | ||
| Balance at September 30, 2019 | $ | 4,502 | ||
| Balance at December 31, 2019 | $ | 4,575 | ||
| Net income | 299 | |||
| Distributions to parent | (200 | ) | ||
| Balance at September 30, 2020 | $ | 4,674 | ||
See Notes to Condensed Consolidated Financial Statements
38
| FINANCIAL STATEMENTS | |||||
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Operating Revenues | $ | 195 | $ | 162 | $ | 1,016 | $ | 871 | |||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Cost of natural gas | 66 | 39 | 354 | 254 | |||||||||||||||||||
| Operation, maintenance and other | 77 | 75 | 231 | 234 | |||||||||||||||||||
| Depreciation and amortization | 51 | 45 | 150 | 133 | |||||||||||||||||||
| Property and other taxes | 16 | 13 | 44 | 37 | |||||||||||||||||||
| Impairment of assets and other charges | 4 | 7 | 9 | 7 | |||||||||||||||||||
| Total operating expenses | 214 | 179 | 788 | 665 | |||||||||||||||||||
| Operating (Loss) Income | (19) | (17) | 228 | 206 | |||||||||||||||||||
| Other Income and Expenses, net | 16 | 16 | 51 | 44 | |||||||||||||||||||
| Interest Expense | 29 | 29 | 88 | 89 | |||||||||||||||||||
| (Loss) Income Before Income Taxes | (32) | (30) | 191 | 161 | |||||||||||||||||||
| Income Tax (Benefit) Expense | (8) | (5) | 16 | 6 | |||||||||||||||||||
| Net (Loss) Income and Comprehensive (Loss) Income | $ | (24) | $ | (25) | $ | 175 | $ | 155 | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Operating Revenues | $ | 162 | $ | 168 | $ | 871 | $ | 956 | |||||||
| Operating Expenses | |||||||||||||||
| Cost of natural gas | 39 | 46 | 254 | 384 | |||||||||||
| Operation, maintenance and other | 75 | 78 | 234 | 241 | |||||||||||
| Depreciation and amortization | 45 | 43 | 133 | 127 | |||||||||||
| Property and other taxes | 13 | 14 | 37 | 39 | |||||||||||
| Impairment charges | 7 | — | 7 | — | |||||||||||
| Total operating expenses | 179 | 181 | 665 | 791 | |||||||||||
| Operating (Loss) Income | (17 | ) | (13 | ) | 206 | 165 | |||||||||
| Other Income and Expenses, net | 16 | 7 | 44 | 19 | |||||||||||
| Interest Expense | 29 | 22 | 89 | 65 | |||||||||||
| (Loss) Income Before Income Taxes | (30 | ) | (28 | ) | 161 | 119 | |||||||||
| Income Tax (Benefit) Expense | (5 | ) | (10 | ) | 6 | 22 | |||||||||
| Net (Loss) Income and Comprehensive (Loss) Income | $ | (25 | ) | $ | (18 | ) | $ | 155 | $ | 97 | |||||
See Notes to Condensed Consolidated Financial Statements
39
| FINANCIAL STATEMENTS | |||||
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions) | September 30, 2021 | December 31, 2020 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Receivables (net of allowance for doubtful accounts of $15 at 2021 and $12 at 2020) | $ | 96 | $ | 250 | |||||||
| Receivables from affiliated companies | 11 | 10 | |||||||||
| Inventory | 68 | 68 | |||||||||
| Regulatory assets | 125 | 153 | |||||||||
| Other | 59 | 20 | |||||||||
| Total current assets | 359 | 501 | |||||||||
| Property, Plant and Equipment | |||||||||||
| Cost | 9,733 | 9,134 | |||||||||
| Accumulated depreciation and amortization | (1,862) | (1,749) | |||||||||
| Facilities to be retired, net | 11 | — | |||||||||
| Net property, plant and equipment | 7,882 | 7,385 | |||||||||
| Other Noncurrent Assets | |||||||||||
| Goodwill | 49 | 49 | |||||||||
| Regulatory assets | 335 | 302 | |||||||||
| Operating lease right-of-use assets, net | 17 | 20 | |||||||||
| Investments in equity method unconsolidated affiliates | 100 | 88 | |||||||||
| Other | 282 | 270 | |||||||||
| Total other noncurrent assets | 783 | 729 | |||||||||
| Total Assets | $ | 9,024 | $ | 8,615 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 184 | $ | 230 | |||||||
| Accounts payable to affiliated companies | 31 | 79 | |||||||||
| Notes payable to affiliated companies | 315 | 530 | |||||||||
| Taxes accrued | 41 | 23 | |||||||||
| Interest accrued | 35 | 34 | |||||||||
| Current maturities of long-term debt | — | 160 | |||||||||
| Regulatory liabilities | 64 | 88 | |||||||||
| Other | 76 | 69 | |||||||||
| Total current liabilities | 746 | 1,213 | |||||||||
| Long-Term Debt | 2,968 | 2,620 | |||||||||
| Other Noncurrent Liabilities | |||||||||||
| Deferred income taxes | 875 | 821 | |||||||||
| Asset retirement obligations | 21 | 20 | |||||||||
| Regulatory liabilities | 1,004 | 1,044 | |||||||||
| Operating lease liabilities | 15 | 19 | |||||||||
| Accrued pension and other post-retirement benefit costs | 6 | 8 | |||||||||
| Other | 175 | 155 | |||||||||
| Total other noncurrent liabilities | 2,096 | 2,067 | |||||||||
| Commitments and Contingencies | 0 | 0 | |||||||||
| Equity | |||||||||||
| Common stock, no par value: 100 shares authorized and outstanding at 2021 and 2020 | 1,635 | 1,310 | |||||||||
| Retained earnings | 1,579 | 1,405 | |||||||||
| Total equity | 3,214 | 2,715 | |||||||||
| Total Liabilities and Equity | $ | 9,024 | $ | 8,615 | |||||||
| (in millions) | September 30, 2020 | December 31, 2019 | |||||
| ASSETS | |||||||
| Current Assets | |||||||
| Receivables (net of allowance for doubtful accounts of $9 at 2020 and $6 at 2019) | $ | 93 | $ | 241 | |||
| Receivables from affiliated companies | 11 | 10 | |||||
| Inventory | 47 | 72 | |||||
| Regulatory assets | 119 | 73 | |||||
| Other | 51 | 28 | |||||
| Total current assets | 321 | 424 | |||||
| Property, Plant and Equipment | |||||||
| Cost | 8,882 | 8,446 | |||||
| Accumulated depreciation and amortization | (1,713 | ) | (1,681 | ) | |||
| Net property, plant and equipment | 7,169 | 6,765 | |||||
| Other Noncurrent Assets | |||||||
| Goodwill | 49 | 49 | |||||
| Regulatory assets | 287 | 290 | |||||
| Operating lease right-of-use assets, net | 21 | 24 | |||||
| Investments in equity method unconsolidated affiliates | 86 | 83 | |||||
| Other | 279 | 121 | |||||
| Total other noncurrent assets | 722 | 567 | |||||
| Total Assets | $ | 8,212 | $ | 7,756 | |||
| LIABILITIES AND EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 177 | $ | 215 | |||
| Accounts payable to affiliated companies | 63 | 3 | |||||
| Notes payable to affiliated companies | 327 | 476 | |||||
| Taxes accrued | 36 | 24 | |||||
| Interest accrued | 37 | 33 | |||||
| Current maturities of long-term debt | 160 | — | |||||
| Regulatory liabilities | 101 | 81 | |||||
| Other | 59 | 67 | |||||
| Total current liabilities | 960 | 899 | |||||
| Long-Term Debt | 2,620 | 2,384 | |||||
| Other Noncurrent Liabilities | |||||||
| Deferred income taxes | 775 | 708 | |||||
| Asset retirement obligations | 17 | 17 | |||||
| Regulatory liabilities | 1,070 | 1,131 | |||||
| Operating lease liabilities | 20 | 23 | |||||
| Accrued pension and other post-retirement benefit costs | 7 | 3 | |||||
| Other | 146 | 148 | |||||
| Total other noncurrent liabilities | 2,035 | 2,030 | |||||
| Commitments and Contingencies | |||||||
| Equity | |||||||
| Common stock, no par value: 100 shares authorized and outstanding at 2020 and 2019 | 1,310 | 1,310 | |||||
| Retained earnings | 1,287 | 1,133 | |||||
| Total equity | 2,597 | 2,443 | |||||
| Total Liabilities and Equity | $ | 8,212 | $ | 7,756 | |||
See Notes to Condensed Consolidated Financial Statements
40
| FINANCIAL STATEMENTS | |||||
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| (in millions) | 2021 | 2020 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 175 | $ | 155 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 152 | 135 | |||||||||
| Equity component of AFUDC | (19) | (14) | |||||||||
| Impairment of assets and other charges | 10 | 7 | |||||||||
| Deferred income taxes | 10 | 24 | |||||||||
| Equity in earnings from unconsolidated affiliates | (7) | (7) | |||||||||
| Provision for rate refunds | (3) | (27) | |||||||||
| (Increase) decrease in | |||||||||||
| Receivables | 151 | 164 | |||||||||
| Receivables from affiliated companies | (1) | (1) | |||||||||
| Inventory | — | 25 | |||||||||
| Other current assets | 7 | (59) | |||||||||
| Increase (decrease) in | |||||||||||
| Accounts payable | (55) | (53) | |||||||||
| Accounts payable to affiliated companies | (48) | 60 | |||||||||
| Taxes accrued | 17 | 16 | |||||||||
| Other current liabilities | (32) | (4) | |||||||||
| Other assets | 3 | (14) | |||||||||
| Other liabilities | 2 | 7 | |||||||||
| Net cash provided by operating activities | 362 | 414 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Capital expenditures | (628) | (641) | |||||||||
| Contributions to equity method investments | (9) | — | |||||||||
| Return of investment capital | 1 | — | |||||||||
| Other | (23) | (18) | |||||||||
| Net cash used in investing activities | (659) | (659) | |||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from the issuance of long-term debt | 347 | 394 | |||||||||
| Payments for the redemption of long-term debt | (160) | — | |||||||||
| Notes payable to affiliated companies | (215) | (149) | |||||||||
| Capital contributions from parent | 325 | — | |||||||||
| Net cash provided by financing activities | 297 | 245 | |||||||||
| Net increase in cash and cash equivalents | — | — | |||||||||
| Cash and cash equivalents at beginning of period | — | — | |||||||||
| Cash and cash equivalents at end of period | $ | — | $ | — | |||||||
| Supplemental Disclosures: | |||||||||||
| Significant non-cash transactions: | |||||||||||
| Accrued capital expenditures | $ | 115 | $ | 123 | |||||||
| Nine Months Ended | |||||||
| September 30, | |||||||
| (in millions) | 2020 | 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net income | $ | 155 | $ | 97 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 135 | 129 | |||||
| Equity component of AFUDC | (14 | ) | — | ||||
| Impairment charges | 7 | — | |||||
| Deferred income taxes | 24 | 110 | |||||
| Equity in earnings from unconsolidated affiliates | (7 | ) | (6 | ) | |||
| Contributions to qualified pension plans | — | (1 | ) | ||||
| Provision for rate refunds | (27 | ) | 9 | ||||
| (Increase) decrease in | |||||||
| Receivables | 164 | 192 | |||||
| Receivables from affiliated companies | (1 | ) | 12 | ||||
| Inventory | 25 | 23 | |||||
| Other current assets | (59 | ) | (95 | ) | |||
| Increase (decrease) in | |||||||
| Accounts payable | (53 | ) | (93 | ) | |||
| Accounts payable to affiliated companies | 60 | 12 | |||||
| Taxes accrued | 16 | (51 | ) | ||||
| Other current liabilities | (4 | ) | (6 | ) | |||
| Other assets | (14 | ) | (10 | ) | |||
| Other liabilities | 7 | (5 | ) | ||||
| Net cash provided by operating activities | 414 | 317 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Capital expenditures | (641 | ) | (751 | ) | |||
| Contributions to equity method investments | — | (16 | ) | ||||
| Other | (18 | ) | (10 | ) | |||
| Net cash used in investing activities | (659 | ) | (777 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from the issuance of long-term debt | 394 | 596 | |||||
| Payments for the redemption of long-term debt | — | (350 | ) | ||||
| Notes payable to affiliated companies | (149 | ) | 64 | ||||
| Capital contributions from parent | — | 150 | |||||
| Net cash provided by financing activities | 245 | 460 | |||||
| Net increase in cash and cash equivalents | — | — | |||||
| Cash and cash equivalents at beginning of period | — | — | |||||
| Cash and cash equivalents at end of period | $ | — | $ | — | |||
| Supplemental Disclosures: | |||||||
| Significant non-cash transactions: | |||||||
| Accrued capital expenditures | $ | 123 | $ | 121 | |||
See Notes to Condensed Consolidated Financial Statements
41
| FINANCIAL STATEMENTS | |||||
PIEDMONT NATURAL GAS COMPANY, INC.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Three Months Ended September 30, 2020 and 2021 | |||||||||||||||||||||||||||||||||||
| Common | Retained | Total | |||||||||||||||||||||||||||||||||
| (in millions) | Stock | Earnings | Equity | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2020 | $ | 1,310 | $ | 1,312 | $ | 2,622 | |||||||||||||||||||||||||||||
| Net loss | — | (25) | (25) | ||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 1,310 | $ | 1,287 | $ | 2,597 | |||||||||||||||||||||||||||||
| Balance at June 30, 2021 | $ | 1,635 | $ | 1,604 | $ | 3,239 | |||||||||||||||||||||||||||||
| Net loss | — | (24) | (24) | ||||||||||||||||||||||||||||||||
| Other | — | (1) | (1) | ||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | 1,635 | $ | 1,579 | $ | 3,214 | |||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2020 and 2021 | |||||||||||||||||||||||||||||||||||
| Common | Retained | Total | |||||||||||||||||||||||||||||||||
| (in millions) | Stock | Earnings | Equity | ||||||||||||||||||||||||||||||||
| Balance at December 31, 2019 | $ | 1,310 | $ | 1,133 | $ | 2,443 | |||||||||||||||||||||||||||||
| Net income | — | 155 | 155 | ||||||||||||||||||||||||||||||||
| Other | — | (1) | (1) | ||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 1,310 | $ | 1,287 | $ | 2,597 | |||||||||||||||||||||||||||||
| Balance at December 31, 2020 | $ | 1,310 | $ | 1,405 | $ | 2,715 | |||||||||||||||||||||||||||||
| Net income | — | 175 | 175 | ||||||||||||||||||||||||||||||||
| Contribution from parent | 325 | — | 325 | ||||||||||||||||||||||||||||||||
| Other | — | (1) | (1) | ||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | 1,635 | $ | 1,579 | $ | 3,214 | |||||||||||||||||||||||||||||
| Three Months Ended September 30, 2019 and 2020 | |||||||||||
| Common | Retained | Total | |||||||||
| (in millions) | Stock | Earnings | Equity | ||||||||
| Balance at June 30, 2019 | $ | 1,310 | $ | 1,046 | $ | 2,356 | |||||
| Net loss | — | (18 | ) | (18 | ) | ||||||
| Balance at September 30, 2019 | $ | 1,310 | $ | 1,028 | $ | 2,338 | |||||
| Balance at June 30, 2020 | $ | 1,310 | $ | 1,312 | $ | 2,622 | |||||
| Net loss | — | (25 | ) | (25 | ) | ||||||
| Balance at September 30, 2020 | $ | 1,310 | $ | 1,287 | $ | 2,597 | |||||
| Nine Months Ended September 30, 2019 and 2020 | |||||||||||
| Common | Retained | Total | |||||||||
| (in millions) | Stock | Earnings | Equity | ||||||||
| Balance at December 31, 2018 | $ | 1,160 | $ | 931 | $ | 2,091 | |||||
| Net income | — | 97 | 97 | ||||||||
| Contribution from parent | 150 | — | 150 | ||||||||
| Balance at September 30, 2019 | $ | 1,310 | $ | 1,028 | $ | 2,338 | |||||
| Balance at December 31, 2019 | $ | 1,310 | $ | 1,133 | $ | 2,443 | |||||
| Net income | — | 155 | 155 | ||||||||
| Other | — | (1 | ) | (1 | ) | ||||||
| Balance at September 30, 2020 | $ | 1,310 | $ | 1,287 | $ | 2,597 | |||||
See Notes to Condensed Consolidated Financial Statements
42
| 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 | Applicable Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Registrant | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | Registrant | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke Energy | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | Duke Energy | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke Energy Carolinas | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | Duke Energy Carolinas | • | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Progress Energy | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | Progress Energy | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke Energy Progress | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | Duke Energy Progress | • | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke Energy Florida | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | Duke Energy Florida | • | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke Energy Ohio | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | Duke Energy Ohio | • | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke Energy Indiana | • | • | • | • | • | • | • | • | • | • | • | • | • | • | • | Duke Energy Indiana | • | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Piedmont | • | • | • | • | • | • | • | • | • | • | • | • | • | • | Piedmont | • | • | • | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables within the notes may not sum across due to (i) Progress Energy's consolidation of Duke Energy Progress, Duke Energy Florida and other subsidiaries that are not registrants and (ii) subsidiaries that are not registrants but included in the consolidated Duke Energy balances.
1. ORGANIZATION AND BASIS OF PRESENTATION
BASIS OF PRESENTATION
These Condensed Consolidated Financial Statements have been prepared in accordance with 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 and should be read in conjunction with the Consolidated Financial Statements in the Duke Energy Registrants’ combined Annual Report on Form 10-K for the year ended December 31, 2019.2020.
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.
BASIS OF CONSOLIDATION
These Condensed Consolidated Financial Statements include, after eliminating intercompany transactions and balances, the accounts of the Duke Energy Registrants and subsidiaries or VIEs where the respective Duke Energy Registrants have control. See Note 1211 for additional information on VIEs. These Condensed Consolidated Financial Statements also reflect the Duke Energy Registrants’ proportionate share of certain jointly owned generation and transmission facilities.
OTHER CURRENT LIABILITIES
Included in Other within Current Liabilities on the Duke Energy Condensed Consolidated Balance Sheet is a current liability of $935$36 million and $0$936 million as of September 30, 2020,2021, and December 31, 2019,2020, respectively. The current liability, initially recorded in the second quarter and increased during the third quarter,2020, primarily representsrepresented Duke Energy's share of ACP's obligations of outstanding debt and to satisfy ARO requirements to restore construction sites. See Notes 3 4 and 1211 for further information.
NONCONTROLLING INTEREST
Duke Energy maintains a controlling financial interest in certain less than wholly owned nonregulated subsidiaries. As a result, Duke Energy consolidates these subsidiaries and presents the third-party investors' portion of Duke Energy's net income (loss), net assets and comprehensive income (loss) as noncontrolling interest. Noncontrolling interest is included as a component of equity on the Condensed Consolidated Balance Sheet.
Several operating agreements of Duke Energy's subsidiaries with noncontrolling interest are subject to allocations of earnings, tax attributes and cash flows in accordance with contractual agreements that vary throughout the lives of the subsidiaries. Therefore, Duke Energy and the other investors' (the owners) interests in the subsidiaries are not fixed, and the subsidiaries apply the Hypothetical Liquidation at Book Value (HLBV) method in allocating income or loss and other comprehensive income or loss (all measured on a pretax basis) to the owners. The HLBV method measures the amounts that each owner would hypothetically claim at each balance sheet reporting date, including tax benefits realized by the owners over the IRS recapture period, upon a hypothetical liquidation of the subsidiary at the net book value of its underlying assets. The change in the amount that each owner would hypothetically receive at the reporting date compared to the amount it would have received on the previous reporting date represents the amount of income or loss allocated to each owner for the reporting period.
43
| FINANCIAL STATEMENTS | ORGANIZATION AND BASIS OF PRESENTATION | ||||
During September 2021, Duke Energy completed the initial minority interest investment in a portion of Duke Energy Indiana to an affiliate of GIC. GIC's ownership interest in Duke Energy Indiana represents a noncontrolling interest. See Note 2 for additional information on the sale.
Other operating agreements of Duke Energy's subsidiaries with noncontrolling interest allocate profit and loss based on their pro rata shares of the ownership interest in the respective subsidiary. Therefore, Duke Energy allocates net income or loss and other comprehensive income or loss of these subsidiaries to the owners based on their pro rata shares.
The following table presents cash received for the sale of noncontrolling interest and allocated losses to noncontrolling interest for the three and nine months ended September 30, 2020,2021, and 2019.2020.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Noncontrolling Interest Capital Contributions | |||||||||||||||
| Cash received for the sale of noncontrolling interest to tax equity members | $ | 239 | $ | 7 | $ | 402 | $ | 200 | |||||||
| Cash received for the sale of noncontrolling interest to pro rata share members | 0 | 0 | 0 | 415 | |||||||||||
| Total Noncontrolling Interest Capital Contributions | 239 | 7 | 402 | 615 | |||||||||||
| Noncontrolling Interest Allocation of Income | |||||||||||||||
| Allocated losses to noncontrolling tax equity members utilizing the HLBV method | 59 | 15 | 187 | 105 | |||||||||||
| Allocated losses to noncontrolling members based on pro rata shares of ownership | 11 | 4 | 21 | 5 | |||||||||||
| Total Noncontrolling Interest Allocated Losses | $ | 70 | $ | 19 | $ | 208 | $ | 110 | |||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Noncontrolling Interest Allocation of Income | |||||||||||||||||||||||
| Allocated losses to noncontrolling tax equity members utilizing the HLBV method | $ | 119 | $ | 59 | $ | 217 | $ | 187 | |||||||||||||||
| Allocated losses to noncontrolling members based on pro rata shares of ownership | 10 | 11 | 30 | 21 | |||||||||||||||||||
| Total Noncontrolling Interest Allocated Losses | $ | 129 | $ | 70 | $ | 247 | $ | 208 | |||||||||||||||
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 VIEs. See Notes 109 and 1211 for additional information. Restricted cash amounts are included in Other within Current Assets and Other Noncurrent 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, 2020 | December 31, 2019 | ||||||||||||||||||
| Duke | Duke | ||||||||||||||||||
| Duke | Progress | Energy | Duke | Progress | Energy | ||||||||||||||
| Energy | Energy | Florida | Energy | Energy | Florida | ||||||||||||||
| Current Assets | |||||||||||||||||||
| Cash and cash equivalents | $ | 308 | $ | 70 | $ | 19 | $ | 311 | $ | 48 | $ | 17 | |||||||
| Other | 187 | 16 | 16 | 222 | 39 | 39 | |||||||||||||
| Other Noncurrent Assets | |||||||||||||||||||
| Other | 105 | 102 | — | 40 | 39 | — | |||||||||||||
| Total cash, cash equivalents and restricted cash | $ | 600 | $ | 188 | $ | 35 | $ | 573 | $ | 126 | $ | 56 | |||||||
| September 30, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Duke | Duke | ||||||||||||||||||||||
| Duke | Progress | Energy | Duke | Progress | Energy | ||||||||||||||||||
| Energy | Energy | Florida | Energy | Energy | Florida | ||||||||||||||||||
| Current Assets | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 548 | $ | 102 | $ | 40 | $ | 259 | $ | 59 | $ | 11 | |||||||||||
| Other | 194 | 17 | 17 | 194 | 39 | 39 | |||||||||||||||||
| Other Noncurrent Assets | |||||||||||||||||||||||
| Other | 1 | — | — | 103 | 102 | — | |||||||||||||||||
| Total cash, cash equivalents and restricted cash | $ | 743 | $ | 119 | $ | 57 | $ | 556 | $ | 200 | $ | 50 | |||||||||||
INVENTORY
Provisions for inventory write-offs were not material at September 30, 2020,2021, and December 31, 2019.2020. The components of inventory are presented in the tables below.
| September 30, 2020 | |||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||
| Materials and supplies | $ | 2,341 | $ | 779 | $ | 1,021 | $ | 682 | $ | 340 | $ | 79 | $ | 314 | $ | 13 | |||||||||||||||
| Coal | 546 | 173 | 168 | 120 | 48 | 12 | 192 | — | |||||||||||||||||||||||
| Natural gas, oil and other fuel | 303 | 40 | 189 | 108 | 80 | 39 | 1 | 34 | |||||||||||||||||||||||
| Total inventory | $ | 3,190 | $ | 992 | $ | 1,378 | $ | 910 | $ | 468 | $ | 130 | $ | 507 | $ | 47 | |||||||||||||||
| December 31, 2019 | September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Materials and supplies | $ | 2,297 | $ | 768 | $ | 1,038 | $ | 686 | $ | 351 | $ | 79 | $ | 318 | $ | 5 | Materials and supplies | $ | 2,317 | $ | 779 | $ | 1,009 | $ | 674 | $ | 336 | $ | 85 | $ | 305 | $ | 11 | |||||||||||||||||||||||||||||||||||||||||||||
| Coal | 586 | 187 | 186 | 138 | 48 | 15 | 198 | — | Coal | 312 | 152 | 89 | 45 | 43 | 10 | 61 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Natural gas, oil and other fuel | 349 | 41 | 199 | 110 | 90 | 41 | 1 | 67 | Natural gas, oil and other fuel | 271 | 38 | 157 | 96 | 60 | 19 | 1 | 57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total inventory | $ | 3,232 | $ | 996 | $ | 1,423 | $ | 934 | $ | 489 | $ | 135 | $ | 517 | $ | 72 | Total inventory | $ | 2,900 | $ | 969 | $ | 1,255 | $ | 815 | $ | 439 | $ | 114 | $ | 367 | $ | 68 | |||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||
| Materials and supplies | $ | 2,312 | $ | 785 | $ | 999 | $ | 673 | $ | 325 | $ | 78 | $ | 307 | $ | 12 | |||||||||||||||||||||||||||||||
| Coal | 561 | 186 | 193 | 131 | 63 | 16 | 165 | — | |||||||||||||||||||||||||||||||||||||||
| Natural gas, oil and other fuel | 294 | 39 | 183 | 107 | 76 | 16 | 1 | 56 | |||||||||||||||||||||||||||||||||||||||
| Total inventory | $ | 3,167 | $ | 1,010 | $ | 1,375 | $ | 911 | $ | 464 | $ | 110 | $ | 473 | $ | 68 | |||||||||||||||||||||||||||||||
44
| FINANCIAL STATEMENTS | ORGANIZATION AND BASIS OF PRESENTATION | ||||
PROPERTY, PLANT & EQUIPMENT AND LEASES
Duke Energy continues to execute on its business transformation strategy, including the evaluation of in-office work policies considering the experience with the COVID-19 pandemic and also workforce realignment of roles and responsibilities. In May 2021, Duke Energy management approved the sale of certain properties and entered into an agreement to exit certain leased space on December 31, 2021. The sale of the properties is subject to abandonment accounting and resulted in an impairment charge. Additionally, the exit of the leased space resulted in the impairment of related furniture, fixtures and equipment. The total 2021 charges related to the reduction in physical workspace, including these impairments, are expected to be approximately $200 million. During the three months ended September 30, 2021, Duke Energy recorded a pretax charge to earnings of $9 million on the Condensed Consolidated Statements of Operations, which includes $8 million within Impairment of assets and other charges and $1 million within Operations, maintenance and other. During the nine months ended September 30, 2021, Duke Energy recorded a pretax charge to earnings of $184 million on the Condensed Consolidated Statements of Operations, which includes $139 million within Impairment of assets and other charges, $28 million within Operations, maintenance and other and $17 million within Depreciation and amortization.
NEW ACCOUNTING STANDARDS
The following new accounting standard was adopted by the Duke Energy Registrants in 2021.
Leases with Variable Lease Payments. In July 2021, the Financial Accounting Standards Board (FASB) issued new accounting guidance requiring lessors to classify a lease with variable lease payments that do not depend on a reference index or rate as an operating lease if both of the following are met: (1) the lease would have to be classified as a sales-type or direct financing lease under prior guidance, and (2) the lessor would have recognized a day-one loss. Duke Energy elected to adopt the guidance immediately upon issuance of the new standard and will be applying the new standard prospectively to new lease arrangements meeting the criteria. Duke Energy does not currently have any lease arrangements that this new accounting guidance will materially impact.
The following accounting standard was adopted by the Duke Energy Registrants in 2020.
Current Expected Credit Losses. In June 2016, the Financial Accounting Standards Board (FASB)FASB issued new accounting guidance for credit losses. Duke Energy adopted the new accounting guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year results. Duke Energy did not adopt any practical expedients.
Duke Energy recognizes allowances for credit losses based on management's estimate of losses expected to be incurred over the lives of certain assets or guarantees. Management monitors credit quality, changes in expected credit losses and the appropriateness of the allowance for credit losses on a forward-looking basis. Management reviews the risk of loss periodically as part of the existing assessment of collectability of receivables.
Duke Energy reviews the credit quality of its counterparties as part of its regular risk management process and requires credit enhancements, such as deposits or letters of credit, as appropriate and as allowed by regulators.
Duke Energy recorded cumulative effects of changes in accounting principles related to the adoption of the new credit loss standard for allowances for credit losses of trade and other receivables, insurance receivables and financial guarantees. These amounts are included in the Condensed Consolidated Balance Sheets in Receivables, Receivables of VIEs, Other Noncurrent Assets and Other Noncurrent Liabilities. See Notes 4 and 1312 for more information.
Duke Energy recorded an adjustment for the cumulative effect of a change in accounting principle due to the adoption of this standard on January 1, 2020, as shown in the table below:
| January 1, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Piedmont | |||||||||||||||||||||||||||||||||||||||||
| Total pretax impact to Retained Earnings | $ | 120 | $ | 16 | $ | 2 | $ | 1 | $ | 1 | $ | 1 | |||||||||||||||||||||||||||||||||||
The following new accounting standard has been issued but not yet adopted by the Duke Energy Registrants as of September 30, 2020.2021.
Reference Rate Reform. In March 2020, the FASB issued new accounting guidance for reference rate reform. This guidance is elective and provides expedients to facilitate financial reporting for the anticipated transition away from the London Inter-bank Offered Rate (LIBOR) and other interbank reference rates by the end of 2021.2022. The optional expedients are effective for modification of existing contracts or new arrangements executed between March 12, 2020, through December 31, 2022.
Duke Energy has variable-rate debt and manages interest rate risk by entering into financial contracts including interest rate swaps that are generally indexed to LIBOR. Impacted financial arrangements extending beyond 20212022 may require contractual amendment or termination to fully adapt to a post-LIBOR environment. Duke Energy is assessing these financial arrangements and is evaluating the use of optional expedients outlined in the new accounting guidance. Alternative index provisions are also being assessed and incorporated into new financial arrangements that extend beyond 2021.2022. The full outcome of the transition away from LIBOR cannot be determined at this time, but is not expected to have a material impact on the financial statements.
2. BUSINESS SEGMENTS
Duke Energy
Duke Energy's segment structure includes the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables.
45
| FINANCIAL STATEMENTS | BUSINESS SEGMENTS | ||||
The Electric Utilities and Infrastructure segment primarily includes Duke Energy's regulated electric utilities in the Carolinas, Florida and the Midwest. On January 28, 2021, Duke Energy executed an agreement providing for an investment by an affiliate of GIC in Duke Energy Indiana in exchange for a 19.9% minority interest issued by Duke Energy Indiana Holdco, LLC, the holding company for Duke Energy Indiana. The transaction will be completed following 2 closings for an aggregate purchase price of approximately $2 billion. The first closing, which occurred on September 8, 2021, resulted in Duke Energy Indiana Holdco, LLC issuing 11.05% of its membership interests in exchange for approximately $1,025 million or 50% of the purchase price. Duke Energy retained indirect control of these assets, and, therefore, no gain or loss was recognized on the Condensed Consolidated Statements of Operations. The difference between the cash consideration received, net of transaction costs of approximately $27 million, and the carrying value of the noncontrolling interest is $545 million and was recorded as an increase to equity.
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 and renewable natural gas investments.
The Commercial Renewables segment is primarily comprised of nonregulated utility-scale wind and solar generation assets located throughout the U.S. In 2020,2021, Duke Energy continues to evaluatemonitor recoverability of aits renewable merchant plantplants located in the Electric Reliability Council of Texas West market and in the PJM West market due to decliningfluctuating market pricing and declining long-term forecasted energy prices, primarily driven by lower forecasted natural gas prices. Duke Energy determined that the asset wasThe assets were not impaired as of September 30, 2020,2021, because the carrying value of approximately $150$206 million approximatescontinues to approximate the aggregate estimated future undiscounted cash flows. Duke Energy has a 50% ownership interest in these assets. A continued decline in energy market pricing or other factors unfavorably impacting the economics would likely result in a future impairment. Duke Energy retained 51% ownership interest in this facility following the 2019 transaction to sell a minority interest in certain renewable assets.
The remainder of Duke Energy’s operations is presented as Other, which is primarily comprised of interest expense on holding company debt, unallocated corporate costs, Duke Energy’s wholly owned captive insurance company, Bison, and Duke Energy's ownership interest in National Methanol Company.
Business segment information is presented in the following tables. Segment assets presented exclude intercompany assets.
| Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||
| Utilities and | Utilities and | Commercial | Reportable | ||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Renewables | Segments | Other | Eliminations | Total | ||||||||||||||||||||
| Unaffiliated revenues | $ | 6,371 | $ | 217 | $ | 126 | $ | 6,714 | $ | 7 | $ | — | $ | 6,721 | |||||||||||||
| Intersegment revenues | 8 | 24 | — | 32 | 17 | (49 | ) | — | |||||||||||||||||||
| Total revenues | $ | 6,379 | $ | 241 | $ | 126 | $ | 6,746 | $ | 24 | $ | (49 | ) | $ | 6,721 | ||||||||||||
Segment income (loss)(a)(b) | $ | 1,381 | $ | (73 | ) | $ | 60 | $ | 1,368 | $ | (103 | ) | $ | — | $ | 1,265 | |||||||||||
| Less: Noncontrolling interests | 70 | ||||||||||||||||||||||||||
| Add: Preferred stock dividend | 39 | ||||||||||||||||||||||||||
| Net Income | $ | 1,234 | |||||||||||||||||||||||||
| Segment assets | $ | 138,142 | $ | 13,343 | $ | 6,541 | $ | 158,026 | $ | 3,387 | $ | (4 | ) | $ | 161,409 | ||||||||||||
| Three Months Ended September 30, 2019 | |||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||
| Utilities and | Utilities and | Commercial | Reportable | ||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Renewables | Segments | Other | Eliminations | Total | ||||||||||||||||||||
| Unaffiliated revenues | $ | 6,569 | $ | 225 | $ | 138 | $ | 6,932 | $ | 8 | $ | — | $ | 6,940 | |||||||||||||
| Intersegment revenues | 8 | 24 | — | 32 | 17 | (49 | ) | — | |||||||||||||||||||
| Total revenues | $ | 6,577 | $ | 249 | $ | 138 | $ | 6,964 | $ | 25 | $ | (49 | ) | $ | 6,940 | ||||||||||||
Segment income (loss)(c) | $ | 1,385 | $ | 26 | $ | 40 | $ | 1,451 | $ | (124 | ) | $ | — | $ | 1,327 | ||||||||||||
| Less: Noncontrolling interests | 19 | ||||||||||||||||||||||||||
| Add: Preferred stock dividend | 15 | ||||||||||||||||||||||||||
| Net Income | $ | 1,323 | |||||||||||||||||||||||||
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Commercial | Reportable | ||||||||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Renewables | Segments | Other | Eliminations | Total | ||||||||||||||||||||||||||||||||||
| Unaffiliated revenues | $ | 6,560 | $ | 266 | $ | 117 | $ | 6,943 | $ | 8 | $ | — | $ | 6,951 | |||||||||||||||||||||||||||
| Intersegment revenues | 9 | 23 | — | 32 | 20 | (52) | — | ||||||||||||||||||||||||||||||||||
| Total revenues | $ | 6,569 | $ | 289 | $ | 117 | $ | 6,975 | $ | 28 | $ | (52) | $ | 6,951 | |||||||||||||||||||||||||||
Segment income (loss)(a) | $ | 1,425 | $ | (3) | $ | 78 | $ | 1,500 | $ | (134) | $ | — | $ | 1,366 | |||||||||||||||||||||||||||
| Less: Noncontrolling interests | 129 | ||||||||||||||||||||||||||||||||||||||||
| Add: Preferred stock dividend | 39 | ||||||||||||||||||||||||||||||||||||||||
| Net Income | $ | 1,276 | |||||||||||||||||||||||||||||||||||||||
| Segment assets | $ | 141,565 | $ | 14,692 | $ | 7,037 | $ | 163,294 | $ | 3,717 | $ | (4) | $ | 167,007 | |||||||||||||||||||||||||||
| Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Commercial | Reportable | ||||||||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Renewables | Segments | Other | Eliminations | Total | ||||||||||||||||||||||||||||||||||
| Unaffiliated revenues | $ | 6,371 | $ | 217 | $ | 126 | $ | 6,714 | $ | 7 | $ | — | $ | 6,721 | |||||||||||||||||||||||||||
| Intersegment revenues | 8 | 24 | — | 32 | 17 | (49) | — | ||||||||||||||||||||||||||||||||||
| Total revenues | $ | 6,379 | $ | 241 | $ | 126 | $ | 6,746 | $ | 24 | $ | (49) | $ | 6,721 | |||||||||||||||||||||||||||
Segment income (loss)(b) | $ | 1,381 | $ | (73) | $ | 60 | $ | 1,368 | $ | (103) | $ | — | $ | 1,265 | |||||||||||||||||||||||||||
| Less: Noncontrolling interests | 70 | ||||||||||||||||||||||||||||||||||||||||
| Add: Preferred stock dividend | 39 | ||||||||||||||||||||||||||||||||||||||||
| Net Income | $ | 1,234 | |||||||||||||||||||||||||||||||||||||||
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| FINANCIAL STATEMENTS | BUSINESS SEGMENTS | ||||
(b)Electric Utilities and Infrastructure includes $19 million recorded within Impairment charges and $8 million recorded within Operations, maintenance and other on the Duke Energy Carolinas' Condensed Consolidated Statements of Operations related to a partial settlement in the Duke Energy Carolinas' 2019 North Carolina rate case and $8 million recorded within Operations, maintenance and other on Duke Energy Progress' Condensed Consolidated Statements of Operation related to a partial settlement in the Duke Energy Progress' 2019 North Carolina rate case. See Note 3 for more information. Additionally, Electric Utilities and Infrastructure includes $5 million of Impairment charges related to gas pipeline assets recorded on Duke Energy Progress' Condensed Consolidated Statement of Operations. Gas Utilities and Infrastructure includes $78 million recorded within Equity in earnings (losses) of unconsolidated affiliates on the Condensed Consolidated Statements of Operations and $7 million in Impairment charges recorded on the Piedmont Condensed Consolidated Statements of Operations related to gas pipeline investments.
| Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Commercial | Reportable | ||||||||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Renewables | Segments | Other | Eliminations | Total | ||||||||||||||||||||||||||||||||||
| Unaffiliated revenues | $ | 17,161 | $ | 1,323 | $ | 355 | $ | 18,839 | $ | 20 | $ | — | $ | 18,859 | |||||||||||||||||||||||||||
| Intersegment revenues | 24 | 68 | — | 92 | 61 | (153) | — | ||||||||||||||||||||||||||||||||||
| Total revenues | $ | 17,185 | $ | 1,391 | $ | 355 | $ | 18,931 | $ | 81 | $ | (153) | $ | 18,859 | |||||||||||||||||||||||||||
Segment income (loss)(a) | $ | 3,180 | $ | 259 | $ | 152 | $ | 3,591 | $ | (521) | $ | — | $ | 3,070 | |||||||||||||||||||||||||||
| Less: Noncontrolling interests | 247 | ||||||||||||||||||||||||||||||||||||||||
| Add: Preferred stock dividend | 92 | ||||||||||||||||||||||||||||||||||||||||
| Net Income | $ | 2,915 | |||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Commercial | Reportable | ||||||||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Renewables | Segments | Other | Eliminations | Total | ||||||||||||||||||||||||||||||||||
| Unaffiliated revenues | $ | 16,571 | $ | 1,122 | $ | 378 | $ | 18,071 | $ | 20 | $ | — | $ | 18,091 | |||||||||||||||||||||||||||
| Intersegment revenues | 25 | 72 | — | 97 | 53 | (150) | — | ||||||||||||||||||||||||||||||||||
| Total revenues | $ | 16,596 | $ | 1,194 | $ | 378 | $ | 18,168 | $ | 73 | $ | (150) | $ | 18,091 | |||||||||||||||||||||||||||
Segment income (loss)(b) | $ | 2,839 | $ | (1,400) | $ | 207 | $ | 1,646 | $ | (299) | $ | — | $ | 1,347 | |||||||||||||||||||||||||||
| Less: Noncontrolling interests | 208 | ||||||||||||||||||||||||||||||||||||||||
| Add: Preferred stock dividend | 93 | ||||||||||||||||||||||||||||||||||||||||
| Net Income | $ | 1,232 | |||||||||||||||||||||||||||||||||||||||
47
| Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||
| Utilities and | Utilities and | Commercial | Reportable | ||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Renewables | Segments | Other | Eliminations | Total | ||||||||||||||||||||
| Unaffiliated revenues | $ | 16,571 | $ | 1,122 | $ | 378 | $ | 18,071 | $ | 20 | $ | — | $ | 18,091 | |||||||||||||
| Intersegment revenues | 25 | 72 | — | 97 | 53 | (150 | ) | — | |||||||||||||||||||
| Total revenues | $ | 16,596 | $ | 1,194 | $ | 378 | $ | 18,168 | $ | 73 | $ | (150 | ) | $ | 18,091 | ||||||||||||
Segment income (loss)(a)(b)(c) | $ | 2,839 | $ | (1,400 | ) | $ | 207 | $ | 1,646 | $ | (299 | ) | $ | — | $ | 1,347 | |||||||||||
| Less: Noncontrolling interests | 208 | ||||||||||||||||||||||||||
| Add: Preferred stock dividend | 93 | ||||||||||||||||||||||||||
| Net Income | $ | 1,232 | |||||||||||||||||||||||||
| Nine Months Ended September 30, 2019 | |||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||
| Utilities and | Utilities and | Commercial | Reportable | ||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Renewables | Segments | Other | Eliminations | Total | ||||||||||||||||||||
| Unaffiliated revenues | $ | 17,357 | $ | 1,239 | $ | 362 | $ | 18,958 | $ | 18 | $ | — | $ | 18,976 | |||||||||||||
| Intersegment revenues | 24 | 72 | — | 96 | 53 | (149 | ) | — | |||||||||||||||||||
| Total revenues | $ | 17,381 | $ | 1,311 | $ | 362 | $ | 19,054 | $ | 71 | $ | (149 | ) | $ | 18,976 | ||||||||||||
Segment income (loss)(d) | $ | 2,944 | $ | 292 | $ | 139 | $ | 3,375 | $ | (328 | ) | $ | — | $ | 3,047 | ||||||||||||
| Less: Noncontrolling interests | 110 | ||||||||||||||||||||||||||
| Add: Preferred stock dividend | 27 | ||||||||||||||||||||||||||
| Net Income | $ | 2,964 | |||||||||||||||||||||||||
| FINANCIAL STATEMENTS | BUSINESS SEGMENTS | ||
(b)Gas Utilities and Infrastructure includes $2 billion recorded within Equity in earnings (losses) of unconsolidated affiliates on the Condensed Consolidated Statements of Operations, related to gas pipeline investments. See Note 3 for additional information. Other includes a $98 million reversal, included in Operations, maintenance and other on the Condensed Consolidated Statements of Operations, of 2018 severance costs due to a partial settlement in the Duke Energy Carolinas' 2019 North Carolina rate case. See Note 3 for additional information. Electric Utilities and Infrastructure includes $19 million recorded within Impairment charges and $8 million recorded within Operations, maintenance and other on the Duke Energy Carolinas' Condensed Consolidated Statements of Operations related to a partial settlement in the Duke Energy Carolinas' 2019 North Carolina rate case and $8 million recorded within Operations, maintenance and other on Duke Energy Progress' Condensed Consolidated Statements of Operation related to a partial settlement in the Duke Energy Progress' 2019 North Carolina rate case. See Note 3 for more information. Additionally, Electric Utilities and Infrastructure includes $5 million of Impairment charges related to gas pipeline assets recorded on Duke Energy Progress' Condensed Consolidated Statement of Operations in the prior year.
Duke Energy Ohio
Duke Energy Ohio has 2 reportable segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure. The remainder of Duke Energy Ohio's operations is presented as Other.
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Eliminations | Total | |||||||||||||||||||||||||||||
| Total revenues | $ | 413 | $ | 93 | $ | 506 | $ | — | $ | — | $ | 506 | |||||||||||||||||||||||
| Segment income/Net (loss) income | $ | 48 | $ | 11 | $ | 59 | $ | (1) | $ | — | $ | 58 | |||||||||||||||||||||||
| Segment assets | $ | 6,716 | $ | 3,783 | $ | 10,499 | $ | 27 | $ | (21) | $ | 10,505 | |||||||||||||||||||||||
| Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||||||||||||||||||
| Total revenues | $ | 394 | $ | 79 | $ | 473 | $ | — | $ | 473 | |||||||||||||||||||||||||
| Segment income/Net (loss) income | $ | 63 | $ | 9 | $ | 72 | $ | (2) | $ | 70 | |||||||||||||||||||||||||
| Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||||||||||||||||||
| Total revenues | $ | 1,119 | $ | 375 | $ | 1,494 | $ | — | $ | 1,494 | |||||||||||||||||||||||||
| Segment income/Net (loss) income | $ | 122 | $ | 77 | $ | 199 | $ | (11) | $ | 188 | |||||||||||||||||||||||||
| Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||||||||||||||||||
| Total revenues | $ | 1,070 | $ | 324 | $ | 1,394 | $ | — | $ | 1,394 | |||||||||||||||||||||||||
| Segment income/Net (loss) income | $ | 137 | $ | 68 | $ | 205 | $ | (4) | $ | 201 | |||||||||||||||||||||||||
48
| Three Months Ended September 30, 2020 | |||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Eliminations | Total | |||||||||||||||||
| Total revenues | $ | 394 | $ | 79 | $ | 473 | $ | — | $ | — | $ | 473 | |||||||||||
| Segment income/Net income | $ | 63 | $ | 9 | $ | 72 | $ | (2 | ) | $ | — | $ | 70 | ||||||||||
| Segment assets | $ | 6,448 | $ | 3,297 | $ | 9,745 | $ | 27 | $ | (23 | ) | $ | 9,749 | ||||||||||
| FINANCIAL STATEMENTS | REGULATORY MATTERS | ||||
| Three Months Ended September 30, 2019 | |||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||
| Total revenues | $ | 408 | $ | 81 | $ | 489 | $ | — | $ | 489 | |||||||||
| Segment income/Net income | $ | 62 | $ | 13 | $ | 75 | $ | (1 | ) | $ | 74 | ||||||||
| Nine Months Ended September 30, 2020 | |||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||
| Total revenues | $ | 1,070 | $ | 324 | $ | 1,394 | $ | — | $ | 1,394 | |||||||||
| Segment income/Net (loss) income | $ | 137 | $ | 68 | $ | 205 | $ | (4 | ) | $ | 201 | ||||||||
| Nine Months Ended September 30, 2019 | |||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||
| Total revenues | $ | 1,099 | $ | 354 | $ | 1,453 | $ | — | $ | 1,453 | |||||||||
| Segment income/Net (loss) income | $ | 129 | $ | 65 | $ | 194 | $ | (4 | ) | $ | 190 | ||||||||
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
On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the Coal Combustion Residuals Settlement Agreement (the “CCR Settlement Agreement”) with the North Carolina Public Staff (Public Staff), the North Carolina Attorney General’s Office and the Sierra Club (collectively, the "Settling Parties"), which was filed with the NCUC on January 25, 2021. The CCR Settlement Agreement resolves all coal ash prudence and cost recovery issues in connection with 2019 rate cases filed by Duke Energy Carolinas and Duke Energy Progress with the NCUC, as well as the equitable sharing issue on remand from the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases as a result of the December 11, 2020 North Carolina Supreme Court opinion. The settlement also provides clarity on coal ash cost recovery in North Carolina for Duke Energy Carolinas and Duke Energy Progress through January 2030 and February 2030 (the "Term"), respectively.
The Settling Parties agreed that execution by Duke Energy Carolinas and Duke Energy Progress of a settlement agreement between themselves and the NCDEQ dated December 31, 2019, (the “DEQ Settlement”) and the coal ash management plans included therein or subsequently approved by DEQ are reasonable and prudent. The Settling Parties retain the right to challenge the reasonableness and prudence of actions taken by Duke Energy Carolinas and Duke Energy Progress and costs incurred to implement the scope of work agreed upon in the DEQ Settlement, after February 1, 2020, and March 10,1, 2020, Governor Roy Cooper declared a statefor Duke Energy Carolinas and Duke Energy Progress, respectively. The Settling Parties further agreed to waive rights through the Term to challenge the reasonableness or prudence of emergencyDuke Energy Carolinas’ and Duke Energy Progress’ historical coal ash management practices, and to waive the right to assert any arguments that future coal ash costs, including financing costs, shall be shared between either company and customers through equitable sharing or any other rate base or return adjustment that shares the revenue requirement burden of coal ash costs not otherwise disallowed due to imprudence.
The Settling Parties agreed to a sharing arrangement for future coal ash insurance litigation proceeds between Duke Energy Carolinas and Duke Energy Progress and North Carolina customers. For more information, see Note 4 "Commitments and Contingencies."
As a result of the COVID-19 pandemic. OnCCR Settlement Agreement, Duke Energy Carolinas and Duke Energy Progress recorded a pretax charge of approximately $454 million and $494 million, respectively, in the fourth quarter of 2020 to Impairment charges and a reversal of approximately $50 million and $102 million, respectively, to Regulated electric operating revenues on the respective Consolidated Statements of Operations.
The Coal Ash Settlement was approved without modification in the NCUC Orders in the 2019 rate cases on March 19, 2020, the31, 2021, and April 16, 2021, for Duke Energy Carolinas and Duke Energy Progress, respectively. The NCUC issued an order directing that utilities under its jurisdiction suspend disconnections for nonpayment of utility bills duringOrder on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties in the state of emergency and allow for customers to enter into payment arrangements to pay off arrearages accumulated during the state of emergency after the end of the state of emergency. Additionally, to help mitigate the financial impacts of the COVID-19 pandemic2017 rate cases on their customers, on March 19,June 25, 2021.
2020 North Carolina Storm Securitization Filings
On October 26, 2020, Duke Energy Carolinas and Duke Energy Progress filed a requestjoint petition with the NCUC, seeking authorizationas agreed to waive: (1) any late payment charges incurred by a residential or nonresidential customer, effective March 21, 2020; (2)in partial settlements reached in the application of fees2019 North Carolina Rate Cases for checks returned for insufficient funds for residential and nonresidential customers; (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit; and (4) the fees and charges associated with the use of credit cards or debit cards to pay residential electric utility bills, effective March 21, 2020. The NCUC granted the companies’ request on March 20, 2020.
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| FINANCIAL STATEMENTS | REGULATORY MATTERS | ||||
COVID-19 Filings
North Carolina
Duke Energy Carolinas and Duke Energy Progress filed a joint petition on August 7, 2020, with the NCUC for deferral treatment of incremental costs and the cost of waived customer fees due to the COVID-19 pandemic. On October 30, 2020, the NCUC issued an order extending deadlines to file commentsComments on the joint petition towere filed on November 5, 2020, and reply comments towere filed on November 30, 2020. A summary of incremental COVID-19 costs incurred as of June 30, 2021, was filed with the NCUC by Duke Energy Carolinas and Duke Energy Progress on August 6, 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
South Carolina
Duke Energy Carolinas
2017 North Carolina Rate Case
On August 25, 2017, Duke Energy Carolinas filed an application with the NCUC for a rate increase for retail customers of approximately $647 million. On February 28, 2018, Duke Energy Carolinas and the 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 equityan ROE of 9.9% and a capital structure of 52% equity and 48% debt. On June 22, 2018, the NCUC issued an order approving the Stipulation of Partial Settlement and requiring a revenue reduction.
The North Carolina Attorney General and other parties separately filed Notices of Appeal to the North Carolina Supreme Court. On August 8, 2018, the Public Staff filed a Notice of Cross Appeal to the North Carolina Supreme Court. On November 29, 2018, the North Carolina Attorney General's Office filed a motion with theThe 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 consolidateconsolidated the Duke Energy Carolinas and Duke Energy Progress appeals. Appellant briefs were filed on April 26, 2019. The Appellee response briefs were filed on September 25, 2019. Oral arguments beforeOn December 11, 2020, the North Carolina Supreme Court were heldissued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on March 11, 2020.the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. On January 22, 2021, Duke Energy Carolinas cannot predictand Duke Energy Progress entered into the outcome of this matter.
2019 North Carolina Rate Case
On September 30, 2019, Duke Energy Carolinas filed an application with the NCUC for a net rate increase for retail customers of approximately $291 million, which represented an approximate 6% increase in annual base revenues. The gross rate case revenue increase request was $445 million, which was offset by an EDIT rider of $154 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Carolinas requested rates be effective no later than August 1, 2020. The NCUC established a procedural schedule with an evidentiary hearing to begin on March 23, 2020. On March 16, 2020, in consideration of public health and safety as a result of the COVID-19 pandemic, Duke Energy Carolinas filed a motion with the NCUC seeking a suspension of the procedural schedule in the rate case, including issuing discovery requests, and postponement of the evidentiary hearing for 60 days. Also on March 16, 2020, the NCUC issued an Order Postponing Hearing and Addressing Procedural Matters, which postponed the evidentiary hearing until further order by the commission.
On March 25, 2020, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. Major components of the settlement included:
On July 31, 2020, Duke Energy Carolinas and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), which is subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. Major components of the Second Partial Settlement included:
The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting, implementation of new depreciation rates and the amortization period of the loss on the hydro station sale.
On August 4, 2020, Duke Energy Carolinas filed an amended motion for approval of its amended notice to customers, seeking to exercise its statutory right to implement temporary rates subject to refund on or after August 24, 2020. The revenue requirement to be recovered, subject to refund, through the temporary rates iswas based on and consistent with the base rate component of the Second Partial Settlement with the Public Staff and excludesexcluded the items to be litigated noted above. Duke Energy Carolinas will not begin the amortization or implementation of these items until a final order is issued in the rate case and new base rates are implemented. These items will also be excluded when determining whether a refund of amounts collected through these temporary rates is needed. In addition, Duke Energy Carolinas also seeks authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Carolinas on a permanent basis. The NCUC approved the August 4, 2020 amended temporary rates motion on August 6, 2020, and temporary rates went into effect on August 24, 2020.
The Duke Energy Carolinas evidentiary hearing concluded on September 18, 2020, and post-hearing filings were filedmade with the NCUC from all parties by November 4, 2020. On January 22, 2021, Duke Energy Carolinas expectsand Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC to issueon January 25, 2021.
On March 31, 2021, the NCUC issued an order on its netapproving the March 25, 2020, and July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2) deferral treatment of approximately $800 million of grid improvement projects with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the reasonableness and prudence of $213 million of deferred storm costs, which were removed from the rate increase before the end of the first quarter of 2021.case and for which Duke Energy Carolinas cannot predictfiled a petition seeking securitization in October 2020. Additionally, the outcomeorder approved without modification the CCR Settlement Agreement.
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| FINANCIAL STATEMENTS | REGULATORY MATTERS | ||||
The order denied Duke Energy Carolinas' proposal to shorten the remaining depreciable lives of this matter.certain Duke Energy Carolinas coal-fired generating units, indicating the NCUC has not had the chance to fully examine the issue within the context of an integrated resource planning (IRP) proceeding, and upon retirement the remaining net book value of these units should be placed in a regulatory asset account to be amortized over an appropriate period to be determined in a future rate case.
On May 21, 2021, the NCUC issued an Order Approving Rate Schedules, which resulted in a net increase of approximately $33 million. Revised customer rates became effective on June 1, 2021. The deadline to appeal has passed and no parties appealed the NCUC's order.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Carolinas filed an application with the PSCSC for a rate increase for retail customers of approximately $168 million.
After hearings in March 2019, the PSCSC issued an order on May 21, 2019, which included a return on equityan ROE of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:
•Approval of cancellation of the Lee Nuclear Project, with Duke Energy Carolinas maintaining the Combined Operating License;
•Approval of recovery of $125 million (South Carolina retail portion) of Lee Nuclear Project development costs (including AFUDC through December 2017) over a 12-year period, but denial of a return on the deferred balance of costs;
•Approval of recovery of $96 million of coal ash costs over a five-year period with a return at Duke Energy Carolinas' WACC;
•Denial of recovery of $115 million of certain coal ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;
•Approval of a $66 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;
•Approval of a $45 million decrease through the EDIT Rider to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with the Average Rate Assumption Method (ARAM) for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a five-year period for the deferred revenues; and
•Approval of a $17 million decrease through the EDIT Rider related to reductions in the North Carolina state income tax rate from 6.9% to 2.5% to be returned over a five-year period.
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Carolinas filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Carolinas were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Carolinas' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, return on equityROE and the recovery of a return on deferred operation and maintenance expenses. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Carolinas filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal and the ORS filed a Notice of Cross Appeal with the Supreme Court of South Carolina. On February 12, 2020, Duke Energy Carolinas and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to the Lee Nuclear Station. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments have not yet been scheduled bywere heard before the Supreme Court of South Carolina. BasedCarolina on legal analysisMay 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed the PSCSC's May 2019 order to:
•Disallow cost recovery on certain CCR compliance costs the PSCSC deemed to be incremental to the federal CCR rules;
•Disallow recovery of certain coal ash litigation expenses;
•Disallow a return on certain deferred expenses; and
•Allow recovery of Lee Nuclear Project preconstruction costs.
The Supreme Court's decision notes the filingprior determination made by the PSCSC that Duke Energy could submit coal ash costs for recovery that were not initially approved in the rate case order if such costs can be attributed to the CCR rules. As a result of the appeal,Court's opinion, Duke Energy Carolinas has not recorded an adjustmentrecognized a pretax charge of approximately $160 million to Impairment of assets and other charges, and a $31 million increase in Other income and expenses, net, in the Condensed Consolidated Statement of Operations for its deferredthe three and nine months ended September 30, 2021, principally related to coal ash costs.remediation at retired coal ash basin sites. Duke Energy Carolinas is evaluating whether to file a Petition for rehearing on the Supreme Court's decision. Petitions are due November 11, 2021, unless an extension is sought and granted.
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Oconee Nuclear Station Subsequent License Renewal
On June 7, 2021, Duke Energy Carolinas filed a subsequent license renewal application for the Oconee Nuclear Station (ONS) with the U.S. Nuclear Regulatory Commission (NRC) to renew ONS’s operating license for an additional 20 years. The subsequent license renewal would extend operations of the facility from 60 to 80 years. The current license for units 1 and 2 expire in 2033 and the license for unit 3 expires in 2034. By a Federal Register Notice dated July 28, 2021, the NRC provided a 60-day comment period for persons whose interest may be affected by the issuance of a subsequent renewed license for ONS to file a request for a hearing and a petition for leave to intervene. On September 27, 2021, Beyond Nuclear and Sierra Club (Petitioners) filed a Hearing Request and Petition to Intervene (Hearing Request) and a Petition for Waiver. The Hearing Request proposes 3 contentions purporting to challenge Duke Energy Carolinas’ environmental report (ER). In general, the proposed contentions claim that the ER does not consider certain information regarding the environmental aspects of Severe Accidents caused by a hypothetical failure of the Jocassee Dam, and therefore does not satisfy the National Environmental Policy Act of 1969, as amended (NEPA), or the NRC’s NEPA-implementing regulations. Duke Energy Carolinas filed its answer to the proposed contentions on October 22, 2021, and the Petitioners have until November 5, 2021, to respond to Duke Energy Carolina’s answer.
Duke Energy Carolinas and Duke Energy Progress intend to seek renewal of operating licenses and 20-year license extensions for all of their nuclear stations. New depreciation rates were implemented for all of the nuclear facilities during the second quarter of 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Progress
2017 North Carolina Rate Case
On June 1, 2017, Duke Energy Progress filed an application with the NCUC for a rate increase for retail customers of approximately $477 million, which was subsequently adjusted to $420 million. On November 22, 2017, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included a return on equityan ROE of 9.9% and a capital structure of 52% equity and 48% debt. On February 23, 2018, the NCUC issued an order approving the stipulation. The Public Staff, the North Carolina Attorney General and the Sierra Club filed notices of appeal to the North Carolina Supreme Court.
2019 North Carolina Rate Case
On October 30, 2019, Duke Energy Progress filed an application with the NCUC for a net rate increase for retail customers of approximately $464 million, which represented an approximate 12.3% increase in annual base revenues. The gross rate case revenue increase request was $586 million, which was offset by riders of $122 million, primarily an EDIT rider of $120 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Progress seekssought to defer and recover incremental Hurricane Dorian storm costs in this proceeding and requestsrequested rates be effective no later than September 1, 2020. As a result of the COVID-19 pandemic, on March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on this matter indefinitely. On April 7, 2020, the NCUC issued an order partially resuming the procedural schedule requiring intervenors to file direct testimony on April 13, 2020. Public Staff filed supplemental direct testimony on April 23, 2020. Duke Energy Progress filed rebuttal testimony on May 4, 2020.
On June 2, 2020, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, which is subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. Major components of the settlement included:
On July 31, 2020, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement, (Second Partial Settlement), which is subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. Major components of the Second Partial Settlement included:
The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting and implementation of new depreciation rates.
On August 7, 2020, Duke Energy Progress filed a motion for approval of notice required to implement temporary rates,, seeking to exercise its statutory right to implement temporary rates subject to refund on or after September 1, 2020. The revenue requirement to be recovered subject to refund through the temporary rates iswas based on and consistent with the terms of the base rate component of the settlement agreements with the Public Staff and excludesexcluded items to be litigated noted above. Duke Energy Progress will not begin the amortization or implementation of these items until a final determination is issued in the rate case and new base rates are implemented. These items will also be excluded when determining whether a refund of amounts collected through these temporary rates is needed. In addition, Duke Energy Progress also seekssought authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The temporary rate changes are not final rates and remain subject to the NCUC's determination of the just and reasonable rates to be charged by Duke Energy Progress on a permanent basis. The NCUC approved the August 7, 2020 temporary rates motion on August 11, 2020, and temporary rates went into effect on September 1, 2020.
The Duke Energy Progress evidentiary hearing concluded on October 6, 2020, and post-hearing filings are due to bewere filed with the NCUC from all parties by December 4, 2020. On January 22, 2021, Duke Energy Progress expectsand Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC to issueon January 25, 2021.
On April 16, 2021, the NCUC issued an order on its net rate increase by the end of the first quarter of 2021. Duke Energy Progress cannot predict the outcome of this matter.
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On May 21, 2021, the NCUC issued an Order Approving Rate Schedules, which resulted in a net increase of approximately $178 million. Revised customer rates became effective on June 1, 2021. The deadline to appeal has passed and no parties appealed the NCUC's order.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Progress filed an application with the PSCSC for a rate increase for retail customers of approximately $59 million.
After hearings in April 2019, the PSCSC issued an order on May 21, 2019, which included a return on equityan ROE of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:
•Approval of recovery of $4 million of coal ash costs over a five-year period with a return at Duke Energy Progress' WACC;
•Denial of recovery of $65 million of certain coal ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;
•Approval of a $17 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;
•Approval of a $12 million decrease through the EDIT Tax Savings Rider resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with ARAM for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a three-year period for the deferred revenues; and
•Approval of a $12 million increase due to the expiration of EDIT related to reductions in the North Carolina state income tax rate from 6.9% to 2.5%.
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Progress' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, return on equityROE and the recovery of a return on deferred operation and maintenance expenses, but allowing additional litigation-related costs. As a result of the Directive allowing litigation-related costs, customer rates were revised effective July 1, 2019. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Progress filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. The ORS filed a Notice of Cross Appeal on November 20, 2019. On February 12, 2020, Duke Energy Progress and the ORS filed a joint motion to extend briefing schedule deadlines, which was approved by the Supreme Court of South Carolina on February 20, 2020. On March 10, 2020, the ORS filed a consent motion requesting withdrawal of their appeal, which was granted by the Supreme Court of South Carolina on April 30, 2020. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments have not yet been scheduled bywere heard before the Supreme Court of South Carolina. BasedCarolina on legal analysisMay 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed the PSCSC's May 2019 order to:
•Disallow cost recovery on certain CCR compliance costs the PSCSC deemed to be incremental to the federal CCR rules;
•Disallow recovery of certain coal ash litigation expenses; and
•Disallow a return on certain deferred expenses.
The Supreme Court's decision notes the filingprior determination made by the PSCSC that Duke Energy could submit coal ash costs for recovery that were not initially approved in the rate case order if such costs can be attributed to the CCR rules. As a result of the appeal,Court's opinion, Duke Energy Progress has not recorded an adjustmentrecognized a pretax charge of approximately $42 million to Impairment of assets and other charges, and a $6 million increase in Other income and expenses, net, in the Condensed Consolidated Statement of Operations for its deferredthe three and nine months ended September 30, 2021, principally related to coal ash costs.remediation at retired coal ash basin sites. Duke Energy Progress cannot predictis evaluating whether to file a Petition for rehearing on the outcome of this matter.Supreme Court's decision. Petitions are due November 11, 2021, unless an extension is sought and granted.
Duke Energy Ohio has 2 reportable segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure. The remainder of Duke Energy Ohio's operations is presented as Other.
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Eliminations | Total | |||||||||||||||||||||||||||||
| Total revenues | $ | 413 | $ | 93 | $ | 506 | $ | — | $ | — | $ | 506 | |||||||||||||||||||||||
| Segment income/Net (loss) income | $ | 48 | $ | 11 | $ | 59 | $ | (1) | $ | — | $ | 58 | |||||||||||||||||||||||
| Segment assets | $ | 6,716 | $ | 3,783 | $ | 10,499 | $ | 27 | $ | (21) | $ | 10,505 | |||||||||||||||||||||||
| Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||||||||||||||||||
| Total revenues | $ | 394 | $ | 79 | $ | 473 | $ | — | $ | 473 | |||||||||||||||||||||||||
| Segment income/Net (loss) income | $ | 63 | $ | 9 | $ | 72 | $ | (2) | $ | 70 | |||||||||||||||||||||||||
| Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||||||||||||||||||
| Total revenues | $ | 1,119 | $ | 375 | $ | 1,494 | $ | — | $ | 1,494 | |||||||||||||||||||||||||
| Segment income/Net (loss) income | $ | 122 | $ | 77 | $ | 199 | $ | (11) | $ | 188 | |||||||||||||||||||||||||
| Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||||||||||||||||||
| Total revenues | $ | 1,070 | $ | 324 | $ | 1,394 | $ | — | $ | 1,394 | |||||||||||||||||||||||||
| Segment income/Net (loss) income | $ | 137 | $ | 68 | $ | 205 | $ | (4) | $ | 201 | |||||||||||||||||||||||||
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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 retired the 376-MW Asheville coal-fired plant on
2021 Coal Ash Settlement
On January 29, 2020, at which time the net book value, including associated ash basin closure costs, of $214 million was transferred from Generation facilities to be retired, net to Regulatory assets within Current Assets22, 2021, Duke Energy Carolinas and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets.
Duke Energy Carolinas and Duke Energy Progress agreed not to seek recovery of approximately $1 billion of systemwide deferred coal ash expenditures, but will retain the ability to earn a debt and equity return during the amortization period, which shall be five years under the 2019 North Carolina rate cases and will be set by the NCUC in future rate case proceedings. The equity return and the amortization period on deferred coal ash costs under the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases will remain unaffected. The equity return on deferred coal ash costs under the 2019 North Carolina rate cases and future rate cases in North Carolina will be set at 150 basis points lower than the authorized return on equity (ROE) then in effect, with a capital structure composed of 48% debt and 52% equity. Duke Energy Carolinas and Duke Energy Progress retain the ability to earn a full WACC return during the deferral period, which is the period from when costs are incurred until they are recovered in rates.
The Settling Parties agreed that execution by Duke Energy Carolinas and Duke Energy Progress of a settlement agreement between themselves and the NCDEQ dated December 31, 2019, (the “DEQ Settlement”) and the coal ash management plans included therein or subsequently approved by DEQ are reasonable and prudent. The Settling Parties retain the right to challenge the reasonableness and prudence of actions taken by Duke Energy Carolinas and Duke Energy Progress and costs incurred to implement the scope of work agreed upon in the DEQ Settlement, after February 1, 2020, and March 1, 2020, for Duke Energy Carolinas and Duke Energy Progress, respectively. The Settling Parties further agreed to waive rights through the Term to challenge the reasonableness or prudence of Duke Energy Carolinas’ and Duke Energy Progress’ historical coal ash management practices, and to waive the right to assert any arguments that future coal ash costs, including financing costs, shall be shared between either company and customers through equitable sharing or any other rate base or return adjustment that shares the revenue requirement burden of coal ash costs not otherwise disallowed due to imprudence.
The Settling Parties agreed to a sharing arrangement for future coal ash insurance litigation proceeds between Duke Energy Carolinas and Duke Energy Progress and North Carolina customers. For more information, see Note 4 "Commitments and Contingencies."
As a result of the CCR Settlement Agreement, Duke Energy Carolinas and Duke Energy Progress recorded a pretax charge of approximately $454 million and $494 million, respectively, in the fourth quarter of 2020 to Impairment charges and a reversal of approximately $50 million and $102 million, respectively, to Regulated electric operating revenues on the respective Consolidated Statements of Operations.
The Coal Ash Settlement was approved without modification in the NCUC Orders in the 2019 rate cases on March 31, 2021, and April 5, 2020. 16, 2021, for Duke Energy Carolinas and Duke Energy Progress, respectively. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties in the 2017 rate cases on June 25, 2021.
2020 North Carolina Storm Securitization Filings
On June 2,October 26, 2020, Duke Energy Carolinas and Duke Energy Progress filed a requestjoint petition with the NCUC, as agreed to in partial settlements reached in the 2019 North Carolina Rate Cases for Duke Energy Carolinas and Duke Energy Progress, seeking authorization for the financing of the costs of each utility's storm recovery activities required as a result of Hurricane Florence, Hurricane Michael, Hurricane Dorian and Winter Storm Diego. Specifically, Duke Energy Carolinas and Duke Energy Progress requested that the NCUC find that their storm recovery costs and related financing costs are appropriately financed by debt secured by storm recovery property, and that the commission issue financing orders by which each utility may accomplish such financing using a securitization structure. On January 27, 2021, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain accounting issues, including agreement to support an 18- to 20-year bond period. The total revenue requirement over a proposed 20-year bond period for the storm recovery charges is approximately $287 million for Duke Energy Carolinas and $920 million for Duke Energy Progress and will be finalized upon issuance of the bonds. A remote evidentiary hearing ended on January 29, 2021. In the NCUC Orders in the 2019 rate cases issued on March 31, 2021, and April 16, 2021, for Duke Energy Carolinas and Duke Energy Progress, respectively, the reasonableness and prudence of the deferred storm costs was approved. On May 10, 2021, the NCUC issued financing orders authorizing the companies to issue storm recovery bonds, subject to the terms of the financing orders, and approving the Agreement and Stipulation of Partial Settlement in its entirety. Duke Energy Carolinas and Duke Energy Progress are currently in the process of structuring and marketing the bonds that will be presented to the market. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
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COVID-19 Filings
North Carolina
Duke Energy Carolinas and Duke Energy Progress filed a joint petition on August 7, 2020, with the NCUC for deferral treatment of incremental costs and the cost of waived customer fees due to the COVID-19 pandemic. Comments on the joint petition were filed on November 5, 2020, and reply comments were filed on November 30, 2020. A summary of incremental COVID-19 costs incurred as of June 30, 2021, was filed with the NCUC by Duke Energy Carolinas and Duke Energy Progress on August 6, 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
South Carolina
Duke Energy Carolinas and Duke Energy Progress filed a report on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. On August 14, 2020, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the PSCSC for approval of an accounting order to defer incremental COVID-19 related costs incurred through June 30, 2020, and for the deferral of post-in-service costs incurred in connection withongoing months during the additionduration of the Asheville combined-cycle generating plant. The petition requested the PSCSC issue an accounting order authorizingCOVID-19 pandemic. Duke Energy Carolinas and Duke Energy Progress to defer post-in-service costs includingwithdrew their joint petition on May 17, 2021.
Duke Energy Carolinas
2017 North Carolina Rate Case
On August 25, 2017, Duke Energy Carolinas filed an application with the Asheville combined-cycle’s depreciation expense, property taxes, incremental O&M and carrying costs at WACCNCUC for a rate increase for retail customers of approximately $8 million annually.$647 million. On February 28, 2018, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included an ROE of 9.9% and a capital structure of 52% equity and 48% debt. On June 17,22, 2018, the NCUC issued an order approving the Stipulation of Partial Settlement and requiring a revenue reduction.
The North Carolina Attorney General and other parties separately filed Notices of Appeal to the North Carolina Supreme Court. The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021, and approved by the NCUC on March 31, 2021. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties on June 25, 2021.
2019 North Carolina Rate Case
On September 30, 2019, Duke Energy Carolinas filed an application with the NCUC for a net rate increase for retail customers of approximately $291 million, which represented an approximate 6% increase in annual base revenues. The gross rate case revenue increase request was $445 million, which was offset by an EDIT rider of $154 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Carolinas requested rates be effective no later than August 1, 2020.
On March 25, 2020, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. On July 24, 2020, Duke Energy Carolinas filed its request for approval of its notice to customers required to implement temporary rates. On July 27, 2020, Duke Energy Carolinas filed a joint motion with Duke Energy Progress and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff. Also on July 27, 2020, Duke Energy Carolinas filed a letter stating that it intended to update its temporary rates calculation to reflect the terms of the partial settlement. On July 31, 2020, Duke Energy Carolinas and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting, implementation of new depreciation rates and the amortization period of the loss on the hydro station sale.
On August 4, 2020, Duke Energy Carolinas filed an amended motion for approval of its amended notice to customers, seeking to exercise its statutory right to implement temporary rates subject to refund on or after August 24, 2020. The revenue requirement to be recovered, subject to refund, through the temporary rates was based on and consistent with the base rate component of the Second Partial Settlement and excluded the items to be litigated noted above. The NCUC approved the August 4, 2020 amended temporary rates motion on August 6, 2020, and temporary rates went into effect on August 24, 2020.
The Duke Energy Carolinas evidentiary hearing concluded on September 18, 2020, and post-hearing filings were made with the NCUC from all parties by November 4, 2020. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021.
On March 31, 2021, the NCUC issued an order approving the March 25, 2020, and July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2) deferral treatment of approximately $800 million of grid improvement projects with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the reasonableness and prudence of $213 million of deferred storm costs, which were removed from the rate case and for which Duke Energy Carolinas filed a petition seeking securitization in October 2020. Additionally, the order approved without modification the CCR Settlement Agreement.
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The order denied Duke Energy Carolinas' proposal to shorten the remaining depreciable lives of certain Duke Energy Carolinas coal-fired generating units, indicating the NCUC has not had the chance to fully examine the issue within the context of an integrated resource planning (IRP) proceeding, and upon retirement the remaining net book value of these units should be placed in a regulatory asset account to be amortized over an appropriate period to be determined in a future rate case.
On May 21, 2021, the NCUC issued an Order Approving Rate Schedules, which resulted in a net increase of approximately $33 million. Revised customer rates became effective on June 1, 2021. The deadline to appeal has passed and no parties appealed the NCUC's order.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Carolinas filed an application with the PSCSC votedfor a rate increase for retail customers of approximately $168 million.
After hearings in March 2019, the PSCSC issued an order on May 21, 2019, which included an ROE of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:
•Approval of cancellation of the Lee Nuclear Project, with Duke Energy Carolinas maintaining the Combined Operating License;
•Approval of recovery of $125 million (South Carolina retail portion) of Lee Nuclear Project development costs (including AFUDC through December 2017) over a 12-year period, but denial of a return on the deferred balance of costs;
•Approval of recovery of $96 million of coal ash costs over a five-year period with a return at Duke Energy Carolinas' WACC;
•Denial of recovery of $115 million of certain coal ash costs deemed to approvebe related to the petitionCoal Ash Act and incremental to the federal CCR rule;
•Approval of a $66 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;
•Approval of a $45 million decrease through the EDIT Rider to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with the Average Rate Assumption Method (ARAM) for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a five-year period for the deferred revenues; and
•Approval of a $17 million decrease through the EDIT Rider related to reductions in the North Carolina state income tax rate from 6.9% to 2.5% to be returned over a five-year period.
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Carolinas filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Carolinas were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued its finala Directive denying Duke Energy Carolinas' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, ROE and the recovery of a return on deferred operation and maintenance expenses. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Carolinas filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal with the Supreme Court of South Carolina. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to the Lee Nuclear Station. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments were heard before the Supreme Court of South Carolina on May 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed the PSCSC's May 2019 order to:
•Disallow cost recovery on certain CCR compliance costs the PSCSC deemed to be incremental to the federal CCR rules;
•Disallow recovery of certain coal ash litigation expenses;
•Disallow a return on certain deferred expenses; and
•Allow recovery of Lee Nuclear Project preconstruction costs.
The Supreme Court's decision notes the prior determination made by the PSCSC that Duke Energy could submit coal ash costs for recovery that were not initially approved in the rate case order if such costs can be attributed to the CCR rules. As a result of the Court's opinion, Duke Energy Carolinas recognized a pretax charge of approximately $160 million to Impairment of assets and other charges, and a $31 million increase in Other income and expenses, net, in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2021, principally related to coal ash remediation at retired coal ash basin sites. Duke Energy Carolinas is evaluating whether to file a Petition for rehearing on the Supreme Court's decision. Petitions are due November 11, 2021, unless an extension is sought and granted.
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Oconee Nuclear Station Subsequent License Renewal
On June 7, 2021, Duke Energy Carolinas filed a subsequent license renewal application for the Oconee Nuclear Station (ONS) with the U.S. Nuclear Regulatory Commission (NRC) to renew ONS’s operating license for an additional 20 years. The subsequent license renewal would extend operations of the facility from 60 to 80 years. The current license for units 1 and 2 expire in 2033 and the license for unit 3 expires in 2034. By a Federal Register Notice dated July 28, 2021, the NRC provided a 60-day comment period for persons whose interest may be affected by the issuance of a subsequent renewed license for ONS to file a request for a hearing and a petition for leave to intervene. On September 27, 2021, Beyond Nuclear and Sierra Club (Petitioners) filed a Hearing Request and Petition to Intervene (Hearing Request) and a Petition for Waiver. The Hearing Request proposes 3 contentions purporting to challenge Duke Energy Carolinas’ environmental report (ER). In general, the proposed contentions claim that the ER does not consider certain information regarding the environmental aspects of Severe Accidents caused by a hypothetical failure of the Jocassee Dam, and therefore does not satisfy the National Environmental Policy Act of 1969, as amended (NEPA), or the NRC’s NEPA-implementing regulations. Duke Energy Carolinas filed its answer to the proposed contentions on October 8, 2018,22, 2021, and the Petitioners have until November 5, 2021, to respond to Duke Energy Carolina’s answer.
Duke Energy Carolinas and Duke Energy Progress intend to seek renewal of operating licenses and 20-year license extensions for all of their nuclear stations. New depreciation rates were implemented for all of the nuclear facilities during the second quarter of 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Progress
2017 North Carolina Rate Case
On June 1, 2017, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Hot Springs Microgrid Solar and Battery Storage Facility,rate increase for retail customers of approximately $477 million, which was approvedsubsequently adjusted to $420 million. On November 22, 2017, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included an ROE of 9.9% and a capital structure of 52% equity and 48% debt. On February 23, 2018, the NCUC issued an order approving the stipulation. The Public Staff, the North Carolina Attorney General and the Sierra Club filed notices of appeal to the North Carolina Supreme Court.
The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with certain conditions on May 10, 2019. A hearing to updatethe Settling Parties, which was filed with the NCUC on January 25, 2021, and approved by the status of the project was heldNCUC on March 5, 2020. Construction began in May 2020 with commercial operation expected to begin in OctoberApril 16, 2021. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties on June 25, 2021.
2019 North Carolina Rate Case
On July 27, 2020,October 30, 2019, Duke Energy Progress filed an application with the NCUC for a CPCNnet rate increase for retail customers of approximately $464 million, which represented an approximate 12.3% increase in annual base revenues. The gross rate case revenue increase request was $586 million, which was offset by riders of $122 million, primarily an EDIT rider of $120 million to construct the Woodfin Solar Facility, a 5-MW solar generating facilityreturn to be constructed on a closed landfill in Buncombe County. The expert hearing is scheduled for November 18, 2020.
On October 16, 2020, North Carolina Electric Membership Corporation (NCEMC) filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the FPA. The complaint alleges that the ROE component in the formula rate contained within the Power Supply and Coordination Agreement (PSCA) between NCEMC and Duke Energy Progress is unjust and unreasonable. The PSCA's return on equity is 11% as applied to the Production Capacity Rate for the requirements service provided by Duke Energy Progress. Under FPA Section 206, the earliest refund effective date that the FERC can establish is the date of the filing of the complaint. Duke Energy Progress will respond to the complaint and believes the 11% ROE is just and reasonable for the service provided under the contract. Duke Energy Progress cannot predict the outcome of this matter.
On August 7, 2020, Duke Energy Progress filed a motion for approval of notice required to implement temporary rates, seeking to exercise its statutory right to implement temporary rates subject to refund on or after September 1, 2020. The revenue requirement to be recovered subject to refund through the temporary rates was based on and consistent with the terms of the base rate component of the settlement agreements with the Public Staff and excluded items to be litigated noted above. In addition, Duke Energy Progress also sought authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The NCUC approved the August 7, 2020 temporary rates motion on August 11, 2020, and temporary rates went into effect on September 1, 2020.
The Duke Energy Progress evidentiary hearing concluded on October 6, 2020, and post-hearing filings were filed with the NCUC from all parties by December 4, 2020. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021.
On April 16, 2021, the NCUC issued an order approving the June 2, 2020, and July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a settlementcapital structure of 52% equity and 48% debt; 2) deferral treatment of approximately $400 million of grid improvement projects with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the reasonableness and prudence of approximately $714 million of deferred storm costs, which were removed from the rate case and for which Duke Energy Progress filed a petition seeking securitization in October 2020. Additionally, the order approved without modification the CCR Settlement Agreement.
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The order denied Duke Energy Progress' proposal to shorten the remaining depreciable lives of certain intervenorsDuke Energy Progress coal-fired generating units, indicating the NCUC has not had the chance to fully examine the issue within the context of an IRP proceeding, and upon retirement the remaining net book value of these units should be placed in supporta regulatory asset account to be amortized over an appropriate period to be determined in a future rate case.
On May 21, 2021, the NCUC issued an Order Approving Rate Schedules, which resulted in a net increase of this filing. approximately $178 million. Revised customer rates became effective on June 1, 2021. The deadline to appeal has passed and no parties appealed the NCUC's order.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Progress filed an application with the PSCSC for a rate increase for retail customers of approximately $59 million.
After hearings in April 2019, the PSCSC issued an order on May 21, 2019, which included an ROE of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:
•Approval of recovery of $4 million of coal ash costs over a five-year period with a return at Duke Energy Progress' WACC;
•Denial of recovery of $65 million of certain coal ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;
•Approval of a $17 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;
•Approval of a $12 million decrease through the EDIT Tax Savings Rider resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with ARAM for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a three-year period for the deferred revenues; and
•Approval of a $12 million increase due to the expiration of EDIT related to reductions in the North Carolina state income tax rate from 6.9% to 2.5%.
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Progress' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, ROE and the recovery of a return on deferred operation and maintenance expenses, but allowing additional litigation-related costs. As a result of the Directive allowing litigation-related costs, customer rates were revised effective July 1, 2019. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Progress filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 28, 2020,11, 2020. Oral arguments were heard before the FPSC unanimouslySupreme Court of South Carolina on May 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed the PSCSC's May 2019 order to:
•Disallow cost recovery on certain CCR compliance costs the PSCSC deemed to be incremental to the federal CCR rules;
•Disallow recovery of certain coal ash litigation expenses; and
•Disallow a return on certain deferred expenses.
The Supreme Court's decision notes the prior determination made by the PSCSC that Duke Energy could submit coal ash costs for recovery that were not initially approved in the settlement agreement, which effectively approvesrate case order if such costs can be attributed to the 2020-2029 SPP as-filed, without modification.CCR rules. As a result of the Court's opinion, Duke Energy Progress recognized a pretax charge of approximately $42 million to Impairment of assets and other charges, and a $6 million increase in Other income and expenses, net, in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2021, principally related to coal ash remediation at retired coal ash basin sites. Duke Energy Progress is evaluating whether to file a Petition for rehearing on the Supreme Court's decision. Petitions are due November 11, 2021, unless an extension is sought and granted.
Duke Energy Ohio
Duke Energy Ohio has 2 reportable segments, Electric Utilities and Infrastructure and Gas Utilities and Infrastructure. The remainder of Duke Energy Ohio's operations is presented as Other.
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Eliminations | Total | |||||||||||||||||||||||||||||
| Total revenues | $ | 413 | $ | 93 | $ | 506 | $ | — | $ | — | $ | 506 | |||||||||||||||||||||||
| Segment income/Net (loss) income | $ | 48 | $ | 11 | $ | 59 | $ | (1) | $ | — | $ | 58 | |||||||||||||||||||||||
| Segment assets | $ | 6,716 | $ | 3,783 | $ | 10,499 | $ | 27 | $ | (21) | $ | 10,505 | |||||||||||||||||||||||
| Three Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||||||||||||||||||
| Total revenues | $ | 394 | $ | 79 | $ | 473 | $ | — | $ | 473 | |||||||||||||||||||||||||
| Segment income/Net (loss) income | $ | 63 | $ | 9 | $ | 72 | $ | (2) | $ | 70 | |||||||||||||||||||||||||
| Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||||||||||||||||||
| Total revenues | $ | 1,119 | $ | 375 | $ | 1,494 | $ | — | $ | 1,494 | |||||||||||||||||||||||||
| Segment income/Net (loss) income | $ | 122 | $ | 77 | $ | 199 | $ | (11) | $ | 188 | |||||||||||||||||||||||||
| Nine Months Ended September 30, 2020 | |||||||||||||||||||||||||||||||||||
| Electric | Gas | Total | |||||||||||||||||||||||||||||||||
| Utilities and | Utilities and | Reportable | |||||||||||||||||||||||||||||||||
| (in millions) | Infrastructure | Infrastructure | Segments | Other | Total | ||||||||||||||||||||||||||||||
| Total revenues | $ | 1,070 | $ | 324 | $ | 1,394 | $ | — | $ | 1,394 | |||||||||||||||||||||||||
| Segment income/Net (loss) income | $ | 137 | $ | 68 | $ | 205 | $ | (4) | $ | 201 | |||||||||||||||||||||||||
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3. REGULATORY MATTERS
RATE-RELATED INFORMATION
The NCUC, PSCSC, FPSC, IURC, PUCO, TPUC and KPSC approve rates for retail electric and natural gas services within their states. The FERC approves rates for electric sales to wholesale customers served under cost-based rates (excluding Ohio and Indiana), as well as sales of transmission service. The FERC also regulates certification and siting of new interstate natural gas pipeline projects.
Duke Energy Carolinas and Duke Energy Progress
2021 Coal Ash Settlement
On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the Coal Combustion Residuals Settlement Agreement (the “CCR Settlement Agreement”) with the North Carolina Public Staff (Public Staff), the North Carolina Attorney General’s Office and the Sierra Club (collectively, the "Settling Parties"), which was filed with the NCUC on January 25, 2021. The CCR Settlement Agreement resolves all coal ash prudence and cost recovery issues in connection with 2019 rate cases filed by Duke Energy Carolinas and Duke Energy Progress with the NCUC, as well as the equitable sharing issue on remand from the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases as a result of the December 11, 2020 North Carolina Supreme Court opinion. The settlement also provides clarity on coal ash cost recovery in North Carolina for Duke Energy Carolinas and Duke Energy Progress through January 2030 and February 2030 (the "Term"), respectively.
Duke Energy Carolinas and Duke Energy Progress agreed not to seek recovery of approximately $1 billion of systemwide deferred coal ash expenditures, but will retain the ability to earn a debt and equity return during the amortization period, which shall be five years under the 2019 North Carolina rate cases and will be set by the NCUC in future rate case proceedings. The equity return and the amortization period on deferred coal ash costs under the 2017 Duke Energy Carolinas and Duke Energy Progress North Carolina rate cases will remain unaffected. The equity return on deferred coal ash costs under the 2019 North Carolina rate cases and future rate cases in North Carolina will be set at 150 basis points lower than the authorized return on equity (ROE) then in effect, with a capital structure composed of 48% debt and 52% equity. Duke Energy Carolinas and Duke Energy Progress retain the ability to earn a full WACC return during the deferral period, which is the period from when costs are incurred until they are recovered in rates.
The Settling Parties agreed that execution by Duke Energy Carolinas and Duke Energy Progress of a settlement agreement between themselves and the NCDEQ dated December 31, 2019, (the “DEQ Settlement”) and the coal ash management plans included therein or subsequently approved by DEQ are reasonable and prudent. The Settling Parties retain the right to challenge the reasonableness and prudence of actions taken by Duke Energy Carolinas and Duke Energy Progress and costs incurred to implement the scope of work agreed upon in the DEQ Settlement, after February 1, 2020, and March 1, 2020, for Duke Energy Carolinas and Duke Energy Progress, respectively. The Settling Parties further agreed to waive rights through the Term to challenge the reasonableness or prudence of Duke Energy Carolinas’ and Duke Energy Progress’ historical coal ash management practices, and to waive the right to assert any arguments that future coal ash costs, including financing costs, shall be shared between either company and customers through equitable sharing or any other rate base or return adjustment that shares the revenue requirement burden of coal ash costs not otherwise disallowed due to imprudence.
The Settling Parties agreed to a sharing arrangement for future coal ash insurance litigation proceeds between Duke Energy Carolinas and Duke Energy Progress and North Carolina customers. For more information, see Note 4 "Commitments and Contingencies."
As a result of the CCR Settlement Agreement, Duke Energy Carolinas and Duke Energy Progress recorded a pretax charge of approximately $454 million and $494 million, respectively, in the fourth quarter of 2020 to Impairment charges and a reversal of approximately $50 million and $102 million, respectively, to Regulated electric operating revenues on the respective Consolidated Statements of Operations.
The Coal Ash Settlement was approved without modification in the NCUC Orders in the 2019 rate cases on March 31, 2021, and April 16, 2021, for Duke Energy Carolinas and Duke Energy Progress, respectively. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties in the 2017 rate cases on June 25, 2021.
2020 North Carolina Storm Securitization Filings
On October 26, 2020, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the NCUC, as agreed to in partial settlements reached in the 2019 North Carolina Rate Cases for Duke Energy Carolinas and Duke Energy Progress, seeking authorization for the financing of the costs of each utility's storm recovery activities required as a result of Hurricane Florence, Hurricane Michael, Hurricane Dorian and Winter Storm Diego. Specifically, Duke Energy Carolinas and Duke Energy Progress requested that the NCUC find that their storm recovery costs and related financing costs are appropriately financed by debt secured by storm recovery property, and that the commission issue financing orders by which each utility may accomplish such financing using a securitization structure. On January 27, 2021, Duke Energy Carolinas, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain accounting issues, including agreement to support an 18- to 20-year bond period. The total revenue requirement over a proposed 20-year bond period for the storm recovery charges is approximately $287 million for Duke Energy Carolinas and $920 million for Duke Energy Progress and will be finalized upon issuance of the bonds. A remote evidentiary hearing ended on January 29, 2021. In the NCUC Orders in the 2019 rate cases issued on March 31, 2021, and April 16, 2021, for Duke Energy Carolinas and Duke Energy Progress, respectively, the reasonableness and prudence of the deferred storm costs was approved. On May 10, 2021, the NCUC issued financing orders authorizing the companies to issue storm recovery bonds, subject to the terms of the financing orders, and approving the Agreement and Stipulation of Partial Settlement in its entirety. Duke Energy Carolinas and Duke Energy Progress are currently in the process of structuring and marketing the bonds that will be presented to the market. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
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COVID-19 Filings
Duke Energy Carolinas and Duke Energy Progress filed a joint petition on August 7, 2020, with the NCUC for deferral treatment of incremental costs and the cost of waived customer fees due to the COVID-19 pandemic,pandemic. Comments on March 9,the joint petition were filed on November 5, 2020, Governor Mike DeWine declaredand reply comments were filed on November 30, 2020. A summary of incremental COVID-19 costs incurred as of June 30, 2021, was filed with the NCUC by Duke Energy Carolinas and Duke Energy Progress on August 6, 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
South Carolina
Duke Energy Carolinas and Duke Energy Progress filed a statereport on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. On August 14, 2020, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the PSCSC for approval of emergency inan accounting order to defer incremental COVID-19 related costs incurred through June 30, 2020, and for the stateongoing months during the duration of Ohio. The PUCOthe COVID-19 pandemic. Duke Energy Carolinas and Duke Energy Progress withdrew their joint petition on May 17, 2021.
Duke Energy Carolinas
2017 North Carolina Rate Case
On August 25, 2017, Duke Energy Carolinas filed an application with the NCUC for a rate increase for retail customers of approximately $647 million. On February 28, 2018, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included an ROE of 9.9% and a capital structure of 52% equity and 48% debt. On June 22, 2018, the NCUC issued an order directing utilitiesapproving the Stipulation of Partial Settlement and requiring a revenue reduction.
The North Carolina Attorney General and other parties separately filed Notices of Appeal to cease disconnections for nonpayment and waive late payment and reconnection fees and to minimize direct customer contact.the North Carolina Supreme Court. The PUCO also directed utilities to maintain flexible payment plans and tariff interpretations to assist customers during this crisis and to seek any regulatory waivers, if necessary. In response,North Carolina Supreme Court consolidated the Duke Energy Ohio ceased all disconnections exceptCarolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for safety-related concernsthe Public Staff’s equitable sharing argument. On January 22, 2021, Duke Energy Carolinas and waived late paymentDuke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021, and reconnection fees. approved by the NCUC on March 31, 2021. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties on June 25, 2021.
2019 North Carolina Rate Case
On September 30, 2019, Duke Energy Carolinas filed an application with the NCUC for a net rate increase for retail customers of approximately $291 million, which represented an approximate 6% increase in annual base revenues. The gross rate case revenue increase request was $445 million, which was offset by an EDIT rider of $154 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Carolinas requested rates be effective no later than August 1, 2020.
On March 19,25, 2020, Duke Energy OhioCarolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. On July 24, 2020, Duke Energy Carolinas filed its compliance planrequest for approval of its notice to customers required to implement temporary rates. On July 27, 2020, Duke Energy Carolinas filed a joint motion with Duke Energy Progress and the Public Staff notifying the commission that the parties reached a joint partial settlement with the PUCOPublic Staff. Also on July 27, 2020, Duke Energy Carolinas filed a letter stating that it intended to update its temporary rates calculation to reflect the terms of the partial settlement. On July 31, 2020, Duke Energy Carolinas and sought waiverthe Public Staff filed a Second Agreement and Stipulation of several regulationsPartial Settlement (Second Partial Settlement), subject to minimize direct customer contact. review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting, implementation of new depreciation rates and the amortization period of the loss on the hydro station sale.
On MayAugust 4, 2020, Duke Energy OhioCarolinas filed an amended motion for approval of its amended notice to customers, seeking to exercise its statutory right to implement temporary rates subject to refund on or after August 24, 2020. The revenue requirement to be recovered, subject to refund, through the temporary rates was based on and consistent with the base rate component of the Second Partial Settlement and excluded the items to be litigated noted above. The NCUC approved the August 4, 2020 amended temporary rates motion on August 6, 2020, and temporary rates went into effect on August 24, 2020.
The Duke Energy Carolinas evidentiary hearing concluded on September 18, 2020, and post-hearing filings were made with the NCUC from all parties by November 4, 2020. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021.
On March 31, 2021, the NCUC issued an order approving the March 25, 2020, and July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2) deferral treatment of approximately $800 million of grid improvement projects with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the reasonableness and prudence of $213 million of deferred storm costs, which were removed from the rate case and for which Duke Energy Carolinas filed a motion to suspend payment rules to enable proactive outreach to residential customers offering additional options for managing their utility bills. PUCO foundpetition seeking securitization in October 2020. Additionally, the order approved without modification the CCR Settlement Agreement.
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The order denied Duke Energy Carolinas' proposal to addressshorten the stateremaining depreciable lives of emergency and the accompanying waivers reasonable and directedcertain Duke Energy OhioCarolinas coal-fired generating units, indicating the NCUC has not had the chance to work withfully examine the PUCO Staff onissue within the context of an integrated resource planning (IRP) proceeding, and upon retirement the remaining net book value of these units should be placed in a comprehensive plan for resumption of activities and operations,regulatory asset account to be filed 45 days before resumptionamortized over an appropriate period to be determined in a future rate case.
On May 21, 2021, the NCUC issued an Order Approving Rate Schedules, which resulted in a net increase of activities. The transition plan to resume normal operations to pre-COVID-19 levels was filedapproximately $33 million. Revised customer rates became effective on June 26, 2020,1, 2021. The deadline to appeal has passed and approved byno parties appealed the PUCO on July 29, 2020. It included resuming suspended work and activities beginning August 10, 2020, and resuming disconnections in September 2020.NCUC's order.
2018 South Carolina Rate Case
On April 16, 2020,November 8, 2018, Duke Energy OhioCarolinas filed an application with the PSCSC for a Reasonable Arrangement to temporarily lowerrate increase for retail customers of approximately $168 million.
After hearings in March 2019, the minimum bill for demand-metered commercialPSCSC issued an order on May 21, 2019, which included an ROE of 9.5% and industrial customers. On June 17, 2020,a capital structure of 53% equity and 47% debt. The order also included the PUCO deniedfollowing material components:
•Approval of cancellation of the Lee Nuclear Project, with Duke Energy Ohio's application forCarolinas maintaining the Combined Operating License;
•Approval of recovery of $125 million (South Carolina retail portion) of Lee Nuclear Project development costs (including AFUDC through December 2017) over a reasonable arrangement and ordered12-year period, but denial of a return on the deferred balance of costs;
•Approval of recovery of $96 million of coal ash costs over a five-year period with a return at Duke Energy OhioCarolinas' WACC;
•Denial of recovery of $115 million of certain coal ash costs deemed to workbe related to the Coal Ash Act and incremental to the federal CCR rule;
•Approval of a $66 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;
•Approval of a $45 million decrease through the EDIT Rider to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with the PUCO Staff on payment arrangementsAverage Rate Assumption Method (ARAM) for impacted nonresidential customers.protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a five-year period for the deferred revenues; and
As a result of COVID-19.the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Carolinas filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Carolinas were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Carolinas' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, ROE and the recovery of a return on deferred operation and maintenance expenses. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Carolinas filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal with the Supreme Court of South Carolina. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to the Lee Nuclear Station. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments were heard before the Supreme Court of South Carolina on May 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed the PSCSC's May 2019 order to:
•Disallow cost recovery on certain CCR compliance costs the PSCSC deemed to be incremental to the federal CCR rules;
•Disallow recovery of certain coal ash litigation expenses;
•Disallow a return on certain deferred expenses; and
•Allow recovery of Lee Nuclear Project preconstruction costs.
The Supreme Court's decision notes the prior determination made by the PSCSC that Duke Energy could submit coal ash costs for recovery that were not initially approved in the rate case order if such costs can be attributed to the CCR rules. As a result of the Court's opinion, Duke Energy Carolinas recognized a pretax charge of approximately $160 million to Impairment of assets and other charges, and a $31 million increase in Other income and expenses, net, in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2021, principally related to coal ash remediation at retired coal ash basin sites. Duke Energy Carolinas is evaluating whether to file a Petition for rehearing on the Supreme Court's decision. Petitions are due November 11, 2021, unless an extension is sought and granted.
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Oconee Nuclear Station Subsequent License Renewal
On June 7, 2021, Duke Energy Carolinas filed a subsequent license renewal application for the Oconee Nuclear Station (ONS) with the U.S. Nuclear Regulatory Commission (NRC) to renew ONS’s operating license for an additional 20 years. The subsequent license renewal would extend operations of the facility from 60 to 80 years. The current license for units 1 and 2 expire in 2033 and the license for unit 3 expires in 2034. By a Federal Register Notice dated July 28, 2021, the NRC provided a 60-day comment period for persons whose interest may be affected by the issuance of a subsequent renewed license for ONS to file a request for a hearing and a petition for leave to intervene. On September 27, 2021, Beyond Nuclear and Sierra Club (Petitioners) filed a Hearing Request and Petition to Intervene (Hearing Request) and a Petition for Waiver. The Hearing Request proposes 3 contentions purporting to challenge Duke Energy Carolinas’ environmental report (ER). In general, the proposed contentions claim that the ER does not consider certain information regarding the environmental aspects of Severe Accidents caused by a hypothetical failure of the Jocassee Dam, and therefore does not satisfy the National Environmental Policy Act of 1969, as amended (NEPA), or the NRC’s NEPA-implementing regulations. Duke Energy Carolinas filed its answer to the proposed contentions on October 22, 2021, and the Petitioners have until November 5, 2021, to respond to Duke Energy Carolina’s answer.
Duke Energy Kentucky COVID-19
Duke Energy Progress
2017 Electric Security Plan FilingNorth Carolina Rate Case
On June 1, 2017, Duke Energy OhioProgress filed an application with the NCUC for a rate increase for retail customers of approximately $477 million, which was subsequently adjusted to $420 million. On November 22, 2017, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included an ROE of 9.9% and a capital structure of 52% equity and 48% debt. On February 23, 2018, the NCUC issued an order approving the stipulation. The Public Staff, the North Carolina Attorney General and the Sierra Club filed notices of appeal to the North Carolina Supreme Court.
The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the PUCONCUC on January 25, 2021, and approved by the NCUC on April 16, 2021. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties on June 25, 2021.
2019 North Carolina Rate Case
On October 30, 2019, Duke Energy Progress filed an application with the NCUC for a net rate increase for retail customers of approximately $464 million, which represented an approximate 12.3% increase in annual base revenues. The gross rate case revenue increase request was $586 million, which was offset by riders of $122 million, primarily an EDIT rider of $120 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a standard service offerrate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Progress sought to defer and recover incremental Hurricane Dorian storm costs in this proceeding and requested rates be effective no later than September 1, 2020. As a result of the COVID-19 pandemic, on March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on this matter indefinitely.
On June 2, 2020, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain issues in the formbase rate proceeding. On July 27, 2020, Duke Energy Progress filed a joint motion with Duke Energy Carolinas and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff. On July 31, 2020, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting and implementation of new depreciation rates.
On August 7, 2020, Duke Energy Progress filed a motion for approval of notice required to implement temporary rates, seeking to exercise its statutory right to implement temporary rates subject to refund on or after September 1, 2020. The revenue requirement to be recovered subject to refund through the temporary rates was based on and consistent with the terms of the base rate component of the settlement agreements with the Public Staff and excluded items to be litigated noted above. In addition, Duke Energy Progress also sought authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The NCUC approved the August 7, 2020 temporary rates motion on August 11, 2020, and temporary rates went into effect on September 1, 2020.
The Duke Energy Progress evidentiary hearing concluded on October 6, 2020, and post-hearing filings were filed with the NCUC from all parties by December 4, 2020. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021.
On April 16, 2021, the NCUC issued an order approving the June 2, 2020, and July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2) deferral treatment of approximately $400 million of grid improvement projects with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the reasonableness and prudence of approximately $714 million of deferred storm costs, which were removed from the rate case and for which Duke Energy Progress filed a petition seeking securitization in October 2020. Additionally, the order approved without modification the CCR Settlement Agreement.
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The order denied Duke Energy Progress' proposal to shorten the remaining depreciable lives of certain Duke Energy Progress coal-fired generating units, indicating the NCUC has not had the chance to fully examine the issue within the context of an ESP. IRP proceeding, and upon retirement the remaining net book value of these units should be placed in a regulatory asset account to be amortized over an appropriate period to be determined in a future rate case.
On April 13,May 21, 2021, the NCUC issued an Order Approving Rate Schedules, which resulted in a net increase of approximately $178 million. Revised customer rates became effective on June 1, 2021. The deadline to appeal has passed and no parties appealed the NCUC's order.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Ohio, alongProgress filed an application with the PSCSC for a rate increase for retail customers of approximately $59 million.
After hearings in April 2019, the PSCSC issued an order on May 21, 2019, which included an ROE of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:
•Approval of recovery of $4 million of coal ash costs over a five-year period with a return at Duke Energy Progress' WACC;
•Denial of recovery of $65 million of certain coal ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;
•Approval of a $17 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;
•Approval of a $12 million decrease through the EDIT Tax Savings Rider resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with ARAM for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a three-year period for the deferred revenues; and
•Approval of a $12 million increase due to the expiration of EDIT related to reductions in the North Carolina state income tax rate from 6.9% to 2.5%.
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Progress' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, ROE and the recovery of a return on deferred operation and maintenance expenses, but allowing additional litigation-related costs. As a result of the Directive allowing litigation-related costs, customer rates were revised effective July 1, 2019. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Progress filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments were heard before the Supreme Court of South Carolina on May 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed the PSCSC's May 2019 order to:
•Disallow cost recovery on certain CCR compliance costs the PSCSC deemed to be incremental to the federal CCR rules;
•Disallow recovery of certain coal ash litigation expenses; and
•Disallow a return on certain deferred expenses.
The Supreme Court's decision notes the prior determination made by the PSCSC that Duke Energy could submit coal ash costs for recovery that were not initially approved in the rate case order if such costs can be attributed to the CCR rules. As a result of the Court's opinion, Duke Energy Progress recognized a pretax charge of approximately $42 million to Impairment of assets and other charges, and a $6 million increase in Other income and expenses, net, in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2021, principally related to coal ash remediation at retired coal ash basin sites. Duke Energy Progress is evaluating whether to file a Petition for rehearing on the Supreme Court's decision. Petitions are due November 11, 2021, unless an extension is sought and granted.
Western Carolinas Modernization Plan
On October 8, 2018, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Hot Springs Microgrid Solar and Battery Storage Facility, which was approved with certain intervenors,conditions on May 10, 2019. A hearing to update the NCUC on the status of the project was held on March 5, 2020. Construction began in May 2020 with commercial operation expected to begin in December 2021.
On July 27, 2020, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Woodfin Solar Facility, a 5-MW solar generating facility to be constructed on a closed landfill in Buncombe County. The expert hearing was held on November 18, 2020. The application was approved and a CPCN was granted by order of the NCUC on April 20, 2021. Construction began in April 2021 with an expected in-service date in March 2022.
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FERC Return on Equity Complaints
On October 11, 2019, North Carolina Eastern Municipal Power Agency (NCEMPA) filed a Stipulationcomplaint at the FERC against Duke Energy Progress pursuant to Section 206 of the Federal Power Act (FPA), alleging that the 11% stated ROE component contained in the demand formula rate in the Full Requirements Power Purchase Agreement (FRPPA) between NCEMPA and Recommendation (Stipulation)Duke Energy Progress is unjust and unreasonable. On July 16, 2020, the FERC set this matter for hearing and settlement judge procedures and established a refund effective date of October 11, 2019. In its order setting the matter for settlement, the FERC allowed for the consideration of variations to the base transmission-related ROE methodology developed in its Order No. 569-A, through the introduction of “specific facts and circumstances” involving issues specific to the case. The parties reached a settlement in principle at a settlement conference on January 7, 2021, and filed a settlement package on March 10, 2021. The FERC Trial Staff filed comments in support of the settlement. On April 19, 2021, the Settlement Judge certified the settlement to the FERC as an uncontested settlement. The FERC approved the settlement on May 25, 2021, and Duke Energy Progress filed compliance documents on June 10, 2021. The FERC accepted the compliance filing on October 8, 2021.
On October 16, 2020, North Carolina Electric Membership Corporation (NCEMC) filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the FPA, alleging that the 11% stated ROE component in the demand formula rate in the Power Supply and Coordination Agreement between NCEMC and Duke Energy Progress is unjust and unreasonable. Under FPA Section 206, the earliest refund effective date that the FERC can establish is the date of the filing of the complaint. Duke Energy Progress responded to the complaint on November 20, 2020, seeking dismissal, demonstrating that the 11% ROE is just and reasonable for the service provided. The parties filed responsive pleadings and are awaiting an order from the FERC. Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Florida
2021 Settlement Agreement
On January 14, 2021, Duke Energy Florida filed a Settlement Agreement (the “2021 Settlement”) with the PUCO resolvingFPSC. The parties to the 2021 Settlement include Duke Energy Florida, the Office of Public Counsel (OPC), the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PCS Phosphate and NUCOR Steel Florida, Inc. (collectively, the “Parties”).
Pursuant to the 2021 Settlement, the Parties agreed to a base rate stay-out provision that expires year-end 2024; however, Duke Energy Florida is allowed an increase to its base rates of an incremental $67 million in 2022, $49 million in 2023 and $79 million in 2024, subject to adjustment in the event of tax reform during the years 2021, 2022 and 2023. The Parties also agreed to an ROE band of 8.85% to 10.85% with a midpoint of 9.85% based on a capital structure of 53% equity and 47% debt. The ROE band can be increased by 25 basis points if the average 30-year U.S. Treasury rate increases 50 basis points or more over a six-month period in which case the midpoint ROE would rise from 9.85% to 10.10%. Duke Energy Florida will also be able to retain the DOE award of approximately $173 million for spent nuclear fuel, which is expected to be received in 2022, in order to mitigate customer rates over the term of the ESP would2021 Settlement. In return, Duke Energy Florida will be able to recognize the $173 million into earnings from 2022 through 2024.
In addition to these terms, the 2021 Settlement contains provisions related to the accelerated depreciation of Crystal River Units 4-5, the approval of approximately $1 billion in future investments in new cost-effective solar power, the implementation of a new Electric Vehicle Charging Station Program and the deferral and recovery of costs in connection with the implementation of Duke Energy Florida’s Vision Florida program, which explores various emerging non-carbon emitting generation technology, distributed technologies and resiliency projects, among other things. The 2021 Settlement also resolves remaining unrecovered storm costs for Hurricane Dorian and Hurricane Michael.
The FPSC approved the 2021 Settlement on May 4, 2021, issuing an order on June 1, 2018, to May 31, 2025, and included continuation of market-based4, 2021. Revised customer rates through competitive procurement processeswill be effective January 1, 2022, with subsequent base rate increases effective January 1, 2023, and January 1, 2024.
Storm Restoration Cost Recovery
Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover $223 million of estimated retail incremental storm restoration costs for generation, continuationHurricane Michael, consistent with the provisions in the 2017 Settlement, and expansionthe FPSC approved the petition on June 11, 2019. The FPSC also approved allowing Duke Energy Florida to use the tax savings resulting from the Tax Act to recover these storm costs in lieu of existing rider mechanismsimplementing a storm surcharge. Approved storm costs are currently expected to be fully recovered by year-end 2021. On November 22, 2019, Duke Energy Florida filed a petition for approval of actual retail recoverable storm restoration costs related to Hurricane Michael in the amount of $191 million plus interest. On May 19, 2020, Duke Energy Florida filed a supplemental true up reducing the actual retail recoverable storm restoration costs related to Hurricane Michael by approximately $3 million, resulting in a total request to recover $188 million actual retail recoverable storm restoration costs, plus interest. Approximately $80 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of December 31, 2020.
Duke Energy Florida filed a petition with the FPSC on December 19, 2019, to recover $169 million of estimated retail incremental storm restoration costs for Hurricane Dorian, consistent with the provisions in the 2017 Settlement and the FPSC approved new rider mechanismsthe petition on February 24, 2020. The final actual amount of $145 million was filed on September 30, 2020. The 2021 Settlement resolved all matters regarding storm cost recovery relating to costs incurredHurricane Michael and Hurricane Dorian.
Clean Energy Connection
On July 1, 2020, Duke Energy Florida petitioned the FPSC for approval of a voluntary solar program. The program consists of 10 new solar generating facilities with combined capacity of approximately 750 MW. The program allows participants to enhancesupport cost-effective solar development in Florida by paying a subscription fee based on per kilowatt-subscriptions and receiving a credit on their bill based on the customer experienceactual generation associated with their portion of the solar portfolio. The estimated cost of the 10 new solar generation facilities is approximately $1 billion over the next four years, and transformthis investment will be included in base rates offset by the gridrevenue from the subscription fees. The credits will be included for recovery in the fuel cost recovery clause. A remote hearing was held on November 17, 2020, and post-hearing briefs were filed with the FPSC from all parties by December 9, 2020. The FPSC voted to approve the program on January 5, 2021, and issued its written order on January 26, 2021.
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On February 24, 2021, the League of United Latin American Citizens (LULAC) filed a service reliability rider for vegetation management. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association andnotice of appeal of the Ohio Consumers' Counsel (OCC), respectively, filed appealsFPSC’s order approving the Clean Energy Connection to the Supreme Court of Ohio claimingFlorida. LULAC's initial brief was filed on May 26, 2021, and Appellees' response briefs were filed on July 26, 2021. LULAC's reply brief was filed on September 24, 2021, and its request for oral argument was filed on September 28, 2021. The FPSC approval order remains in effect pending the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appealsoutcome of the PUCO's December 19, 2018 order approvingappeal. Duke Energy Florida cannot predict the Stipulation. The case has been resolved.outcome of this matter.
Duke Energy Ohio Electric Base Rate Case
Duke Energy Ohio filed with the PUCO an electric distribution base rate case application andon October 1, 2021, with supporting testimony filed on October 15, 2021, requesting an increase in Marchelectric distribution base rates of approximately $55 million and an ROE of 10.3%. This is an approximate 3.3% average increase across all customer classes. The drivers for this case are capital invested since Duke Energy Ohio's last electric distribution base rate case in 2017. Duke Energy Ohio requested an estimated annual increase of approximately $15 million and a returnis also seeking to adjust the caps on equity of 10.4%its Distribution Capital Investment Rider (DCI Rider). On April 13, 2018, Duke Energy Ohio along with certain intervenors, filed the Stipulation withanticipates the PUCO including a $19 million decrease in annual base distribution revenue with a returnwill rule on equity unchanged from the current raterequest by the summer of 9.84% based upon a capital structure of 50.75% equity and 49.25% debt. Upon approval of new rates, Duke Energy Ohio's rider for recovering its initial SmartGrid implementation ended as these costs would be recovered through base rates. The Stipulation also renewed 14 existing riders, some of which were included in Duke Energy Ohio's ESP, and added two new riders including the Enhanced Service Reliability Rider to recover vegetation management costs not included in base rates, up to $10 million per year (operation and maintenance only) and the Power Future Initiatives Rider (formerly PowerForward Rider) to recover costs incurred to enhance the customer experience and further transform the grid (operation and maintenance and capital). In addition to the changes in revenue attributable to the Stipulation, Duke Energy Ohio’s capital-related riders, including the Distribution Capital Investments Rider, began to reflect the lower federal income tax rate associated with the Tax Act with updates to customers’ bills beginning April 1, 2018. This change reduced electric revenue by approximately $20 million on an annualized basis. On December 19, 2018, the PUCO approved the Stipulation without material modification. New base rates were implemented effective January 2, 2019. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC, respectively, filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the Stipulation. The case has been resolved.
Ohio sought deferral authority for net costs incurred from April 1, 2017, until the new rates under Rider PSR were put into effect. On April 13, 2018, Duke Energy Ohio, along with certain intervenors, filed a Stipulation with the PUCO resolving numerous issues including those related to Rider PSR. The Stipulation activated Rider PSR for recovery of net costs incurred from January 1, 2018, through May 2025. On December 19, 2018, the PUCO approved the Stipulation without material modification. The PSR rider became effective April 1, 2019. On September 13, 2019, and September 16, 2019, Interstate Gas Supply/Retail Supply Association and the OCC filed appeals to the Supreme Court of Ohio claiming the PUCO’s order was in error. On March 13, 2020, the Supreme Court of Ohio dismissed OCC's appeal. On April 22, 2020, the Supreme Court of Ohio dismissed all remaining appeals of the PUCO's December 19, 2018 order approving the Stipulation. The case has been resolved.House Bill 6
On July 23, 2019, House Bill 6 (HB 6) was signed into law thatand became effective January 1, 2020. Among other things, the bill allows for funding, through a rider mechanism referred to as the Clean Air Fund (Rider CAF), of two2 nuclear generating facilities located in Northern Ohio through a charge on utility bills owned by Energy Harbor (f/k/a FirstEnergy Solutions), and certain renewable resources, repeal of energy efficiency mandates and recovery of prudently incurred costs, net of any revenues, for Ohio investor-owned utilities that are participants under the OVEC power agreement. The OVEC recovery shall beis through a non-bypassable rider that is to replacereplaced any existing recovery mechanism approved by the PUCO and will remain in place through 2030. As such, Duke Energy Ohio created the Legacy Generation Rider (Rider LGR) that replaced Rider PSR effective January 1, 2020. The amounts recoverable from customers will beare subject to an annual cap, with incremental costs that exceed such cap eligible for deferral and recovery subject to review. See Note 1211 for additional discussion of Duke Energy Ohio's ownership interest in OVEC. In July 2020, legislation to repealHouse Bill 128 was signed into law on March 31, 2021, and became effective June 30, 2021. The bill removes nuclear plant funding included in HB 6, was proposedeliminates Rider CAF and establishes the Solar Generation Fund Rider (Rider SGF) to recover the renewable investments originally included in both the Ohio House and Senate, with subsequent hearings to receive witness testimony. Duke Energy Ohio cannot predict the outcome of this matter.HB 6. HB 128 does not impact OVEC cost recovery or any transmission or distribution rider.
South Carolina
Duke Energy Efficiency Cost RecoveryCarolinas and Duke Energy Progress filed a report on June 30, 2020, as required by PSCSC order, reporting revenue impact, costs and savings related to COVID-19 to date. On August 14, 2020, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the PSCSC for approval of an accounting order to defer incremental COVID-19 related costs incurred through June 30, 2020, and for the ongoing months during the duration of the COVID-19 pandemic. Duke Energy Carolinas and Duke Energy Progress withdrew their joint petition on May 17, 2021.
Duke Energy Carolinas
2017 North Carolina Rate Case
On August 25, 2017, Duke Energy Carolinas filed an application with the NCUC for a rate increase for retail customers of approximately $647 million. On February 26, 2020,28, 2018, Duke Energy Carolinas and the PUCOPublic Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included an ROE of 9.9% and a capital structure of 52% equity and 48% debt. On June 22, 2018, the NCUC issued an order directing utilitiesapproving the Stipulation of Partial Settlement and requiring a revenue reduction.
The North Carolina Attorney General and other parties separately filed Notices of Appeal to wind down their demand-side management programsthe North Carolina Supreme Court. The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021, and approved by the NCUC on March 31, 2021. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties on June 25, 2021.
2019 North Carolina Rate Case
On September 30, 2020,2019, Duke Energy Carolinas filed an application with the NCUC for a net rate increase for retail customers of approximately $291 million, which represented an approximate 6% increase in annual base revenues. The gross rate case revenue increase request was $445 million, which was offset by an EDIT rider of $154 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase was driven by major capital investments subsequent to terminate the programs by December 31, 2020, in response to changes in Ohio law that eliminated Ohio's energy efficiency mandates. previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Carolinas requested rates be effective no later than August 1, 2020.
On March 25, 2020, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. On July 24, 2020, Duke Energy Carolinas filed its request for approval of its notice to customers required to implement temporary rates. On July 27, 2020, Duke Energy OhioCarolinas filed a joint motion with Duke Energy Progress and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff. Also on July 27, 2020, Duke Energy Carolinas filed a letter stating that it intended to update its temporary rates calculation to reflect the terms of the partial settlement. On July 31, 2020, Duke Energy Carolinas and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting, implementation of new depreciation rates and the amortization period of the loss on the hydro station sale.
On August 4, 2020, Duke Energy Carolinas filed an Applicationamended motion for approval of its amended notice to customers, seeking to exercise its statutory right to implement temporary rates subject to refund on or after August 24, 2020. The revenue requirement to be recovered, subject to refund, through the temporary rates was based on and consistent with the base rate component of the Second Partial Settlement and excluded the items to be litigated noted above. The NCUC approved the August 4, 2020 amended temporary rates motion on August 6, 2020, and temporary rates went into effect on August 24, 2020.
The Duke Energy Carolinas evidentiary hearing concluded on September 18, 2020, and post-hearing filings were made with the NCUC from all parties by November 4, 2020. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021.
On March 31, 2021, the NCUC issued an order approving the March 25, 2020, and July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2) deferral treatment of approximately $800 million of grid improvement projects with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the reasonableness and prudence of $213 million of deferred storm costs, which were removed from the rate case and for which Duke Energy Carolinas filed a petition seeking securitization in October 2020. Additionally, the order approved without modification the CCR Settlement Agreement.
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The order denied Duke Energy Carolinas' proposal to shorten the remaining depreciable lives of certain Duke Energy Carolinas coal-fired generating units, indicating the NCUC has not had the chance to fully examine the issue within the context of an integrated resource planning (IRP) proceeding, and upon retirement the remaining net book value of these units should be placed in a regulatory asset account to be amortized over an appropriate period to be determined in a future rate case.
On May 21, 2021, the NCUC issued an Order Approving Rate Schedules, which resulted in a net increase of approximately $33 million. Revised customer rates became effective on June 1, 2021. The deadline to appeal has passed and no parties appealed the NCUC's order.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Carolinas filed an application with the PSCSC for a rate increase for retail customers of approximately $168 million.
After hearings in March 2019, the PSCSC issued an order on May 21, 2019, which included an ROE of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:
•Approval of cancellation of the Lee Nuclear Project, with Duke Energy Carolinas maintaining the Combined Operating License;
•Approval of recovery of $125 million (South Carolina retail portion) of Lee Nuclear Project development costs (including AFUDC through December 2017) over a 12-year period, but denial of a return on the deferred balance of costs;
•Approval of recovery of $96 million of coal ash costs over a five-year period with a return at Duke Energy Carolinas' WACC;
•Denial of recovery of $115 million of certain coal ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;
•Approval of a $66 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;
•Approval of a $45 million decrease through the EDIT Rider to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with the Average Rate Assumption Method (ARAM) for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a five-year period for the deferred revenues; and
•Approval of a $17 million decrease through the EDIT Rider related to reductions in the North Carolina state income tax rate from 6.9% to 2.5% to be returned over a five-year period.
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Carolinas filed a Petition for Rehearing seeking clarificationor Reconsideration of that order contending substantial rights of Duke Energy Carolinas were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Carolinas' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, ROE and the recovery of a return on deferred operation and maintenance expenses. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Carolinas filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal with the Supreme Court of South Carolina. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to the Lee Nuclear Station. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments were heard before the Supreme Court of South Carolina on May 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed the PSCSC's May 2019 order to:
•Disallow cost recovery on certain CCR compliance costs the PSCSC deemed to be incremental to the federal CCR rules;
•Disallow recovery of certain coal ash litigation expenses;
•Disallow a return on certain deferred expenses; and
•Allow recovery of Lee Nuclear Project preconstruction costs.
The Supreme Court's decision notes the prior determination made by the PSCSC that Duke Energy could submit coal ash costs for recovery that were not initially approved in the rate case order if such costs can be attributed to the CCR rules. As a result of the Court's opinion, Duke Energy Carolinas recognized a pretax charge of approximately $160 million to Impairment of assets and other charges, and a $31 million increase in Other income and expenses, net, in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2021, principally related to coal ash remediation at retired coal ash basin sites. Duke Energy Carolinas is evaluating whether to file a Petition for rehearing on the final true upSupreme Court's decision. Petitions are due November 11, 2021, unless an extension is sought and reconciliation process after 2020. granted.
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Oconee Nuclear Station Subsequent License Renewal
On AprilJune 7, 2021, Duke Energy Carolinas filed a subsequent license renewal application for the Oconee Nuclear Station (ONS) with the U.S. Nuclear Regulatory Commission (NRC) to renew ONS’s operating license for an additional 20 years. The subsequent license renewal would extend operations of the facility from 60 to 80 years. The current license for units 1 and 2 expire in 2033 and the license for unit 3 expires in 2034. By a Federal Register Notice dated July 28, 2021, the NRC provided a 60-day comment period for persons whose interest may be affected by the issuance of a subsequent renewed license for ONS to file a request for a hearing and a petition for leave to intervene. On September 27, 2021, Beyond Nuclear and Sierra Club (Petitioners) filed a Hearing Request and Petition to Intervene (Hearing Request) and a Petition for Waiver. The Hearing Request proposes 3 contentions purporting to challenge Duke Energy Carolinas’ environmental report (ER). In general, the proposed contentions claim that the ER does not consider certain information regarding the environmental aspects of Severe Accidents caused by a hypothetical failure of the Jocassee Dam, and therefore does not satisfy the National Environmental Policy Act of 1969, as amended (NEPA), or the NRC’s NEPA-implementing regulations. Duke Energy Carolinas filed its answer to the proposed contentions on October 22, 2020,2021, and the PUCO granted rehearingPetitioners have until November 5, 2021, to respond to Duke Energy Carolina’s answer.
Duke Energy Carolinas and Duke Energy Progress intend to seek renewal of operating licenses and 20-year license extensions for further consideration.all of their nuclear stations. New depreciation rates were implemented for all of the nuclear facilities during the second quarter of 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Progress
2017 North Carolina Rate Case
On June 1, 2017, Duke Energy Progress filed an application with the NCUC for a rate increase for retail customers of approximately $477 million, which was subsequently adjusted to $420 million. On November 22, 2017, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included an ROE of 9.9% and a capital structure of 52% equity and 48% debt. On February 23, 2018, the NCUC issued an order approving the stipulation. The Public Staff, the North Carolina Attorney General and the Sierra Club filed notices of appeal to the North Carolina Supreme Court.
The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021, and approved by the NCUC on April 16, 2021. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties on June 25, 2021.
2019 North Carolina Rate Case
On October 30, 2019, Duke Energy Progress filed an application with the NCUC for a net rate increase for retail customers of approximately $464 million, which represented an approximate 12.3% increase in annual base revenues. The gross rate case revenue increase request was $586 million, which was offset by riders of $122 million, primarily an EDIT rider of $120 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Progress sought to defer and recover incremental Hurricane Dorian storm costs in this proceeding and requested rates be effective no later than September 1, 2020. As a result of the COVID-19 pandemic, on March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on this matter indefinitely.
On June 2, 2020, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. On July 27, 2020, Duke Energy Progress filed a joint motion with Duke Energy Carolinas and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff. On July 31, 2020, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting and implementation of new depreciation rates.
On August 7, 2020, Duke Energy Progress filed a motion for approval of notice required to implement temporary rates, seeking to exercise its statutory right to implement temporary rates subject to refund on or after September 1, 2020. The revenue requirement to be recovered subject to refund through the temporary rates was based on and consistent with the terms of the base rate component of the settlement agreements with the Public Staff and excluded items to be litigated noted above. In addition, Duke Energy Progress also sought authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The NCUC approved the August 7, 2020 temporary rates motion on August 11, 2020, and temporary rates went into effect on September 1, 2020.
The Duke Energy Progress evidentiary hearing concluded on October 6, 2020, and post-hearing filings were filed with the NCUC from all parties by December 4, 2020. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021.
On April 16, 2021, the NCUC issued an order approving the June 2, 2020, and July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2) deferral treatment of approximately $400 million of grid improvement projects with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the reasonableness and prudence of approximately $714 million of deferred storm costs, which were removed from the rate case and for which Duke Energy Progress filed a petition seeking securitization in October 2020. Additionally, the order approved without modification the CCR Settlement Agreement.
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The order denied Duke Energy Progress' proposal to shorten the remaining depreciable lives of certain Duke Energy Progress coal-fired generating units, indicating the NCUC has not had the chance to fully examine the issue within the context of an IRP proceeding, and upon retirement the remaining net book value of these units should be placed in a regulatory asset account to be amortized over an appropriate period to be determined in a future rate case.
On May 21, 2021, the NCUC issued an Order Approving Rate Schedules, which resulted in a net increase of approximately $178 million. Revised customer rates became effective on June 1, 2021. The deadline to appeal has passed and no parties appealed the NCUC's order.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Progress filed an application with the PSCSC for a rate increase for retail customers of approximately $59 million.
After hearings in April 2019, the PSCSC issued an order on May 21, 2019, which included an ROE of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:
•Approval of recovery of $4 million of coal ash costs over a five-year period with a return at Duke Energy Progress' WACC;
•Denial of recovery of $65 million of certain coal ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;
•Approval of a $17 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;
•Approval of a $12 million decrease through the EDIT Tax Savings Rider resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with ARAM for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a three-year period for the deferred revenues; and
•Approval of a $12 million increase due to the expiration of EDIT related to reductions in the North Carolina state income tax rate from 6.9% to 2.5%.
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Progress' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, ROE and the recovery of a return on deferred operation and maintenance expenses, but allowing additional litigation-related costs. As a result of the Directive allowing litigation-related costs, customer rates were revised effective July 1, 2019. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Progress filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments were heard before the Supreme Court of South Carolina on May 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed the PSCSC's May 2019 order to:
•Disallow cost recovery on certain CCR compliance costs the PSCSC deemed to be incremental to the federal CCR rules;
•Disallow recovery of certain coal ash litigation expenses; and
•Disallow a return on certain deferred expenses.
The Supreme Court's decision notes the prior determination made by the PSCSC that Duke Energy could submit coal ash costs for recovery that were not initially approved in the rate case order if such costs can be attributed to the CCR rules. As a result of the Court's opinion, Duke Energy Progress recognized a pretax charge of approximately $42 million to Impairment of assets and other charges, and a $6 million increase in Other income and expenses, net, in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2021, principally related to coal ash remediation at retired coal ash basin sites. Duke Energy Progress is evaluating whether to file a Petition for rehearing on the Supreme Court's decision. Petitions are due November 11, 2021, unless an extension is sought and granted.
Western Carolinas Modernization Plan
On October 8, 2018, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Hot Springs Microgrid Solar and Battery Storage Facility, which was approved with certain conditions on May 10, 2019. A hearing to update the NCUC on the status of the project was held on March 5, 2020. Construction began in May 2020 with commercial operation expected to begin in December 2021.
On July 27, 2020, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Woodfin Solar Facility, a 5-MW solar generating facility to be constructed on a closed landfill in Buncombe County. The expert hearing was held on November 18, 2020. The application was approved and a CPCN was granted by order of the NCUC on April 20, 2021. Construction began in April 2021 with an expected in-service date in March 2022.
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FERC Return on Equity Complaints
On October 11, 2019, North Carolina Eastern Municipal Power Agency (NCEMPA) filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the Federal Power Act (FPA), alleging that the 11% stated ROE component contained in the demand formula rate in the Full Requirements Power Purchase Agreement (FRPPA) between NCEMPA and Duke Energy Progress is unjust and unreasonable. On July 16, 2020, the FERC set this matter for hearing and settlement judge procedures and established a refund effective date of October 11, 2019. In its order setting the matter for settlement, the FERC allowed for the consideration of variations to the base transmission-related ROE methodology developed in its Order No. 569-A, through the introduction of “specific facts and circumstances” involving issues specific to the case. The parties reached a settlement in principle at a settlement conference on January 7, 2021, and filed a settlement package on March 10, 2021. The FERC Trial Staff filed comments in support of the settlement. On April 19, 2021, the Settlement Judge certified the settlement to the FERC as an uncontested settlement. The FERC approved the settlement on May 25, 2021, and Duke Energy Progress filed compliance documents on June 10, 2021. The FERC accepted the compliance filing on October 8, 2021.
On October 16, 2020, North Carolina Electric Membership Corporation (NCEMC) filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the FPA, alleging that the 11% stated ROE component in the demand formula rate in the Power Supply and Coordination Agreement between NCEMC and Duke Energy Progress is unjust and unreasonable. Under FPA Section 206, the earliest refund effective date that the FERC can establish is the date of the filing of the complaint. Duke Energy Progress responded to the complaint on November 20, 2020, seeking dismissal, demonstrating that the 11% ROE is just and reasonable for the service provided. The parties filed responsive pleadings and are awaiting an order from the FERC. Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Florida
2021 Settlement Agreement
On January 14, 2021, Duke Energy Florida filed a Settlement Agreement (the “2021 Settlement”) with the FPSC. The parties to the 2021 Settlement include Duke Energy Florida, the Office of Public Counsel (OPC), the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PCS Phosphate and NUCOR Steel Florida, Inc. (collectively, the “Parties”).
Pursuant to the 2021 Settlement, the Parties agreed to a base rate stay-out provision that expires year-end 2024; however, Duke Energy Florida is allowed an increase to its base rates of an incremental $67 million in 2022, $49 million in 2023 and $79 million in 2024, subject to adjustment in the event of tax reform during the years 2021, 2022 and 2023. The Parties also agreed to an ROE band of 8.85% to 10.85% with a midpoint of 9.85% based on a capital structure of 53% equity and 47% debt. The ROE band can be increased by 25 basis points if the average 30-year U.S. Treasury rate increases 50 basis points or more over a six-month period in which case the midpoint ROE would rise from 9.85% to 10.10%. Duke Energy Florida will also be able to retain the DOE award of approximately $173 million for spent nuclear fuel, which is expected to be received in 2022, in order to mitigate customer rates over the term of the 2021 Settlement. In return, Duke Energy Florida will be able to recognize the $173 million into earnings from 2022 through 2024.
In addition to these terms, the 2021 Settlement contains provisions related to the accelerated depreciation of Crystal River Units 4-5, the approval of approximately $1 billion in future investments in new cost-effective solar power, the implementation of a new Electric Vehicle Charging Station Program and the deferral and recovery of costs in connection with the implementation of Duke Energy Florida’s Vision Florida program, which explores various emerging non-carbon emitting generation technology, distributed technologies and resiliency projects, among other things. The 2021 Settlement also resolves remaining unrecovered storm costs for Hurricane Dorian and Hurricane Michael.
The FPSC approved the 2021 Settlement on May 4, 2021, issuing an order on June 4, 2021. Revised customer rates will be effective January 1, 2022, with subsequent base rate increases effective January 1, 2023, and January 1, 2024.
Storm Restoration Cost Recovery
Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover $223 million of estimated retail incremental storm restoration costs for Hurricane Michael, consistent with the provisions in the 2017 Settlement, and the FPSC approved the petition on June 11, 2019. The FPSC also approved allowing Duke Energy Florida to use the tax savings resulting from the Tax Act to recover these storm costs in lieu of implementing a storm surcharge. Approved storm costs are currently expected to be fully recovered by year-end 2021. On November 22, 2019, Duke Energy Florida filed a petition for approval of actual retail recoverable storm restoration costs related to Hurricane Michael in the amount of $191 million plus interest. On May 19, 2020, Duke Energy Florida filed a supplemental true up reducing the actual retail recoverable storm restoration costs related to Hurricane Michael by approximately $3 million, resulting in a total request to recover $188 million actual retail recoverable storm restoration costs, plus interest. Approximately $80 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of December 31, 2020.
Duke Energy Florida filed a petition with the FPSC on December 19, 2019, to recover $169 million of estimated retail incremental storm restoration costs for Hurricane Dorian, consistent with the provisions in the 2017 Settlement and the FPSC approved the petition on February 24, 2020. The final actual amount of $145 million was filed on September 30, 2020. The 2021 Settlement resolved all matters regarding storm cost recovery relating to Hurricane Michael and Hurricane Dorian.
Clean Energy Connection
On July 1, 2020, Duke Energy Florida petitioned the FPSC for approval of a voluntary solar program. The program consists of 10 new solar generating facilities with combined capacity of approximately 750 MW. The program allows participants to support cost-effective solar development in Florida by paying a subscription fee based on per kilowatt-subscriptions and receiving a credit on their bill based on the actual generation associated with their portion of the solar portfolio. The estimated cost of the 10 new solar generation facilities is approximately $1 billion over the next four years, and this investment will be included in base rates offset by the revenue from the subscription fees. The credits will be included for recovery in the fuel cost recovery clause. A remote hearing was held on November 17, 2020, and post-hearing briefs were filed with the FPSC from all parties by December 9, 2020. The FPSC voted to approve the program on January 5, 2021, and issued its written order on January 26, 2021.
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On February 24, 2021, the League of United Latin American Citizens (LULAC) filed a notice of appeal of the FPSC’s order approving the Clean Energy Connection to the Supreme Court of Florida. LULAC's initial brief was filed on May 26, 2021, and Appellees' response briefs were filed on July 26, 2021. LULAC's reply brief was filed on September 24, 2021, and its request for oral argument was filed on September 28, 2021. The FPSC approval order remains in effect pending the outcome of the appeal. Duke Energy Florida cannot predict the outcome of this matter.
Duke Energy Ohio
Duke Energy Ohio Electric Base Rate Case
Duke Energy Ohio filed an application to implement a voluntary energy efficiency program portfolio to commence on January 1, 2021. The application proposes a mechanism for recovery of program costs, lost margins and a shared savings incentive mechanism similar to those previously approved by the PUCO. On June 17, 2020,with the PUCO an electric distribution base rate case application on its own motion, struckOctober 1, 2021, with supporting testimony filed on October 15, 2021, requesting an increase in electric distribution base rates of approximately $55 million and an ROE of 10.3%. This is an approximate 3.3% average increase across all customer classes. The drivers for this case are capital invested since Duke Energy Ohio’s proposal to include a shared savings mechanismOhio's last electric distribution base rate case in its plan finding such incentives are not permissible or supportable under Ohio law. On June 26, 2020,2017. Duke Energy Ohio withdrewis also seeking to adjust the caps on its application. On October 9, 2020,Distribution Capital Investment Rider (DCI Rider). Duke Energy Ohio filed an application to implement a voluntary efficiency program portfolio to commenceanticipates the PUCO will rule on January 1, 2021. The application proposes a mechanism for recoverythe request by the summer of program costs and a benefit associated with avoided transmission and distribution costs.2022. Duke Energy Ohio cannot predict the outcome of this matter.
South Carolina
Duke Energy Carolinas
2017 North Carolina Rate Case
On August 25, 2017, Duke Energy Carolinas filed an application with the NCUC for a rate increase for retail customers of approximately $647 million. On February 28, 2018, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included financial impacts throughan ROE of 9.9% and a capital structure of 52% equity and 48% debt. On June 22, 2018, the endNCUC issued an order approving the Stipulation of August 2020.Partial Settlement and requiring a revenue reduction.
The North Carolina Attorney General and other parties separately filed Notices of Appeal to the North Carolina Supreme Court. The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. On January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021, and approved by the NCUC on March 31, 2021. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties on June 25, 2021.
2019 North Carolina Rate Case
On September 30, 2020, Piedmont2019, Duke Energy Carolinas filed an update on their plannedapplication with the NCUC for a net rate increase for retail customers of approximately $291 million, which represented an approximate 6% increase in annual base revenues. The gross rate case revenue increase request was $445 million, which was offset by an EDIT rider of $154 million to return to normal operations duringcustomers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase was driven by major capital investments subsequent to the COVID-19 pandemic. Normal billing practices resumed asprevious base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Carolinas requested rates be effective no later than August 1, 2020.
On March 25, 2020, Duke Energy Carolinas and the Public Staff filed an Agreement and Stipulation of October 1,Partial Settlement, subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. On July 24, 2020, Duke Energy Carolinas filed its request for approval of its notice to customers required to implement temporary rates. On July 27, 2020, Duke Energy Carolinas filed a joint motion with Duke Energy Progress and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff. Also on July 27, 2020, Duke Energy Carolinas filed a letter stating that it intended to update its temporary rates calculation to reflect the terms of the partial settlement. On July 31, 2020, Duke Energy Carolinas and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement (Second Partial Settlement), subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting, implementation of new depreciation rates and the amortization period of the loss on the hydro station sale.
On August 4, 2020, Duke Energy Carolinas filed an amended motion for approval of its amended notice to customers, seeking to exercise its statutory right to implement temporary rates subject to refund on or after August 24, 2020. The revenue requirement to be recovered, subject to refund, through the temporary rates was based on and consistent with the base rate component of the Second Partial Settlement and excluded the items to be litigated noted above. The NCUC approved the August 4, 2020 amended temporary rates motion on August 6, 2020, and service disconnections for nonpayment resumedtemporary rates went into effect on August 24, 2020.
The Duke Energy Carolinas evidentiary hearing concluded on September 18, 2020, and post-hearing filings were made with the NCUC from all parties by November 4, 2020. Customers were notified ofOn January 22, 2021, Duke Energy Carolinas and Duke Energy Progress entered into the resumption of normal billing practices,CCR Settlement Agreement with the option of payment arrangements and where to find assistance, if necessary.
On March 12,31, 2021, the NCUC issued an order approving the March 25, 2020, Governor Bill Lee issued Executive Order No. 14 declaringand July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a statecapital structure of emergency due to52% equity and 48% debt; 2) deferral treatment of approximately $800 million of grid improvement projects with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the COVID-19 pandemic. In an effort to help mitigatereasonableness and prudence of $213 million of deferred storm costs, which were removed from the financial impacts of the COVID-19 pandemic on their customers, on March 20, 2020, Piedmontrate case and for which Duke Energy Carolinas filed a request withpetition seeking securitization in October 2020. Additionally, the TPUC seeking authorization to waive, effective March 21, 2020: (1) any late payment charges incurred by a residential or nonresidential customer; (2)order approved without modification the application of fees for checks returned for insufficient funds for residential and nonresidential customers; and (3) the reconnection charge when a residential or nonresidential customer seeks to have service restored for those customers whose service was recently disconnected for nonpayment and to work with customers regarding the other requirements to restore service, including re-establishment of credit. The TPUC granted Piedmont’s request by Order issued March 31,2020. The Order also stated that customers were not relieved of their obligation to pay for utility services received.CCR Settlement Agreement.
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The TPUC held its regularly scheduled Commission Conference electronically on August 10, 2020,order denied Duke Energy Carolinas' proposal to shorten the remaining depreciable lives of certain Duke Energy Carolinas coal-fired generating units, indicating the NCUC has not had the chance to fully examine the issue within the context of an integrated resource planning (IRP) proceeding, and on September 16, 2020,upon retirement the remaining net book value of these units should be placed in a regulatory asset account to be amortized over an appropriate period to be determined in a future rate case.
On May 21, 2021, the NCUC issued an Order Lifting SuspensionApproving Rate Schedules, which resulted in a net increase of Disconnectionsapproximately $33 million. Revised customer rates became effective on June 1, 2021. The deadline to appeal has passed and no parties appealed the NCUC's order.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Carolinas filed an application with the PSCSC for a rate increase for retail customers of Service for Lackapproximately $168 million.
After hearings in March 2019, the PSCSC issued an order on May 21, 2019, which included an ROE of Payment9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:
•Approval of cancellation of the Lee Nuclear Project, with Conditions, effective August 29, 2020. The conditions relateDuke Energy Carolinas maintaining the Combined Operating License;
•Approval of recovery of $125 million (South Carolina retail portion) of Lee Nuclear Project development costs (including AFUDC through December 2017) over a 12-year period, but denial of a return on the deferred balance of costs;
•Approval of recovery of $96 million of coal ash costs over a five-year period with a return at Duke Energy Carolinas' WACC;
•Denial of recovery of $115 million of certain coal ash costs deemed to required customer communications, payment plan options for past-due amounts and ongoing reportingbe related to the TPUC. PotentialCoal Ash Act and incremental to the federal CCR rule;
•Approval of a $66 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;
•Approval of a $45 million decrease through the EDIT Rider to return EDIT resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with the Average Rate Assumption Method (ARAM) for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a five-year period for the deferred revenues; and
•Approval of a $17 million decrease through the EDIT Rider related to reductions in the North Carolina state income tax rate from 6.9% to 2.5% to be returned over a five-year period.
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Carolinas filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Carolinas were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Carolinas' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, ROE and the recovery of a return on deferred operation and maintenance expenses. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Carolinas filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. On November 20, 2019, the South Carolina Energy Users Committee filed a Notice of Appeal with the Supreme Court of South Carolina. Initial briefs were filed on April 21, 2020, which included the South Carolina Energy User's Committee brief arguing that the PSCSC erred in allowing Duke Energy Carolinas' recovery of costs related to the COVID-19 pandemic may be considered in future, individual docketed proceedings.Lee Nuclear Station. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments were heard before the Supreme Court of South Carolina on May 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed the PSCSC's May 2019 order to:
•Disallow cost recovery on certain CCR compliance costs the PSCSC deemed to be incremental to the federal CCR rules;
•Disallow recovery of certain coal ash litigation expenses;
•Disallow a return on certain deferred expenses; and
•Allow recovery of Lee Nuclear Project preconstruction costs.
The Supreme Court's decision notes the prior determination made by the PSCSC that Duke Energy could submit coal ash costs for recovery that were not initially approved in the rate case order if such costs can be attributed to the CCR rules. As a result of the Court's opinion, Duke Energy Carolinas recognized a pretax charge of approximately $160 million to Impairment of assets and other charges, and a $31 million increase in Other income and expenses, net, in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2021, principally related to coal ash remediation at retired coal ash basin sites. Duke Energy Carolinas is evaluating whether to file a Petition for rehearing on the Supreme Court's decision. Petitions are due November 11, 2021, unless an extension is sought and granted.
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Oconee Nuclear Station Subsequent License Renewal
On June 7, 2021, Duke Energy Carolinas filed a subsequent license renewal application for the Oconee Nuclear Station (ONS) with the U.S. Nuclear Regulatory Commission (NRC) to renew ONS’s operating license for an additional 20 years. The subsequent license renewal would extend operations of the facility from 60 to 80 years. The current license for units 1 and 2 expire in 2033 and the license for unit 3 expires in 2034. By a Federal Register Notice dated July 28, 2021, the NRC provided a 60-day comment period for persons whose interest may be affected by the issuance of a subsequent renewed license for ONS to file a request for a hearing and a petition for leave to intervene. On September 27, 2021, Beyond Nuclear and Sierra Club (Petitioners) filed a Hearing Request and Petition to Intervene (Hearing Request) and a Petition for Waiver. The Hearing Request proposes 3 contentions purporting to challenge Duke Energy Carolinas’ environmental report (ER). In general, the proposed contentions claim that the ER does not consider certain information regarding the environmental aspects of Severe Accidents caused by a hypothetical failure of the Jocassee Dam, and therefore does not satisfy the National Environmental Policy Act of 1969, as amended (NEPA), or the NRC’s NEPA-implementing regulations. Duke Energy Carolinas filed its answer to the proposed contentions on October 22, 2021, and the Petitioners have until November 5, 2021, to respond to Duke Energy Carolina’s answer.
Duke Energy Carolinas and Duke Energy Progress intend to seek renewal of operating licenses and 20-year license extensions for all of their nuclear stations. New depreciation rates were implemented for all of the nuclear facilities during the second quarter of 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Progress
2017 North Carolina Rate Case
On June 1, 2017, Duke Energy Progress filed an application with the NCUC for a rate increase for retail customers of approximately $477 million, which was subsequently adjusted to $420 million. On November 22, 2017, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement resolving certain portions of the proceeding. Terms of the settlement included an ROE of 9.9% and a capital structure of 52% equity and 48% debt. On February 23, 2018, the NCUC issued an order approving the stipulation. The Public Staff, the North Carolina Attorney General and the Sierra Club filed notices of appeal to the North Carolina Supreme Court.
The North Carolina Supreme Court consolidated the Duke Energy Carolinas and Duke Energy Progress appeals. On December 11, 2020, the North Carolina Supreme Court issued an opinion, which affirmed, in part, and reversed and remanded, in part, the NCUC’s decisions. In the Opinion, the court upheld the NCUC's decision to include coal ash costs in the cost of service, as well as the NCUC’s discretion to allow a return on the unamortized balance of coal ash costs. The court also remanded to the NCUC a single issue to consider the assessment of support for the Public Staff’s equitable sharing argument. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021, and approved by the NCUC on April 16, 2021. The NCUC issued an Order on Remand Accepting CCR Settlement and Affirming Previous Orders Setting Rates and Imposing Penalties on June 25, 2021.
2019 North Carolina Rate Case
On October 30, 2019, Duke Energy Progress filed an application with the NCUC for a net rate increase for retail customers of approximately $464 million, which represented an approximate 12.3% increase in annual base revenues. The gross rate case revenue increase request was $586 million, which was offset by riders of $122 million, primarily an EDIT rider of $120 million to return to customers North Carolina and federal EDIT resulting from recent reductions in corporate tax rates. The request for a rate increase was driven by major capital investments subsequent to the previous base rate case, coal ash pond closure costs, accelerated coal plant depreciation and deferred 2018 storm costs. Duke Energy Progress sought to defer and recover incremental Hurricane Dorian storm costs in this proceeding and requested rates be effective no later than September 1, 2020. As a result of the COVID-19 pandemic, on March 24, 2020, the NCUC suspended the procedural schedule and postponed the previously scheduled evidentiary hearing on this matter indefinitely.
On June 2, 2020, Duke Energy Progress and the Public Staff filed an Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain issues in the base rate proceeding. On July 27, 2020, Duke Energy Progress filed a joint motion with Duke Energy Carolinas and the Public Staff notifying the commission that the parties reached a joint partial settlement with the Public Staff. On July 31, 2020, Duke Energy Progress and the Public Staff filed a Second Agreement and Stipulation of Partial Settlement, subject to review and approval of the NCUC, resolving certain remaining issues in the base rate proceeding. The remaining items litigated at hearing included recovery of deferred coal ash compliance costs that are subject to asset retirement obligation accounting and implementation of new depreciation rates.
On August 7, 2020, Duke Energy Progress filed a motion for approval of notice required to implement temporary rates, seeking to exercise its statutory right to implement temporary rates subject to refund on or after September 1, 2020. The revenue requirement to be recovered subject to refund through the temporary rates was based on and consistent with the terms of the base rate component of the settlement agreements with the Public Staff and excluded items to be litigated noted above. In addition, Duke Energy Progress also sought authorization to place a temporary decrement EDIT Rider into effect, concurrent with the temporary base rate change. The NCUC approved the August 7, 2020 temporary rates motion on August 11, 2020, and temporary rates went into effect on September 1, 2020.
The Duke Energy Progress evidentiary hearing concluded on October 6, 2020, and post-hearing filings were filed with the NCUC from all parties by December 4, 2020. On January 22, 2021, Duke Energy Progress and Duke Energy Carolinas entered into the CCR Settlement Agreement with the Settling Parties, which was filed with the NCUC on January 25, 2021.
On April 16, 2021, the NCUC issued an order approving the June 2, 2020, and July 31, 2020, partial settlements. The order includes approval of 1) an ROE of 9.6% based upon a capital structure of 52% equity and 48% debt; 2) deferral treatment of approximately $400 million of grid improvement projects with a return; 3) a flow back period of five years for unprotected federal EDIT; and 4) the reasonableness and prudence of approximately $714 million of deferred storm costs, which were removed from the rate case and for which Duke Energy Progress filed a petition seeking securitization in October 2020. Additionally, the order approved without modification the CCR Settlement Agreement.
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The order denied Duke Energy Progress' proposal to shorten the remaining depreciable lives of certain Duke Energy Progress coal-fired generating units, indicating the NCUC has not had the chance to fully examine the issue within the context of an IRP proceeding, and upon retirement the remaining net book value of these units should be placed in a regulatory asset account to be amortized over an appropriate period to be determined in a future rate case.
On May 21, 2021, the NCUC issued an Order Approving Rate Schedules, which resulted in a net increase of approximately $178 million. Revised customer rates became effective on June 1, 2021. The deadline to appeal has passed and no parties appealed the NCUC's order.
2018 South Carolina Rate Case
On November 8, 2018, Duke Energy Progress filed an application with the PSCSC for a rate increase for retail customers of approximately $59 million.
After hearings in April 2019, the PSCSC issued an order on May 21, 2019, which included an ROE of 9.5% and a capital structure of 53% equity and 47% debt. The order also included the following material components:
•Approval of recovery of $4 million of coal ash costs over a five-year period with a return at Duke Energy Progress' WACC;
•Denial of recovery of $65 million of certain coal ash costs deemed to be related to the Coal Ash Act and incremental to the federal CCR rule;
•Approval of a $17 million decrease to base rates to reflect the change in ongoing tax expense, primarily the reduction in the federal income tax rate from 35% to 21%;
•Approval of a $12 million decrease through the EDIT Tax Savings Rider resulting from the federal tax rate change and deferred revenues since January 2018 related to the change, to be returned in accordance with ARAM for protected EDIT, over a 20-year period for unprotected EDIT associated with Property, Plant and Equipment, over a five-year period for unprotected EDIT not associated with Property, Plant and Equipment and over a three-year period for the deferred revenues; and
•Approval of a $12 million increase due to the expiration of EDIT related to reductions in the North Carolina state income tax rate from 6.9% to 2.5%.
As a result of the order, revised customer rates were effective June 1, 2019. On May 31, 2019, Duke Energy Progress filed a Petition for Rehearing or Reconsideration of that order contending substantial rights of Duke Energy Progress were prejudiced by unlawful, arbitrary and capricious rulings by the PSCSC on certain issues presented in the proceeding. On June 19, 2019, the PSCSC issued a Directive denying Duke Energy Progress' request to rehear or reconsider the commission's rulings on certain issues presented in the proceeding including coal ash remediation and disposal costs, ROE and the recovery of a return on deferred operation and maintenance expenses, but allowing additional litigation-related costs. As a result of the Directive allowing litigation-related costs, customer rates were revised effective July 1, 2019. An order detailing the commission's decision in the Directive was issued on October 18, 2019. Duke Energy Progress filed a notice of appeal on November 15, 2019, with the Supreme Court of South Carolina. Initial briefs were filed on April 21, 2020. Response briefs were filed on July 6, 2020, and reply briefs were filed on August 11, 2020. Oral arguments were heard before the Supreme Court of South Carolina on May 26, 2021.
On October 27, 2021, the Supreme Court of South Carolina affirmed the PSCSC's May 2019 order to:
•Disallow cost recovery on certain CCR compliance costs the PSCSC deemed to be incremental to the federal CCR rules;
•Disallow recovery of certain coal ash litigation expenses; and
•Disallow a return on certain deferred expenses.
The Supreme Court's decision notes the prior determination made by the PSCSC that Duke Energy could submit coal ash costs for recovery that were not initially approved in the rate case order if such costs can be attributed to the CCR rules. As a result of the Court's opinion, Duke Energy Progress recognized a pretax charge of approximately $42 million to Impairment of assets and other charges, and a $6 million increase in Other income and expenses, net, in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2021, principally related to coal ash remediation at retired coal ash basin sites. Duke Energy Progress is evaluating whether to file a Petition for rehearing on the Supreme Court's decision. Petitions are due November 11, 2021, unless an extension is sought and granted.
Western Carolinas Modernization Plan
On October 8, 2018, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Hot Springs Microgrid Solar and Battery Storage Facility, which was approved with certain conditions on May 10, 2019. A hearing to update the NCUC on the status of the project was held on March 5, 2020. Construction began in May 2020 with commercial operation expected to begin in December 2021.
On July 27, 2020, Duke Energy Progress filed an application with the NCUC for a CPCN to construct the Woodfin Solar Facility, a 5-MW solar generating facility to be constructed on a closed landfill in Buncombe County. The expert hearing was held on November 18, 2020. The application was approved and a CPCN was granted by order of the NCUC on April 20, 2021. Construction began in April 2021 with an expected in-service date in March 2022.
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FERC Return on Equity Complaints
On October 11, 2019, North Carolina Eastern Municipal Power Agency (NCEMPA) filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the Federal Power Act (FPA), alleging that the 11% stated ROE component contained in the demand formula rate in the Full Requirements Power Purchase Agreement (FRPPA) between NCEMPA and Duke Energy Progress is unjust and unreasonable. On July 16, 2020, the FERC set this matter for hearing and settlement judge procedures and established a refund effective date of October 11, 2019. In its order setting the matter for settlement, the FERC allowed for the consideration of variations to the base transmission-related ROE methodology developed in its Order No. 569-A, through the introduction of “specific facts and circumstances” involving issues specific to the case. The parties reached a settlement in principle at a settlement conference on January 7, 2021, and filed a settlement package on March 10, 2021. The FERC Trial Staff filed comments in support of the settlement. On April 19, 2021, the Settlement Judge certified the settlement to the FERC as an uncontested settlement. The FERC approved the settlement on May 25, 2021, and Duke Energy Progress filed compliance documents on June 10, 2021. The FERC accepted the compliance filing on October 8, 2021.
On October 16, 2020, North Carolina Electric Membership Corporation (NCEMC) filed a complaint at the FERC against Duke Energy Progress pursuant to Section 206 of the FPA, alleging that the 11% stated ROE component in the demand formula rate in the Power Supply and Coordination Agreement between NCEMC and Duke Energy Progress is unjust and unreasonable. Under FPA Section 206, the earliest refund effective date that the FERC can establish is the date of the filing of the complaint. Duke Energy Progress responded to the complaint on November 20, 2020, seeking dismissal, demonstrating that the 11% ROE is just and reasonable for the service provided. The parties filed responsive pleadings and are awaiting an order from the FERC. Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Florida
2021 Settlement Agreement
On January 14, 2021, Duke Energy Florida filed a Settlement Agreement (the “2021 Settlement”) with the FPSC. The parties to the 2021 Settlement include Duke Energy Florida, the Office of Public Counsel (OPC), the Florida Industrial Power Users Group, White Springs Agricultural Chemicals, Inc. d/b/a PCS Phosphate and NUCOR Steel Florida, Inc. (collectively, the “Parties”).
Pursuant to the 2021 Settlement, the Parties agreed to a base rate stay-out provision that expires year-end 2024; however, Duke Energy Florida is allowed an increase to its base rates of an incremental $67 million in 2022, $49 million in 2023 and $79 million in 2024, subject to adjustment in the event of tax reform during the years 2021, 2022 and 2023. The Parties also agreed to an ROE band of 8.85% to 10.85% with a midpoint of 9.85% based on a capital structure of 53% equity and 47% debt. The ROE band can be increased by 25 basis points if the average 30-year U.S. Treasury rate increases 50 basis points or more over a six-month period in which case the midpoint ROE would rise from 9.85% to 10.10%. Duke Energy Florida will also be able to retain the DOE award of approximately $173 million for spent nuclear fuel, which is expected to be received in 2022, in order to mitigate customer rates over the term of the 2021 Settlement. In return, Duke Energy Florida will be able to recognize the $173 million into earnings from 2022 through 2024.
In addition to these terms, the 2021 Settlement contains provisions related to the accelerated depreciation of Crystal River Units 4-5, the approval of approximately $1 billion in future investments in new cost-effective solar power, the implementation of a new Electric Vehicle Charging Station Program and the deferral and recovery of costs in connection with the implementation of Duke Energy Florida’s Vision Florida program, which explores various emerging non-carbon emitting generation technology, distributed technologies and resiliency projects, among other things. The 2021 Settlement also resolves remaining unrecovered storm costs for Hurricane Dorian and Hurricane Michael.
The FPSC approved the 2021 Settlement on May 4, 2021, issuing an order on June 4, 2021. Revised customer rates will be effective January 1, 2022, with subsequent base rate increases effective January 1, 2023, and January 1, 2024.
Storm Restoration Cost Recovery
Duke Energy Florida filed a petition with the FPSC on April 30, 2019, to recover $223 million of estimated retail incremental storm restoration costs for Hurricane Michael, consistent with the provisions in the 2017 Settlement, and the FPSC approved the petition on June 11, 2019. The FPSC also approved allowing Duke Energy Florida to use the tax savings resulting from the Tax Act to recover these storm costs in lieu of implementing a storm surcharge. Approved storm costs are currently expected to be fully recovered by year-end 2021. On November 22, 2019, Duke Energy Florida filed a petition for approval of actual retail recoverable storm restoration costs related to Hurricane Michael in the amount of $191 million plus interest. On May 19, 2020, Duke Energy Florida filed a supplemental true up reducing the actual retail recoverable storm restoration costs related to Hurricane Michael by approximately $3 million, resulting in a total request to recover $188 million actual retail recoverable storm restoration costs, plus interest. Approximately $80 million of these costs are included in Regulatory assets within Current Assets and Other Noncurrent Assets on the Condensed Consolidated Balance Sheets as of December 31, 2020.
Duke Energy Florida filed a petition with the FPSC on December 19, 2019, to recover $169 million of estimated retail incremental storm restoration costs for Hurricane Dorian, consistent with the provisions in the 2017 Settlement and the FPSC approved the petition on February 24, 2020. The final actual amount of $145 million was filed on September 30, 2020. The 2021 Settlement resolved all matters regarding storm cost recovery relating to Hurricane Michael and Hurricane Dorian.
Clean Energy Connection
On July 1, 2020, Duke Energy Florida petitioned the FPSC for approval of a voluntary solar program. The program consists of 10 new solar generating facilities with combined capacity of approximately 750 MW. The program allows participants to support cost-effective solar development in Florida by paying a subscription fee based on per kilowatt-subscriptions and receiving a credit on their bill based on the actual generation associated with their portion of the solar portfolio. The estimated cost of the 10 new solar generation facilities is approximately $1 billion over the next four years, and this investment will be included in base rates offset by the revenue from the subscription fees. The credits will be included for recovery in the fuel cost recovery clause. A remote hearing was held on November 17, 2020, and post-hearing briefs were filed with the FPSC from all parties by December 9, 2020. The FPSC voted to approve the program on January 5, 2021, and issued its written order on January 26, 2021.
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On February 24, 2021, the League of United Latin American Citizens (LULAC) filed a notice of appeal of the FPSC’s order approving the Clean Energy Connection to the Supreme Court of Florida. LULAC's initial brief was filed on May 26, 2021, and Appellees' response briefs were filed on July 26, 2021. LULAC's reply brief was filed on September 24, 2021, and its request for oral argument was filed on September 28, 2021. The FPSC approval order remains in effect pending the outcome of the appeal. Duke Energy Florida cannot predict the outcome of this matter.
Duke Energy Ohio
Duke Energy Ohio Electric Base Rate Case
Duke Energy Ohio filed with the PUCO an electric distribution base rate case application on October 1, 2021, with supporting testimony filed on October 15, 2021, requesting an increase in electric distribution base rates of approximately $55 million and an ROE of 10.3%. This is an approximate 3.3% average increase across all customer classes. The drivers for this case are capital invested since Duke Energy Ohio's last electric distribution base rate case in 2017. Duke Energy Ohio is also seeking to adjust the caps on its Distribution Capital Investment Rider (DCI Rider). Duke Energy Ohio anticipates the PUCO will rule on the request by the summer of 2022. Duke Energy Ohio cannot predict the outcome of this matter.
Ohio House Bill 6
On July 23, 2019, House Bill 6 was signed into law and became effective January 1, 2020. Among other things, the bill allows for funding, through a rider mechanism referred to as the Clean Air Fund (Rider CAF), of 2 nuclear generating facilities located in Northern Ohio owned by Energy Harbor (f/k/a FirstEnergy Solutions) and certain renewable resources, repeal of energy efficiency mandates and recovery of prudently incurred costs, net of any revenues, for Ohio investor-owned utilities that are participants under the OVEC power agreement. The OVEC recovery is through a non-bypassable rider that replaced any existing recovery mechanism approved by the PUCO and will remain in place through 2030. As such, Duke Energy Ohio created the Legacy Generation Rider (Rider LGR) that replaced Rider PSR effective January 1, 2020. The amounts recoverable from customers are subject to an annual cap, with incremental costs that exceed such cap eligible for deferral and recovery subject to review. See Note 11 for additional discussion of Duke Energy Ohio's ownership interest in OVEC. House Bill 128 was signed into law on March 31, 2021, and became effective June 30, 2021. The bill removes nuclear plant funding included in HB 6, eliminates Rider CAF and establishes the Solar Generation Fund Rider (Rider SGF) to recover the renewable investments originally included in HB 6. HB 128 does not impact OVEC cost recovery or any transmission or distribution rider.
Energy Efficiency Cost Recovery
On February 26, 2020, the PUCO issued an order directing utilities to wind down their demand-side management programs by September 30, 2020, and to terminate the programs by December 31, 2020, in response to changes in Ohio law that eliminated Ohio's energy efficiency mandates. On March 27, 2020, Duke Energy Ohio filed an Application for Rehearing seeking clarification on the final true up and reconciliation process after 2020. On November 18, 2020, the PUCO issued 2 orders on the application for rehearing. The first order was a Third Entry on Rehearing on the Duke Energy Ohio portfolio holding the cost cap previously imposed was unlawful, a shared savings cap of $8 million pretax should be imposed and lost distribution revenues could not be recovered after December 31, 2020. The second order directs all utilities set the rider to zero effective January 1, 2021, and to file a separate application for final reconciliation of all energy efficiency costs prior to December 31, 2020. On December 18, 2020, Duke Energy Ohio filed an application for rehearing. On January 13, 2021, the application for rehearing was granted for further consideration. Duke Energy Ohio cannot predict the outcome of this matter.
On October 9, 2020, Duke Energy Ohio filed an application to implement a voluntary energy efficiency program portfolio to commence on January 1, 2021. The application proposes a mechanism for recovery of program costs and a benefit associated with avoided transmission and distribution costs. The application remains under review. Effective January 1, 2021, Duke Energy Ohio suspended its energy efficiency programs due to changes in Ohio law. On June 14, 2021, the PUCO issued an entry for each utility to file by July 15, 2021, a proposal to reestablish low-income programs through December 31, 2021. Duke Energy Ohio filed its application on July 14, 2021. Duke Energy Ohio cannot predict the outcome of this matter.
Natural Gas Pipeline Extension
Duke Energy Ohio is installing a new natural gas pipeline (the Central Corridor Project) in its Ohio service territory to increase system reliability and enable the retirement of older infrastructure. Duke Energy Ohio currently estimates the pipeline development costs and construction activities will range from $185 million to $205 million in direct costs (excluding overheads and AFUDC) and that construction of the pipeline extension will be completed in time for use during the 2021/2022 winter season. An evidentiary hearing on Duke Energy Ohio's application for a Certificate of Environmental Compatibility and Public Need concluded on April 11, 2019. On November 21, 2019, the Ohio Power Siting Board (OPSB) approved Duke Energy Ohio's application subject to 41 conditions on construction. Applications for rehearing were filed by several stakeholders on December 23, 2019, arguing that the OPSB approval was incorrect. On February 20, 2020, the OPSB denied the rehearing requests. On April 15, 2020, Piedmontthose stakeholders filed a notice of appeal at the Supreme Court of Ohio of the OPSB’s decision approving Duke Energy Ohio’s Central Corridor project application. The Ohio Supreme Court affirmed the OPSB order on September 22, 2021.
On September 22, 2020, Duke Energy Ohio filed an application with the OPSB for approval to amend the certificated pipeline route due to changes in the route negotiated with property owners and municipalities. On January 21, 2021, the OPSB approved the amended filing with recommended conditions that reaffirm previous conditions and provide guidance regarding local permitting and construction supervision.
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MGP Cost Recovery
In an order issued in 2013, the PUCO approved Duke Energy Ohio's deferral and recovery of costs related to environmental remediation at 2 sites (East End and West End) that housed former MGP operations. Duke Energy Ohio has collected approximately $55 million in environmental remediation costs incurred between 2008 through 2012 through Rider MGP, which is currently suspended. Duke Energy Ohio has made annual applications with the PUCO to recover its incremental remediation costs consistent with the PUCO’s directive in Duke Energy Ohio’s 2012 natural gas base rate case. To date, the PUCO has not ruled on Duke Energy Ohio’s annual applications for the calendar years 2013 through 2019. On September 28, 2018, the Staff of the PUCO (Staff) 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 2013 order granting Duke Energy Ohio recovery of MGP remediation as limiting the recovery to work directly on the East End and West End sites. On October 30, 2018, Duke Energy Ohio filed reply comments objecting to the Staff’s recommendations and explaining, among other things, the obligation Duke Energy Ohio has under Ohio law to remediate all areas impacted by the former MGPs and not just physical property that housed the former plants and equipment. On March 29, 2019, Duke Energy Ohio filed its annual application to recover incremental remediation expense for the calendar year 2018 seeking recovery of approximately $20 million in remediation costs. On July 12, 2019, the Staff recommended a disallowance of approximately $11 million for work that the Staff believes occurred in areas not authorized for recovery. Additionally, the Staff recommended that any discussion pertaining to Duke Energy Ohio's recovery of ongoing MGP costs should be directly tied to or netted against insurance proceeds collected by Duke Energy Ohio. An evidentiary hearing concluded on November 21, 2019. Initial briefs were filed on January 17, 2020, and reply briefs were filed on February 14, 2020.
On March 31, 2020, Duke Energy Ohio filed its annual application to recover incremental MGP remediation expense, seeking recovery of approximately $39 million in remediation costs incurred during 2019. On July 23, 2020, the Staff recommended a disallowance of approximately $4 million for work the Staff believes occurred in areas not authorized for recovery. Additionally, the Staff recommended insurance proceeds, net of litigation costs and attorney fees, should be paid to customers and not be held by Duke Energy Ohio until all investigation and remediation is complete. Duke Energy Ohio filed comments in response to the Staff report on their planned returnAugust 21, 2020, and intervenor comments were filed on November 9, 2020.
The 2013 PUCO order also contained conditional deadlines for completing the MGP environmental remediation and the deferral of related remediation costs. Subsequent to normal operationsthe order, the deadline was extended to December 31, 2019. On May 10, 2019, Duke Energy Ohio filed an application requesting a continuation of its existing deferral authority for MGP remediation that must occur after December 31, 2019. On July 12, 2019, the Staff recommended the commission deny the deferral authority request. On September 13, 2019, intervenor comments were filed opposing Duke Energy Ohio's request for continuation of existing deferral authority and on October 2, 2019, Duke Energy Ohio filed reply comments.
A Stipulation and Recommendation was filed jointly by Duke Energy Ohio, the Staff, the Office of the Ohio Consumers' Counsel and the Ohio Energy Group on August 31, 2021, which is subject to review and approval by the PUCO. If approved, the Stipulation and Recommendation would, among other things, resolve all open issues regarding MGP remediation costs incurred between 2013 and 2019, including Duke Energy Ohio’s request for additional deferral authority beyond 2019, and the pending issues related to the Tax Act as it relates to Duke Energy Ohio’s natural gas operations. These impacts are not expected to have a material impact on the Duke Energy Ohio financial statements. The Stipulation and Recommendation further acknowledges Duke Energy Ohio’s ability to file a request for additional deferral authority in the future related to environmental remediation of any MGP impacts in the Ohio River if necessary, subject to specific conditions. On October 15, 2021, the PUCO granted motions to intervene filed in September 2021 by Interstate Gas Supply, Inc. and Retail Energy Supply Association on a limited basis. An evidentiary hearing is scheduled for November 22, 2021. Duke Energy Ohio cannot predict the outcome of this matter.
Tax Act – Ohio
On December 21, 2018, Duke Energy Ohio filed an application to change its base rate tariffs and establish a new rider to implement the benefits of the Tax Act for natural gas customers. Duke Energy Ohio requested commission approval to implement the tariff changes and rider effective April 1, 2019. The new rider will flow through to customers the benefit of the reduction in the statutory federal tax rate from 35% to 21% since January 1, 2018, all future benefits of the lower tax rates and a full refund of deferred income taxes collected at the higher tax rates in prior years. Deferred income taxes subject to normalization rules will be refunded consistent with federal law and deferred income taxes not subject to normalization rules will be refunded over a 10-year period. The PUCO established a procedural schedule and testimony was filed on July 31, 2019. An evidentiary hearing occurred on August 7, 2019. Initial briefs were filed on September 11, 2019. Reply briefs were filed on September 25, 2019. The Stipulation and Recommendation filed on August 31, 2021, disclosed in the MGP Cost Recovery matter above, also resolves the outstanding issues in this proceeding. On October 15, 2021, the PUCO granted motions to intervene filed in September 2021 by Interstate Gas Supply, Inc. and Retail Energy Supply Association on a limited basis. An evidentiary hearing is scheduled for November 22, 2021. Duke Energy Ohio cannot predict the outcome of this matter.
Duke Energy Kentucky Natural Gas Base Rate Case
On June 1, 2021, Duke Energy Kentucky filed an application with the KPSC requesting an increase in natural gas base rates of approximately $15 million, an approximate 13% average increase across all customer classes. The drivers for this case are capital invested since Duke Energy Kentucky's last natural gas base rate case in 2018. Duke Energy Kentucky is also seeking implementation of a Governmental Mandate Adjustment mechanism (Rider GMA) in order to recover from or pay to customers the financial impact of governmental directives and mandates, including changes in federal or state tax rates and regulations issued by the Pipeline and Hazardous Materials Safety Administration (PHMSA). On October 8, 2021, Duke Energy Kentucky filed a Stipulation and Recommendation jointly with the Kentucky Attorney General, subject to review and approval by the KPSC, which if approved, would resolve the case. The Stipulation and Recommendation includes a $9 million increase in base revenues, an ROE of 9.375% for natural gas base rates and 9.3% for natural gas riders, a rider for PHMSA-required capital investments with an annual 5% rate increase cap and a four-year natural gas base rate case stay-out. The hearing was held on October 18, 2021. Duke Energy Kentucky anticipates the KPSC will rule on the request by the end of 2021. Duke Energy Kentucky cannot predict the outcome of this matter.
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Midwest Propane Caverns
Duke Energy Ohio uses propane stored in caverns to meet peak demand during winter. Once the COVID-19 pandemic. Normal billing practices resumedCentral Corridor Project is complete, the propane peaking facilities will no longer be necessary and will be retired. On October 7, 2021, Duke Energy Ohio requested deferral treatment of the property, plant and equipment as well as costs related to propane inventory and decommissioning costs. There is approximately $27 million in Property, Plant and Equipment on the Condensed Consolidated Balance Sheets as of October 1,September 30, 2021, and December 31, 2020, and service disconnectionsrelated to the propane caverns. Duke Energy Ohio cannot predict the outcome of this matter.
Duke Energy Indiana
2019 Indiana Rate Case
On July 2, 2019, Duke Energy Indiana filed a general rate case with the IURC for nonpayment resumeda rate increase for retail customers of approximately $395 million. The rebuttal case, filed on NovemberDecember 4, 2020. Customers were notified2019, updated the requested revenue requirement to result in a 15.6% or $396 million average retail rate increase, including the impacts of the resumptionUtility Receipts Tax. Hearings concluded on February 7, 2020. On June 29, 2020, the IURC issued an order in the rate case approving a revenue increase of normal billing practices,$146 million before certain adjustments and ratemaking refinements. The order approved Duke Energy Indiana’s requested forecasted rate base of $10.2 billion as of December 31, 2020, including the optionEdwardsport Integrated Gasification Combined Cycle (IGCC) Plant. The IURC reduced Duke Energy Indiana’s request by slightly more than $200 million, when accounting for the utility receipts tax and other adjustments. Approximately 50% of payment arrangementsthe reduction was due to a prospective change in depreciation and whereuse of regulatory asset for the end-of-life inventory at retired generating plants, approximately 20% was due to find assistance, if necessary.the approved ROE of 9.7% versus the requested ROE of 10.4% and approximately 20% was related to miscellaneous earnings neutral adjustments. Step one rates were estimated to be approximately 75% of the total and became effective on July 30, 2020. Step two rates are estimated to be the remaining 25% of the total rate increase. Step two rates were approved July 28, 2021, and implemented in August 2021. Step two rates are based on a return on equity of 9.7% and actual December 31, 2020 capital structure with a 54% equity component. Step two rates will be reconciled to January 1, 2021. Several groups appealed the IURC order to the Indiana Court of Appeals. Appellate briefs were filed on October 14, 2020, focusing on three issues: wholesale sales allocations, coal ash basin cost recovery and the Edwardsport IGCC operating and maintenance expense level approved. The appeal was fully briefed in January 2021 and an oral argument was held on April 8, 2021. The Indiana Court of Appeals affirmed the IURC decision on May 13, 2021. The Indiana Office of Utility Consumer Counselor (OUCC) and the Duke Industrial Group filed a joint petition to transfer the rate case appeal to the Indiana Supreme Court on June 28, 2021. Response briefs were filed July 19, 2021. The Indiana Supreme Court granted the petition to transfer on September 16, 2021, and scheduled oral argument for November 16, 2021. Duke Energy Indiana cannot predict the outcome of this matter.
2020 Indiana Coal Ash Recovery Case
In Duke Energy Indiana’s 2019 rate case, the IURC approved coal ash basin closure costs expended through 2018 including financing costs as a regulatory asset and included in rate base. The IURC also opened a subdocket for post-2018 coal ash related expenditures. Duke Energy Indiana filed testimony on April 15, 2020, in the coal ash subdocket requesting recovery for the post-2018 coal ash basin closure costs for plans that have been approved by the Indiana Department of Environmental Management (IDEM) as well as continuing deferral, with carrying costs, on the balance. An evidentiary hearing was held on September 14, 2020. Briefing was completed by mid-September 2021. On November 3, 2021, the IURC issued an order allowing recovery for post-2018 coal ash basin closure costs for the plans that have been approved by IDEM, as well as continuing deferral, with carrying costs, on the balance. The IURC order is subject to appeal within 30 days to the IURC or the Indiana Court of Appeals. Duke Energy Indiana cannot predict the outcome of this matter.
Piedmont
2020 Tennessee Rate Case
On July 2, 2020, Piedmont filed an application with the TPUC, its first general rate case in Tennessee in nine years, for a rate increase for retail customers of approximately $30 million, which represents an approximate 15% increase in annual revenues. The rate increase is driven by significant infrastructure upgrade investments since itsPiedmont's previous rate case. Approximately half of the plant additions being added to rate base are categories of capital investment not covered under the IMR mechanism, which was approved in 2013. Piedmont amended its requested increase to approximately $26 million in December 2020. As authorized under Tennessee law, Piedmont implemented interim rates on January 2, 2021, at the level requested in its adjusted request. A settlement reached with the Tennessee Consumer Advocate in mid-January was filed with the TPUC on February 2, 2021. The settlement results in an increase of revenues of approximately $16 million and an ROE of 9.8%. On August 25, 2020,May 6, 2021, the TPUC issued an order approving the procedural schedulesettlement. Revised customer rates became effective January 2, 2021. Piedmont refunded customers the difference between bills previously rendered under interim rates and such bills if rendered under approved rates, plus interest, in April 2021.
2021 North Carolina Rate Case
On March 22, 2021, Piedmont filed an application with the NCUC for this case, targetinga rate increase for retail customers of approximately $109 million, which represents an approximate 10% increase in retail revenues. The rate increase is driven by customer growth and significant infrastructure upgrade investments (plant additions) since the last general rate case. Approximately 70% 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. On July 28, 2021, Piedmont amended its requested increase to approximately $97 million.
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On September 7, 2021, Piedmont and the Public Staff, the Carolina Utility Customers Association, Inc. and the Carolina Industrial Group for Fair Utility Rates IV filed a Stipulation of Partial Settlement (Stipulation), which is subject to review and approval by the NCUC, resolving most issues between these parties. Major components of the Stipulation include:
•A return on equity of 9.6% and a capital structure of 51.6% equity and 48.4% debt;
•Continuation of the IMR mechanism and margin decoupling; and
•A revenue increase of $67 million, subject to completion of the Robeson County LNG facility and the Pender Onslow County expansion project.
An evidentiary hearing to beginreview the Stipulation and other issues concluded on January 11,September 9, 2021. The TPUC is requiredOn October 12, 2021, Piedmont notified the NCUC of its intent to renderimplement the stipulated rates effective November 1, 2021, on a decision ontemporary basis and subject to refund. On October 18, 2021, Piedmont and the Public Staff filed supplemental testimony attesting to the completion of the Robeson County LNG facility and the Pender Onslow County expansion project and to the propriety of including the capital investment for these two projects in this matter on or before April 1, 2021.proceeding. Piedmont cannot predict the outcome of this matter.
OTHER REGULATORY MATTERS
Atlantic Coast Pipeline, LLC
Atlantic Coast Pipeline (ACP pipeline) iswas planned to be an approximately 600-mile interstate natural gas pipeline running from West Virginia to North Carolina. Duke Energy indirectly owns a 47% interest, which is accounted for as an equity method investment through its Gas Utilities and Infrastructure segment.
As a result of the uncertainty created by the NWP 12various legal rulings, the potential impact on the cost and schedule for the project, the ongoing legal challenges and the risk of additional legal challenges and delays through the construction period and Dominion’s decision to sell substantially all of its gas transmission and storage segment assets, Duke Energy's Board of Directors and management decided that it was not prudent to continue to invest in the project. On July 5, 2020, Duke Energy and Dominion announced the cancellation of the ACP pipeline project.
As a result, Duke Energy recordedpart of the pretax charges to earnings of approximately $2.1 billion for the nine months ended September 30,recorded in June 2020, within Equity in (losses) earnings of unconsolidated affiliates on the Duke Energy Condensed Consolidated Statements of Operations. The tax benefit associated with this cancellation was $389 million and is recorded in Income Tax Expense (Benefit) on the Duke Energy Condensed Consolidated Statements of Operations. Additional charges of less than $50 million are expected to be recorded within the next 12 months as ACP incurs obligations to exit operations.
See Notes 1 4 and 1211 for additional information regarding this transaction.
Potential Coal Plant Retirements
The Subsidiary Registrants periodically file integrated resource plans (IRPs)IRPs with their state regulatory commissions. The IRPs provide a view of forecasted energy needs over a long term (10 to 20 years) and options being considered to meet those needs. IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in North Carolina and Indiana earlier than their current estimated useful lives. 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. Dollar amounts in the table below are included in Net property, plant and equipment on the Condensed Consolidated Balance Sheets as of September 30, 2020,2021, and exclude capitalized asset retirement costs.
| Remaining Net | |||||||||||||||||||||||||||||||||||||||||
| Capacity | Book Value | ||||||||||||||||||||||||||||||||||||||||
| (in MW) | (in millions) | ||||||||||||||||||||||||||||||||||||||||
| Duke Energy Carolinas | |||||||||||||||||||||||||||||||||||||||||
Allen Steam Station Units 1-2(a) | 324 | $ | 19 | ||||||||||||||||||||||||||||||||||||||
Allen Steam Station Units 4-5(b) | 516 | 362 | |||||||||||||||||||||||||||||||||||||||
Cliffside Unit 5(b) | 544 | 367 | |||||||||||||||||||||||||||||||||||||||
| Duke Energy Progress | |||||||||||||||||||||||||||||||||||||||||
Mayo Unit 1(b) | 704 | 640 | |||||||||||||||||||||||||||||||||||||||
Roxboro Units 3-4(b) | 1,392 | 465 | |||||||||||||||||||||||||||||||||||||||
| Duke Energy Florida | |||||||||||||||||||||||||||||||||||||||||
Crystal River Units 4-5(c) | 1,410 | 1,658 | |||||||||||||||||||||||||||||||||||||||
Duke Energy Indiana (d) | |||||||||||||||||||||||||||||||||||||||||
Gibson Units 1-5(e) | 2,822 | 1,814 | |||||||||||||||||||||||||||||||||||||||
Cayuga Units 1-2(e) | 995 | 713 | |||||||||||||||||||||||||||||||||||||||
| Total Duke Energy | 8,707 | $ | 6,038 | ||||||||||||||||||||||||||||||||||||||
58
| Remaining Net | ||||||
| Capacity | Book Value | |||||
| (in MW) | (in millions) | |||||
| Duke Energy Carolinas | ||||||
Allen Steam Station Units 1-3(a) | 582 | $ | 141 | |||
Allen Steam Station Units 4-5(b) | 516 | 321 | ||||
Cliffside Unit 5(b) | 544 | 355 | ||||
| Duke Energy Progress | ||||||
Mayo Unit 1(b) | 727 | 673 | ||||
Roxboro Units 3-4(b) | 1,392 | 486 | ||||
| Duke Energy Indiana | ||||||
Gallagher Units 2 and 4(c) | 280 | 112 | ||||
Gibson Units 1-5(d) | 3,132 | 1,683 | ||||
Cayuga Units 1-2(d) | 1,005 | 935 | ||||
| Total Duke Energy | 8,178 | $ | 4,706 | |||
(a)As part of the 2015 resolution of a lawsuit involving alleged New Source Review violations, Duke Energy Carolinas must retire Allen Steam Station Units 1 through 3 by December 31, 2024. The long-term energy options considered in the IRP could result in retirement of these units earlier than their current estimated useful lives. Unit 3 with a capacity of 270 MW and a net book value of $26 million at December 31, 2020, was retired in March 2021.
(b)These units were included in the IRP filed by Duke Energy Carolinas and Duke Energy Progress in North Carolina and South Carolina on September 1, 2020. The long-term energy options considered in the IRP could result in retirement of these units earlier than their current estimated useful lives. In 2019, Duke Energy Carolinas and Duke Energy Progress filed North Carolina rate cases that included depreciation studies that accelerate end-of-life dates for these plants. The NCUC issued orders in the 2019 rate cases of Duke Energy Carolinas and Duke Energy Progress on March 31, 2021, and April 16, 2021, respectively, in which the proposals to shorten the remaining depreciable lives of these units were denied, while indicating the IRP proceeding was the appropriate proceeding for the review of generating plant retirements.
(c)On January 14, 2021, Duke Energy Florida filed a settlement agreement with the FPSC, which proposed depreciation rates reflecting retirement dates for Duke Energy Florida's last 2 coal-fired generating facilities, Crystal River Units 4-5, eight years ahead of schedule in 2034 rather than in 2042. The settlement was approved by the FPSC on May 4, 2021.
(d)Gallagher Units 2 and 4 with a total capacity of 280 MW and a total net book value of $102 million at December 31, 2020, were retired on June 1, 2021.
(e)The rate case filed July 2, 2019, included proposed depreciation rates reflecting retirement dates from 2026 to 2038. The depreciation rates reflecting these updated retirement dates were approved by the IURC as part of the rate case order issued on June 29, 2020.
4. COMMITMENTS AND CONTINGENCIES
ENVIRONMENTAL
The Duke Energy Registrants are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal, coal ash and other environmental matters. These regulations can be changed from time to time, imposing new obligations on the Duke Energy Registrants. The following environmental matters impact all Duke Energy Registrants.
Remediation Activities
In addition to AROs recorded as a result of various environmental regulations, the Duke Energy Registrants are responsible for environmental remediation at various sites. These include certain properties that are part of ongoing operations and sites formerly owned or used by Duke Energy entities. These sites are in various stages of investigation, remediation and monitoring. Managed in conjunction with relevant federal, state and local agencies, remediation activities vary based upon site conditions and location, remediation requirements, complexity and sharing of responsibility. If remediation activities involve joint and several liability provisions, strict liability, or cost recovery or contribution actions, the Duke Energy Registrants could potentially be held responsible for environmental impacts caused by other potentially responsible parties and may also benefit from insurance policies or contractual indemnities that cover some or all cleanup costs. Liabilities are recorded when losses become probable and are reasonably estimable. The total costs that may be incurred cannot be estimated because the extent of environmental impact, allocation among potentially responsible parties, remediation alternatives and/or regulatory decisions have not yet been determined at all sites. Additional costs associated with remediation activities are likely to be incurred in the future and could be significant. Costs are typically expensed as Operation, maintenance and other on the Condensed Consolidated Statements of Operations unless regulatory recovery of the costs is deemed probable.
The following table contains information regarding reserves for probable and estimable costs related to the various environmental sites. These reserves are recorded in Accounts Payable within Current Liabilities and Other within Other Noncurrent Liabilities on the Condensed Consolidated Balance Sheets.
| (in millions) | September 30, 2020 | December 31, 2019 | ||||
| Reserves for Environmental Remediation | ||||||
| Duke Energy | $ | 66 | $ | 58 | ||
| Duke Energy Carolinas | 16 | 11 | ||||
| Progress Energy | 15 | 16 | ||||
| Duke Energy Progress | 5 | 4 | ||||
| Duke Energy Florida | 8 | 9 | ||||
| Duke Energy Ohio | 22 | 19 | ||||
| Duke Energy Indiana | 5 | 4 | ||||
| Piedmont | 8 | 8 | ||||
| (in millions) | September 30, 2021 | December 31, 2020 | ||||||||||||
| Reserves for Environmental Remediation | ||||||||||||||
| Duke Energy | $ | 74 | $ | 75 | ||||||||||
| Duke Energy Carolinas | 19 | 19 | ||||||||||||
| Progress Energy | 17 | 19 | ||||||||||||
| Duke Energy Progress | 6 | 6 | ||||||||||||
| Duke Energy Florida | 11 | 12 | ||||||||||||
| Duke Energy Ohio | 21 | 22 | ||||||||||||
| Duke Energy Indiana | 5 | 6 | ||||||||||||
| Piedmont | 12 | 10 | ||||||||||||
Additional losses in excess of recorded reserves that could be incurred for the stages of investigation, remediation and monitoring for environmental sites that have been evaluated at this time are not material except as presentedmaterial.
LITIGATION
Duke Energy
Texas Storm Uri Tort Litigation
Duke Energy and several Duke Energy renewables project companies have been named in multiple lawsuits arising out of Texas Storm Uri in mid-February 2021, and particularly, in the table below.deregulated market managed by the Electric Reliability Council of Texas. There are 30 state court actions pending. These lawsuits seek recovery for property damages, personal injury and for wrongful death allegedly incurred by the plaintiffs as a result of power outages, which the plaintiffs claim was the result of the defendants' failures. The cases pending in state court have been consolidated into a Texas state court multidistrict litigation proceeding before a single judge to handle all pretrial coordination. Duke Energy cannot predict the outcomes of these matters.
| (in millions) | |||
| Duke Energy | $ | 56 | |
| Duke Energy Carolinas | 12 | ||
| Duke Energy Ohio | 38 | ||
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| FINANCIAL STATEMENTS | COMMITMENTS AND CONTINGENCIES | ||||
Duke Energy Carolinas and Duke Energy Progress
Coal Ash Insurance Coverage Litigation
In March 2017, Duke Energy Carolinas and Duke Energy Progress filed a civil action in the North Carolina Business Court against various insurance providers. The lawsuit seeks payment for coal ash-relatedash 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 EPAU.S. Environmental Protection Agency CCR rule at 15 coal-fired plants in North Carolina and South Carolina. Due
Duke Energy Carolinas and Duke Energy Progress have resolved claims against all, but two of the insurers, sued in this litigation and are dismissing their claims against the settling insurers. Duke Energy Carolinas and Duke Energy Progress have received approximately $418 million of coal ash insurance litigation proceeds from settlements with insurer-defendants and these proceeds will be distributed in accordance with the terms of the CCR settlement agreement. The companies are assessing their options with regard to COVID-19, the court has issued a new scheduling order and the trial is now scheduled for January 2022. Fact and expert discovery is scheduled to be completed by mid-November 2020. The parties are required to file all dispositive pre-trial motions by December 4, 2020.two remaining foreign insurers that have defaulted. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.
Duke Energy Carolinas
Ruben Villano, et al. v. Duke Energy Carolinas, LLC
On June 16, 2021, a group of 9 individuals went over a low head dam adjacent to the Dan River Steam Station in Eden, North Carolina, while water tubing. Emergency personnel rescued 4 people and 5 others were confirmed deceased. On August 11, 2021, Duke Energy Carolinas was served with the complaint filed in Durham County Superior Court on behalf of 4 survivors, which was later amended to include all the decedents along with the survivors. The lawsuit alleges that Duke Energy Carolinas knew that the river was used for recreational purposes and that Duke Energy did not adequately warn about the dam. On September 30, 2021, Duke Energy Carolinas filed its Motion to Dismiss and Motion for Transfer of Venue from Durham County to Rockingham County. A hearing on these motions is set for November 15, 2021, and discovery has commenced. Duke Energy Carolinas cannot predict the outcome of this matter.
NTE Carolinas II, LLC Litigation
In November 2017, Duke Energy Carolinas entered into a standard FERC large generator interconnection agreement (LGIA) with NTE Carolinas II, LLC (NTE), a company that intendedproposed to build a combined-cycle natural gas plant in Rockingham County, North Carolina. On September 6, 2019, Duke Energy Carolinas filed a lawsuit in Mecklenburg County Superior Court against NTE for breach of contract, and alleging that NTE's failure to pay benchmark payments for Duke Energy Carolinas' transmission system upgrades required under the interconnection agreement constituted a termination of the interconnection agreement. Duke Energy Carolinas is seeking a monetary judgment against NTE because NTE failed to make multiple milestone payments. The lawsuit was moved to federal court in North Carolina. NTE filed a motion to dismiss Duke Energy Carolinas’ complaint and brought counterclaims alleging anti-competitive conduct and violations of state and federal statutes. Duke Energy Carolinas filed a motion to dismiss NTE's counterclaims.
On May 21, 2020, in response to a NTE petition challenging Duke Energy Carolinas' termination of the LGIA, FERC issued a decision, in response to an NTE petition, ruling (i) that 1) it has exclusive jurisdiction to determine whether a transmission provider may terminate a Large Generator Interconnection Agreement (LGIA), (ii)LGIA; 2) FERC approval is required to terminate a conforming LGIA if objected to by the interconnection customer,customer; and (iii)3) Duke Energy may not announce the termination of a conforming LGIA unless FERC has approved the termination. On May 27, 2020, NTE filed FERC's May 21, 2020, Order as a noticeOffice of supplemental authority with the federal district court where its Motion to Dismiss is pending. On June 1, 2020,Enforcement also initiated an investigation of Duke Energy Carolinas filed a response to NTE’s notice of supplemental authority noting that FERC declined to address the merits of any breach of contract claim relatinginto matters pertaining to the LGIA and thatLGIA. Duke Energy Carolinas is cooperating with the federal court then necessarily retains exclusive authority to award damages for NTE’s breach.Office of Enforcement but cannot predict the outcome of this investigation.
On August 17, 2020, the court denied both NTE’s and Duke Energy Carolinas’ Motion to Dismiss. The parties are now preparing to commence discovery.in active discovery and trial is scheduled for June 20, 2022. Duke Energy Carolinas cannot predict the outcome of this matter.
Asbestos-related Injuries and Damages Claims
Duke Energy Carolinas has experienced numerous claims for indemnification and medical cost reimbursement related to asbestos exposure. These claims relate to damages for bodily injuries alleged to have arisen from exposure to or use of asbestos in connection with construction and maintenance activities conducted on its electric generation plants prior to 1985. As of September 30, 2020,2021, there were 15974 asserted claims for non-malignant cases with cumulative relief sought of up to $41$15 million, and 6858 asserted claims for malignant cases with cumulative relief sought of up to $23$21 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 CarolinasCarolinas has recognized asbestos-related reserves of $578$508 million at September 30, 2020,2021, and $604$572 million at December 31, 2019.2020. These reserves are classified in Other within Other Noncurrent Liabilities and Other within Current Liabilities on the Condensed Consolidated Balance Sheets. These reserves are based upon Duke Energy Carolinas' best estimate for current and future asbestos claims through 20402041 and are recorded on an undiscounted basis. In light of the uncertainties inherent in a longer-term forecast, management does not believe they can reasonably estimate the indemnity and medical costs that might be incurred after 20402041 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-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 $714$697 million in excess of the self-insured retention. Receivables for insurance recoveries were $704$644 million at September 30, 2020,2021, and $742$704 million at December 31, 2019.2020. These amounts are classified in Other within Other Noncurrent Assets and Receivables within Current Assets on the Condensed Consolidated Balance Sheets. Duke Energy Carolinas is not aware of any uncertainties regarding the legal sufficiency of insurance claims. Duke Energy Carolinas believes the insurance recovery asset is probable of recovery as the insurance carrier continues to have a strong financial strength rating.
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| FINANCIAL STATEMENTS | COMMITMENTS AND CONTINGENCIES | ||||
As described in Note 1, Duke Energy adopted the new guidance for credit losses effective January 1, 2020, using the modified retrospective method of adoption, which does not require restatement of prior year reported results. The reserve for credit losses for insurance receivables based on adoption of the new standard is $15 million for Duke Energy and Duke Energy Carolinas as of September 30, 2021, and December 31, 2020. The insurance receivable is evaluated based on the risk of default and the historical losses, current conditions and expected conditions around collectability. Management evaluates the risk of default annually based on payment history, credit rating and changes in the risk of default from credit agencies.
Duke Energy Progress and Duke Energy Florida
Spent Nuclear Fuel Matters
On June 18, 2018, Duke Energy Progress and Duke Energy Florida sued the U.S. in the U.S. Court of Federal Claims for damages incurred for the period 2014 through 2018. The lawsuit claimed the Department of Energy breached a contract in failing to accept spent nuclear fuel under the Nuclear Waste Policy Act of 1982 and asserted damages for the cost of on-site storage in the amount of $100 million and $203$200 million for Duke Energy Progress and Duke Energy Florida, respectively. Discovery is ongoingnow complete, and a trial is expectedanticipated to occurbe scheduled in 2021.2022. Duke Energy Progress and Duke Energy Florida cannot predict the outcome of this matter.
Duke Energy Florida
Power Purchase Dispute Arbitration
Duke Energy Florida, on behalf of its customers, entered into a PPA for the purchase of firm capacity and energy from a qualifying facility under the Public Utilities Regulatory Policies Act of 1978. Duke Energy Florida determined the qualifying facility did not perform in accordance with the PPA, and Duke Energy Florida terminated the PPA. The qualifying facility counterparty filed a confidential American Arbitration Association (AAA) arbitration demand, challenging the termination of the PPA and seeking damages. Duke Energy Florida denies liability and is vigorously defending the arbitration claim.
The final arbitration hearing is scheduled foroccurred during the week of December 2020.7, 2020. An interim arbitral award was issued in March 2021, upholding Duke Energy Florida's positions on all issues and awarding the company termination costs. In May 2021, the final arbitral award was issued awarding Duke Energy Florida cannot predictits claimed fees and costs. On August 18, 2021, Duke Energy Florida filed a motion in Florida state court to confirm the outcome of this matter.arbitral award.
Duke Energy Indiana
Coal Ash Basin Closure Plan Appeal
On January 27, 2020, Hoosier Environmental Council (HEC) filed a Petition for Administrative Review with the Indiana Office of Environmental Adjudication (the court) challenging the Indiana Department of Environmental Management’s (IDEM's) December 10, 2019, partial approval of Duke Energy Indiana’s ash pond closure plan. After hearing oral arguments in early April 2021 on Duke Energy Indiana's and HEC's competing Motions for Summary Judgment, on May 4, 2021, the administrative court rejected all of HEC’s claims and issued a ruling in favor of Duke Energy Indiana. On March 11, 2020,June 3, 2021, HEC filed an appeal in Superior Court to seek judicial review of the order. On June 25, 2021, Duke Energy Indiana filed a Motionits response to Dismiss.the Petition to Review. On May 5, 2020, the court denied the motion. The parties are completing discoveryAugust 30, 2021, HEC served Duke Energy Indiana with its Brief in Support of Petition for Judicial Review. On October 29, 2021, Duke Energy Indiana and have untilIDEM filed their response briefs. HEC's Reply Brief is due on or before November 22, 2021. Oral argument will be heard in December 22, 2020, to file dispositive motions. If these claims survive dispositive motions, a hearing is scheduled for April 2021. Duke2021, in Marion County Superior Court. Duke Energy Indiana cannot predict the outcome of this matter. See Note 6 for additional information.
Other Litigation and Legal Proceedings
The Duke Energy Registrants are involved in other legal, tax and regulatory proceedings arising in the ordinary course of business, some of which involve significant amounts. The Duke Energy Registrants believe the final disposition of these proceedings will not have a material effect on their results of operations, cash flows or financial position.
| (in millions) | September 30, 2020 | December 31, 2019 | |||||
| Reserves for Legal Matters | |||||||
| Duke Energy | $ | 60 | $ | 62 | |||
| Duke Energy Carolinas | 2 | 2 | |||||
| Progress Energy | 52 | 55 | |||||
| Duke Energy Progress | 9 | 12 | |||||
| Duke Energy Florida | 23 | 22 | |||||
| Piedmont | 1 | 1 | |||||
OTHER COMMITMENTS AND CONTINGENCIES
General
As part of their normal business, the Duke Energy Registrants are party to various financial guarantees, performance guarantees and other contractual commitments to extend guarantees of credit and other assistance to various subsidiaries, investees and other third parties. These guarantees involve elements of performance and credit risk, which are not fully recognized on the Condensed Consolidated Balance Sheets and have uncapped maximum potential payments. However, the Duke Energy Registrants do not believe these guarantees will have a material effect on their results of operations, cash flows or financial position.
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 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.
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| FINANCIAL STATEMENTS | DEBT AND CREDIT FACILITIES | ||||
5. DEBT AND CREDIT FACILITIES
SUMMARY OF SIGNIFICANT DEBT ISSUANCES
The following table summarizes significant debt issuances (in millions).
| Nine Months Ended September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Maturity | Interest | Duke | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance Date | Date | Rate | Energy | (Parent) | Carolinas | Progress | Piedmont | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unsecured Debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 2021(a) | March 2031 | 2.500 | % | $ | 350 | $ | — | $ | — | $ | — | $ | 350 | ||||||||||||||||||||||||||||||||||||||||||||||
June 2021(b)(c) | June 2023 | 2.500 | % | 500 | 500 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
June 2021(c) | June 2031 | 2.550 | % | 1,000 | 1,000 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
June 2021(c) | June 2041 | 3.300 | % | 750 | 750 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
June 2021(c) | June 2051 | 3.500 | % | 750 | 750 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
September 2021(d) | January 2082 | 3.250 | % | 500 | 500 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| First Mortgage Bonds | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
April 2021(e) | April 2031 | 2.550 | % | 550 | — | 550 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
April 2021(e) | April 2051 | 3.450 | % | 450 | — | 450 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
August 2021(f) | August 2031 | 2.000 | % | 650 | — | — | 650 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
August 2021(f) | August 2051 | 2.900 | % | 450 | — | — | 450 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Total issuances | $ | 5,950 | $ | 3,500 | $ | 1,000 | $ | 1,100 | $ | 350 | |||||||||||||||||||||||||||||||||||||||||||||||||
(a)
| Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||
| Maturity | Interest | Duke | Energy | Energy | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||||
| Issuance Date | Date | Rate | Energy | (Parent) | Carolinas | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||||
| Unsecured Debt | ||||||||||||||||||||||||||||||||||||
May 2020(a) | Jun 2030 | 2.450 | % | $ | 500 | $ | 500 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||
May 2020(b) | Jun 2050 | 3.350 | % | 400 | — | — | — | — | — | 400 | ||||||||||||||||||||||||||
August 2020(c) | Feb 2022 | 0.430 | % | (d) | 700 | — | — | 700 | — | — | — | — | ||||||||||||||||||||||||
September 2020(e) | Sep 2025 | 0.900 | % | 650 | 650 | — | — | — | — | — | — | |||||||||||||||||||||||||
September 2020(e) | Jun 2030 | 2.450 | % | 350 | 350 | — | — | — | — | — | — | |||||||||||||||||||||||||
| First Mortgage Bonds | ||||||||||||||||||||||||||||||||||||
January 2020(f) | Feb 2030 | 2.450 | % | 500 | — | 500 | — | — | — | — | — | |||||||||||||||||||||||||
January 2020(f) | Aug 2049 | 3.200 | % | 400 | — | 400 | — | — | — | — | — | |||||||||||||||||||||||||
March 2020(g) | Apr 2050 | 2.750 | % | 550 | — | — | — | — | — | 550 | — | |||||||||||||||||||||||||
May 2020(b) | Jun 2030 | 2.125 | % | 400 | — | — | — | — | 400 | — | — | |||||||||||||||||||||||||
June 2020(b) | Jun 2030 | 1.750 | % | 500 | — | — | — | 500 | — | — | — | |||||||||||||||||||||||||
August 2020(h) | Aug 2050 | 2.500 | % | 600 | — | — | 600 | — | — | — | — | |||||||||||||||||||||||||
| Total issuances | $ | 5,550 | $ | 1,500 | $ | 900 | $ | 1,300 | $ | 500 | $ | 400 | $ | 550 | $ | 400 | ||||||||||||||||||||
(b)Debt issuance has a floating interest rate.
(c)Debt issued to repay $1.75 billion of Duke Energy (Parent) 2021 debt maturities, to repay a portion of short-term debt and for general corporate purposes.
(d)Debt issued to repay in October 2021 $500 million of Duke Energy (Parent) unsecured notes. The interest rate resets every five years.
(e)Debt issued to repay at maturity $500 million first mortgage bonds due June 2021, pay down short-term debt and for general company purposes.
(f)Debt issued to repay at maturity a total of $600 million first mortgage bonds due September 2021, pay down short-term debt and for general company purposes.
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, 2020 | (in millions) | Maturity Date | Interest Rate | September 30, 2021 | ||||||||||||||||||
| Unsecured Debt | Unsecured Debt | ||||||||||||||||||||||||
| Progress Energy, Inc | January 2021 | 4.400 | % | $ | 500 | ||||||||||||||||||||
Duke Energy (Parent)(a) | Duke Energy (Parent)(a) | October 2021 | 5.125 | % | 500 | ||||||||||||||||||||
Duke Energy Florida(b) | Duke Energy Florida(b) | November 2021 | 0.372 | % | 200 | ||||||||||||||||||||
Duke Energy Progress(b) | Duke Energy Progress(b) | February 2022 | 0.305 | % | 700 | ||||||||||||||||||||
| Duke Energy (Parent) | May 2021 | 0.765 | % | (a) | 500 | Duke Energy (Parent) | March 2022 | 3.227 | % | 300 | |||||||||||||||
| Piedmont | June 2021 | 4.240 | % | 160 | |||||||||||||||||||||
Duke Energy (Parent)(b) | Duke Energy (Parent)(b) | March 2022 | 0.764 | % | 300 | ||||||||||||||||||||
| Progress Energy | Progress Energy | April 2022 | 3.150 | % | 450 | ||||||||||||||||||||
| Duke Energy (Parent) | September 2021 | 3.550 | % | 500 | Duke Energy (Parent) | August 2022 | 3.050 | % | 500 | ||||||||||||||||
| Duke Energy (Parent) | September 2021 | 1.800 | % | 750 | Duke Energy (Parent) | August 2022 | 2.400 | % | 500 | ||||||||||||||||
| Secured Debt | |||||||||||||||||||||||||
| Duke Energy Florida | April 2021 | 1.035 | % | (a) | 250 | ||||||||||||||||||||
| First Mortgage Bonds | First Mortgage Bonds | ||||||||||||||||||||||||
| Duke Energy Indiana | Duke Energy Indiana | January 2022 | 8.850 | % | 53 | ||||||||||||||||||||
| Duke Energy Carolinas | June 2021 | 3.900 | % | 500 | Duke Energy Carolinas | May 2022 | 3.350 | % | 350 | ||||||||||||||||
| Duke Energy Florida | August 2021 | 3.100 | % | 300 | |||||||||||||||||||||
| Duke Energy Progress | September 2021 | 3.000 | % | 500 | Duke Energy Progress | May 2022 | 2.800 | % | 500 | ||||||||||||||||
| Duke Energy Progress | September 2021 | 8.625 | % | 100 | |||||||||||||||||||||
Other(b) | 609 | ||||||||||||||||||||||||
Other(c) | Other(c) | 520 | |||||||||||||||||||||||
| Current maturities of long-term debt | $ | 4,669 | Current maturities of long-term debt | $ | 4,873 | ||||||||||||||||||||
(a)Junior unsecured notes due January 2073 were redeemed on October 7, 2021.
(b)Debt has a floating interest rate.
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| FINANCIAL STATEMENTS | DEBT AND CREDIT FACILITIES | ||||
AVAILABLE CREDIT FACILITIES
Master Credit Facility
In March 2020,2021, Duke Energy amended its existing $8 billion Master Credit Facility to extend the termination date to March 2025.2026. The Duke Energy Registrants, excluding Progress Energy, have borrowing capacity under the Master Credit Facility up to a specified sublimit for each borrower. Duke Energy has the unilateral ability at any time to increase or decrease the borrowing sublimits of each borrower, subject to a maximum sublimit for each borrower. The amount available under the Master Credit Facility has been reduced to backstop issuances of commercial paper, certain letters of credit and variable-rate demand tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder.
The table below includes the current borrowing sublimits and available capacity under these credit facilities.
| September 30, 2020 | September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | (in millions) | Energy | (Parent) | Carolinas | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Facility size(a) | $ | 8,000 | $ | 2,650 | $ | 1,475 | $ | 1,250 | $ | 800 | $ | 625 | $ | 600 | $ | 600 | Facility size(a) | $ | 8,000 | $ | 2,650 | $ | 1,275 | $ | 1,150 | $ | 850 | $ | 775 | $ | 600 | $ | 700 | |||||||||||||||||||||||||||||||||||||||||||||
| Reduction to backstop issuances | Reduction to backstop issuances | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial paper(b) | (2,007 | ) | (693 | ) | (300 | ) | (308 | ) | (62 | ) | (106 | ) | (229 | ) | (309 | ) | Commercial paper(b) | (1,611) | 389 | (375) | (253) | (527) | (419) | (150) | (276) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Outstanding letters of credit | (40 | ) | (34 | ) | (4 | ) | (2 | ) | — | — | — | — | Outstanding letters of credit | (31) | (25) | (4) | (2) | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax-exempt bonds | (81 | ) | — | — | — | — | — | (81 | ) | — | Tax-exempt bonds | (81) | — | — | — | — | — | (81) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Available capacity under the Master Credit Facility | $ | 5,872 | $ | 1,923 | $ | 1,171 | $ | 940 | $ | 738 | $ | 519 | $ | 290 | $ | 291 | Available capacity under the Master Credit Facility | $ | 6,277 | $ | 3,014 | $ | 896 | $ | 895 | $ | 323 | $ | 356 | $ | 369 | $ | 424 | |||||||||||||||||||||||||||||||||||||||||||||
(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 |
| September 30, 2020 | |||||||
| (in millions) | Facility size | Amount drawn | |||||
| Duke Energy (Parent) Three-Year Revolving Credit Facility | $ | 1,000 | $ | 500 | |||
| September 30, 2020 | |||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||
Decommissioning of nuclear power facilities(a) | $ | 6,815 | $ | 2,658 | $ | 4,107 | $ | 3,606 | $ | 501 | $ | — | $ | — | $ | — | |||||||||||||||
| Closure of ash impoundments | 6,458 | 3,049 | 2,172 | 2,150 | 22 | 51 | 1,186 | — | |||||||||||||||||||||||
| Other | 381 | 67 | 76 | 44 | 32 | 40 | 28 | 17 | |||||||||||||||||||||||
| Total ARO | $ | 13,654 | $ | 5,774 | $ | 6,355 | $ | 5,800 | $ | 555 | $ | 91 | $ | 1,214 | $ | 17 | |||||||||||||||
| Less: Current portion | 742 | 267 | 297 | 297 | — | 7 | 170 | — | |||||||||||||||||||||||
| Total noncurrent ARO | $ | 12,912 | $ | 5,507 | $ | 6,058 | $ | 5,503 | $ | 555 | $ | 84 | $ | 1,044 | $ | 17 | |||||||||||||||
| September 30, 2021 | |||||||||||
| (in millions) | Facility size | Amount drawn | |||||||||
Duke Energy (Parent) Three-Year Revolving Credit Facility(a) | $ | 1,000 | $ | 500 | |||||||
(a)During March 2021, Duke Energy amount includes purchase accounting adjustments relatedextended the maturity date of the Three-Year Revolving Credit Facility from May 2022 to the merger with Progress Energy.May 2024.
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||
Balance at December 31, 2019(a) | $ | 13,318 | $ | 5,734 | $ | 6,471 | $ | 5,893 | $ | 578 | $ | 80 | $ | 832 | $ | 17 | |||||||||||||||
Accretion expense(b) | 408 | 195 | 187 | 171 | 16 | 3 | 22 | — | |||||||||||||||||||||||
Liabilities settled(c) | (540 | ) | (151 | ) | (333 | ) | (293 | ) | (40 | ) | (1 | ) | (56 | ) | — | ||||||||||||||||
| Liabilities incurred in the current year | 17 | — | — | — | — | — | — | — | |||||||||||||||||||||||
Revisions in estimates of cash flows(d) | 451 | (4 | ) | 30 | 29 | 1 | 9 | 416 | — | ||||||||||||||||||||||
| Balance at September 30, 2020 | $ | 13,654 | $ | 5,774 | $ | 6,355 | $ | 5,800 | $ | 555 | $ | 91 | $ | 1,214 | $ | 17 | |||||||||||||||
Duke Energy Indiana Term Loan Facility
In October 2021, Duke Energy Indiana entered into a two-year term loan facility with commitments totaling $300 million. Borrowings under the facility will be used to pay down short-term debt and for general corporate purposes. The term loan was fully drawn at the time of closing in October. The balance will be classified as Long-Term Debt on Duke Energy Indiana’s Condensed Consolidated Balance Sheet.
6. GOODWILL
Duke Energy
The following table presents the goodwill by reportable segment included on Duke Energy's Condensed Consolidated Balance Sheets at September 30, 2020,2021, and December 31, 2019.2020.
| Electric Utilities | Gas Utilities | Commercial | ||||||||||||||||||||||||||||||||||||
| (in millions) | (in millions) | and Infrastructure | and Infrastructure | Renewables | Total | |||||||||||||||||||||||||||||||||
| Electric Utilities | Gas Utilities | Commercial | ||||||||||||||||||||||||||||||||||||
| (in millions) | and Infrastructure | and Infrastructure | Renewables | Total | ||||||||||||||||||||||||||||||||||
| Goodwill balance | $ | 17,379 | $ | 1,924 | $ | 122 | $ | 19,425 | Goodwill balance | $ | 17,379 | $ | 1,924 | $ | 122 | $ | 19,425 | |||||||||||||||||||||
| Accumulated impairment charges | — | — | (122 | ) | (122 | ) | Accumulated impairment charges | — | — | (122) | (122) | |||||||||||||||||||||||||||
| Goodwill, adjusted for accumulated impairment charges | $ | 17,379 | $ | 1,924 | $ | — | $ | 19,303 | Goodwill, adjusted for accumulated impairment charges | $ | 17,379 | $ | 1,924 | $ | — | $ | 19,303 | |||||||||||||||||||||
63
| FINANCIAL STATEMENTS | GOODWILL | ||||
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, 2020,2021, and December 31, 2019.
Progress Energy
Progress Energy's Goodwill is included in the Electric Utilities and Infrastructure segment and there are 0no accumulated impairment charges.
Piedmont
Piedmont's Goodwill is included in the Gas Utilities and Infrastructure segment and there are 0no 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. As the fair value for Duke Energy, Progress Energy, Duke Energy Ohio and Piedmont exceeded their respective carrying values at the date of the annual impairment analysis, no goodwill impairment charges were recorded in the third quarter of 2020.2021.
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, | ||||||||||||||
| (in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Duke Energy Carolinas | |||||||||||||||
Corporate governance and shared service expenses(a) | $ | 198 | $ | 197 | $ | 528 | $ | 606 | |||||||
Indemnification coverages(b) | 5 | 5 | 15 | 15 | |||||||||||
Joint Dispatch Agreement (JDA) revenue(c) | 6 | 12 | 16 | 52 | |||||||||||
JDA expense(c) | 28 | 32 | 72 | 145 | |||||||||||
Intercompany natural gas purchases(d) | 10 | 0 | 26 | 7 | |||||||||||
| Progress Energy | |||||||||||||||
Corporate governance and shared service expenses(a) | $ | 185 | $ | 194 | $ | 520 | $ | 553 | |||||||
Indemnification coverages(b) | 9 | 8 | 27 | 27 | |||||||||||
JDA revenue(c) | 28 | 32 | 72 | 145 | |||||||||||
JDA expense(c) | 6 | 12 | 16 | 52 | |||||||||||
Intercompany natural gas purchases(d) | 18 | 19 | 56 | 57 | |||||||||||
| Duke Energy Progress | |||||||||||||||
Corporate governance and shared service expenses(a) | $ | 113 | $ | 114 | $ | 301 | $ | 328 | |||||||
Indemnification coverages(b) | 4 | 3 | 13 | 11 | |||||||||||
JDA revenue(c) | 28 | 32 | 72 | 145 | |||||||||||
JDA expense(c) | 6 | 12 | 16 | 52 | |||||||||||
Intercompany natural gas purchases(d) | 18 | 19 | 56 | 57 | |||||||||||
| Duke Energy Florida | |||||||||||||||
Corporate governance and shared service expenses(a) | $ | 72 | $ | 80 | $ | 219 | $ | 225 | |||||||
Indemnification coverages(b) | 5 | 5 | 14 | 16 | |||||||||||
| Duke Energy Ohio | |||||||||||||||
Corporate governance and shared service expenses(a) | $ | 80 | $ | 90 | $ | 241 | $ | 258 | |||||||
Indemnification coverages(b) | 1 | 1 | 3 | 3 | |||||||||||
| Duke Energy Indiana | |||||||||||||||
Corporate governance and shared service expenses(a) | $ | 102 | $ | 109 | $ | 300 | $ | 299 | |||||||
Indemnification coverages(b) | 2 | 2 | 6 | 5 | |||||||||||
| Piedmont | |||||||||||||||
Corporate governance and shared service expenses(a) | $ | 31 | $ | 33 | $ | 102 | $ | 102 | |||||||
Indemnification coverages(b) | 1 | 1 | 2 | 2 | |||||||||||
Intercompany natural gas sales(d) | 28 | 19 | 82 | 64 | |||||||||||
Natural gas storage and transportation costs(e) | 6 | 6 | 17 | 17 | |||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| Duke Energy Carolinas | |||||||||||||||||||||||
Corporate governance and shared service expenses(a) | $ | 207 | $ | 198 | $ | 653 | $ | 528 | |||||||||||||||
Indemnification coverages(b) | 6 | 5 | 18 | 15 | |||||||||||||||||||
Joint Dispatch Agreement (JDA) revenue(c) | 6 | 6 | 32 | 16 | |||||||||||||||||||
JDA expense(c) | 68 | 28 | 133 | 72 | |||||||||||||||||||
Intercompany natural gas purchases(d) | 14 | 10 | 43 | 26 | |||||||||||||||||||
| Progress Energy | |||||||||||||||||||||||
Corporate governance and shared service expenses(a) | $ | 201 | $ | 185 | $ | 615 | $ | 520 | |||||||||||||||
Indemnification coverages(b) | 10 | 9 | 31 | 27 | |||||||||||||||||||
JDA revenue(c) | 68 | 28 | 133 | 72 | |||||||||||||||||||
JDA expense(c) | 6 | 6 | 32 | 16 | |||||||||||||||||||
Intercompany natural gas purchases(d) | 19 | 18 | 56 | 56 | |||||||||||||||||||
| Duke Energy Progress | |||||||||||||||||||||||
Corporate governance and shared service expenses(a) | $ | 121 | $ | 113 | $ | 367 | $ | 301 | |||||||||||||||
Indemnification coverages(b) | 4 | 4 | 14 | 13 | |||||||||||||||||||
JDA revenue(c) | 68 | 28 | 133 | 72 | |||||||||||||||||||
JDA expense(c) | 6 | 6 | 32 | 16 | |||||||||||||||||||
Intercompany natural gas purchases(d) | 19 | 18 | 56 | 56 | |||||||||||||||||||
| Duke Energy Florida | |||||||||||||||||||||||
Corporate governance and shared service expenses(a) | $ | 80 | $ | 72 | $ | 248 | $ | 219 | |||||||||||||||
Indemnification coverages(b) | 6 | 5 | 17 | 14 | |||||||||||||||||||
| Duke Energy Ohio | |||||||||||||||||||||||
Corporate governance and shared service expenses(a) | $ | 79 | $ | 80 | $ | 237 | $ | 241 | |||||||||||||||
Indemnification coverages(b) | 1 | 1 | 3 | 3 | |||||||||||||||||||
| Duke Energy Indiana | |||||||||||||||||||||||
Corporate governance and shared service expenses(a) | $ | 96 | $ | 102 | $ | 302 | $ | 300 | |||||||||||||||
Indemnification coverages(b) | 2 | 2 | 6 | 6 | |||||||||||||||||||
| Piedmont | |||||||||||||||||||||||
Corporate governance and shared service expenses(a) | $ | 32 | $ | 31 | $ | 101 | $ | 102 | |||||||||||||||
Indemnification coverages(b) | 1 | 1 | 3 | 2 | |||||||||||||||||||
Intercompany natural gas sales(d) | 33 | 28 | 99 | 82 | |||||||||||||||||||
Natural gas storage and transportation costs(e) | 6 | 6 | 17 | 17 | |||||||||||||||||||
64
| FINANCIAL STATEMENTS | RELATED PARTY TRANSACTIONS | ||||
(b)The Subsidiary Registrants incur expenses related to certain indemnification coverages through Bison, Duke Energy’s wholly owned captive insurance subsidiary. These expenses are recorded in Operation, maintenance and other on the Condensed Consolidated Statements of Operations and Comprehensive Income.
(c)Duke Energy Carolinas and Duke Energy Progress participate in a JDA, which allows the collective dispatch of power plants between the service territories to reduce customer rates. Revenues from the sale of power and expenses from the purchase of power pursuant to the JDA are recorded in Operating Revenues and Fuel used in electric generation and purchased power, respectively, on the 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 LNG Company, LLC, Hardy Storage Company, LLC and Cardinal Pipeline Company, LLC natural gas storage and transportation facilities. These expenses are included in Cost of natural gas on Piedmont's Condensed Consolidated Statements of Operations and Comprehensive Income.
In addition to the amounts presented above, the Subsidiary Registrants have other affiliate transactions, including rental of office space, participation in a money pool arrangement, other operational transactions, such as pipeline lease arrangements, and their proportionate share of certain charged expenses. These transactions of the Subsidiary Registrants are incurred in the ordinary course of business and are eliminated in consolidation.
As discussed in Note 12,11, certain trade receivables have been sold by Duke Energy Ohio and Duke Energy Indiana to CRC, an affiliate formed by a subsidiary of Duke Energy. The proceeds obtained from the sales of receivables are largely cash but do include a subordinated note from CRC for a portion of the purchase price.
Intercompany Income Taxes
Duke Energy and the Subsidiary Registrants file a consolidated federal income tax return and other state and jurisdictional returns. The Subsidiary Registrants have a tax sharing agreement with Duke Energy for the allocation of consolidated tax liabilities and benefits. Income taxes recorded represent amounts the Subsidiary Registrants would incur as separate C-Corporations. The following table includes the balance of intercompany income tax receivables and payables for the Subsidiary Registrants.
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||
| Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||
| (in millions) | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||
| September 30, 2020 | |||||||||||||||||||||
| Intercompany income tax receivable | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 14 | |||||||
| Intercompany income tax payable | 206 | 49 | 104 | 98 | 6 | 56 | — | ||||||||||||||
| December 31, 2019 | |||||||||||||||||||||
| Intercompany income tax receivable | $ | — | $ | 125 | $ | 28 | $ | — | $ | 9 | $ | 28 | $ | 13 | |||||||
| Intercompany income tax payable | 5 | — | — | 2 | — | — | — | ||||||||||||||
| Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||
| Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||
| (in millions) | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||
| September 30, 2021 | |||||||||||||||||||||||
| Intercompany income tax receivable | $ | — | $ | 36 | $ | — | $ | 8 | $ | 1 | $ | — | $ | 14 | |||||||||
| Intercompany income tax payable | 133 | — | 51 | — | — | 17 | — | ||||||||||||||||
| December 31, 2020 | |||||||||||||||||||||||
| Intercompany income tax receivable | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 9 | $ | 10 | |||||||||
| Intercompany income tax payable | 31 | 33 | 46 | 35 | 2 | — | — | ||||||||||||||||
8. DERIVATIVES AND HEDGING
The Duke Energy Registrants use commodity and interest rate contracts to manage commodity price risk and interest rate risk. The primary use of commodity derivatives is to hedge the generation portfolio against changes in the prices of electricity and natural gas. Piedmont enters into natural gas supply contracts to provide diversification, reliability and natural gas cost benefits to its customers. Interest rate 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.
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING | ||||
Cash Flow Hedges
For a derivative designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the effective portion of the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Amounts for interest rate contracts are reclassified to earnings as interest expense over the term of the related debt. Gains and losses reclassified out of accumulated other comprehensive income (loss)loss for the three and nine months ended September 30, 2020,2021, and 2019,2020, were not material. Duke Energy's interest rate derivatives designated as hedges include interest rate swaps used to hedge existing debt within the Commercial Renewables segment and forward-starting interest rate swaps not accounted for under regulatory accounting.
Undesignated Contracts
Undesignated contracts primarily include contracts not designated as a hedge because they are accounted for under regulatory accounting or contracts that do not qualify for hedge accounting.
Duke Energy’s interest rate swaps for its regulated operations employ regulatory accounting. With regulatory accounting, the mark-to-market gains or losses on the swaps are deferred as regulatory liabilities or regulatory assets, respectively. Regulatory assets and liabilities are amortized consistent with the treatment of the related costs in the ratemaking process. The accrual of interest on the swaps is recorded as Interest Expense on the Duke Energy Registrant's Condensed Consolidated Statements of Operations and Comprehensive Income.
The following table shows notional amounts of outstanding derivatives related to interest rate risk.
| September 30, 2021 | |||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | ||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | |||||||||||||||||||||||||||||
| Cash flow hedges | $ | 2,094 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||
| Undesignated contracts | 1,371 | 350 | 900 | 400 | 500 | 27 | |||||||||||||||||||||||||||||
Total notional amount(a) | $ | 3,465 | $ | 350 | $ | 900 | $ | 400 | $ | 500 | $ | 27 | |||||||||||||||||||||||
| December 31, 2020 | |||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | ||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | |||||||||||||||||||||||||||||
| Cash flow hedges | $ | 632 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||
| Undesignated contracts | 1,177 | 400 | 750 | 750 | — | 27 | |||||||||||||||||||||||||||||
Total notional amount(a) | $ | 1,809 | $ | 400 | $ | 750 | $ | 750 | $ | — | $ | 27 | |||||||||||||||||||||||
(a)
| September 30, 2020 | |||||||||||||||||||||||
| Duke | Duke | Duke | Duke | ||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | ||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | |||||||||||||||||
| Cash flow hedges | $ | 653 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
| Undesignated contracts | 1,177 | 400 | 750 | 750 | — | 27 | |||||||||||||||||
Total notional amount(a) | $ | 1,830 | $ | 400 | $ | 750 | $ | 750 | $ | — | $ | 27 | |||||||||||
| December 31, 2019 | |||||||||||||||||||||||
| Duke | Duke | Duke | Duke | ||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | ||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | |||||||||||||||||
| Cash flow hedges | $ | 993 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
| Undesignated contracts | 1,277 | 450 | 800 | 250 | 550 | 27 | |||||||||||||||||
Total notional amount(a) | $ | 2,270 | $ | 450 | $ | 800 | $ | 250 | $ | 550 | $ | 27 | |||||||||||
COMMODITY PRICE RISK
The Duke Energy Registrants are exposed to the impact of changes in the prices of electricity purchased and sold in bulk power markets and natural gas purchases, including Piedmont's natural gas supply contracts. Exposure to commodity price risk is influenced by a number of factors including the term of contracts, the liquidity of markets and delivery locations. To manage risk associated with commodity prices, the Duke Energy Registrants may enter into long-term power purchase or sales contracts and long-term natural gas supply agreements.
Cash Flow Hedges
For derivatives designated as hedging the exposure to variable cash flows of a future transaction, referred to as a cash flow hedge, the derivative's gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings once the future transaction impacts earnings. Gains and losses reclassified out of accumulated other comprehensive income (loss)loss for the three and nine months ended September 30, 2020,2021, and 2019,2020, were not material. Duke Energy’s commodity derivatives designated as hedges include long-term electricity sales in the Commercial Renewables segment.
Undesignated Contracts
For the Subsidiary Registrants, bulk power electricity and natural gas purchases flow through fuel adjustment clauses, formula-based contracts or other cost-sharing mechanisms. Differences between the costs included in rates and the incurred costs, including undesignated derivative contracts, are largely deferred as regulatory assets or regulatory liabilities. Piedmont policies allow for the use of financial instruments to hedge commodity price risks. The strategy and objective of these hedging programs are to use the financial instruments to reduce natural gas costs volatility for customers.
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING | ||||
Volumes
The tables below include volumes of outstanding commodity derivatives. Amounts disclosed represent the absolute value of notional volumes of commodity contracts excluding NPNS. The Duke Energy Registrants have netted contractual amounts where offsetting purchase and sale contracts exist with identical delivery locations and times of delivery. Where all commodity positions are perfectly offset, no quantities are shown.
| September 30, 2020 | ||||||||||||||||||||
| Duke | Duke | Duke | Duke | |||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | |||||||||||||||
| Energy | Carolinas | Energy | Progress | Ohio | Indiana | Piedmont | ||||||||||||||
Electricity (GWh)(a) | 32,314 | — | — | — | 4,126 | 17,072 | — | |||||||||||||
| Natural gas (millions of dekatherms) | 683 | 143 | 156 | 156 | — | 2 | 382 | |||||||||||||
| September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2019 | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | Energy | Progress | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | Carolinas | Energy | Progress | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Energy | Carolinas | Energy | Progress | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Electricity (GWh) | 15,858 | — | — | — | 1,887 | 13,971 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Electricity (GWh)(a) | Electricity (GWh)(a) | 29,044 | — | — | — | 3,004 | 15,881 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Natural gas (millions of dekatherms) | 704 | 130 | 160 | 160 | — | 3 | 411 | Natural gas (millions of dekatherms) | 772 | 230 | 190 | 190 | — | 7 | 345 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||
| Energy | Carolinas | Energy | Progress | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||||
Electricity (GWh)(a) | 35,409 | — | — | — | 2,559 | 10,802 | — | ||||||||||||||||||||||||||||||||||||||||
| Natural gas (millions of dekatherms) | 678 | 145 | 158 | 158 | — | 2 | 373 | ||||||||||||||||||||||||||||||||||||||||
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, 2020 | |||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||
| Commodity Contracts | ||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||
| Current | $ | 57 | $ | 24 | $ | 18 | $ | 18 | $ | — | $ | 2 | $ | 8 | $ | 6 | ||||||||||||||||
| Noncurrent | 26 | 14 | 12 | 12 | — | — | — | — | ||||||||||||||||||||||||
| Total Derivative Assets – Commodity Contracts | $ | 83 | $ | 38 | $ | 30 | $ | 30 | $ | — | $ | 2 | $ | 8 | $ | 6 | ||||||||||||||||
| Interest Rate Contracts | ||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||
| Current | $ | 3 | $ | — | $ | 3 | $ | 3 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
| Noncurrent | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Total Derivative Assets – Interest Rate Contracts | $ | 3 | $ | — | $ | 3 | $ | 3 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
| Total Derivative Assets | $ | 86 | $ | 38 | $ | 33 | $ | 33 | $ | — | $ | 2 | $ | 8 | $ | 6 | ||||||||||||||||
| Derivative Assets | September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||||||||||||||||||||
| Commodity Contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | $ | 359 | $ | 171 | $ | 135 | $ | 135 | $ | — | $ | 4 | $ | 36 | $ | 12 | ||||||||||||||||||||||||||||||||||
| Noncurrent | 177 | 100 | 78 | 78 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Assets – Commodity Contracts | $ | 536 | $ | 271 | $ | 213 | $ | 213 | $ | — | $ | 4 | $ | 36 | $ | 12 | ||||||||||||||||||||||||||||||||||
| Interest Rate Contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | $ | 2 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||
| Noncurrent | 3 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | $ | 2 | $ | — | $ | 2 | $ | 2 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||
| Total Derivative Assets – Interest Rate Contracts | $ | 7 | $ | — | $ | 2 | $ | 2 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||
| Total Derivative Assets | $ | 543 | $ | 271 | $ | 215 | $ | 215 | $ | — | $ | 4 | $ | 36 | $ | 12 | ||||||||||||||||||||||||||||||||||
67
| FINANCIAL STATEMENTS | DERIVATIVES AND HEDGING | ||||
| Derivative Liabilities | September 30, 2020 | |||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | ||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | ||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | ||||||||||||||||||||||||
| Commodity Contracts | ||||||||||||||||||||||||||||||||
| Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||
| Current | $ | 17 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | — | |||||||||||||||||
| Noncurrent | 85 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||
| Current | $ | 26 | $ | 12 | $ | — | $ | — | $ | — | $ | 1 | $ | — | $ | 13 | ||||||||||||||||
| Noncurrent | 129 | 4 | 27 | 11 | — | — | — | 98 | ||||||||||||||||||||||||
| Total Derivative Liabilities – Commodity Contracts | $ | 257 | $ | 16 | $ | 27 | $ | 11 | $ | — | $ | 1 | $ | — | $ | 111 | ||||||||||||||||
| Interest Rate Contracts | ||||||||||||||||||||||||||||||||
| Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||
| Current | $ | 14 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
| Noncurrent | 56 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||
| Current | 27 | 17 | 9 | 9 | — | 1 | — | — | ||||||||||||||||||||||||
| Noncurrent | 5 | — | — | — | — | 5 | — | — | ||||||||||||||||||||||||
| Total Derivative Liabilities – Interest Rate Contracts | $ | 102 | $ | 17 | $ | 9 | $ | 9 | $ | — | $ | 6 | $ | — | $ | — | ||||||||||||||||
| Total Derivative Liabilities | $ | 359 | $ | 33 | $ | 36 | $ | 20 | $ | — | $ | 7 | $ | — | $ | 111 | ||||||||||||||||
| Derivative Assets | December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Liabilities | Derivative Liabilities | September 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Duke | Duke | Duke | Duke | Duke | Duke | Duke | Duke | Duke | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Duke | Energy | Progress | Energy | Energy | Energy | Energy | Duke | Energy | Progress | Energy | Energy | Energy | Energy | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | (in millions) | Energy | Carolinas | Energy | Progress | Florida | Ohio | Indiana | Piedmont | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commodity Contracts | Commodity Contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Designated as Hedging Instruments | Designated as Hedging Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | Current | $ | 37 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noncurrent | Noncurrent | 120 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | Not Designated as Hedging Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | $ | 17 | $ | — | $ | — | $ | — | $ | — | $ | 3 | $ | 13 | $ | 1 | Current | $ | 33 | $ | 12 | $ | — | $ | — | $ | — | $ | — | $ | 2 | $ | 20 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Noncurrent | 1 | — | — | — | — | 1 | — | — | Noncurrent | 128 | — | — | — | — | — | — | 128 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Assets – Commodity Contracts | $ | 18 | $ | — | $ | — | $ | — | $ | — | $ | 4 | $ | 13 | $ | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Liabilities – Commodity Contracts | Total Derivative Liabilities – Commodity Contracts | $ | 318 | $ | 12 | $ | — | $ | — | $ | — | $ | — | $ | 2 | $ | 148 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest Rate Contracts | Interest Rate Contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Designated as Hedging Instruments | Designated as Hedging Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | Current | $ | 45 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noncurrent | Noncurrent | 29 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | Not Designated as Hedging Instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | 6 | — | 6 | — | 6 | — | — | — | Current | 19 | 6 | 12 | — | 12 | 1 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Assets – Interest Rate Contracts | $ | 6 | $ | — | $ | 6 | $ | — | $ | 6 | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Securities Contracts | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Not Designated as Hedging Instruments | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current | 1 | — | 1 | — | 1 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Assets – Equity Securities Contracts | $ | 1 | $ | — | $ | 1 | $ | — | $ | 1 | $ | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Assets | $ | 25 | $ | — | $ | 7 | $ | — | $ | 7 | $ | 4 | $ | 13 | $ | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noncurrent | Noncurrent | 4 | — | — | — | — | 4 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Liabilities – Interest Rate Contracts | Total Derivative Liabilities – Interest Rate Contracts | $ | 97 | $ | 6 | $ | 12 | $ | — | $ | 12 | $ | 5 | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Derivative Liabilities | Total Derivative Liabilities | $ | 415 | $ | 18 | $ | 12 | $ | — | $ | 12 | $ | 5 | $ | 2 | $ | 148 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||