~~11. GOODWILL AND INTANGIBLE ASSETS~~

~~Goodwill~~

~~The following tables present goodwill by reportable operating segment~~Allowance for ~~Duke Energy and Duke Energy Ohio.~~ Doubtful Accounts

~~Duke Energy~~Allowances for doubtful accounts are presented in the following table.

(in millions) Regulated Utilities
International Energy
Commercial Power
Total
Balance at December 31, 2013
Goodwill $ 15,950
$ 326
$ 935
$ 17,211
Accumulated impairment charges —
—
(871 ) (871 )
Balance at December 31, 2013, net of accumulated impairment charges 15,950
326
64
16,340
Foreign exchange and other changes —
(19 ) —
(19 )
Balance at December 31, 2014
Goodwill 15,950
307
935
17,192
Accumulated impairment charges —
—
(871 ) (871 )
Balance at December 31, 2014, net of accumulated impairment charges $ 15,950
$ 307
$ 64
$ 16,321



	December 31,
(in millions)	2016		2015		2014
Allowance for Doubtful Accounts
Duke Energy	$	14	$	12	$	14
Duke Energy Carolinas	2		3		3
Progress Energy	6		6		8
Duke Energy Progress	4		4		7
Duke Energy Florida	2		2		2
Duke Energy Ohio	2		2		2
Duke Energy Indiana	1		1		1
Allowance for Doubtful Accounts – VIEs
Duke Energy	$	54	$	53	$	51
Duke Energy Carolinas	7		7		6
Progress Energy	7		8		8
Duke Energy Progress	5		5		5
Duke Energy Florida	2		3		3

~~Duke Energy Ohio~~

Derivatives and Hedging

(in millions)
Regulated Utilities
Commercial Power
Total
Balance at December 31, 2013
Goodwill $ 1,136
$ 1,188
$ 2,324
Accumulated impairment charges (216 ) (1,188 ) (1,404 )
Balance at December 31, 2013, net of accumulated impairment charges 920
—
920
Balance at December 31, 2014
Goodwill 1,136
1,188
2,324
Accumulated impairment charges (216 ) (1,188 ) (1,404 )
Balance at December 31, 2014, net of accumulated impairment charges
$ 920
$ —
$ 920

~~Progress Energy~~

~~Progress Energy's Goodwill is included~~Derivative and non-derivative instruments may be used in connection with commodity price and interest rate activities, including swaps, futures, forwards and options. All derivative instruments, except those that qualify for the normal purchase/normal sale (NPNS) exception, are recorded on the Consolidated Balance Sheets at fair value. Qualifying derivative instruments may be designated as either cash flow hedges or fair value hedges. Other derivative instruments (undesignated contracts) either have not been designated or do not qualify as hedges. The effective portion of the change in the ~~Regulated Utilities operating segment and there are no accumulated impairment charges.~~

~~Impairment Testing~~

~~Duke Energy, Duke Energy Ohio and Progress Energy are required to perform an annual goodwill impairment test as~~fair value of cash flow hedges is recorded in AOCI. The effective portion of the same date each year and, accordingly, performs its annual impairment testing of goodwill as of August 31. Duke Energy, Duke Energy Ohio and Progress Energy update their test between annual tests if events or circumstances occur that would more likely than not reducechange in the fair value of a ~~reporting unit below its carrying value.~~fair value hedge is offset in net income by changes in the hedged item. For activity subject to regulatory accounting, gains and losses on derivative contracts are reflected as regulatory assets or liabilities and not as other comprehensive income or current period income. As ~~the~~a result, changes in fair value of these derivatives have no immediate earnings impact.

Formal documentation, including transaction type and risk management strategy, is maintained for all contracts accounted for as a hedge. At inception and at least every three months thereafter, the hedge contract is assessed to see if it is highly effective in offsetting changes in cash flows or fair values of hedged items.

See Note 14 for further information.

Captive Insurance Reserves

Duke Energy has captive insurance subsidiaries that provide coverage, on an indemnity basis, to the Subsidiary Registrants as well as certain third parties, on a limited basis, for various business risks and losses, such as property, workers’ compensation and general liability. Liabilities include provisions for estimated losses incurred but not yet reported (IBNR), as well as estimated provisions for known claims. IBNR reserve estimates are primarily based upon historical loss experience, industry data and other actuarial assumptions. Reserve estimates are adjusted in future periods as actual losses differ from experience.

Duke Energy, ~~Ohio~~through its captive insurance entities, also has reinsurance coverage with third parties for certain losses above a per occurrence and/or aggregate retention. Receivables for reinsurance coverage are recognized when realization is deemed probable.

Unamortized Debt Premium, Discount and ~~Progress Energy’s reporting units exceeded their respective carrying values at~~Expense

Premiums, discounts and expenses incurred with the ~~date~~issuance of outstanding long-term debt are amortized over the term of the ~~annual impairment analysis,~~debt issue. The gain or loss on extinguishment associated with refinancing higher-cost debt obligations in the regulated operations is amortized. Amortization expense is recorded as Interest Expense in the Consolidated Statements of Operations and is reflected as Depreciation, amortization and accretion within Net cash provided by operating activities on the Consolidated Statements of Cash Flows.

Premiums, discounts and expenses are presented as an adjustment to the carrying value of the debt amount and included in Long-Term Debt on the Consolidated Balance Sheets presented.

Loss Contingencies and Environmental Liabilities

Contingent losses are recorded when it is probable a loss has occurred and can be reasonably estimated. When a range of the probable loss exists and no ~~impairment charges were~~amount within the range is a better estimate than any other amount, the minimum amount in the range is recorded. Unless otherwise required by GAAP, legal fees are expensed as incurred.

Environmental liabilities are recorded ~~in 2014.~~on an undiscounted basis when environmental remediation or other liabilities become probable and can be reasonably estimated. Environmental expenditures related to past operations that do not generate current or future revenues are expensed. Environmental expenditures related to operations that generate current or future revenues are expensed or capitalized, as appropriate. Certain environmental expenditures receive regulatory accounting treatment and are recorded as regulatory assets.

~~166~~127

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

DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY ~~FLORIDA, INC. - DUKE ENERGY OHIO, INC. - DUKE ENERGY~~ INDIANA, ~~INC.~~LLC

Combined Notes To Consolidated Financial Statements – (Continued)

See Notes 4 and 5 for further information.

Pension and Other Post-Retirement Benefit Plans

Duke Energy maintains qualified, non-qualified and other post-retirement benefit plans. Eligible employees of the Subsidiary Registrants participate in the respective qualified, non-qualified and other post-retirement benefit plans and the Subsidiary Registrants are allocated their proportionate share of benefit costs. See Note 21 for further information, including significant accounting policies associated with these plans.

Severance and Special Termination Benefits

Duke Energy has a severance plan under which, in general, the longer a terminated employee worked prior to termination the greater the amount of severance benefits. A liability for involuntary severance is recorded once an involuntary severance plan is committed to by management if involuntary severances are probable and can be reasonably estimated. For involuntary severance benefits incremental to its ongoing severance plan benefits, the fair value of the obligation is expensed at the communication date if there are no future service requirements or over the required future service period. From time to time, Duke Energy offers special termination benefits under voluntary severance programs. Special termination benefits are recorded immediately upon employee acceptance absent a significant retention period. Otherwise, the cost is recorded over the remaining service period. Employee acceptance of voluntary severance benefits is determined by management based on the facts and circumstances of the benefits being offered. See Note 19 for further information.

Guarantees

Liabilities are recognized at the time of issuance or material modification of a guarantee for the estimated fair value of the obligation it assumes. Fair value is estimated using a probability-weighted approach. The obligation is reduced over the term of the guarantee or related contract in a systematic and rational method as risk is reduced. Any additional contingent loss for guarantee contracts subsequent to the initial recognition of a liability is accounted for and recognized at the time a loss is probable and can be reasonably estimated. See Note 7 for further information.

Stock-Based Compensation

Stock-based compensation represents costs related to stock-based awards granted to employees and Duke Energy Board of Directors (Board of Directors) members. Duke Energy recognizes stock-based compensation based upon the estimated fair value of awards, net of estimated forfeitures at the date of issuance. The recognition period for these costs begins at either the applicable service inception date or grant date and continues throughout the requisite service period. Compensation cost is recognized as expense or capitalized as a component of property, plant and equipment. See Note 20 for further information.

Income Taxes

Duke Energy and its subsidiaries file a consolidated federal income tax return and other state and foreign jurisdictional returns. The Subsidiary Registrants entered into a tax-sharing agreement with Duke Energy. Income taxes recorded represent amounts the Subsidiary Registrants would incur as separate C-Corporations. Deferred income taxes have been provided for temporary differences between GAAP and tax bases of assets and liabilities because the differences create taxable or tax-deductible amounts for future periods. Investment tax credits (ITCs) associated with regulated operations are deferred and amortized as a reduction of income tax expense over the estimated useful lives of the related properties.

Positions taken or expected to be taken on tax returns, including the decision to exclude certain income or transactions from a return, are recognized in the financial statements when it is more likely than not the tax position can be sustained based solely on the technical merits of the position. The largest amount of tax benefit that is greater than 50 percent likely of being effectively settled is recorded. Management considers a tax position effectively settled when: (i) the taxing authority has completed its examination procedures, including all appeals and administrative reviews; (ii) the Duke Energy Registrants do not intend to appeal or litigate the tax position included in the completed examination; and (iii) it is remote that the taxing authority would examine or re-examine the tax position. The amount of a tax return position that is not recognized in the financial statements is disclosed as an unrecognized tax benefit. If these unrecognized tax benefits are later recognized, then there will be a decrease in income tax expense or a reclassification between deferred and current taxes payable. If the portion of tax benefits that has been recognized changes and those tax benefits are subsequently unrecognized, then the previously recognized tax benefits may impact the financial statements through increasing income tax expense or a reclassification between deferred and current taxes payable. Changes in assumptions on tax benefits may also impact interest expense or interest income and may result in the recognition of tax penalties.

Tax-related interest and penalties are recorded in Interest Expense and Other Income and Expenses, net in the Consolidated Statements of Operations.

See Note 22 for further information.

Accounting for Renewable Energy Tax Credits and Cash Grants

When Duke Energy receives ITCs or cash grants on wind or solar facilities, it reduces the basis of the property recorded on the Consolidated Balance Sheets by the amount of the ITC or cash grant and, therefore, the ITC or grant benefit is ultimately recognized in the statement of operations through reduced depreciation expense. Additionally, certain tax credits and government grants result in an initial tax depreciable base in excess of the book carrying value by an amount equal to one half of the ITC or government grant. Deferred tax benefits are recorded as a reduction to income tax expense in the period that the basis difference is created.

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

DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Excise Taxes

Certain excise taxes levied by state or local governments are required to be paid even if not collected from the customer. These taxes are recognized on a gross basis. Otherwise, the taxes are accounted for net. Excise taxes accounted for on a gross basis as both operating revenues and property and other taxes in the Consolidated Statements of Operations were as follows.



	Years Ended December 31,
(in millions)	2016		2015		2014
Duke Energy	$	362	$	396	$	498
Duke Energy Carolinas	31		31		94
Progress Energy	213		229		263
Duke Energy Progress	18		16		56
Duke Energy Florida	195		213		207
Duke Energy Ohio	100		102		103
Duke Energy Indiana	17		34		38

On July 23, 2013, North Carolina House Bill 998, or the North Carolina Tax Simplification and Rate Reduction Act (HB 998) was signed into law. HB 998 repealed the utility franchise tax effective July 1, 2014. The utility franchise tax was a 3.22 percent gross receipts tax on sales of electricity. The result of this change in law is an annual reduction in excise taxes of approximately $160 million for Duke Energy Carolinas and approximately $110 million for Duke Energy Progress. HB 998 also increases sales tax on electricity from 3 percent to 7 percent effective July 1, 2014. HB 998 requires the NCUC to adjust retail electric rates for the elimination of the utility franchise tax, changes due to the increase in sales tax on electricity and the resulting change in liability of utility companies under the general franchise tax.

Dividend Restrictions and Unappropriated Retained Earnings

Duke Energy does not have any legal, regulatory or other restrictions on paying common stock dividends to shareholders. However, as further described in Note 4, due to conditions established by regulators in conjunction with merger transaction approvals, Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio, Duke Energy Indiana and Piedmont have restrictions on paying dividends or otherwise advancing funds to Duke Energy. At December 31, 2016 and 2015, an insignificant amount of Duke Energy’s consolidated Retained earnings balance represents undistributed earnings of equity method investments.

New Accounting Standards

The following new accounting standards have been issued, but have not yet been adopted by the Duke Energy Registrants, as of December 31, 2016.

Goodwill Impairment. In January 2017, the Financial Accounting Standards Board (FASB) issued revised guidance for subsequent measurement of goodwill. Under the updated guidance, a company will recognize an impairment to goodwill for the amount by which a reporting unit's carrying value exceeds the reporting unit's fair value, not to exceed the amount of goodwill allocated to that reporting unit. Duke Energy is unable to determine the future impact of adopting this guidance.

For Duke Energy, this guidance is effective for interim and annual periods beginning January 1, 2020, but may be early adopted for interim or annual goodwill tests performed on testing dates after January 1, 2017. The guidance will be applied on a prospective basis.

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

Most of Duke Energy’s revenue is expected to be in scope of the new guidance. The majority of our sales, including energy provided to residential customers, are from tariff offerings that provide natural gas or electricity without a defined contractual term (‘at-will’). For such arrangements, Duke Energy expects that the revenue from contracts with customers will be equivalent to the electricity or natural gas supplied and billed in that period (including estimated billings). As such, Duke Energy does not expect that there will be a significant shift in the timing or pattern of revenue recognition for such sales. The evaluation of other revenue streams is ongoing, including long-term contracts with industrial customers and long-term purchase power agreements (PPA).

Duke Energy continues to evaluate what information would be most useful for users of the financial statements, including information already provided in disclosures outside of the financial statement footnotes. These additional disclosures could include the disaggregation of revenues by geographic location, type of service, customer class or by duration of contract (‘at-will’ versus contracted revenue). Revenues from contracts with customers, revenue recognized under regulated operations accounting and revenue from lease accounting will also be disclosed.

Duke Energy intends to use the modified retrospective method of adoption effective January 1, 2018. This method results in a cumulative change effect that will be recorded as an adjustment to retained earnings as of January 1, 2018, as if the standard had always been in effect. Disclosures for 2018 will include a comparison to what would have been reported for 2018 under the current revenue recognition rules in order to assist financial statement users in understanding how revenue recognition has changed as a result of this standard and to facilitate comparability with prior year reported results, which are not restated under the modified retrospective approach.

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

DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

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

For Duke Energy, this guidance is effective for interim and annual periods beginning January 1, 2019, although it can be early adopted. The guidance is applied using a modified retrospective approach. Duke Energy is currently evaluating the financial statement impact of adopting this standard. Other than an expected increase in assets and liabilities, the ultimate impact of the new standard has not yet been determined. Significant system enhancements may be required to facilitate the identification, tracking and reporting of potential leases based upon requirements of the new lease standard.

Stock-Based Compensation and Income Taxes. In March 2016, the FASB issued revised accounting guidance for stock-based compensation and the associated income taxes. This standard changes certain aspects of accounting for stock-based payment awards to employees including the accounting for income taxes, statutory tax withholding requirements, as well as classification on the Consolidated Statements of Cash Flows. The primary future impact to the Duke Energy Registrants is expected to be a small increase in the volatility of income tax expense. This guidance will be adopted prospectively, retrospectively, or using a modified retrospective approach depending on the item changed for the period beginning January 1, 2017.

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

For Duke Energy, this guidance is effective for the interim and annual periods beginning January 1, 2018, although it can be early adopted. The guidance will be applied using a retrospective transition method to each period presented. Upon adoption by Duke Energy, the revised guidance will result in a change in total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents explained when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prior to adoption, the Duke Energy Registrants reflect changes in restricted cash within Cash Flows from Investing Activities on the Consolidated Statement of Cash Flows.

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

For Duke Energy, the revised accounting guidance is effective for interim and annual periods beginning January 1, 2018, by recording a cumulative change effect that will be recorded as an adjustment to retained earnings as of January 1, 2018. This guidance is expected to have minimal impact on the Duke Energy Registrant's Consolidated Statements of Operations and Comprehensive Income as changes in the fair value of most of the Duke Energy Registrants' available-for-sale equity securities are deferred as regulatory assets or liabilities pursuant to accounting guidance for regulated operations.

2. ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS

The Duke Energy Registrants consolidate assets and liabilities from acquisitions as of the purchase date and include earnings from acquisitions in consolidated earnings after the purchase date.

Acquisition of Piedmont Natural Gas

On October 3, 2016, Duke Energy acquired all outstanding common stock of Piedmont for a total cash purchase price of $5.0 billion and assumed Piedmont's existing long-term debt, which had an estimated fair value of approximately $2.0 billion at the time of the acquisition. Piedmont is a North Carolina corporation primarily engaged in regulated natural gas distribution to residential, commercial, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee. Piedmont is also invested in joint-venture, energy-related businesses, including regulated interstate natural gas transportation and storage and regulated intrastate natural gas transportation. The acquisition provides a foundation for Duke Energy to establish a broader, long-term strategic natural gas infrastructure platform to complement its existing natural gas pipeline investments and regulated natural gas business in the Midwest. In connection with the closing of the acquisition, Piedmont became a wholly owned subsidiary of Duke Energy.

130

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

DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Preliminary Purchase Price Allocation

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



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

The fair value of Piedmont's assets and liabilities were determined based on significant estimates and assumptions that are judgmental in nature, including projected future cash flows (including timing); discount rates reflecting risk inherent in the future cash flows and market prices of long-term debt. The preliminary amounts are subject to revision to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date.

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

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

The excess of the purchase price over the estimated fair value of Piedmont's assets and liabilities on the acquisition date was recorded as goodwill. The goodwill reflects the value paid by Duke Energy primarily for establishing a broader, long-term strategic natural gas infrastructure platform, an improved risk profile and expected synergies resulting from the combined entities. See Note 11 for information related to the allocation of goodwill to Duke Energy’s reporting units.

Accounting Charges Related to the Acquisition

Duke Energy incurred pretax non-recurring transaction and integration costs associated with the acquisition of $439 million and $9 million for the years ended December 31, 2016 and 2015, respectively. Amounts recorded on the Consolidated Statements of Operations in 2016 include:

Interest expense of $234 million related to the acquisition financing, including realized losses on forward-starting interest rate swaps of $190 million. See Note 14 for additional information on the swaps.

Charges of $104 million related to commitments made in conjunction with the transaction, including charitable contributions and a one-time bill credit to Piedmont customers. $10 million was recorded as a reduction in Operating Revenues, with the remaining $94 million recorded within Operation, maintenance and other.

Other transaction and integration costs of $101 million recorded to Operation, maintenance and other, including professional fees and severance.

Pro Forma Financial Information

The following unaudited pro forma financial information reflects the combined results of operations of Duke Energy and Piedmont as if the merger had occurred as of January 1, 2015. The pro forma financial information does not include potential cost savings, intercompany revenues, Piedmont’s earnings from a certain equity method investment sold immediately prior to the merger or non-recurring transaction and integration costs incurred by Duke Energy and Piedmont. The after-tax non-recurring transaction and integration costs incurred by Duke Energy and Piedmont were $279 million and $19 million for the years ended December 31, 2016 and 2015, respectively.

This information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of Duke Energy.

131

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

DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Piedmont's Earnings

Piedmont's revenues and net income included in Duke Energy's Consolidated Statements of Operations for the year ended December 31, 2016, were $367 million and $20 million, respectively. Piedmont's revenues and net income for the year ended December 31, 2016 include the impact of non-recurring transaction costs of $10 million and $46 million, respectively.

Acquisition Related Financings and Other Matters

Duke Energy financed the Piedmont acquisition with a combination of debt and equity issuances and other cash sources, including:

$3.75 billion of long-term debt issued in August 2016.

$750 million borrowed under the $1.5 billion short-term loan facility in September 2016, which was repaid in December 2016.

10.6 million shares of common stock issued in October 2016 for net cash proceeds of approximately $723 million.

The $4.9 billion senior unsecured bridge financing facility (Bridge Facility) with Barclays Capital, Inc. (Barclays) was terminated following the issuance of the long-term debt. For additional information related to the debt and equity issuances, see Notes 6 and 18, respectively. For additional information regarding Duke Energy's and Piedmont's joint investment in Atlantic Coast Pipeline, LLC (ACP), see Note 4.

Purchase of NCEMPA's Generation

On July 31, 2015, Duke Energy Progress completed the purchase of North Carolina Eastern Municipal Power Agency’s (NCEMPA) ownership interests in certain generating assets, fuel and spare parts inventory jointly owned with and operated by Duke Energy Progress for approximately $1.25 billion. This purchase was accounted for as an asset acquisition. The purchase resulted in the acquisition of a total of approximately 700 megawatts (MW) of generating capacity at Brunswick Nuclear Plant (Brunswick), Shearon Harris Nuclear Plant (Harris), Mayo Steam Plant and Roxboro Steam Plant. In connection with this transaction, Duke Energy Progress and NCEMPA entered into a 30-year wholesale power agreement, whereby Duke Energy Progress will sell power to NCEMPA to continue to meet the needs of NCEMPA customers.

The purchase price exceeded the historical carrying value of the acquired assets by $350 million, which was recognized as an acquisition adjustment and recorded in property, plant and equipment. Duke Energy Progress established a rider in North Carolina to recover the costs to acquire, operate and maintain interests in the assets purchased as allocated to its North Carolina retail operations, including the purchase acquisition adjustment, and included the purchase acquisition adjustment in wholesale power formula rates.

Duke Energy Progress received an order from the PSCSC to defer recovery of the South Carolina retail allocated costs of the asset purchased until Duke Energy Progress' next general rate case, which was filed in July 2016. In October 2016, Duke Energy Progress, the Office of Regulatory Staff (ORS) and intervenors entered into a settlement agreement that provides for recovery of the historical carrying value of the South Carolina allocated purchased costs of the transaction. The settlement agreement was approved by the PSCSC in December 2016. See Note 4 for additional information on the South Carolina rate case.

The ownership interests in generating assets acquired are subject to rate-setting authority of the FERC, NCUC and PSCSC and accordingly, the assets are recorded at historical cost. The assets acquired are presented in the following table.



(in millions)
Inventory	$	56
Net property, plant and equipment	845
Total assets	901
Acquisition adjustment, recorded within property, plant and equipment	350
Total purchase price	$	1,251

In connection with the acquisition, Duke Energy Progress acquired NCEMPA's NDTF assets of $287 million and assumed AROs of $204 million associated with NCEMPA's interest in the generation assets. The NDTF and the AROs are subject to regulatory accounting treatment.

DISPOSITIONS

The following table summarizes the (Loss) Income from Discontinued Operations, net of tax recorded on Duke Energy's Consolidated Statements of Operations:



	Years Ended December 31,
(in millions)	2016			2015			2014
International Energy Disposal Group	$	(534	)	$	157		$	(73	)
Midwest Generation Disposal Group	36			33			(524		)
Other^(a)	90			(13		)	(52		)
(Loss) Income from Discontinued Operations, net of tax	$	(408	)	$	177		$	(649	)


(a)	Relates to previously sold businesses not related to the Disposal Groups. The amount for 2016 represents an income tax benefit resulting from immaterial out of period deferred tax liability adjustments. The amounts for 2015 and 2014 include indemnifications provided for certain legal, tax and environmental matters and foreign currency translation adjustments.

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

DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Sale of International Energy

In February 2016, Duke Energy announced it had initiated a process to divest its International Energy businesses, excluding the equity method investment in NMC (the International Disposal Group), and in October 2016, announced it had entered into two separate purchase and sale agreements to execute the divestiture. Both sales closed in December of 2016, resulting in available cash proceeds of $1.9 billion, excluding transaction costs. Proceeds were primarily used to reduce Duke Energy holding company debt. Existing favorable tax attributes result in no immediate U.S. federal-level cash tax impacts. Details of each transaction are as follows:

On December 20, 2016, Duke Energy closed on the sale of its ownership interests in businesses in Argentina, Chile, Ecuador, El Salvador, Guatemala and Peru to I Squared Capital. The assets sold included approximately 2,230 MW of hydroelectric and natural gas generation capacity, transmission infrastructure and natural gas processing facilities. I Squared Capital purchased the businesses for an enterprise value of $1.2 billion.

On December 29, 2016, Duke Energy closed on the sale of its Brazilian business, which included approximately 2,090 MW of hydroelectric generation capacity, to CTG for an enterprise value of $1.2 billion. With the closing of the CTG deal, Duke Energy finalized its exit from the Latin American market.

Assets Held For Sale and Discontinued Operations

As a result of the transactions, the International Disposal Group was classified as held for sale and as discontinued operations in the fourth quarter of 2016. Interest expense directly associated with the International Disposal Group was allocated to discontinued operations. No interest from corporate level debt was allocated to discontinued operations.

The following table presents the carrying values of the major classes of Assets held for sale and Liabilities associated with assets held for sale included in the Consolidated Balance Sheets. As a result of Duke Energy closing both transactions in December 2016, there are no Assets held for sale or Liabilities associated with assets held for sale as of December 31, 2016.



(in millions)	December 31, 2015
Current assets held for sale
Cash and cash equivalents	$	474
Receivables, net	188
Inventory	65
Other	19
Total current assets held for sale	746
Noncurrent assets held for sale
Property, Plant and Equipment
Cost	2,859
Accumulated depreciation and amortization	(930		)
Net property, plant and equipment	1,929
Goodwill	271
Other	213
Total noncurrent assets held for sale	2,413
Total assets held for sale	$	3,159
Current liabilities associated with assets held for sale
Accounts payable	$	51
Taxes accrued	60
Current maturities of long-term debt	48
Other	120
Total current liabilities associated with assets held for sale	279
Noncurrent liabilities associated with assets held for sale
Long-Term Debt	653
Deferred income taxes	157
Other	90
Total noncurrent liabilities associated with assets held for sale	900
Total liabilities associated with assets held for sale	$	1,179

The value of goodwill increased by $7 million from December 31, 2015 through the date of sale as a result of changes in foreign currency exchanges rates. At the time of the disposition, the International Disposal Group included goodwill of $278 million.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

The following table presents the results of the International Disposal Group which are included in (Loss) Income from Discontinued Operations, net of tax in Duke Energy's Consolidated Statements of Operations.



	Years Ended December 31,
(in millions)	2016			2015		2014
Operating Revenues	$	988		$	1,088	$	1,417
Fuel used in electric generation and purchased power	227			306		486
Cost of natural gas	43			53		63
Operation, maintenance and other	341			334		352
Depreciation and amortization^(a)	62			92		97
Property and other taxes	15			7		9
Impairment charges^(b)	194			13		—
(Loss) Gains on Sales of Other Assets and Other, net	(3		)	6		6
Other Income and Expenses, net	58			23		47
Interest Expense	82			85		93
Pretax loss on disposal^(c)	(514		)	—		—
(Loss) Income before income taxes^(d)	(435		)	227		370
Income tax expense^(e)(f)	99			70		443
(Loss) Income from discontinued operations of the International Disposal Group	$	(534	)	$	157	$	(73	)


(a)	Upon meeting the criteria for assets held for sale, beginning in the fourth quarter of 2016 depreciation expense was ceased.

(b)

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


(c)	The pretax loss on disposal includes the recognition of cumulative foreign currency translation losses of $620 million as of the disposal date. See the Consolidated Statements of Changes in Equity for additional information.


(d)	Pretax (Loss) Income attributable to Duke Energy Corporation was $(445) million, $221 million and $360 million for the years ended December 31, 2016, 2015 and 2014, respectively.


(e)	2016 amount includes $126 million of income tax expense on the disposal, which primarily reflects in-country taxes incurred as a result of the sale. The after-tax loss on disposal was $640 million.


(f)	2016 amount includes an income tax benefit of $95 million and 2014 amount includes an income tax charge of $373 million related to historical undistributed foreign earnings. See Note 22, "Income Taxes," for additional information.

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



	Years Ended December 31,
(in millions)	2016			2015		2014
Cash flows provided by (used in):
Operating activities	$	204		$	248	$	339
Investing activities	(434		)	177		111

Other Sale Related Matters

Duke Energy will provide transition services to CTG and I Squared for a period not to extend beyond March 2017 and September 2017, respectively. In addition, Duke Energy will reimburse CTG and I Squared for all tax obligations arising from the period preceding consummation on the transactions, totaling approximately $78 million. Duke Energy has not recorded any other liabilities, contingent liabilities or indemnifications related to the International Disposal Group.

Midwest Generation Exit

Duke Energy, through indirect subsidiaries, completed the sale of the Midwest Generation Disposal Group to a subsidiary of Dynegy on April 2, 2015, for approximately $2.8 billion in cash. The nonregulated Midwest generation business included generation facilities with approximately 5,900 MW of owned capacity located in Ohio, Pennsylvania and Illinois. On April 1, 2015, prior to the sale, Duke Energy Ohio distributed its indirect ownership interest in the nonregulated Midwest generation business to a subsidiary of Duke Energy Corporation.

Duke Energy utilized a revolving credit agreement (RCA) to support the operations of the nonregulated Midwest generation business. Duke Energy Ohio had a power purchase agreement with the Midwest Generation Disposal Group for a portion of its standard service offer (SSO) supply requirement. The agreement and the SSO expired in May 2015.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

The results of operations of the Midwest Generation Disposal Group prior to the date of sale are classified as discontinued operations in the accompanying Consolidated Statements of Operations. Interest expense associated with the RCA was allocated to discontinued operations. No other interest expense related to corporate level debt was allocated to discontinued operations. Certain immaterial costs that were eliminated as a result of the sale remained in continuing operations. The following table summarizes the Midwest Generation Disposal Group activity recorded within discontinued operations.



	Duke Energy									Duke Energy Ohio
	Years Ended December 31,									Years Ended December 31,
(in millions)	2016			2015			2014			2016			2015			2014
Operating Revenues	$	—		$	543		$	1,748		$	—		$	412		$	1,299
Pretax Loss on disposal^(a)	—			(45		)	(929		)	—			(52		)	(959		)

Income (loss) before income taxes^(b)	$	—		$	59		$	(818	)	$	—		$	44		$	(863	)
Income tax (benefit) expense^(c)	(36		)	26			(294		)	(36		)	21			(300		)
Income (loss) from discontinued operations	$	36		$	33		$	(524	)	$	36		$	23		$	(563	)


(a)	The Loss on disposal includes impairments recorded to adjust the carrying amount of the assets to the estimated fair value of the business, based on the selling price to Dynegy less cost to sell.


(b)	2015 amounts include the impact of an $81 million charge for the settlement agreement reached in a lawsuit related to the Midwest Generation Disposal Group. Refer to Note 5 for further information about the lawsuit.


(c)	2016 amounts result from immaterial out of period deferred tax liability adjustments.

3. BUSINESS SEGMENTS

Duke Energy evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to noncontrolling interests. Segment income, as discussed below, includes intercompany revenues and expenses that are eliminated in the Consolidated Financial Statements. Certain governance costs are allocated to each segment. In addition, direct interest expense and income taxes are included in segment income.

Operating segments are determined based on information used by the chief operating decision-maker in deciding how to allocate resources and evaluate the performance of the business.

Products and services are sold between affiliate companies and reportable segments of Duke Energy at cost. Segment assets as presented in the tables that follow exclude all intercompany assets.

Duke Energy

Due to the Piedmont acquisition and the sale of International Energy in the fourth quarter of 2016, Duke Energy's segment structure has been realigned to include the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables. Prior period information has been recast to conform to the current segment structure. See Note 2 for further information on the Piedmont and International Energy transactions.

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

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

Commercial Renewables is primarily comprised of nonregulated utility scale wind and solar generation assets located throughout the U.S.

In December 2016, Duke Energy closed on the sale of the International Disposal Group, which includes the former International Energy business segment, excluding the equity method investment in NMC. Results of the International Disposal Group are presented within Discontinued Operations for all periods and results of NMC are presented within Other for all periods, as described below. See Note 2, "Acquisitions and Dispositions" for additional information related to the sale.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

The remainder of Duke Energy’s operations is presented as Other, which is primarily comprised of unallocated corporate interest expense, unallocated corporate costs, contributions to the Duke Energy Foundation and the operations of Duke Energy’s wholly owned captive insurance subsidiary, Bison Insurance Company Limited (Bison). As discussed above, Other also includes Duke Energy's 25 percent interest in NMC, a large regional producer of methyl tertiary butyl ether (MTBE) located in Saudi Arabia. The investment in NMC is accounted for under the equity method of accounting.



	Year Ended December 31, 2016
	Electric		Gas					Total
	Utilities and		Utilities and		Commercial			Reportable
(in millions)	Infrastructure		Infrastructure		Renewables			Segments			Other			Eliminations			Total
Unaffiliated Revenues	$	21,336	$	875	$	484		$	22,695		$	48		$	—		$	22,743
Intersegment Revenues	30		26		—			56			69			(125		)	—
Total Revenues	$	21,366	$	901	$	484		$	22,751		$	117		$	(125	)	$	22,743
Interest Expense	$	1,136	$	46	$	53		$	1,235		$	693		$	(12	)	$	1,916
Depreciation and amortization	2,897		115		130			3,142			152			—			3,294
Equity in earnings (losses) of unconsolidated affiliates^(a)	5		19		(82		)	(58		)	43			—			(15		)
Income tax expense (benefit)	1,672		90		(160		)	1,602			(446		)	—			1,156
Segment income (loss)^(b)(c)	3,040		152		23			3,215			(645		)	1			2,571
Add back noncontrolling interest component																	7
Loss from discontinued operations, net of tax^(d)																	(408		)
Net income																	$	2,170
Capital investments expenditures and acquisitions^(e)	$	6,649	$	5,519	$	857		$	13,025		$	190		$	—		$	13,215
Segment assets	114,993		10,760		4,377			130,130			2,443			188			132,761

(a) Commercial Renewables includes a pretax impairment charge of $71 million. See Note 12 for additional information.


(b)	Other includes $329 million of after-tax costs to achieve mergers. Refer to Note 2 for additional information on costs related to the Piedmont merger.


(c)	Other includes after-tax charges of $57 million related to cost savings initiatives. Refer to Note 19 for further information.


(d)	Includes a loss on sale of the International Disposal Group. Refer to Note 2 for further information.


(e)	Other includes $26 million of capital investments expenditures related to the International Disposal Group. Gas Utilities and Infrastructure includes the Piedmont acquisition of $5 billion. Refer to Note 2 for more information on the Piedmont acquisition.



	Year Ended December 31, 2015
	Electric			Gas					Total
	Utilities and			Utilities and		Commercial			Reportable
(in millions)	Infrastructure			Infrastructure		Renewables			Segments			Other			Eliminations			Total
Unaffiliated Revenues	$	21,489		$	536	$	286		$	22,311		$	60		$	—		$	22,371
Intersegment Revenues	32			5		—			37			75			(112		)	—
Total Revenues	$	21,521		$	541	$	286		$	22,348		$	135		$	(112	)	$	22,371
Interest Expense	$	1,074		$	25	$	44		$	1,143		$	393		$	(9	)	$	1,527
Depreciation and amortization	2,735			79		104			2,918			135			—			3,053
Equity in earnings (losses) of unconsolidated affiliates	(2		)	1		(6		)	(7		)	76			—			69
Income tax expense (benefit)	1,602			44		(128		)	1,518			(262		)	—			1,256
Segment income (loss)^(a)(b)(c)	2,819			73		52			2,944			(299		)	—			2,645
Add back noncontrolling interest component																		9
Income from discontinued operations, net of tax^(d)																		177
Net income																		$	2,831
Capital investments expenditures and acquisitions^(e)	$	6,852		$	234	$	1,019		$	8,105		$	258		$	—		$	8,363
Segment assets^(f)	109,097			2,637		3,861			115,595			5,373			188			121,156

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)


(a)	Electric Utilities and Infrastructure includes an after-tax charge of $58 million related to the Edwardsport settlement. Refer to Note 4 for further information.

(b) Other includes $60 million of after-tax costs to achieve mergers.


(c)	Other includes after-tax charges of $77 million related to cost savings initiatives. Refer to Note 19 for further information.


(d)	Includes the impact of a settlement agreement reached in a lawsuit related to the Midwest Generation Disposal Group. Refer to Note 5 for further information related to the lawsuit and Note 2 for further information on discontinued operations.


(e)	Other includes capital investment expenditures of $45 million related to the International Disposal Group.


(f)	Other includes Assets Held for Sale balances related to the International Disposal Group. Refer to Note 2 for further information.



	Year Ended December 31, 2014
	Electric			Gas					Total
	Utilities and			Utilities and		Commercial			Reportable
(in millions)	Infrastructure			Infrastructure		Renewables			Segments		Other			Eliminations			Total
Unaffiliated Revenues	$	21,655		$	573	$	235		$	22,463	$	46		$	—		$	22,509
Intersegment Revenues	36			5		1			42		70			(112		)	—
Total Revenues	$	21,691		$	578	$	236		$	22,505	$	116		$	(112	)	$	22,509
Interest Expense	$	1,057		$	37	$	50		$	1,144	$	409		$	(24	)	$	1,529
Depreciation and amortization	2,686			73		90			2,849		120			—			2,969
Equity in earnings (losses) of unconsolidated affiliates	(1		)	—		8			7		123			—			130
Income tax expense (benefit)	1,582			45		(88		)	1,539		(314		)	—			1,225
Segment income (loss)^(a)(b)	2,714			80		53			2,847		(332		)	18			2,533
Add back noncontrolling interest component																	5
Loss from discontinued operations, net of tax^(c)																	(649		)
Net income																	$	1,889
Capital investments expenditures and acquisitions^(d)	$	4,642		$	121	$	514		$	5,277	$	251		$	—		$	5,528
Segment assets^(e)	104,119			2,512		2,981			109,612		10,755			190			120,557


(a)	Other includes a $94 million pretax impairment charge related to Ohio Valley Electric Corporation (OVEC) and costs to achieve mergers.


(b)	Electric Utilities and Infrastructure includes pretax charges of $102 million related to the criminal investigation of the Dan River coal ash spill. See Note 5 for additional information.


(c)	Includes an impairment of the Midwest Generation Disposal Group. Refer to Note 2 for further information.


(d)	Other includes $67 million of capital investments expenditures and acquisitions of the International Disposal Group.


(e)	Other includes Assets Held for Sale balances related to the International Disposal Group and Midwest Generation Disposal Group. Refer to Note 2 for further information.

Geographical Information

For the years ended December 31, 2016, 2015 and 2014, all assets and revenues are within the U.S.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Products and Services

The following table summarizes revenues of the reportable segments by type.



	Retail		Wholesale		Retail					Total
(in millions)	Electric		Electric		Natural Gas		Other			Revenues
2016
Electric Utilities and Infrastructure	$	18,338	$	2,095	$	—	$	933		$	21,366
Gas Utilities and Infrastructure	—		—		871		30			901
Commercial Renewables	—		303		—		181			484
Total Reportable Segments	$	18,338	$	2,398	$	871	$	1,144		$	22,751
2015
Electric Utilities and Infrastructure	$	18,695	$	2,014	$	—	$	812		$	21,521
Gas Utilities and Infrastructure	—		—		546		(5		)	541
Commercial Renewables	—		245		—		41			286
Total Reportable Segments	$	18,695	$	2,259	$	546	$	848		$	22,348
2014
Electric Utilities and Infrastructure	$	19,007	$	1,879	$	—	$	805		$	21,691
Gas Utilities and Infrastructure	—		—		571		7			578
Commercial Renewables	—		236		—		—			236
Total Reportable Segments	$	19,007	$	2,115	$	571	$	812		$	22,505

Duke Energy Ohio

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

Electric Utilities and Infrastructure transmits and distributes electricity in portions of Ohio and generates, distributes and sells electricity in portions of Kentucky. Gas Utilities and Infrastructure transports and sells natural gas in portions of Ohio and northern Kentucky. It conducts operations primarily through Duke Energy Ohio and its wholly owned subsidiary, Duke Energy Kentucky.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Other is primarily comprised of governance costs allocated by its parent, Duke Energy, and revenues and expenses related to Duke Energy Ohio's contractual arrangement to buy power from OVEC's power plants. For additional information on related party transactions refer to Note 13. All of Duke Energy Ohio’s revenues are generated domestically and its long-lived assets are all in the U.S.



	Year Ended December 31, 2016
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Eliminations			Total
Total revenues	$	1,410	$	503	$	1,913	$	31		$	—		$	1,944
Interest expense	$	58	$	27	$	85	$	1		$	—		$	86
Depreciation and amortization	151		80		231		2			—			233
Income tax expense (benefit)	55		44		99		(21		)	—			78
Segment income (loss)	154		77		231		(39		)	—			192
Income from discontinued operations, net of tax													36
Net income													$	228
Capital expenditures	$	322	$	154	$	476	$	—		$	—		$	476
Segment assets	4,782		2,696		7,478		62			(12		)	7,528



	Year Ended December 31, 2015
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Eliminations			Total
Total revenues	$	1,331	$	541	$	1,872	$	33		$	—		$	1,905
Interest expense	$	53	$	25	$	78	$	1		$	—		$	79
Depreciation and amortization	147		79		226		1			—			227
Income tax expense (benefit)	59		45		104		(23		)	—			81
Segment income (loss)	118		73		191		(41		)	(1		)	149
Income from discontinued operations, net of tax													23
Net income													$	172
Capital expenditures	$	264	$	135	$	399	$	—		$	—		$	399
Segment assets	4,534		2,516		7,050		56			(9		)	7,097



	Year Ended December 31, 2014
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Eliminations			Total
Total revenues	$	1,317	$	578	$	1,895	$	19		$	(1	)	$	1,913
Interest expense	$	43	$	37	$	80	$	5		$	1		$	86
Depreciation and amortization	138		73		211		3			—			214
Income tax expense (benefit)	71		45		116		(73		)	—			43
Segment income (loss)^(a)	122		80		202		(133		)	(1		)	68
Loss from discontinued operations, net of tax^(b)													(563		)
Net loss													$	(495	)
Capital expenditures	$	193	$	107	$	300	$	22		$	—		$	322
Segment assets^(c)	4,428		2,487		6,915		3,321			(243		)	9,993


(a)	Other includes a $94 million pretax impairment charge related to OVEC.


(b)	Includes an impairment of the Midwest Generation Disposal Group. Refer to Note 2 for further information.


(c)	Other includes Assets Held for Sale balances related to the Midwest Generation Disposal Group. Refer to Note 2 for further information.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

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

The remaining Subsidiary Registrants each have one reportable operating segment, Electric Utilities and Infrastructure, which generates, transmits, distributes and sells electricity. The remainder of each company’s operations is classified as Other. While not considered a reportable segment for any of these companies, Other consists of certain unallocated corporate costs. Other for Progress Energy also includes interest expense on corporate debt instruments of $221 million, $240 million and $241 million for the years ended December 31, 2016, 2015 and 2014. The following table summarizes the net loss for Other for each of these entities.



	Years Ended December 31,
(in millions)	2016			2015			2014
Duke Energy Carolinas	$	(104	)	$	(95	)	$	(79	)
Progress Energy	(200		)	(159		)	(190		)
Duke Energy Progress	(56		)	(32		)	(31		)
Duke Energy Florida	(23		)	(16		)	(19		)
Duke Energy Indiana	(13		)	(10		)	(11		)

The assets of Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana are substantially all included within the Electric Utilities and Infrastructure segment at December 31, 2016, 2015 and 2014.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

4. REGULATORY MATTERS

REGULATORY ASSETS AND LIABILITIES

The Duke Energy Registrants record regulatory assets and liabilities that result from the ratemaking process. See Note 1 for further information.

The following tables present the regulatory assets and liabilities recorded on the Consolidated Balance Sheets.



	December 31, 2016
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
Regulatory Assets
AROs – coal ash	$	3,761	$	1,536	$	1,830	$	1,822	$	8	$	12	$	276
AROs – nuclear and other	684		9		569		275		294		—		—
Accrued pension and OPEB	2,387		481		882		423		458		135		222
Retired generation facilities	534		39		422		165		257		—		73
Debt fair value adjustment	1,313		—		—		—		—		—		—
Net regulatory asset related to income taxes	894		484		231		7		224		63		119
Storm cost deferrals	153		—		148		148		—		5		—
Nuclear asset securitized balance, net	1,193		—		1,193		—		1,193		—		—
Hedge costs and other deferrals	217		93		91		66		25		7		26
Derivatives – gas supply contracts	187		—		—		—		—		—		—
Demand side management (DSM)/Energy efficiency (EE)	407		122		278		263		15		6		—
Grid Modernization	65		—		—		—		—		65		—
Vacation accrual	196		76		38		38		—		4		10
Deferred fuel and purchased power	156		—		111		24		87		5		40
Nuclear deferral	226		92		134		38		96		—		—
Post-in-service carrying costs and deferred operating expenses	413		70		42		42		—		20		281
Gasification services agreement buyout	8		—		—		—		—		—		8
Transmission expansion obligation	71		—		—		—		—		71		—
Manufactured gas plant (MGP)	99		—		—		—		—		99		—
Advanced metering infrastructure	218		172		—		—		—		—		46
NCEMPA deferrals	51		—		51		51		—		—		—
East Bend deferrals	32		—		—		—		—		32		—
Other	636		223		103		69		36		33		121
Total regulatory assets	13,901		3,397		6,123		3,431		2,693		557		1,222
Less: current portion	1,023		238		401		188		213		37		149
Total noncurrent regulatory assets	$	12,878	$	3,159	$	5,722	$	3,243	$	2,480	$	520	$	1,073

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

DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)



	December 31, 2016
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
Regulatory Liabilities
Costs of removal	$	6,074	$	2,476	$	2,198	$	1,840	$	358	$	212	$	660
Amounts to be refunded to customers	45		—		—		—		—		—		45
Storm reserve	83		22		60		—		60		1		—
Accrued pension and OPEB	174		46		—		—		—		19		72
Deferred fuel and purchased power	192		105		81		64		17		6		—
Other	722		352		245		200		44		19		11
Total regulatory liabilities	7,290		3,001		2,584		2,104		479		257		788
Less: current portion	409		161		189		158		31		21		40
Total noncurrent regulatory liabilities	$	6,881	$	2,840	$	2,395	$	1,946	$	448	$	236	$	748



	December 31, 2015
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
Regulatory Assets
AROs – coal ash	$	2,555	$	1,120	$	1,394	$	1,386	$	8	$	4	$	37
AROs – nuclear and other	838		104		487		195		292		—		—
Accrued pension and OPEB	2,151		479		807		366		441		139		220
Retired generation facilities	509		49		409		179		230		—		51
Debt fair value adjustment	1,191		—		—		—		—		—		—
Net regulatory asset related to income taxes	1,075		564		318		106		212		55		120
Nuclear asset securitizable balance, net	1,237		—		1,237		—		1,237		—		—
Hedge costs and other deferrals	571		127		410		171		239		7		27
DSM/EE	340		80		250		237		13		10		—
Grid Modernization	68		—		—		—		—		68		—
Vacation accrual	192		79		38		38		—		5		10
Deferred fuel and purchased power	151		21		129		93		36		1		—
Nuclear deferral	245		107		138		62		76		—		—
Post-in-service carrying costs and deferred operating expenses	383		97		38		38		—		21		227
Gasification services agreement buyout	32		—		—		—		—		—		32
Transmission expansion obligation	72		—		—		—		—		72		—
MGP	104		—		—		—		—		104		—
NCEMPA deferrals	21		—		21		21		—		—		—
East Bend deferrals	16		—		—		—		—		16		—
Other	499		244		121		82		39		31		94
Total regulatory assets	12,250		3,071		5,797		2,974		2,823		533		818
Less: current portion	877		305		362		264		98		36		102
Total noncurrent regulatory assets	$	11,373	$	2,766	$	5,435	$	2,710	$	2,725	$	497	$	716

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)



	December 31, 2015
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
Regulatory Liabilities
Costs of removal	$	5,329	$	2,413	$	2,078	$	1,725	$	353	$	222	$	616
Amounts to be refunded to customers	71		—		—		—		—		—		71
Storm reserve	150		24		125		—		125		1		—
Accrued pension and OPEB	288		68		51		25		26		21		83
Deferred fuel and purchased power	311		55		255		58		197		1		—
Other	506		281		164		155		8		12		46
Total regulatory liabilities	6,655		2,841		2,673		1,963		709		257		816
Less: current portion	400		39		286		85		200		12		62
Total noncurrent regulatory liabilities	$	6,255	$	2,802	$	2,387	$	1,878	$	509	$	245	$	754

Descriptions of regulatory assets and liabilities, summarized in the tables above, as well as their recovery and amortization periods follow. Items are excluded from rate base unless otherwise noted.

AROs – coal ash. Represents regulatory assets including deferred depreciation and accretion related to the legal obligation to close ash basins. The costs are deferred until recovery treatment has been determined. The recovery period for these costs has yet to be established. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Ohio earn a debt return on their expenditures. See Notes 1 and 9 for additional information.

AROs – nuclear and other. Represents regulatory assets, including deferred depreciation and accretion, related to legal obligations associated with the future retirement of property, plant and equipment, excluding amounts related to coal ash. The AROs relate primarily to decommissioning nuclear power facilities. The amounts also include certain deferred gains on NDTF investments. The recovery period for costs related to nuclear facilities runs through the decommissioning period of each nuclear unit, the latest of which is currently estimated to be 2086. See Notes 1 and 9 for additional information.

Accrued pension and OPEB. Accrued pension and other post-retirement benefit obligations (OPEB) represent regulatory assets and liabilities related to each of the Duke Energy Registrants’ respective shares of unrecognized actuarial gains and losses and unrecognized prior service cost and credit attributable to Duke Energy’s pension plans and OPEB plans. The regulatory asset or liability is amortized with the recognition of actuarial gains and losses and prior service cost and credit to net periodic benefit costs for pension and OPEB plans. The accrued pension and OPEB regulatory asset is expected to be recovered primarily over average remaining service periods of active employees covered by the benefit plans, which is approximately 9 years. See Note 21 for additional detail.

Retired generation facilities. Duke Energy Carolinas earns a return on the outstanding retail balance with recovery periods ranging from one to six years. Duke Energy Progress earns a return on the outstanding balance with recovery over a period of 10 years beginning in 2013 for retail purposes and over the longer of 10 years or the previously estimated planned retirement date for wholesale purposes. Duke Energy Indiana earns a return on the outstanding balances and the costs are included in rate base. Duke Energy Indiana’s recovery period will be determined in the next general rate case. Duke Energy Florida earns a full return on a portion of the regulatory asset related to the retired nuclear plant currently recovered in the nuclear cost recovery clause (NCRC), with the remaining portion earning a reduced return. Duke Energy Florida’s recovery period varies.

Debt fair value adjustment. Purchase accounting adjustments recorded to state the carrying value of Progress Energy and Piedmont at fair value in connection with the 2012 and 2016 mergers, respectively. Amount is amortized over the life of the related debt.

Net regulatory asset related to income taxes. Regulatory assets principally associated with the depreciation and recovery of AFUDC equity. Amounts have no impact on rate base as regulatory assets are offset by deferred tax liabilities. The recovery period is over the life of the associated assets. Amounts for all registrants include regulatory liabilities related to the gross up of federal ITCs. Amounts for Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress include regulatory liabilities related to the change in the North Carolina corporate tax rate discussed in Note 22.

Storm cost deferrals. Represents deferred incremental costs incurred related to extraordinary weather-related events, primarily damage resulting from Hurricane Matthew in the fourth quarter of 2016. The recovery period is unknown.

Nuclear asset securitizable balance, net.Represents the balance associated with Crystal River Unit 3 retirement approved for recovery by the FPSC on September 15, 2015, and the upfront financing costs securitized in 2016 with issuance of the associated bonds. The regulatory asset balance is net of the AFUDC equity portion. The recovery period is through 2036.

Hedge costs and other deferrals. Amounts relate to unrealized gains and losses on derivatives recorded as a regulatory asset or liability, respectively, until the contracts are settled. The recovery period varies for these costs and currently extends to 2048.

Derivatives – gas supply contracts held for utility operations. Represents costs for certain long-dated, fixed quantity forward gas supply contracts which are recoverable through Piedmont's PGA clauses.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

DSM/EE. The recovery period varies for these costs, with some currently unknown. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are required to pay interest on the outstanding liability balance. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida collect a return on DSM/EE investments.

Grid Modernization. Duke Energy Ohio amounts represent deferred depreciation and operating expenses as well as carrying costs on the portion of capital expenditures placed in service but not yet reflected in retail rates as plant in service. Recovery period is generally one year for depreciation and operating expenses. Recovery for post-in-service carrying costs is over the life of the assets. Duke Energy Ohio is earning a return on these costs.

Vacation accrual. Generally recovered within one year. Duke Energy Carolinas earns a return on the North Carolina balance.

Deferred fuel and purchased power. Represents certain energy-related costs that are recoverable or refundable as approved by the applicable regulatory body. Duke Energy Florida amount includes capacity costs. Duke Energy Florida earns a return on the retail portion of under-recovered costs. Duke Energy Ohio earns a return on under-recovered costs. Duke Energy Florida and Duke Energy Ohio pay interest on over-recovered costs. Duke Energy Carolinas and Duke Energy Progress amounts include certain purchased power costs in both North Carolina and South Carolina and costs of distributed energy resource programs in South Carolina. Duke Energy Carolinas and Duke Energy Progress pay interest on over-recovered costs in North Carolina. Recovery period is generally over one year. Duke Energy Indiana recovery period is quarterly.

Nuclear deferral. Includes (i) amounts related to levelizing nuclear plant outage costs at Duke Energy Carolinas and Duke Energy Progress in North Carolina and South Carolina, which allows for the recognition of nuclear outage expenses over the refueling cycle rather than when the outage occurs, resulting in the deferral of operations and maintenance costs associated with refueling and (ii) certain deferred preconstruction and carrying costs at Duke Energy Florida as approved by the FPSC, primarily associated with the Levy nuclear project (Levy), with a final true-up to be filed by May 2017.

Post-in-service carrying costs and deferred operating expenses. Represents deferred depreciation and operating expenses as well as carrying costs on the portion of capital expenditures placed in service but not yet reflected in retail rates as plant in service. Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio and Duke Energy Indiana earn a return on the outstanding balance. For Duke Energy Ohio and Duke Energy Indiana, some amounts are included in rate base. Recovery is over various lives and the latest recovery period is 2083.

Gasification services agreement buyout. The IURC authorized Duke Energy Indiana to recover costs incurred to buyout a gasification services agreement, including carrying costs through 2017. Duke Energy Indiana earns a return on this balance.

Transmission expansion obligation. Represents transmission expansion obligations related to Duke Energy Ohio’s withdrawal from Midcontinent Independent System Operator, Inc. (MISO).

MGP. Represents remediation costs incurred at former MGP sites and the deferral of costs to be incurred at the East End and West End sites through 2019. Costs incurred between 2008 and 2012 are recovered through an approved MGP rider. Recovery of costs incurred after 2012 has been requested but is pending approval from the PUCO. Duke Energy Ohio does not earn a return on these costs.

Advanced metering infrastructure (AMI). Duke Energy Carolinas amount represents deferred costs related to the installation of AMI meters and remaining net book value of non-AMI meters to be replaced. Duke Energy Carolinas earns a return on a portion of the costs and the recovery period varies. Duke Energy Indiana amount represents expected future recovery of net book value of electromechanical meters that have been replaced with AMI meters. Duke Energy Indiana expects to recover this asset over a six-year period and the meters will remain in rate base until the next general rate case.

NCEMPA deferrals. Represents retail allocated cost deferrals and returns associated with the additional ownership interest in assets acquired from NCEMPA discussed in Note 2. The North Carolina retail allocated costs are generally being recovered over a period of time between three years and the remaining life of the assets purchased through a rider that became effective on December 1, 2015. The South Carolina retail allocated costs will be amortized over an average of 24 years beginning January 2017 are earning a return.

East Bend deferrals. Represents both deferred operating expenses and deferred depreciation as well as carrying costs on the portion of East Bend Generating Station (East Bend) that was acquired from Dayton Power and Light and that had been previously operated as a jointly owned facility. Recovery will not commence until resolution of the next electric rate case in Kentucky. Duke Energy Ohio is earning a return on these deferred costs.

Costs of removal. Represents funds received from customers to cover the future removal of property, plant and equipment from retired or abandoned sites as property is retired. Also includes certain deferred gains on NDTF investments.

Amounts to be refunded to customers. Represents required rate reductions to retail customers by the applicable regulatory body. The period of refund for Duke Energy Indiana is through 2018.

Storm reserve. Duke Energy Carolinas and Duke Energy Florida are allowed to petition the PSCSC and FPSC, respectively, to seek recovery of incremental or allowable costs incurred for named storms. Funds are used to offset future incurred costs.

RESTRICTIONS ON THE ABILITY OF CERTAIN SUBSIDIARIES TO MAKE DIVIDENDS, ADVANCES AND LOANS TO DUKE ENERGY

As a condition to the approval of merger transactions, the NCUC, PSCSC, PUCO, KPSC and IURC imposed conditions on the ability of Duke Energy Carolinas, Duke Energy Progress, Duke Energy Ohio, Duke Energy Kentucky, Duke Energy Indiana and Piedmont to transfer funds to Duke Energy through loans or advances, as well as restricted amounts available to pay dividends to Duke Energy. Certain subsidiaries may transfer funds to Duke Energy Corporation Holding Company (the parent) by obtaining approval of the respective state regulatory commissions. These conditions imposed restrictions on the ability of the public utility subsidiaries to pay cash dividends as discussed below.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Duke Energy Progress and Duke Energy Florida also have restrictions imposed by their first mortgage bond indentures and Articles of Incorporation which, in certain circumstances, limit their ability to make cash dividends or distributions on common stock. Amounts restricted as a result of these provisions were not material at December 31, 2016.

Additionally, certain other subsidiaries of Duke Energy have restrictions on their ability to dividend, loan or advance funds to Duke Energy due to specific legal or regulatory restrictions, including, but not limited to, minimum working capital and tangible net worth requirements.

The restrictions discussed below were less than 25 percent of Duke Energy's net assets at December 31, 2016.

Duke Energy Carolinas

Duke Energy Carolinas must limit cumulative distributions subsequent to mergers to (i) the amount of retained earnings on the day prior to the closing of the mergers, plus (ii) any future earnings recorded.

Duke Energy Progress

Duke Energy Progress must limit cumulative distributions subsequent to the mergers between Duke Energy and Progress Energy and Duke Energy and Piedmont to (i) the amount of retained earnings on the day prior to the closing of the respective mergers, plus (ii) any future earnings recorded.

Duke Energy Ohio

Duke Energy Ohio will not declare and pay dividends out of capital or unearned surplus without the prior authorization of the PUCO. Duke Energy Ohio received FERC and PUCO approval to pay dividends from its equity accounts that are reflective of the amount that it would have in its retained earnings account had push-down accounting for the Cinergy Corp. (Cinergy) merger not been applied to Duke Energy Ohio’s balance sheet. The conditions include a commitment from Duke Energy Ohio that equity, adjusted to remove the impacts of push-down accounting, will not fall below 30 percent of total capital.

Duke Energy Kentucky is required to pay dividends solely out of retained earnings and to maintain a minimum of 35 percent equity in its capital structure.

Duke Energy Indiana

Duke Energy Indiana must limit cumulative distributions subsequent to the merger between Duke Energy and Cinergy to (i) the amount of retained earnings on the day prior to the closing of the merger, plus (ii) any future earnings recorded. In addition, Duke Energy Indiana will not declare and pay dividends out of capital or unearned surplus without prior authorization of the IURC.

Piedmont

Piedmont must limit cumulative distributions subsequent to the acquisition of Piedmont by Duke Energy to (i) the amount of retained earnings on the day prior to the closing of the merger, plus (ii) any future earnings recorded.

RATE RELATED INFORMATION

The NCUC, PSCSC, FPSC, IURC, PUCO, TRA and KPSC approve rates for retail electric and natural gas services within their states. The FERC approves rates for electric sales to wholesale customers served under cost-based rates (excluding Ohio and Indiana), as well as sales of transmission service. The FERC also regulates certification and siting of new interstate natural gas pipeline projects.

Duke Energy Carolinas and Duke Energy Progress

Ash Basin Closure Costs Deferral

On July 13, 2016, in response to a joint petition of Duke Energy Carolinas and Duke Energy Progress, the PSCSC issued an accounting order for the deferment into a regulatory account of certain costs incurred in connection with federal and state environmental remediation requirements related to the permanent closure of ash basins and other ash storage units at coal-fired generating facilities that have provided or are providing generation to customers located in South Carolina. The decision allows for ash basin closure expenses to be partially offset with excess regulatory liability amounts from the deferral of nuclear decommissioning costs that are collected from South Carolina retail customers and for Duke Energy Progress to partially offset incurred ash basin closure costs with costs of removal amounts collected from customers. The PSCSC's ruling does not change retail rates or the tariff amounts and does not limit the ability of interested parties to challenge the reasonableness of expenditures in subsequent proceedings. In connection with Duke Energy Progress' base rate case filed in July 2016, in December 2016, the PSCSC approved recovery of coal ash costs incurred from January 1, 2015, through June 30, 2016, over a 15-year period and ongoing deferral of future ash basin closure costs incurred from July 1, 2016, until its next base rate case in South Carolina.

On December 30, 2016, Duke Energy Carolinas and Duke Energy Progress filed a joint petition with the NCUC seeking an accounting order authorizing deferral of certain costs incurred in connection with federal and state environmental remediation requirements related to the permanent closure of ash basins and other ash storage units at coal-fired generating facilities that have provided or are providing generation to customers located in North Carolina. Initial comments are due by March 1, 2017, and reply comments are due by March 29, 2017. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

FERC Transmission Return on Equity Complaints

On January 7, 2016, a group of transmission service customers filed a complaint with FERC that the rate of return on equity of 10.2 percent in Duke Energy Carolinas' transmission formula rates is excessive and should be reduced to no higher than 8.49 percent, effective upon the complaint date. On the same date, a similar complaint was filed with FERC claiming that the rate of return on equity of 10.8 percent in Duke Energy Progress' transmission formula rates is excessive and should be reduced to no higher than 8.49 percent, effective upon the complaint date. On April 21, 2016, FERC issued an order which consolidated the cases, set a refund effective date of January 7, 2016, and set the consolidated case for settlement and hearing. On June 14, 2016, Duke Energy Carolinas and Duke Energy Progress reached a settlement agreement in principle to reduce the return on equity for both companies to 10 percent. On November 21, 2016, the FERC approved the settlement agreement resolving the complaints. The Impact on results of operations, cash flows and the financial position of Duke Energy Carolinas and Duke Energy Progress will not be material.

Duke Energy Carolinas

Advanced Metering Infrastructure Deferral

On July 12, 2016, the PSCSC issued an accounting order for Duke Energy Carolinas to defer the financial effects of depreciation expense incurred for the installation of AMI meters, the carrying costs on the investment at its weighted average cost of capital (WACC) and the carrying costs on the deferred costs at its WACC not to exceed $45 million. The decision also allows Duke Energy Carolinas to continue to depreciate the non-AMI meters to be replaced. Current retail rates will not change as a result of the decision and the ability of interested parties to challenge the reasonableness of expenditures in subsequent proceedings is not limited.

William States Lee Combined Cycle Facility

On April 9, 2014, the PSCSC granted Duke Energy Carolinas and North Carolina Electric Membership Corporation (NCEMC) a Certificate of Environmental Compatibility and Public Convenience and Necessity (CECPCN) for the construction and operation of a 750 MW combined-cycle natural gas-fired generating plant at Duke Energy Carolinas' existing William States Lee Generating Station in Anderson, South Carolina. Duke Energy Carolinas began construction in July 2015 and estimates a cost to build of $600 million for its share of the facility, including AFUDC. The project is expected to be commercially available in late 2017. NCEMC will own approximately 13 percent of the project. On July 3, 2014, the South Carolina Coastal Conservation League (SCCL) and Southern Alliance for Clean Energy (SACE) jointly filed a Notice of Appeal with the Court of Appeals of South Carolina (S.C. Court of Appeals) seeking the court's review of the PSCSC's decision, claiming the PSCSC did not properly consider a request related to a proposed solar facility prior to granting approval of the CECPCN. The S.C. Court of Appeals affirmed the PSCSC's decision on February 10, 2016, and on March 24, 2016, denied a request for rehearing filed by SCCL and SACE. On April 21, 2016, SCCL and SACE petitioned the South Carolina Supreme Court for review of the S.C. Court of Appeals decision. Duke Energy Carolinas filed its response on June 13, 2016, and SCCL and SACE filed a reply on June 23, 2016. On September 6, 2016, the Small Business Chamber of Commerce filed a motion for permission to file a brief supporting the environmental intervenors’ position. On September 22, 2016, the South Carolina Supreme Court granted permission for the brief and allowed Duke Energy Carolinas an opportunity to file a response, which was filed on October 3, 2016. Duke Energy Carolinas cannot predict the outcome of this matter.

William States Lee III Nuclear Station

In December 2007, Duke Energy Carolinas applied to the NRC for combined operating licenses (COLs) for two Westinghouse AP1000 reactors for the proposed William States Lee III Nuclear Station to be located at a site in Cherokee County, South Carolina. The NCUC and PSCSC have concurred with the prudency of Duke Energy Carolinas incurring certain project development and preconstruction costs through several separately issued orders, although full cost recovery is not guaranteed. In December 2016, the NRC issued a COL for each reactor. As of December 31, 2016, Duke Energy Carolinas has incurred approximately $520 million of costs, including AFUDC, related to the project. These project costs are included in Net property, plant and equipment on Duke Energy Carolinas’ Consolidated Balance Sheets. Duke Energy Carolinas is not required to build the nuclear reactors as result of the COLs being issued.

Duke Energy Progress

Storm Cost Deferral Filings

On December 16, 2016, Duke Energy Progress filed a petition with the NCUC requesting an accounting order to defer certain costs incurred in connection with response to Hurricane Matthew and other significant storms in 2016. Current estimated incremental operation and maintenance and capital costs total approximately $140 million. Additional costs could be incurred in 2017 related to storms in the fourth quarter of 2016. Duke Energy Progress proposes to true-up the total costs quarterly through August 2017. Duke Energy Progress cannot predict the outcome of this matter.

On December 16, 2016, Duke Energy Progress filed a petition with the PSCSC requesting an accounting order to defer certain costs incurred related to repairs and restoration of service following Hurricane Matthew. Estimated total restoration costs are approximately $60 million. Actual total costs would be trued-up quarterly through 2017. In January 2017, the PSCSC approved the deferral request and issued an accounting order.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

South Carolina Rate Case

On July 1, 2016, Duke Energy Progress filed an application with the PSCSC requesting an average 14.5 percent increase in retail revenues. The requested rate change would increase annual revenues by approximately $79 million, with a rate of return on equity of 10.75 percent. The increase is designed to recover the cost of investment in new generation infrastructure, environmental expenditures including allocated historical ash basin closure costs and increased nuclear operating costs. Duke Energy Progress has requested new rates to be effective January 1, 2017. On October 19, 2016, Duke Energy Progress, the ORS and intervenors entered into a settlement agreement that was filed with the PSCSC on the same day. Terms of the settlement agreement include an approximate $56 million increase in revenues over a two-year period. An increase of approximately $38 million in revenues was effective January 1, 2017, and an additional increase of approximately $18.5 million in revenues will be effective January 1, 2018. Duke Energy Progress will amortize approximately $18.5 million from the cost of removal reserve in 2017. Other settlement terms include a rate of return on equity of 10.1 percent, recovery of coal ash costs incurred from January 1, 2015, through June 30, 2016, over a 15-year period and ongoing deferral of allocated ash basin closure costs from July 1, 2016, until the next base rate case. The settlement also provides that Duke Energy Progress will not seek an increase in rates in South Carolina to occur prior to 2019, with limited exceptions. In December 2016, the PSCSC approved the settlement and issued an approval order.

Western Carolinas Modernization Plan

On November 4, 2015, in response to community feedback, Duke Energy Progress announced a revised Western Carolinas Modernization Plan with an estimated cost of $1.1 billion. The revised plan includes retirement of the existing Asheville coal-fired plant, the construction of two 280 MW combined-cycle natural gas plants having dual fuel capability, with the option to build a third natural gas simple cycle unit in 2023 based upon the outcome of initiatives to reduce the region's power demand. The revised plan includes upgrades to existing transmission lines and substations, but eliminates the need for a new transmission line and a new substation associated with the project in South Carolina. The revised plan has the same overall project cost as the original plan and the plans to install solar generation remain unchanged. Duke Energy Progress has also proposed to add a pilot battery storage project. These investments will be made within the next seven years. Duke Energy Progress is also working with the local natural gas distribution company to upgrade an existing natural gas pipeline to serve the natural gas plant. The plan requires various approvals including regulatory approvals in North Carolina.

Duke Energy Progress filed for a Certificate of Public Convenience and Necessity (CPCN) with the NCUC for the new natural gas units on January 15, 2016. On March 28, 2016, the NCUC issued an order approving the CPCN for the new combined-cycle natural gas plants, but denying the CPCN for the contingent simple cycle unit without prejudice to Duke Energy Progress to refile for approval in the future. Site preparation activities are underway and construction of these plants is scheduled to begin in early 2017. The plants are expected to be in service by late 2019. Duke Energy Progress plans to file for future approvals related to the proposed solar generation and pilot battery storage project.

On May 27, 2016, N.C. Waste Awareness and Reduction Network (NC WARN) and The Climate Times filed a notice of appeal from the CPCN order to the N.C. Court of Appeals. On May 31, 2016, Duke Energy Progress filed a motion to dismiss the notice of appeal with the NCUC due to NC WARN's and The Climate Times' failure to post a required appeal bond. After a series of filings, an NCUC order, petitions to the N.C. Court of Appeals and an evidentiary hearing, on July 8, 2016, the NCUC issued an order setting NC WARN's and The Climate Times' appeal bond at $98 million. On July 28, 2016, NC WARN and The Climate Times filed a notice of appeal and exceptions from the NCUC's July 8, 2016, appeal bond order. On August 2, 2016, the NCUC granted Duke Energy Progress' motion to dismiss NC WARN's and The Climate Times' notice of appeal from the CPCN order due to failure to post the requisite bond. On August 18, 2016, NC WARN and The Climate Times filed a petition with the N.C. Court of Appeals seeking appellate review of the NCUC’s CPCN order, the July 8, 2016, appeal bond order and the August 2, 2016, order dismissing their notice of appeal, which the N.C. Court of Appeals denied on September 6, 2016. On September 19, 2016, the NCUC granted Duke Energy Progress' motion to dismiss NC WARN's and The Climate Times' subsequent appeal of the second bond order dated July 28, 2016, and NC WARN's and The Climate Times' subsequent appeal of the CPCN order and dismissal order dated August 18, 2016. On October 17, 2016, NC WARN and The Climate Times filed another petition for review with the N.C. Court of Appeals asking the court to reverse the CPCN order, the second bond order and the dismissal of their first and second notices of appeal as to the CPCN order. On November 3, 2016, the N.C. Court of Appeals denied NC WARN's and The Climate Times' petition for review. All appeals have been concluded.

The carrying value of the 376 MW Asheville coal-fired plant, including associated ash basin closure costs, of $492 million and $548 million are included in Generation facilities to be retired, net on Duke Energy Progress' Consolidated Balance Sheets as of December 31, 2016 and 2015, respectively.

Shearon Harris Nuclear Plant Expansion

In 2006, Duke Energy Progress selected a site at Harris to evaluate for possible future nuclear expansion. On February 19, 2008, Duke Energy Progress filed its COL application with the NRC for two Westinghouse AP1000 reactors at Harris, which the NRC docketed for review. On May 2, 2013, Duke Energy Progress filed a letter with the NRC requesting the NRC to suspend its review activities associated with the COL at the Harris site. The NCUC and PSCSC have approved deferral for $48 million of retail costs which are recorded in Regulatory assets on Duke Energy Progress’ Consolidated Balance Sheets. On November 17, 2016, the FERC approved Duke Energy Progress’ rate recovery request filing for the wholesale ratepayers’ share of the abandonment costs, including a debt only return to be recovered through revised formula rates and amortized over a 15-year period beginning May 1, 2014.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Duke Energy Florida

Hines Chiller Uprate Project

On May 20, 2016, Duke Energy Florida filed a petition seeking approval to include in base rates the revenue requirement for a Chiller Uprate Project (Uprate Project) at the Hines Energy Complex (Hines). Duke Energy Florida proposed to complete the Uprate Project in two phases: Phase one to include work on Hines units 1-3 and common equipment, to be placed in service during October 2016; and Phase two work on Hines Unit 4 to be placed in service during January 2017. The final combined construction cost estimate for both phases of approximately $150 million is below the cost estimate provided during the need determination proceeding. Duke Energy Florida estimated an annual retail revenue requirement for Phase one and Phase two of approximately $17 million and $3 million, respectively. On August 29, 2016, the FPSC approved the Phase one revenue requirement to be effective in customer rates in November 2016. However, Duke Energy Florida made filings with the FPSC in October 2016 to remove the Uprate Project from customer rates because a portion of the common equipment required for either phase to be considered in service was not completed as expected. Duke Energy Florida filed for recovery of the costs associated with the Uprate Project in February 2017. Duke Energy Florida cannot predict the outcome of this matter.

Citrus County Combined Cycle Facility

On October 2, 2014, the FPSC granted Duke Energy Florida a Determination of Need for the construction of a 1,640 MW combined-cycle natural gas plant in Citrus County, Florida. On May 5, 2015, the Florida Department of Environmental Protection approved Duke Energy Florida's Site Certification Application. The project has received all required permits and approvals and construction began in October 2015. The facility is expected to be commercially available in 2018 at an estimated cost of $1.5 billion, including AFUDC.

Purchase of Osprey Energy Center

In December 2014, Duke Energy Florida and Osprey Energy Center, LLC, a wholly owned subsidiary of Calpine Corporation (Calpine), entered into an Asset Purchase and Sale Agreement for the purchase of a 599 MW combined-cycle natural gas plant in Auburndale, Florida (Osprey Plant acquisition) for approximately $166 million. On August 2, 2016, Duke Energy Florida filed a petition seeking approval to include in base rates the revenue requirements for the Osprey Plant acquisition to be included in customer bills beginning in February 2017. Duke Energy Florida estimated the retail revenue requirements for the Osprey acquisition to be approximately $48 million. On November 1, 2016, the FPSC approved the petition to include the revenue requirements in base rates. Closing of the acquisition occurred on January 3, 2017.

Duke Energy Florida received a Civil Investigative Demand from the Department of Justice (DOJ) related to alleged violation of the waiting period for the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The DOJ alleged Duke Energy Florida assumed operational control of the Osprey Plant before the waiting period expiration on February 27, 2015. On January 17, 2017, Duke Energy Florida entered into a stipulation agreement to settle with the DOJ for $600,000 without admission of liability. On January 18, 2017, the DOJ filed a complaint and the stipulation in the U.S. District Court for the District of Columbia. The stipulation is subject to court approval. Duke Energy recorded a reserve in the fourth quarter of 2016.

FPSC Settlement Agreements

On February 22, 2012, the FPSC approved a settlement agreement (the 2012 Settlement) among Duke Energy Florida, the Florida OPC and other customer advocates. The 2012 Settlement was to continue through the last billing cycle of December 2016. On October 17, 2013, the FPSC approved a settlement agreement (the 2013 Settlement) between Duke Energy Florida, Florida OPC and other customer advocates. The 2013 Settlement replaces and supplants the 2012 Settlement and substantially resolves issues related to (i) Crystal River Unit 3, (ii) Levy, (iii) Crystal River 1 and 2 coal units and (iv) future generation needs in Florida. Refer to the remaining sections below for further discussion of these settlement agreements.

Crystal River Unit 3

In December 2014, the FPSC approved Duke Energy Florida's decision to construct an independent spent fuel storage installation (ISFSI) for the retired Crystal River Unit 3 nuclear plant and approved Duke Energy Florida's request to defer amortization of the ISFSI pending resolution of litigation against the federal government as a result of the Department of Energy's breach of its obligation to accept spent nuclear fuel. The return rate is based on the currently approved AFUDC rate with a return on equity of 7.35 percent, or 70 percent of the currently approved 10.5 percent. The return rate is subject to change if the return on equity changes in the future. In September 2016, the FPSC approved an amendment to the 2013 Settlement authorizing recovery of the ISFSI through the Capacity Cost Recovery Clause. Through December 31, 2016, Duke Energy Florida has deferred approximately $93 million for recovery associated with building the ISFSI.

The regulatory asset associated with the original Crystal River Unit 3 power uprate project will continue to be recovered through the NCRC over an estimated seven years period that began in 2013 with a remaining uncollected balance of $128 million at December 31, 2016.

Crystal River Unit 3 Regulatory Asset

On May 22, 2015, Duke Energy Florida petitioned the FPSC for approval to include in base rates the revenue requirement for the projected $1.298 billion Crystal River Unit 3 regulatory asset as authorized by the 2013 Revised and Restated Stipulation and Settlement Agreement (2013 Agreement). On September 15, 2015, the FPSC approved Duke Energy Florida's motion for approval of a settlement agreement with intervenors to reduce the value of the projected Crystal River Unit 3 regulatory asset to be recovered to $1.283 billion as of December 31, 2015. An impairment charge of $15 million was recognized in the third quarter of 2015 to adjust the regulatory asset balance.

In June 2015, the governor of Florida signed legislation to allow utilities to issue nuclear asset-recovery bonds to finance the recovery of certain retired nuclear generation assets, with approval of the FPSC. In November 2015, the FPSC issued a financing order approving Duke Energy Florida’s request to issue nuclear asset-recovery bonds to finance its unrecovered regulatory asset related to Crystal River Unit 3 through a wholly owned special purpose entity. Nuclear asset-recovery bonds replace the base rate recovery methodology authorized by the 2013 Agreement and result in a lower rate impact to customers with a recovery period of approximately 20 years.

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Pursuant to provisions in Florida Statutes and the FPSC financing order, in 2016, Duke Energy Florida formed Duke Energy Florida Project Finance, LLC (DEFPF), a wholly owned, bankruptcy remote special purpose subsidiary for the purpose of issuing nuclear asset-recovery bonds. In June 2016, DEFPF issued $1,294 million aggregate principal amount of senior secured bonds (nuclear asset-recovery bonds) to finance the recovery of Duke Energy Florida's Crystal River 3 regulatory asset.

In connection with this financing, net proceeds to DEFPF of approximately $1,287 million, after underwriting costs, were used to acquire nuclear asset-recovery property from Duke Energy Florida and to pay transaction related expenses. The nuclear asset-recovery property includes the right to impose, bill, collect and adjust a non-bypassable nuclear asset-recovery charge, to be collected on a per kilowatt-hour basis, from all Duke Energy Florida retail customers until the bonds are paid in full. Duke Energy Florida began collecting the nuclear asset-recovery charge on behalf of DEFPF in customer rates in July 2016.

See Notes 6 and 17 for additional information.

Customer Rate Matters

Pursuant to the 2013 Settlement, Duke Energy Florida will maintain base rates at the current level through the last billing period of 2018, subject to the return on equity range of 9.5 percent to 11.5 percent, with exceptions for base rate increases for new generation through 2018, per the provisions of the 2013 Settlement. Duke Energy Florida is not required to file a depreciation study, fossil dismantlement study or nuclear decommissioning study until the earlier of the next rate case filing or March 31, 2019. The 2013 Settlement also provided for a $150 million increase in base revenue effective with the first billing cycle of January 2013. If Duke Energy Florida’s retail base rate earnings fall below the return on equity range, as reported on a FPSC-adjusted or pro forma basis on a monthly earnings surveillance report, it may petition the FPSC to amend its base rates during the term of the 2013 Settlement.

Levy Nuclear Project

On July 28, 2008, Duke Energy Florida applied to the NRC for a COL for two Westinghouse AP1000 reactors at Levy. In 2008, the FPSC granted Duke Energy Florida’s petition for an affirmative Determination of Need and related orders requesting cost recovery under Florida’s nuclear cost-recovery rule, together with the associated facilities, including transmission lines and substation facilities. In October 2016, the NRC issued COLs for the proposed Levy Nuclear Plant Units 1 and 2.

On January 28, 2014, Duke Energy Florida terminated the Levy engineering, procurement and construction agreement (EPC). Duke Energy Florida may be required to pay for work performed under the EPC and to bring existing work to an orderly conclusion, including but not limited to costs to demobilize and cancel certain equipment and material orders placed. Duke Energy Florida recorded an exit obligation in 2014 for the termination of the EPC. This liability was recorded within Other in Deferred Credits and Other Liabilities with an offset primarily to Regulatory assets on the Consolidated Balance Sheets. Duke Energy Florida is allowed to recover reasonable and prudent EPC cancellation costs from its retail customers.

The 2012 Settlement provided that Duke Energy Florida include the allocated wholesale cost of Levy as a retail regulatory asset and include this asset as a component of rate base and amortization expense for regulatory reporting. In accordance with the 2013 Settlement, Duke Energy Florida ceased amortization of the wholesale allocation of Levy investments against retail rates.

On October 27, 2014, the FPSC approved Duke Energy Florida rates for 2015 for Levy as filed and consistent with those established in the 2013 Revised and Restated Settlement Agreement. Recovery of the remaining retail portion of the project costs may occur over 5 years from 2013 through 2017. Duke Energy Florida has an ongoing responsibility to demonstrate prudency related to the wind down of the Levy investment and the potential for salvage of Levy assets. As of December 31, 2016, Duke Energy Florida has a net uncollected investment in Levy of approximately $219 million, including AFUDC. Of this amount, $119 million related to land and the COL is included in Net, property, plant and equipment and will be recovered through base rates and $100 million is included in Regulatory assets within Regulatory Assets and Deferred Debits on the Consolidated Balance Sheets and will be recovered through the NCRC.

On April 16, 2015, the FPSC approved Duke Energy Florida’s petition to cease collection of the Levy Nuclear Project fixed charge beginning with the first billing cycle in May 2015. On August 18, 2015, the FPSC approved leaving the Levy Nuclear Project portion of the NCRC charge at zero dollars for 2016 and 2017, consistent with the 2013 Settlement. Duke Energy Florida will submit by May 2017 a true-up of Levy Nuclear Project costs or credits to be recovered no earlier than January 2018. To the extent costs become known after May 2017, Duke Energy Florida will petition for recovery at that time.

Crystal River 1 and 2 Coal Units

Duke Energy Florida has evaluated Crystal River 1 and 2 coal units for retirement in order to comply with certain environmental regulations. Based on this evaluation, those units will likely be retired by 2018. Once those units are retired Duke Energy Florida will continue recovery of existing annual depreciation expense through the end of 2020. Beginning in 2021, Duke Energy Florida will be allowed to recover any remaining net book value of the assets from retail customers through the Capacity Cost Recovery Clause. In April 2014, the FPSC approved Duke Energy Florida's petition to allow for the recovery of prudently incurred costs to comply with the Mercury and Air Toxics Standard through the Environmental Cost Recovery Clause.

Duke Energy Ohio

East Bend Coal Ash Basin Filing

On December 2, 2016, Duke Energy Kentucky filed with the KPSC a request for a CPCN for construction projects necessary to close and repurpose an ash basin at the East Bend necessitated by current and proposed EPA regulations. Duke Energy Kentucky is targeting a completion date in fourth quarter 2018 for these projects and estimates a total cost of approximately $93 million. Duke Energy Kentucky has requested an order to be issued by April 30, 2017.

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Base Rate Case

In connection with Duke Energy Ohio’s deployment of SmartGrid network, consisting of investments in AMI and distribution automation, a rider was established to recover these investments and return expected savings to customers. A stipulation updating this rider was approved by the PUCO in 2012, whereby Duke Energy Ohio committed to filing a base electric distribution case within one year of full deployment of SmartGrid. On October 22, 2015, PUCO staff concluded that full deployment had occurred thereby, absent relief by the PUCO, Duke Energy Ohio would be required to file a base electric rate case. Pursuant to an order (PUCO order) authorizing a modification in the filing date, Duke Energy Ohio notified the PUCO of its intent to file an electric distribution rate case in Ohio. The base rate case application and supporting testimony will be filed March 2, 2017, and March 16, 2017, respectively. Duke Energy Ohio cannot predict the outcome of this matter.

Natural Gas Pipeline Extension

Duke Energy Ohio is proposing to install a new natural gas pipeline in its Ohio service territory to increase system reliability and enable the retirement of older infrastructure. The proposed project involves the installation of a natural gas line and is estimated to cost between $86 million and $110 million, excluding AFUDC. On September 13, 2016, Duke Energy Ohio filed with the Ohio Power Siting Board for approval of one of two proposed routes. If approved, construction of the pipeline extension is expected to be completed by 2019.

Advanced Metering Infrastructure

On April 25, 2016, Duke Energy Kentucky filed with the KPSC an application for approval of a CPCN for the construction of AMI. Duke Energy Kentucky anticipates that the estimated $49 million project, if approved, will take about two years to complete. Duke Energy Kentucky also requested approval to establish a regulatory asset of approximately $10 million for the remaining book value of existing meter equipment and inventory that will be replaced. On July 20, 2016, the Kentucky Attorney General, the only intervenor in the proceeding, moved to dismiss the application. Duke Energy Kentucky filed its opposition to the Kentucky Attorney General's motion to dismiss on July 27, 2016. On September 28, 2016, the KPSC denied the Kentucky Attorney General's motion to dismiss and granted Duke Energy Kentucky's motion to file rebuttal testimony. Duke Energy Kentucky and the Kentucky Attorney General entered into a stipulation resolving the matters raised in the application. An evidentiary hearing was held on December 8, 2016. Duke Energy Kentucky cannot predict the outcome of this matter.

Accelerated Natural Gas Service Line Replacement Rider

On January 20, 2015, Duke Energy Ohio filed an application for approval of an accelerated natural gas service line replacement program (ASRP). Under the ASRP, Duke Energy Ohio proposed to replace certain natural gas service lines on an accelerated basis over a 10-year period. Duke Energy Ohio also proposed to complete preliminary survey and investigation work related to natural gas service lines that are customer owned and for which it does not have valid records and, further, to relocate interior natural gas meters to suitable exterior locations where such relocation can be accomplished. Duke Energy Ohio's current projected total capital and operations and maintenance expenditures under the ASRP are approximately $240 million. The filing also sought approval of Rider ASRP to recover related expenditures. Duke Energy Ohio proposed to update Rider ASRP on an annual basis. Intervenors opposed the ASRP, primarily because they believe the program is neither required nor necessary under federal pipeline regulation. On October 26, 2016, the PUCO issued an order denying the proposed ASRP. The PUCO did, however, encourage Duke Energy Ohio to work with the PUCO Staff and intervenors to identify a reasonable solution for the risks attributed to service line leaks caused by corrosion. Duke Energy Ohio filed an application for rehearing of the PUCO decision. In December 2016, the PUCO granted the request for the purpose of further review. Duke Energy Ohio cannot predict the outcome of this matter.

Energy Efficiency Cost Recovery

On March 28, 2014, Duke Energy Ohio filed an application for recovery of program costs, lost distribution revenue and performance incentives related to its energy efficiency and peak demand reduction programs. These programs are undertaken to comply with environmental mandates set forth in Ohio law. After a comment period, the PUCO approved Duke Energy Ohio’s application, but found that Duke Energy Ohio was not permitted to use banked energy savings from previous years in order to calculate the amount of allowed incentive. This conclusion represented a change to the cost recovery mechanism that had been agreed to by intervenors and approved by the PUCO in previous cases. The PUCO granted the applications for rehearing filed by Duke Energy Ohio and an intervenor on July 8, 2015. On January 6, 2016, Duke Energy Ohio and PUCO Staff entered into a stipulation pending PUCO approval, resolving the issues related to, among other things, performance incentives and the PUCO Staff audit of 2013 costs. Based on the stipulation, in December 2015, Duke Energy Ohio re-established approximately $20 million of the revenues that had been reversed in the second quarter. On October 26, 2016, the PUCO issued an order approving the stipulation without modification. Intervenors requested rehearing of the PUCO decision and, in December 2016, the PUCO granted rehearing for the purpose of further review. Duke Energy Ohio cannot predict the outcome of this matter.

2014 Electric Security Plan

In April 2015, the PUCO modified and approved Duke Energy Ohio's proposed electric security plan (ESP), with a three-year term and an effective date of June 1, 2015. The PUCO approved a competitive procurement process for SSO load, a distribution capital investment rider and a tracking mechanism for incremental distribution expenses caused by major storms. The PUCO also approved a placeholder tariff for a price stabilization rider, but denied Duke Energy Ohio's specific request to include Duke Energy Ohio's entitlement to generation from OVEC in the rider at this time; however, the order allows Duke Energy Ohio to submit additional information to request recovery in the future. On May 4, 2015, Duke Energy Ohio filed an application for rehearing requesting the PUCO to modify or amend certain aspects of the order. On May 28, 2015, the PUCO granted all applications for rehearing filed in the case for future consideration. Duke Energy Ohio cannot predict the outcome of the appeals in this matter.

During May and November 2016, Duke Energy Ohio completed two competitive bidding processes with results approved by the PUCO to procure a portion of the supply for its SSO load for the term of the ESP. In 2016, Duke Energy Ohio also issued requests for proposal (RFP) to serve a portion of the load attributed to its customers on the state’s percentage of income payment plan. This RFP was issued consistent with state law enacted in 2016.

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2012 Natural Gas Rate Case/Manufactured Gas Plant Cost Recovery

On November 13, 2013, the PUCO issued an order approving a settlement of Duke Energy Ohio’s natural gas base rate case and authorizing the recovery of costs incurred between 2008 and 2012 for environmental investigation and remediation of two former MGP sites. The PUCO order also authorized Duke Energy Ohio to continue deferring MGP environmental investigation and remediation costs incurred subsequent to 2012 and to submit annual filings to adjust the MGP rider for future costs. Intervening parties appealed this decision to the Ohio Supreme Court and that appeal remains pending. Oral argument is scheduled for February 28, 2017. Incurred and projected investigation and remediation expenses at these MGP sites that have not been collected through the MGP rider are approximately $99 million and are recorded as Regulatory assets on Duke Energy Ohio's Consolidated Balance Sheet as of December 31, 2016. Duke Energy Ohio cannot predict the outcome of this matter.

The PUCO order also contained deadlines for completing the MGP environmental investigation and remediation costs at the MGP sites. For the property known as the East End site, the PUCO order established a deadline of December 31, 2016. The PUCO order authorized Duke Energy Ohio to seek to extend these deadlines due to certain circumstances. On May 16, 2016, Duke Energy Ohio filed an application to extend the deadline for cost recovery applicable to the East End site. In December 2016, the PUCO approved the request, extending the deadline to complete the remediation work until December 31, 2019. In January 2017, intervening parties filed for rehearing of the PUCO's decision. On February 8, 2017, the PUCO denied the rehearing request. As of December 31, 2016, $46 million of the regulatory asset represents future remediation cost expected to be incurred at the East End site. Duke Energy Ohio cannot predict the outcome of this matter.

Regional Transmission Organization Realignment

Duke Energy Ohio, including Duke Energy Kentucky, transferred control of its transmission assets from MISO to PJM Interconnection, LLC (PJM), effective December 31, 2011. The PUCO approved a settlement related to Duke Energy Ohio’s recovery of certain costs of the Regional Transmission Organization (RTO) realignment via a non-bypassable rider. Duke Energy Ohio is allowed to recover all MISO Transmission Expansion Planning (MTEP) costs, including but not limited to Multi Value Project (MVP) costs, directly or indirectly charged to Ohio customers. Duke Energy Ohio also agreed to vigorously defend against any charges for MVP projects from MISO. The KPSC also approved a request to effect the RTO realignment, subject to a commitment not to seek double recovery in a future rate case of the transmission expansion fees that may be charged by MISO and PJM in the same period or overlapping periods.

The following table provides a reconciliation of the beginning and ending balance of Duke Energy Ohio’s recorded liability for its exit obligation and share of MTEP costs, excluding MVP, recorded within Other in Current liabilities and Other in Deferred credits and other liabilities on the Consolidated Balance Sheets. The retail portions of MTEP costs billed by MISO are recovered by Duke Energy Ohio through a non-bypassable rider. As of December 31, 2016 and 2015, $71 million and $72 million are recorded in Regulatory assets on Duke Energy Ohio's Consolidated Balance Sheets, respectively.



			Provisions/		Cash
(in millions)	December 31, 2015		Adjustments		Reductions			December 31, 2016
Duke Energy Ohio	$	92	$	3	$	(5	)	$	90

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

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

On October 29, 2015, the FERC issued an order reversing the ALJ's decision. The FERC ruled the cost allocation methodology is not consistent with the MISO tariff and that Duke Energy Ohio has no liability for MVP costs after its withdrawal from MISO. On May 19, 2016, the FERC denied the request for rehearing filed by MISO and the MISO Transmission Owners. On July 15, 2016, the MISO Transmission Owners filed a petition for review with the U.S. Court of Appeals for the Sixth Circuit. Duke Energy Ohio cannot predict the outcome of this matter.

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Duke Energy Indiana

Coal Combustion Residual Plan

On March 17, 2016, Duke Energy Indiana filed with the IURC a request for approval of its first group of federally mandated Coal Combustion Residual (CCR) rule compliance projects (Phase I CCR Compliance Projects) to comply with the EPA's CCR rule. The projects in this Phase I filing are CCR compliance projects, including the conversion of Cayuga and Gibson Stations to dry bottom ash handling and related water treatment. Duke Energy Indiana has requested timely recovery of approximately $380 million in retail capital costs and incremental operating and maintenance costs, including AFUDC, under a federal mandate tracker which provides for timely recovery of 80 percent of such costs and deferral with carrying costs of 20 percent of such costs for recovery in a subsequent retail base rate case. On January 24, 2017, Duke Energy Indiana and various Intervenors filed a settlement agreement with the IURC. Terms of the settlement include recovery of 60 percent of the estimated CCR compliance construction project capital costs through existing rider mechanisms and deferral of 40 percent of these costs until Duke Energy Indiana's next general retail rate case. The deferred costs will earn a return based on Duke Energy Indiana's long-term debt rate of 4.73 percent until costs are included in retail rates, at which time the deferred costs will earn a full return. Costs are to be capped at $365 million, plus actual AFUDC. Costs above the cap may be recoverable in the next rate case. Terms of the settlement agreement also require Duke Energy Indiana to perform certain reporting and groundwater monitoring. The settlement is subject to approval by the IURC. An evidentiary hearing was held on February 23, 2017. Duke Energy Indiana cannot predict the outcome of this matter.

Edwardsport Integrated Gasification Combined Cycle Plant

Costs for the Edwardsport Integrated Gasification Combined Cycle (IGCC) Plant are recovered from retail electric customers via a tracking mechanism (IGCC rider) with updates filed by Duke Energy Indiana. The IGCC Plant was placed into commercial operation in June 2013.

Duke Energy Indiana and several intervenors agreed upon a settlement (IGCC settlement) in 2015 to resolve disputes related to five IGCC riders (the 11th through 15th) and a subdocket to Duke Energy Indiana's fuel adjustment clause. The settlement agreement resolved disputes related to the determination on whether the IGCC plant was properly declared in-service for ratemaking purposes in June 2013, as well as the operational performance of the plant. The IGCC settlement resulted in customers not being billed for previously incurred plant operating costs of $87.5 million and payments and commitments from Duke Energy Indiana of $5.5 million for attorneys’ fees and consumer programs funding. Duke Energy Indiana recognized pretax impairment and related charges of $93 million in 2015. Additionally, under the IGCC settlement, the recovery of operating and maintenance expenses and ongoing maintenance capital at the plant are subject to certain caps during the years of 2016 and 2017. The IGCC settlement also includes a commitment to either retire or stop burning coal by December 31, 2022, at the Gallagher Station. Pursuant to the IGCC settlement, the in-service date used for accounting and ratemaking will remain as June 2013. Remaining deferred costs will be recovered over eight years and not earn a carrying cost. On August 24, 2016, the IURC approved the settlement in full with no changes or conditions. The order was not appealed and the proceeding is concluded. As of December 31, 2016, deferred costs related to the project are approximately $161 million. Under the IGCC settlement, future IGCC riders will be filed annually, rather than every six months, with the next filing scheduled for first quarter 2017.

The ninth semi-annual IGCC rider order was appealed by various intervenors and the matter was remanded to the IURC for further proceedings and additional findings on a tax in-service issue. On February 2, 2017, the IURC issued an order upholding the original decision, finding that an estimate of impact on customer rates due to the federal income tax in-service determination was reasonable. The intervenors could appeal this order.

FERC Transmission Return on Equity Complaint

Customer groups have filed with the FERC complaints against MISO and its transmission-owning members, including Duke Energy Indiana, alleging, among other things, that the current base rate of return on equity earned by MISO transmission owners of 12.38 percent is unjust and unreasonable. The latest complaint, filed on February 12, 2015, claims the base rate of return on equity should be reduced to 8.67 percent and requests a consolidation of complaints. The motion to consolidate complaints was denied. On January 5, 2015, the FERC issued an order accepting the MISO transmission owners 0.50 percent adder to the base rate of return on equity based on participation in an RTO subject to it being applied to a return on equity that is shown to be just and reasonable in the pending return on equity complaints. A hearing in the base return on equity proceeding was held in August 2015. On December 22, 2015, the presiding FERC ALJ in the first complaint issued an Initial Decision in which the base rate of return on equity was set at 10.32 percent. On September 28, 2016, the Initial Decision in the first complaint was affirmed by FERC. On June 30, 2016, the presiding FERC ALJ in the second complaint issued an Initial Decision setting the base rate of return on equity at 9.70 percent. The Initial Decision in the second complaint is pending FERC review. Duke Energy Indiana currently believes these matters will not have a material impact on its results of operations, cash flows and financial position.

Grid Infrastructure Improvement Plan

On August 29, 2014, pursuant to a new statute, Duke Energy Indiana filed a seven-year grid infrastructure improvement plan with the IURC with an estimated cost of $1.9 billion, focusing on the reliability, integrity and modernization of the transmission and distribution system. The plan also provided for cost recovery through a transmission and distribution rider (T&D Rider). In May 2015, the IURC denied the original proposal due to an insufficient level of detailed projects and cost estimates in the plan. On December 7, 2015, Duke Energy Indiana filed a revised infrastructure improvement plan with an estimated cost of $1.8 billion in response to guidance from IURC orders and the Indiana Court of Appeals decisions related to this new statute. The revised plan uses a combination of advanced technology and infrastructure upgrades to improve service to customers and provide them with better information about their energy use. It also provides for cost recovery through a T&D Rider. In March 2016, Duke Energy Indiana entered into a settlement with all parties to the proceeding except the Citizens Action Coalition of Indiana, Inc. The settlement agreement decreased the capital expenditures eligible for timely recovery of costs in the seven-year plan to approximately $1.4 billion, including the removal of an AMI project. Under the settlement, the return on equity to be used in the T&D Rider is 10 percent. The IURC approved the settlement and issued a final order on June 29, 2016. The order was not appealed and the proceeding is concluded.

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The settlement also provided for deferral accounting for depreciation and post-in-service carrying costs for AMI projects outside the seven-year plan. Duke Energy Indiana withdrew its request for a regulatory asset for current meters and will retain any savings associated with future AMI installation until the next retail base rate case, which is required to be filed prior to the end of the seven-year plan. In 2016, Duke Energy Indiana decided to implement the AMI project. This decision resulted in a pretax impairment charge related to existing or non-AMI meters of approximately $8 million, based in part on Duke Energy Indiana's intent to file a base rate case in 2022 under the approved T&D Rider plan. At December 31, 2016, Duke Energy Indiana's remaining net book value of non-AMI meters is approximately $46 million which will be depreciated through 2022. In the event that Duke Energy Indiana was to file a base rate case earlier than 2022, it may incur additional impairment charges.

Other Regulatory Matters

Atlantic Coast Pipeline

On September 2, 2014, Duke Energy, Dominion Resources (Dominion), Piedmont and Southern Company Gas, formerly AGL Resources Inc., announced the formation of ACP to build and own the proposed Atlantic Coast Pipeline (ACP pipeline), an approximately 600-mile interstate natural gas pipeline running from West Virginia to North Carolina. The ACP pipeline is designed to meet the needs identified in RFPs by Duke Energy Carolinas, Duke Energy Progress and Piedmont. The ACP pipeline development costs are estimated between $5.0 billion to $5.5 billion. Dominion will build and operate the ACP pipeline. Originally, Dominion held a 45 percent membership interest in ACP, Duke Energy held a 40 percent interest, Piedmont held a 10 percent interest and Southern Company Gas held a 5 percent interest. On October 3, 2016, Duke Energy and Piedmont completed a merger transaction that resulted in Piedmont becoming a wholly owned subsidiary of Duke Energy. In connection with this transaction, and pursuant to terms of the ACP partnership agreement, Piedmont transferred 3 percent of its membership interest in ACP to Dominion in exchange for approximately $14 million. As a result of this transfer, Dominion maintains a leading ownership percentage in ACP of 48 percent and Duke Energy owns a 47 percent interest through its Gas Utilities and Infrastructure segment. Southern Company Gas maintains a 5 percent interest. See Note 2 for additional information related to Duke Energy's acquisition of Piedmont.

Duke Energy Carolinas, Duke Energy Progress and Piedmont, among others, will be customers of the pipeline. Purchases will be made under several 20-year supply contracts, subject to state regulatory approval. In October 2014, the NCUC and PSCSC approved the Duke Energy Carolinas and Duke Energy Progress requests to enter into certain affiliate agreements, pay compensation to ACP and to grant a waiver of certain Code of Conduct provisions relating to contractual and jurisdictional matters. On September 18, 2015, ACP filed an application with the FERC requesting a CPCN authorizing ACP to construct the pipeline. In December 2016, FERC issued a preliminary Environmental Impact Statement (EIS) indicating that the proposed pipeline would not cause significant harm to the environment or protected populations. The final EIS is expected by June 30, 2017. FERC approval of the application is expected within 90 days of the issuance of the final EIS. Construction is projected to begin once FERC approval is received with a targeted in-service date in the second half of 2019. ACP executed a construction agreement in September 2016 and is working with various agencies to develop the final pipeline route. ACP also requested approval of an open access tariff and the precedent agreements it entered into with future pipeline customers, including Duke Energy Carolinas and Duke Energy Progress. See Notes 12 and 17 for additional information.

Sabal Trail Transmission Pipeline

On May 4, 2015, Duke Energy acquired a 7.5 percent ownership interest in Sabal Trail Transmission, LLC (Sabal Trail) from Spectra Energy Partners, LP, a master limited partnership, formed by Spectra Energy Corp. Spectra Energy Partners, LP holds a 50 percent ownership interest in Sabal Trail and NextEra Energy has a 42.5 percent ownership interest. Sabal Trail is a joint venture that is constructing a 515-mile natural gas pipeline (Sabal Trail pipeline) to transport natural gas to Florida. Total estimated project costs are approximately $3.2 billion. The Sabal Trail pipeline will traverse Alabama, Georgia and Florida. The primary customers of the Sabal Trail pipeline, Duke Energy Florida and Florida Power & Light Company (FP&L), have each contracted to buy pipeline capacity for 25-year initial terms. On February 3, 2016, the FERC issued an order granting the request for a CPCN to construct and operate the pipeline. The Sabal Trail pipeline has received regulatory approvals and initiated construction of the pipeline with an expected in-service date in mid-2017. See Notes 12 and 17 for additional information.

Constitution Pipeline

Duke Energy owns a 24 percent ownership interest in Constitution Pipeline Company, LLC (Constitution) through a wholly owned subsidiary of Piedmont. Constitution is a natural gas pipeline project slated to transport natural gas supplies from the Marcellus supply region in northern Pennsylvania to major northeastern markets. The pipeline will be constructed and operated by Williams Partners L.P. which has a 41 percent ownership share. The remaining interest is held by Cabot Oil and Gas Corporation and WGL Holdings, Inc.

On April 22, 2016, the New York State Department of Environmental Conservation (NYSDEC) denied Constitution’s application for a necessary water quality certification for the New York portion of the Constitution pipeline. Constitution filed legal actions in the U.S. District Court for the Northern District of New York and in the U.S. Court of Appeals for the Second Circuit (U.S. Court of Appeals) challenging the legality and appropriateness of the NYSDEC’s decision. Both courts granted Constitution's motions to expedite the schedules for the legal actions. On November 16, 2016, oral arguments were heard in the U.S. Court of Appeals.

Constitution remains steadfastly committed to pursuing the project and intends to pursue all available options to challenge the NYSDEC's decision. In light of the denial of the certification, Constitution revised its target in-service date of the project to be as early as the second half of 2018, assuming that the challenge process is satisfactorily and promptly concluded.

In July 2016, Constitution requested and the FERC approved an extension of the construction period and in-service deadline of the project to December 2018. Also in July, the FERC denied the New York Attorney General's (NYAG) complaint and request for a stay of the certificate order authorizing the project on the grounds that Constitution had improperly cut trees along the proposed route. The FERC found the complaint procedurally deficient and that there was no justification for a stay; it did find the filing constituted a valid request for investigation and thus referred the matter to FERC staff for further examination as may be appropriate. On November 22, 2016, the FERC denied the NYAG's request for reconsideration of this order.

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Combined Notes To Consolidated Financial Statements – (Continued)

Since April 2016, with the actions of the NYSDEC, Constitution stopped construction and discontinued capitalization of future development costs until the project's uncertainty is resolved. As a result, Duke Energy evaluated the investment in the Constitution project for OTTIs. At this time, no OTTI has been determined and therefore no impairment charge to reduce the carrying value of the investment has been recorded. However, to the extent that the legal and regulatory proceedings have unfavorable outcomes, or if Constitution concludes that the project is not viable or does not go forward as legal and regulatory actions progress, the conclusions with respect to OTTIs could change and may require that an impairment charge of up to the recorded investment in the project, net of any cash and working capital returned, be recorded. Duke Energy will continue to monitor and update the OTTI analysis as required. Different assumptions could affect the timing and amount of any charge recorded in a period.

Pending the outcome of the matters described above, and when construction proceeds, Duke Energy remains committed to fund an amount in proportion to its ownership interest for the development and construction of the new pipeline. Duke Energy's total anticipated contributions are approximately $229 million. See Notes 12 and 17 for additional information.

Progress Energy Merger FERC Mitigation

In June 2012, the FERC approved the merger with Progress Energy, including Duke Energy and Progress Energy’s revised market power mitigation plan, the Joint Dispatch Agreement (JDA) and the joint Open Access Transmission Tariff. The revised market power mitigation plan provided for the acceleration of one transmission project and the completion of seven other transmission projects (Long-Term FERC Mitigation) and interim firm power sale agreements during the completion of the transmission projects (Interim FERC Mitigation). The Long-Term FERC Mitigation was expected to increase power imported into the Duke Energy Carolinas and Duke Energy Progress service areas and enhance competitive power supply options in the service areas. All of these projects were completed in or before 2014. On May 30, 2014, the Independent Monitor filed with FERC a final report stating that the Long-Term FERC Mitigation is complete. In 2014, Duke Energy Progress recorded an $18 million partial reversal of an impairment recorded in 2012. This reversal adjusts the initial disallowance from the Long-Term FERC mitigation and reflects updated information on the construction costs and in-service dates of the transmission projects.

Following the closing of the merger, outside counsel reviewed Duke Energy’s mitigation plan and discovered a technical error in the calculations. On December 6, 2013, Duke Energy submitted a filing to the FERC disclosing the error and arguing that no additional mitigation is necessary. The city of New Bern filed a protest and requested that FERC order additional mitigation. On October 29, 2014, the FERC ordered that the amount of the stub mitigation be increased from 25 MW to 129 MW. The stub mitigation is Duke Energy’s commitment to set aside for third parties a certain quantity of firm transmission capacity from Duke Energy Carolinas to Duke Energy Progress during summer off-peak hours. The FERC also ordered that Duke Energy operate certain phase shifters to create additional import capability and that such operation be monitored by an independent monitor. The costs to comply with this order are not material. The FERC also referred Duke Energy’s failure to expressly designate the phase shifter reactivation as a mitigation project in the original mitigation plan filing in March 2012 to the FERC Office of Enforcement for further inquiry. In response, and since December 2014, the FERC Office of Enforcement has been conducting a nonpublic investigation of Duke Energy's market power analyses included in the Progress merger filings submitted to FERC. Duke Energy cannot predict the outcome of this investigation.

Potential Coal Plant Retirements

The Subsidiary Registrants periodically file Integrated Resource Plans (IRP) with their state regulatory commissions. The IRPs provide a view of forecasted energy needs over a long term (10 to 20 years) and options being considered to meet those needs. Recent IRPs filed by the Subsidiary Registrants included planning assumptions to potentially retire certain coal-fired generating facilities in Florida and Indiana earlier than their current estimated useful lives primarily because facilities do not have the requisite emission control equipment to meet EPA regulations recently approved or proposed.

The table below contains the net carrying value of generating facilities planned for retirement or included in recent IRPs as evaluated for potential retirement due to a lack of requisite environmental control equipment. Dollar amounts in the table below are included in Net property, plant and equipment on the Consolidated Balance Sheets as of December 31, 2016 and exclude capitalized asset retirement costs.



		Remaining Net
	Capacity	Book Value
	(in MW)	(in millions)
Duke Energy Carolinas
Allen Steam Station Units 1-3^(a)	585	$	168
Progress Energy and Duke Energy Florida
Crystal River Units 1 and 2	873	120
Duke Energy Indiana^(b)
Gallagher Units 2 and 4^(c)	280	136
Total Duke Energy	1,738	$	424


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


(b)	Duke Energy Indiana retired Wabash River Units 2 through 6 in 2016.


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

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Combined Notes To Consolidated Financial Statements – (Continued)

On October 23, 2015, the EPA published in the Federal Register the final Clean Power Plan (CPP) rule regulating carbon dioxide (CO2) emissions from existing fossil fuel-fired electric generating units (EGUs). The CPP establishes CO2 emission rates and mass cap goals that apply to existing fossil fuel-fired EGUs. Petitions challenging the final CPP have been filed by several groups and on February 9, 2016, the U.S. Supreme Court issued a stay of the final CPP rule, halting implementation until legal challenges are resolved. States in which the Duke Energy Registrants operate have suspended work on CPP compliance plans as a result of the stay. The court is expected to decide the case in early 2017. Compliance with CPP could cause the industry to replace coal-fired generation with natural gas and renewables, especially in states that have significant CO2 reduction targets under the rule. Costs to operate coal-fired generation plants continue to grow due to increasing environmental compliance requirements, including ash management costs unrelated to CPP, which may result in the retirement of coal-fired generation plants earlier than the current end of useful lives. Duke Energy continues to evaluate the need to retire generating facilities and plans to seek regulatory recovery, where appropriate, for amounts that have not been recovered upon asset retirements. However, recovery is subject to future regulatory approval, including the recovery of carrying costs on remaining book values, and therefore cannot be assured.

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

5. COMMITMENTS AND CONTINGENCIES

INSURANCE

General Insurance

The Duke Energy Registrants have insurance and reinsurance coverage either directly or through indemnification from Duke Energy’s captive insurance company, Bison, and its affiliates, consistent with companies engaged in similar commercial operations with similar type properties. The Duke Energy Registrants’ coverage includes (i) commercial general liability coverage for liabilities arising to third parties for bodily injury and property damage; (ii) workers’ compensation; (iii) automobile liability coverage; and (iv) property coverage for all real and personal property damage. Real and personal property damage coverage excludes electric transmission and distribution lines, but includes damages arising from boiler and machinery breakdowns, earthquakes, flood damage and extra expense, but not outage or replacement power coverage. All coverage is subject to certain deductibles or retentions, sublimits, exclusions, terms and conditions common for companies with similar types of operations. The Duke Energy Registrants self-insure their electric transmission and distribution lines against loss due to storm damage and other natural disasters. As discussed further in Note 4, Duke Energy Florida maintains a storm damage reserve and has a regulatory mechanism to recover the cost of named storms on an expedited basis.

The cost of the Duke Energy Registrants’ coverage can fluctuate from year to year reflecting claims history and conditions of the insurance and reinsurance markets.

In the event of a loss, terms and amounts of insurance and reinsurance available might not be adequate to cover claims and other expenses incurred. Uninsured losses and other expenses, to the extent not recovered by other sources, could have a material effect on the Duke Energy Registrants’ results of operations, cash flows or financial position. Each company is responsible to the extent losses may be excluded or exceed limits of the coverage available.

Nuclear Insurance

Duke Energy Carolinas owns and operates the McGuire Nuclear Station (McGuire) and the Oconee Nuclear Station (Oconee) and operates and has a partial ownership interest in the Catawba Nuclear Station (Catawba). McGuire and Catawba each have two reactors. Oconee has three reactors. The other joint owners of Catawba reimburse Duke Energy Carolinas for certain expenses associated with nuclear insurance per the Catawba joint owner agreements.

Duke Energy Progress owns and operates the Robinson Nuclear Plant (Robinson), Brunswick and Harris. Robinson and Harris each have one reactor. Brunswick has two reactors.

Duke Energy Florida owns Crystal River Unit 3, which has been retired.

In the event of a loss, terms and amounts of insurance available might not be adequate to cover property damage and other expenses incurred. Uninsured losses and other expenses, to the extent not recovered by other sources, could have a material effect on Duke Energy Carolinas’, Duke Energy Progress’ and Duke Energy Florida’s results of operations, cash flows or financial position. Each company is responsible to the extent losses may be excluded or exceed limits of the coverage available.

Nuclear Liability Coverage

The Price-Anderson Act requires owners of nuclear reactors to provide for public nuclear liability protection per nuclear incident up to a maximum total financial protection liability. The maximum total financial protection liability, which is approximately $13.4 billion, is subject to change every five years for inflation and for the number of licensed reactors. Total nuclear liability coverage consists of a combination of private primary nuclear liability insurance coverage and a mandatory industry risk-sharing program to provide for excess nuclear liability coverage above the maximum reasonably available private primary coverage. The United States Congress could impose revenue-raising measures on the nuclear industry to pay claims.

Primary Liability Insurance

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida have purchased the maximum reasonably available private primary nuclear liability insurance as required by law, which was $375 million per station. For incidents after January 1, 2017, this primary nuclear liability insurance limit increased to $450 million per station.

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Combined Notes To Consolidated Financial Statements – (Continued)

Excess Liability Program

This program provides $13 billion of coverage per incident through the Price-Anderson Act’s mandatory industrywide excess secondary financial protection program of risk pooling. This amount is the product of potential cumulative retrospective premium assessments of $127 million times the current 102 licensed commercial nuclear reactors in the U.S. Under this program, licensees could be assessed retrospective premiums to compensate for public nuclear liability damages in the event of a nuclear incident at any licensed facility in the U.S. Retrospective premiums may be assessed at a rate not to exceed $19 million per year per licensed reactor for each incident. The assessment may be subject to state premium taxes.

Nuclear Property and Accidental Outage Coverage

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are members of Nuclear Electric Insurance Limited (NEIL), an industry mutual insurance company, which provides "all risk" property damage, decontamination and premature decommissioning insurance for each station for losses resulting from damage to its nuclear plants, either due to accidents or acts of terrorism. Additionally, NEIL provides some replacement power cost insurance for each station for losses in the event of a major accidental outage at an insured nuclear station. NEIL requires its members to maintain an investment grade credit rating or to ensure collectability of their annual retrospective premium obligation by providing a financial guarantee, letter of credit, deposit premium or other means of assurance. The companies are required each year to report to the NRC the current levels and sources of insurance that demonstrate it possesses sufficient financial resources to stabilize and decontaminate its reactors and reactor station sites in the event of an accident.

Pursuant to regulations of the NRC, each company’s property damage insurance policies provide that all proceeds from such insurance be applied, first, to place the plant in a safe and stable condition after a qualifying accident and second, to decontaminate the plant before any proceeds can be used for decommissioning, plant repair or restoration.

Losses resulting from acts of terrorism are covered as common occurrences, such that if terrorist acts occur against one or more commercial nuclear power plants insured by NEIL within a 12-month period, they would be treated as one event and the owners of the plants where the act occurred would share one full limit of liability. The full limit of liability is currently $3.2 billion. NEIL sublimits the total aggregate for all of their policies for non-nuclear terrorist events to approximately $1.83 billion.

Each nuclear facility has accident property damage, decontamination and premature decommissioning liability insurance from NEIL with limits of $1.5 billion, except for Crystal River Unit 3. Crystal River Unit 3’s limit is $50 million and is on an actual cash value basis. All nuclear facilities except for Catawba and Crystal River Unit 3 also share an additional $1.25 billion nuclear accident insurance limit above their dedicated underlying limit. This shared additional excess limit is not subject to reinstatement in the event of a loss. Catawba has a dedicated $1.25 billion of additional nuclear accident insurance limit above its dedicated underlying limit. Catawba and Oconee also have an additional $750 million of non-nuclear accident property damage limit. All coverages are subject to sublimits and significant deductibles.

NEIL’s Accidental Outage policy provides some replacement power cost insurance for losses in the event of a major accident property damage outage of a nuclear unit. Coverage is provided on a weekly limit basis after a significant waiting period deductible and at 100 percent of the available weekly limits for 52 weeks and 80 percent of the available weekly limits for the next 110 weeks. Coverage is provided until these available weekly periods are met where the accidental outage policy limit will not exceed $490 million for McGuire, Catawba, Brunswick and Harris, $464 million for Oconee and $404 million for Robinson. NEIL sublimits the accidental outage recovery to the first 104 weeks of coverage not to exceed $328 million from non-nuclear accidental property damage. Coverage amounts decrease in the event more than one unit at a station is out of service due to a common accident. All coverages are subject to sublimits and significant deductibles.

Potential Retroactive Premium Assessments

In the event of NEIL losses, NEIL’s board of directors may assess member companies retroactive premiums of amounts up to 10 times their annual premiums for up to six years after a loss. NEIL has never exercised this assessment. The maximum aggregate annual retrospective premium obligations for Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are $164 million, $104 million and $1 million, respectively. Duke Energy Carolinas' maximum assessment amount includes 100 percent of potential obligations to NEIL for jointly owned reactors. Duke Energy Carolinas would seek reimbursement from the joint owners for their portion of these assessment amounts.

ENVIRONMENTAL

The Duke Energy Registrants are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal and other environmental matters. These regulations can be changed from time to time, imposing new obligations on the Duke Energy Registrants. The following environmental matters impact all of the Duke Energy Registrants.

Remediation Activities

In addition to the ARO recorded as a result of various environmental regulations, discussed in Note 9, 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 in the Consolidated Statements of Operations unless regulatory recovery of the costs is deemed probable.

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Combined Notes To Consolidated Financial Statements – (Continued)

The following tables contain information regarding reserves for probable and estimable costs related to the various environmental sites. These reserves are recorded in Other within Deferred Credits and Other Liabilities on the Consolidated Balance Sheets.



				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Balance at December 31, 2013	$	74		$	11		$	27		$	8		$	19		$	27		$	7
Provisions/adjustments	32			(1		)	1			4			(3		)	28			4
Cash reductions	(14		)	—			(11		)	(7		)	(4		)	(1		)	(1		)
Balance at December 31, 2014	92			10			17			5			12			54			10
Provisions/adjustments	11			1			4			—			4			1			5
Cash reductions	(9		)	(1		)	(4		)	(2		)	(2		)	(1		)	(3		)
Balance at December 31, 2015	94			10			17			3			14			54			12
Provisions/adjustments	19			4			7			2			4			7			1
Cash reductions	(15		)	(4		)	(6		)	(2		)	(4		)	(2		)	(3		)
Balance at December 31, 2016	$	98		$	10		$	18		$	3		$	14		$	59		$	10

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



(in millions)
Duke Energy	$	69
Duke Energy Carolinas	22
Duke Energy Ohio	36
Duke Energy Indiana	7

North Carolina and South Carolina Ash Basins

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

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

LITIGATION

Duke Energy

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

Ash Basin Shareholder Derivative Litigation

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

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Combined Notes To Consolidated Financial Statements – (Continued)

The Consolidated Complaint alleges the Duke Energy Defendants breached their fiduciary duties by failing to adequately oversee Duke Energy’s ash basins and that these breaches of fiduciary duty may have contributed to the incident at Dan River and continued thereafter. The lawsuit also asserts claims against the Duke Energy Defendants for corporate waste (relating to the money Duke Energy has spent and will spend as a result of the fines, penalties and coal ash removal) and unjust enrichment (relating to the compensation and director remuneration that was received despite these alleged breaches of fiduciary duty). The lawsuit seeks both injunctive relief against Duke Energy and restitution from the Duke Energy Defendants. On January 21, 2015, the Duke Energy Defendants filed a Motion to Stay and an alternative Motion to Dismiss. On August 31, 2015, the court issued an order staying the case which was lifted on March 24, 2016. On April 22, 2016, plaintiffs filed an Amended Verified Consolidated Shareholder Derivative Complaint (Amended Complaint) making the same allegations as in the Consolidated Complaint. The Duke Energy Defendants filed a motion to dismiss the Amended Complaint on June 21, 2016. On December 14, 2016, the Delaware Chancery Court entered an order dismissing the Amended Complaint. Plaintiffs filed an appeal to the Delaware Supreme Court on January 9, 2017. Opening briefs were due by February 24, 2017, and a date for oral argument has not been set.

On March 5, 2015, shareholder Judy Mesirov filed a shareholder derivative complaint (Mesirov Complaint) in North Carolina state court. The lawsuit, styled Mesirov v. Good, was similar to the consolidated derivative action pending in Delaware Chancery Court and was filed against the same current directors and former directors and officers as the Delaware litigation. Duke Energy Corporation, Duke Energy Progress and Duke Energy Carolinas were named as nominal defendants. The Mesirov Complaint alleged that the Duke Energy Board of Directors was aware of Clean Water Act (CWA) compliance issues and failures to maintain structures in ash basins, but that the Board of Directors did not require Duke Energy Carolinas and Duke Energy Progress to take action to remedy deficiencies. The Mesirov Complaint further alleged that the Board of Directors sanctioned activities to avoid compliance with the law by allowing improper influence of the NCDEQ to minimize regulation and by opposing previously anticipated citizen suit litigation. The Mesirov Complaint sought corporate governance reforms and damages relating to costs associated with the Dan River release, remediation of ash basins that are out of compliance with the CWA and defending and payment of fines, penalties and settlements relating to criminal and civil investigations and lawsuits. On July 5, 2016, the plaintiff filed a Notice of Voluntary Dismissal Without Prejudice, closing this matter.

In addition to the above derivative complaints, in 2014, Duke Energy received two shareholder litigation demand letters. The letters alleged that the members of the Board of Directors and certain officers breached their fiduciary duties by allowing the company to illegally dispose of and store coal ash pollutants. One of the letters also alleged a breach of fiduciary duty in the decision-making relating to the leadership changes following the close of the Progress Energy merger in July 2012.

By letter dated September 4, 2015, attorneys for the shareholders were informed that, on the recommendation of the Demand Review Committee formed to consider such matters, the Board of Directors concluded not to pursue potential claims against individuals. One of the shareholders, Mitchell Pinsly, sent a formal demand for records and Duke Energy has responded to this request.

On October 30, 2015, shareholder Saul Bresalier filed a shareholder derivative complaint (Bresalier Complaint) in the U.S. District Court for the District of Delaware. The lawsuit alleges that several current and former Duke Energy officers and directors (Bresalier Defendants) breached their fiduciary duties in connection with coal ash environmental issues, the post-merger change in Chief Executive Officer (CEO) and oversight of political contributions. Duke Energy is named as a nominal defendant. The Bresalier Complaint contends that the Demand Review Committee failed to appropriately consider the shareholder’s earlier demand for litigation and improperly decided not to pursue claims against the Bresalier Defendants. The Bresalier Defendants filed a Motion to Dismiss the Bresalier litigation on January 15, 2016. In lieu of a response to the Motion to Dismiss, the plaintiff filed a Motion to Convert the Bresalier Defendants' Motion to Dismiss into a Motion for Summary Judgment and also for limited discovery. Following a hearing on June 15, 2016, the court denied the plaintiff's Motion to Convert and is requiring the parties to complete briefing on the Bresalier Defendants' Motion to Dismiss. On July 29, 2016, the Bresalier Defendants filed an Amended Motion to Dismiss. Oral argument on the Amended Motion to Dismiss was heard on December 20, 2016. As discussed below, an agreement-in-principle has been reached to settle the merger related claims in the Bresalier Complaint.

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

Progress Energy Merger Shareholder Litigation

Duke Energy, the 11 members of the Board of Directors who were also members of the pre-merger Board of Directors (Legacy Duke Energy Directors) and certain Duke Energy officers were defendants in a purported securities class action lawsuit (Nieman v. Duke Energy Corporation, et al). This lawsuit consolidated three lawsuits originally filed in July 2012. The plaintiffs alleged federal Securities Act of 1933 and Securities Exchange Act of 1934 (Exchange Act) claims based on allegations of materially false and misleading representations and omissions in the Registration Statement filed on July 7, 2011, and purportedly incorporated into other documents, all in connection with the post-merger change in CEO. On August 15, 2014, the parties reached an agreement in principle to settle the litigation. On March 10, 2015, the parties filed a Stipulation of Settlement and a Motion for Preliminary Approval of the Settlement. Under the terms of the agreement, Duke Energy agreed to pay $146 million to settle the claim. On April 22, 2015, Duke Energy made a payment of $25 million into the settlement escrow account. The remainder of $121 million was paid by insurers into the settlement escrow account. The final order approving the settlement was issued on November 2, 2015, thus closing the matter.

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

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

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Combined Notes To Consolidated Financial Statements – (Continued)

The Legacy Duke Energy Directors have reached an agreement-in-principle to settle the Merger Chancery Litigation, conditioned on dismissal as well, of the Tansey v. Rogers, et al case and the merger related claims in the Bresalier Complaint discussed above, for a total of $27 million. The entire settlement amount is to be funded by insurance. The settlement amount, less court-approved attorney fees, will be payable to Duke Energy. The settlement is subject to the execution of definitive settlement documents and court approval.

Price Reporting Cases

Duke Energy Trading and Marketing, LLC (DETM), a non-operating Duke Energy affiliate, was a defendant, along with numerous other energy companies, in four class-action lawsuits and a fifth single-plaintiff lawsuit in a consolidated federal court proceeding in Nevada. Each of these lawsuits contained similar claims that defendants allegedly manipulated natural gas markets by various means, including providing false information to natural gas trade publications and entering into unlawful arrangements and agreements in violation of the antitrust laws of the respective states. Plaintiffs sought damages in unspecified amounts. In February 2016, DETM reached agreements in principle to settle all of the pending lawsuits. Settlement of the single-plaintiff settlement was finalized and paid in March 2016. The proposed settlement of the class-action lawsuits was submitted to the Court and preliminarily approved on January 26, 2017. The Court will consider final approval of the class settlement following notice to the class members. The settlement amounts are not material to Duke Energy.

Duke Energy Carolinas and Duke Energy Progress

NCDEQ Notice of Violation

In August 2014, NCDEQ issued an NOV for alleged groundwater violations at Duke Energy Progress' Sutton Plant. On March 10, 2015, NCDEQ issued a civil penalty of approximately $25 million to Duke Energy Progress for environmental damages related to alleged groundwater contamination at the Sutton Plant. On April 9, 2015, Duke Energy Progress filed a Petition for Contested Case hearing in the Office of Administrative Hearings. In February 2015, NCDEQ issued an NOV for alleged groundwater violations at Duke Energy Progress' Asheville Plant. Duke Energy Progress responded to NCDEQ regarding this NOV.

On September 29, 2015, Duke Energy Progress and Duke Energy Carolinas entered into a settlement agreement with NCDEQ resolving all former, current and future groundwater penalties at all Duke Energy Carolinas and Duke Energy Progress coal facilities in North Carolina. Under the agreement, Duke Energy Progress paid approximately $6 million and Duke Energy Carolinas paid approximately $1 million. In addition to these payments, Duke Energy Progress and Duke Energy Carolinas will accelerate remediation actions at the Sutton, Asheville, Belews Creek and H.F. Lee plants. The court entered a consent order resolving the contested case relating to the Sutton Plant and NCDEQ rescinded the NOVs relating to alleged groundwater violations at both the Sutton and Asheville plants.

On October 13, 2015, the Southern Environmental Law Center (SELC), representing multiple conservation groups, filed a lawsuit in North Carolina Superior Court seeking judicial review of the order approving the settlement agreement with NCDEQ. The conservation groups contend that the ALJ exceeded his statutory authority in approving a settlement that provided for past, present and future resolution of groundwater issues at facilities which were not at issue in the penalty appeal. On December 18, 2015, Duke Energy Carolinas and Duke Energy Progress filed a Motion to Dismiss the complaint. On February 12, 2016, the ALJ entered a new order clarifying that the dismissal of the contested case only applied to the specific issues before the ALJ in the Petition for Contested Case. On March 10, 2016, the court dismissed the SELC lawsuit based on the ALJ's entry of the new order.

On February 8, 2016, the NCDEQ assessed a penalty of approximately $6.8 million, including enforcement costs, against Duke Energy Carolinas related to stormwater pipes and associated discharges at the Dan River Steam Station. Duke Energy Carolinas recorded a charge in December 2015 for this penalty. In March 2016, Duke Energy Carolinas filed an appeal of this penalty. On September 23, 2016, Duke Energy Carolinas entered into a settlement agreement with the NCDEQ, without admission of liability, under which Duke Energy Carolinas agreed to a payment of $6 million to resolve allegations underlying the asserted civil penalty related to the Dan River coal ash release and a March 4, 2016, NOV alleging unpermitted discharges at the facility.

NCDEQ State Enforcement Actions

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

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

On July 10, 2015, Duke Energy Carolinas and Duke Energy Progress filed two Motions for Partial Summary Judgment in the case on the basis that there is no longer either a genuine controversy or disputed material facts about the relief for seven of the 14 North Carolina plants with coal ash basins. On September 14, 2015, the court granted the Motions for Partial Summary Judgment pending court approval of the terms through an order. On April 4, 2016, the court issued an order granting Duke Energy Progress' Motion for Partial Summary Judgment for cases involving the H.F. Lee, Cape Fear and Weatherspoon plants. On June 1, 2016, the court issued an order granting Duke Energy Carolinas' and Duke Energy Progress' Motion for Partial Summary Judgment for cases involving the Asheville, Dan River, Riverbend and Sutton plants. The litigation is concluded for these seven plants. Litigation continues for the remaining seven plants. In response to a motion for partial summary judgment on the groundwater claims filed by the environmental groups, on October 17, 2016, Duke Energy Carolinas and Duke Energy Progress filed a cross-motion for partial summary judgment on the groundwater claims. On February 13, 2017, the court issued an order denying both the environmental groups' motion for partial summary judgment and Duke Energy Carolinas and Duke Energy Progress' cross-motion for partial summary judgment.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

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

Federal Citizens Suits

On June 13, 2016, the Roanoke River Basin Association filed a federal citizen suit in the Middle District of North Carolina alleging unpermitted discharges to surface water and groundwater violations at the Mayo Plant. On August 19, 2016, Duke Energy Progress filed a Motion to Dismiss the complaint and a decision is pending. It is not possible to predict whether Duke Energy Progress will incur any liability or to estimate the damages, if any, they might incur in connection with this matter.

Five previously filed cases involving the Riverbend, Cape Fear, H.F. Lee, Sutton and Buck plants have been dismissed or settled during 2016.

North Carolina Ash Basin Grand Jury Investigation

As a result of the Dan River ash basin water release discussed above, NCDEQ issued a NOV and Recommendation of Assessment of Civil Penalties with respect to this matter on February 28, 2014, which the company responded to on March 13, 2014. Duke Energy and certain Duke Energy employees received subpoenas issued by the United States Attorney for the Eastern District of North Carolina in connection with a criminal investigation related to all 14 of the North Carolina facilities with ash basins and the nature of Duke Energy's contacts with NCDEQ with respect to those facilities. This was a multidistrict investigation that also involves state law enforcement authorities.

On February 20, 2015, Duke Energy Carolinas, Duke Energy Progress and Duke Energy Business Services LLC (DEBS), a wholly owned subsidiary of Duke Energy, each entered into Plea Agreements in connection with the investigation initiated by the United States Department of Justice Environmental Crimes Section and the United States Attorneys for the Eastern District of North Carolina, the Middle District of North Carolina and the Western District of North Carolina (collectively, USDOJ). On May 14, 2015, the United States District Court for the Eastern District of North Carolina approved the Plea Agreements.

Under the Plea Agreements, DEBS and Duke Energy Progress pleaded guilty to four misdemeanor CWA violations related to violations at Duke Energy Progress’ H.F. Lee Steam Electric Plant, Cape Fear Steam Electric Plant and Asheville Steam Electric Generating Plant. Duke Energy Carolinas and DEBS pleaded guilty to five misdemeanor CWA violations related to violations at Duke Energy Carolinas’ Dan River Steam Station and Riverbend Steam Station. DEBS, Duke Energy Carolinas and Duke Energy Progress also agreed (i) to a five-year probation period, (ii) to pay a total of approximately $68 million in fines and restitution and $34 million for community service and mitigation (the Payments), (iii) to fund and establish environmental compliance plans subject to the oversight of a court-appointed monitor in addition to certain other conditions set out in the Plea Agreements. Duke Energy Carolinas and Duke Energy Progress also agree to each maintain $250 million under their Master Credit Facility as security to meet their obligations under the Plea Agreements. Payments under the Plea Agreements will be borne by shareholders and are not tax deductible. Duke Energy Corporation has agreed to issue a guarantee of all payments and performance due from DEBS, Duke Energy Carolinas and Duke Energy Progress, including but not limited to payments for fines, restitution, community service, mitigation and the funding of, and obligations under, the environmental compliance plans. As a result of the Plea Agreements, Duke Energy Carolinas and Duke Energy Progress recognized charges of $72 million and $30 million, respectively, in Operation, maintenance and other on the Consolidated Statements of Operations and Comprehensive Income during 2014. Payment of the amounts relating to fines and restitution were made between May and July 2015. The Plea Agreements do not cover pending civil claims related to the Dan River coal ash release and operations at other North Carolina coal plants.

On May 14, 2015, Duke Energy reached an Interim Administrative Agreement with the U.S. Environmental Protection Agency Office of Suspension and Debarment that avoids debarment of DEBS, Duke Energy Carolinas or Duke Energy Progress with respect to all active generating facilities. The Interim Administrative Agreement imposes a number of requirements relating to environmental and ethical compliance, subject to the oversight of an independent monitor.

Potential Groundwater Contamination Claims

Beginning in May 2015, a number of residents living in the vicinity of the North Carolina facilities with ash basins received letters from the NCDEQ advising them not to drink water from the private wells on their land tested by the NCDEQ as the samples were found to have certain substances at levels higher than the criteria set by the North Carolina Department of Health and Human Services (DHHS). The criteria, in some cases, are considerably more stringent than federal drinking water standards established to protect human health and welfare. The North Carolina Coal Ash Management Act of 2014, as amended, (Coal Ash Act) requires additional groundwater monitoring and assessments for each of the 14 coal-fired plants in North Carolina, including sampling of private water supply wells. The data gathered through these Comprehensive Site Assessments (CSAs) will be used by NCDEQ to determine whether the water quality of these private water supply wells has been adversely impacted by the ash basins. Duke Energy has submitted CSAs documenting the results of extensive groundwater monitoring around coal ash basins at all 14 of the plants with coal ash basins. Generally, the data gathered through the installation of new monitoring wells and soil and water samples across the state have been consistent with historical data provided to state regulators over many years. The DHHS and NCDEQ sent follow-up letters on October 15, 2015, to residents near coal ash basins who have had their wells tested, stating that private well samplings at a considerable distance from coal ash basins, as well as some municipal water supplies, contain similar levels of vanadium and hexavalent chromium which leads investigators to believe these constituents are naturally occurring. In March 2016, DHHS rescinded the advisories.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Duke Energy Carolinas and Duke Energy Progress have received formal demand letters from residents near Duke Energy Carolinas' and Duke Energy Progress' coal ash basins. The residents claim damages for nuisance and diminution in property value, among other things. The parties held three days of mediation discussions which ended at impasse. On January 6, 2017, Duke Energy Carolinas and Duke Energy Progress received the plaintiffs' notice of their intent to file suits should the matter not settle. The NCDEQ preliminarily approved Duke Energy’s permanent water solution plans on January 13, 2017, and as a result shortly thereafter, Duke Energy issued a press release, providing additional details regarding the homeowner compensation package. This package consists of three components: (i) a $5,000 goodwill payment to each eligible well owner to support the transition to a new water supply, (ii) where a public water supply is available and selected by the eligible well owner, a stipend to cover 25 years of water bills and (iii) the Property Value Protection Plan. The Property Value Protection Plan is a program offered by Duke Energy designed to guarantee eligible plant neighbors the fair market value of their residential property should they decide to sell their property during the time which the plan is offered. Duke Energy Carolinas and Duke Energy Progress recognized charges of $18 million and $4 million, respectively, in Operation, maintenance and other on the Consolidated Statements of Operations and Comprehensive Income in December 2016.

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

Duke Energy Carolinas

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 December 31, 2016, there were 121 asserted claims for non-malignant cases with the cumulative relief sought of up to $32 million and 58 asserted claims for malignant cases with the cumulative relief sought of up to $16 million. Based on Duke Energy Carolinas’ experience, it is expected that the ultimate resolution of most of these claims likely will be less than the amount claimed.

Duke Energy Carolinas has recognized asbestos-related reserves of $512 million and $536 million at December 31, 2016 and 2015, respectively. These reserves are classified in Other within Deferred Credits and Other Liabilities and Other within Current Liabilities on the Consolidated Balance Sheets. These reserves are based upon the minimum amount of the range of loss for current and future asbestos claims through 2036, are recorded on an undiscounted basis and incorporate anticipated inflation. In light of the uncertainties inherent in a longer-term forecast, management does not believe they can reasonably estimate the indemnity and medical costs that might be incurred after 2036 related to such potential claims. It is possible Duke Energy Carolinas may incur asbestos liabilities in excess of the recorded reserves.

Duke Energy Carolinas has third-party insurance to cover certain losses related to asbestos-related injuries and damages above an aggregate self-insured retention. Duke Energy Carolinas’ cumulative payments began to exceed the self-insurance 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 $814 million in excess of the self-insured retention. Receivables for insurance recoveries were $587 million and $599 million at December 31, 2016 and 2015, respectively. These amounts are classified in Other within Investments and Other Assets and Receivables on the Consolidated Balance Sheets. Duke Energy Carolinas is not aware of any uncertainties regarding the legal sufficiency of insurance claims. Duke Energy Carolinas believes the insurance recovery asset is probable of recovery as the insurance carrier continues to have a strong financial strength rating.

Duke Energy Progress and Duke Energy Florida

Spent Nuclear Fuel Matters

On October 16, 2014, Duke Energy Progress and Duke Energy Florida sued the U.S. in the U.S. Court of Federal Claims. The lawsuit claimed the Department of Energy breached a contract in failing to accept spent nuclear fuel under the Nuclear Waste Policy Act of 1982 and asserted damages for the cost of on-site storage. Duke Energy Progress and Duke Energy Florida asserted damages for the period January 1, 2011 through December 31, 2013, of $48 million and $25 million, respectively. Claims for all periods prior to 2011 have been resolved. Additional claims are likely to be filed after the current litigation is resolved. Trial has been set for June 2017. Duke Energy Progress and Duke Energy Florida cannot predict the outcome of this matter.

Duke Energy Florida

Class Action Lawsuit

On February 22, 2016, a lawsuit was filed in the U.S. District Court for the Southern District of Florida on behalf of a putative class of Duke Energy Florida and FP&L’s customers in Florida. The suit alleges the State of Florida’s nuclear power plant cost recovery statutes (NCRS) are unconstitutional and pre-empted by federal law. Plaintiffs claim they are entitled to repayment of all money paid by customers of Duke Energy Florida and FP&L as a result of the NCRS, as well as an injunction against any future charges under those statutes. The constitutionality of the NCRS has been challenged unsuccessfully in a number of prior cases on alternative grounds. Duke Energy Florida and FP&L filed motions to dismiss the complaint on May 5, 2016. On September 21, 2016, the Court granted the motions to dismiss with prejudice. Plaintiffs filed a motion for reconsideration, which was denied. On January 4, 2017, plaintiffs filed a notice of appeal. Duke Energy Florida cannot predict the outcome of this appeal.

Westinghouse Contract Litigation

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

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

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

On June 9, 2014, the judge in the North Carolina case ruled that the litigation will proceed in the Western District of North Carolina. On July 11, 2016, Duke Energy Florida and Westinghouse filed separate Motions for Summary Judgment. On September 29, 2016, the court issued its ruling on the parties' respective Motions for Summary Judgment, ruling in favor of Westinghouse on a $30 million termination fee claim and dismissing Duke Energy Florida's $54 million refund claim, but stating that Duke Energy Florida could use the refund claim to offset any damages for termination costs. Westinghouse's claim for termination costs was unaffected by this ruling and continued to trial. At trial, Westinghouse reduced its claim for termination costs from $482 million to $424 million.

Following a trial on the matter, the court issued its final order in December 2016 denying Westinghouse’s claim for termination costs and re-affirming its earlier ruling in favor of Westinghouse on the $30 million termination fee and Duke Energy Florida’s refund claim. Judgment was entered against Duke Energy Florida in the amount of approximately $34 million, which includes pre-judgment interest. Westinghouse has appealed the trial court's order and Duke Energy Florida has cross-appealed.

It is not possible to predict the ultimate outcome of the appeal of the trial court's order. Ultimate resolution of these matters could have a material effect on the results of operations, financial position or cash flows of Duke Energy Florida. However, appropriate regulatory recovery will be pursued for the retail portion of any costs incurred in connection with such resolution.

MGP Cost Recovery Action

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

Duke Energy Ohio

Antitrust Lawsuit

In January 2008, four plaintiffs, including individual, industrial and nonprofit customers, filed a lawsuit against Duke Energy Ohio in federal court in the Southern District of Ohio. Plaintiffs alleged Duke Energy Ohio conspired to provide inequitable and unfair price advantages for certain large business consumers by entering into nonpublic option agreements in exchange for their withdrawal of challenges to Duke Energy Ohio’s Rate Stabilization Plan implemented in early 2005. In March 2014, a federal judge certified this matter as a class action. Plaintiffs alleged claims of antitrust violations under the federal Robinson Patman Act as well as fraud and conspiracy allegations under the federal Racketeer Influenced and Corrupt Organizations statute and the Ohio Corrupt Practices Act.

During 2015, the parties received preliminary court approval of a settlement agreement. Duke Energy Ohio recorded a litigation settlement reserve of $81 million classified in Other within Current Liabilities on the Consolidated Balance Sheet at December 31, 2015. Duke Energy Ohio also recognized a pretax charge of $81 million in (Loss) Income From Discontinued Operations, net of tax in the Consolidated Statements of Operations and Comprehensive Income for the year ended December 31, 2015. The settlement agreement was approved at a federal court hearing on April 19, 2016. Distribution of the settlement checks was approved by the court in January 2017. See Note 2 for further discussion on the Midwest Generation Exit.

W.C. Beckjord Fuel Release

On August 18, 2014, approximately 9,000 gallons of fuel oil were inadvertently discharged into the Ohio River during a fuel oil transfer at the W.C. Beckjord generating station. The Ohio Environmental Protection Agency issued a NOV related to the discharge. On November 22, 2016, Duke Energy Ohio entered into a plea agreement with the U.S. Attorney for the Southern District of Ohio. Terms of the agreement include a misdemeanor violation of the CWA, a fine of $1 million and a $100 thousand contribution to the Foundation for Ohio River Education, which were paid in fourth quarter 2016. Duke Energy Ohio has also reimbursed government and private entities for approximately $1 million of costs incurred as a result of the fuel release.

Duke Energy Indiana

Benton County Wind Farm Dispute

On December 16, 2013, Benton County Wind Farm LLC (BCWF) filed a lawsuit against Duke Energy Indiana seeking damages for past generation losses totaling approximately $16 million alleging Duke Energy Indiana violated its obligations under a 2006 PPA by refusing to offer electricity to the market at negative prices. Damage claims continue to increase during times that BCWF is not dispatched. Under 2013 revised MISO market rules, Duke Energy Indiana is required to make a price offer to MISO for the power it proposes to sell into MISO markets and MISO determines whether BCWF is dispatched. Because market prices would have been negative due to increased market participation, Duke Energy Indiana determined it would not bid at negative prices in order to balance customer needs against BCWF's need to run. BCWF contends Duke Energy Indiana must bid at the lowest negative price to ensure dispatch, while Duke Energy Indiana contends it is not obligated to bid at any particular price, that it cannot ensure dispatch with any bid and that is has reasonably balanced the parties' interests. On July 6, 2015, the U.S. District Court for the Southern District of Indiana entered judgment against BCWF on all claims. BCWF appealed the decision and on December 9, 2016, the appeals court ruled in favor of BCWF. The matter has been remanded to a lower court to determine damages. Duke Energy Indiana cannot predict the outcome of this matter. Ultimate resolution of this matter could have a material effect on the results of operations, financial position or cash flows of Duke Energy Indiana. However, appropriate regulatory recovery will be pursued for the retail portion of any costs incurred in connection with such resolution.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Other Litigation and Legal Proceedings

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

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



	December 31,
(in millions)	2016		2015
Reserves for Legal Matters
Duke Energy	$	98	$	156
Duke Energy Carolinas	23		11
Progress Energy	59		54
Duke Energy Progress	14		6
Duke Energy Florida	28		31
Duke Energy Ohio	4		80

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

Purchase Obligations

Purchased Power

Duke Energy Progress, Duke Energy Florida and Duke Energy Ohio have ongoing purchased power contracts, including renewable energy contracts, with other utilities, wholesale marketers, co-generators and qualified facilities. These purchased power contracts generally provide for capacity and energy payments. In addition, Duke Energy Progress and Duke Energy Florida have various contracts to secure transmission rights.

The following table presents executory purchased power contracts with terms exceeding one year, excluding contracts classified as leases.



		Minimum Purchase Amount at December 31, 2016
	Contract
(in millions)	Expiration	2017		2018		2019		2020		2021		Thereafter		Total
Duke Energy Progress^(a)	2019-2031	$	66	$	67	$	67	$	50	$	51	$	267	$	568
Duke Energy Florida^(b)	2021-2043	341		357		377		394		376		1,211		3,056
Duke Energy Ohio^(c)(d)	2018	203		89		—		—		—		—		292

(a) Contracts represent between 15 percent and 100 percent of net plant output.

(b) Contracts represent between 81 percent and 100 percent of net plant output.

(d) Excludes PPA with OVEC. See Note 17 for additional information.

Gas Supply and Capacity Contracts

Duke Energy and Duke Energy Ohio routinely enter into long-term gas supply commodity and capacity commitments and other agreements that commit future cash flows to acquire services needed in their businesses. These commitments include pipeline and storage capacity contracts and natural gas supply contracts to provide service to customers. Costs arising from the natural gas supply commodity and capacity commitments, while significant, are pass-through costs to customers and are generally fully recoverable through the fuel adjustment or PGA procedures and prudence reviews in North Carolina and South Carolina and under the Tennessee Incentive Plan in Tennessee. In the Midwest, these costs are recovered via the Gas Cost Recovery Rate in Ohio or the Gas Cost Adjustment Clause in Kentucky. The time periods for fixed payments under pipeline and storage capacity contracts are up to 19 years. The time periods for fixed payments under natural gas supply contracts are up to three years. The time period for the natural gas supply purchase commitments is up to 15 years.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Certain storage and pipeline capacity contracts require the payment of demand charges that are based on rates approved by the FERC in order to maintain rights to access the natural gas storage or pipeline capacity on a firm basis during the contract term. The demand charges that are incurred in each period are recognized in the Consolidated Statements of Operations and Comprehensive Income as part of natural gas purchases and are included in Cost of natural gas.

The following table presents future unconditional purchase obligations under natural gas supply and capacity contracts as of December 31, 2016.



(in millions)	Duke Energy		Duke Energy Ohio
2017	$	371	$	52
2018	308		35
2019	286		26
2020	269		22
2021	267		22
Thereafter	1,595		7
Total	$	3,096	$	164

Operating and Capital Lease Commitments

The Duke Energy Registrants lease office buildings, railcars, vehicles, computer equipment and other property and equipment with various terms and expiration dates. Additionally, Duke Energy Progress has a capital lease related to firm gas pipeline transportation capacity. Duke Energy Progress and Duke Energy Florida have entered into certain purchased power agreements, which are classified as leases. Consolidated capitalized lease obligations are classified as Long-Term Debt or Other within Current Liabilities on the Consolidated Balance Sheets. Amortization of assets recorded under capital leases is included in Depreciation and amortization and Fuel used in electric generation on the Consolidated Statements of Operations.

The following table presents rental expense for operating leases. These amounts are included in Operation, maintenance and other on the Consolidated Statements of Operations.



	Years Ended December 31,
(in millions)	2016		2015		2014
Duke Energy	$	242	$	313	$	350
Duke Energy Carolinas	45		41		41
Progress Energy	140		230		257
Duke Energy Progress	68		149		161
Duke Energy Florida	72		81		96
Duke Energy Ohio	16		13		17
Duke Energy Indiana	23		20		21

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



	December 31, 2016
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
2017	$	218	$	41	$	129	$	75	$	54	$	12	$	20
2018	205		35		126		73		53		11		17
2019	181		27		120		68		52		7		11
2020	164		23		109		58		51		6		10
2021	134		17		91		43		48		4		6
Thereafter	948		52		602		379		223		7		9
Total	$	1,850	$	195	$	1,177	$	696	$	481	$	47	$	73

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

The following table presents future minimum lease payments under capital leases.



	December 31, 2016
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
2017	$	148		$	6		$	46		$	21		$	25		$	4		$	1
2018	154			6			46			21			25			3			2
2019	154			6			45			20			25			1			1
2020	159			5			46			22			25			—			1
2021	163			1			45			20			25			—			1
Thereafter	784			30			322			250			71			—			41
Minimum annual payments	1,562			54			550			354			196			8			47
Less: amount representing interest	(462		)	(32		)	(265		)	(212		)	(53		)	(1		)	(36		)
Total	$	1,100		$	22		$	285		$	142		$	143		$	7		$	11

6. DEBT AND CREDIT FACILITIES

Summary of Debt and Related Terms

The following tables summarize outstanding debt.



	December 31, 2016
	Weighted
	Average					Duke						Duke			Duke			Duke			Duke
	Interest		Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Rate		Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Unsecured debt, maturing 2017 - 2073	4.30	%	$	17,812		$	1,150		$	3,551		$	—		$	150		$	810		$	415
Secured debt, maturing 2017 - 2037	2.60	%	3,909			425			1,819			300			1,519			—			—
First mortgage bonds, maturing 2017 - 2046^(a)	4.61	%	21,879			7,410			10,800			6,425			4,375			1,000			2,669
Capital leases, maturing 2018 - 2051^(b)	4.48	%	1,100			22			285			142			143			7			11
Tax-exempt bonds, maturing 2017 - 2041^(c)	2.84	%	1,053			355			48			48			—			77			572
Notes payable and commercial paper^(d)	1.01	%	3,112			—			—			—			—			—			—
Money pool/intercompany borrowings^(e)			—			300			1,902			150			297			41			150
Fair value hedge carrying value adjustment			6			6			—			—			—			—			—
Unamortized debt discount and premium, net^(f)			1,753			(20		)	(31		)	(16		)	(10		)	(28		)	(9		)
Unamortized debt issuance costs^(g)			(242		)	(45		)	(104		)	(38		)	(52		)	(7		)	(22		)
Total debt	4.07	%	$	50,382		$	9,603		$	18,270		$	7,011		$	6,422		$	1,900		$	3,786
Short-term notes payable and commercial paper			(2,487		)	—			—			—			—			—			—
Short-term money pool/intercompany borrowings			—			—			(729		)	—			(297		)	(16		)	—
Current maturities of long-term debt^(h)			(2,319		)	(116		)	(778		)	(452		)	(326		)	(1		)	(3		)
Total long-term debt^(h)			$	45,576		$	9,487		$	16,763		$	6,559		$	5,799		$	1,883		$	3,783


(a)	Substantially all electric utility property is mortgaged under mortgage bond indentures.


(b)	Duke Energy includes $98 million and $670 million of capital lease purchase accounting adjustments related to Duke Energy Progress and Duke Energy Florida, respectively, related to power purchase agreements that are not accounted for as capital leases in their respective financial statements because of grandfathering provisions in GAAP.


(c)	Substantially all tax-exempt bonds are secured by first mortgage bonds or letters of credit.

(d)

Includes $625 million that was classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for Duke Energy and Piedmont's commercial paper programs were 14 days and eight days, respectively.


(e)	Progress Energy amount includes a $1 billion intercompany loan related to the sale of the International Disposal Group. See Note 2 for further discussion of the sale.


(f)	Duke Energy includes $1,653 million and $197 million in purchase accounting adjustments related to Progress Energy and Piedmont, respectively.


(g)	Duke Energy includes $53 million in purchase accounting adjustments primarily related to the merger with Progress Energy.


(h)	Refer to Note 17 for additional information on amounts from consolidated VIEs.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)



	December 31, 2015
	Weighted
	Average					Duke						Duke			Duke			Duke			Duke
	Interest		Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Rate		Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Unsecured debt, maturing 2016 - 2073	4.68	%	$	12,960		$	1,152		$	3,850		$	—		$	150		$	765		$	740
Secured debt, maturing 2016 - 2037	2.37	%	2,361			425			479			254			225			—			—
First mortgage bonds, maturing 2016 - 2045^(a)	4.74	%	18,980			6,161			9,750			5,975			3,775			750			2,319
Capital leases, maturing 2016 - 2051^(b)	5.39	%	1,335			24			300			144			156			13			14
Tax-exempt bonds, maturing 2017 - 2041^(c)	2.59	%	1,053			355			48			48			—			77			572
Notes payable and commercial paper^(d)	0.88	%	4,258			—			—			—			—			—			—
Money pool/intercompany borrowings			—			300			1,458			359			813			128			150
Fair value hedge carrying value adjustment			6			6			—			—			—			—			—
Unamortized debt discount and premium, net^(e)			1,712			(17		)	(28		)	(16		)	(8		)	(28		)	(8		)
Unamortized debt issuance costs^(f)			(164		)	(39		)	(85		)	(37		)	(32		)	(4		)	(19		)
Total debt	4.15	%	$	42,501		$	8,367		$	15,772		$	6,727		$	5,079		$	1,701		$	3,768
Short-term notes payable and commercial paper			(3,633		)	—			—			—			—			—			—
Short-term money pool/intercompany borrowings			—			—			(1,308		)	(209		)	(813		)	(103		)	—
Current maturities of long-term debt^(g)			(2,026		)	(356		)	(315		)	(2		)	(13		)	(106		)	(547		)
Total long-term debt^(g)			$	36,842		$	8,011		$	14,149		$	6,516		$	4,253		$	1,492		$	3,221


(a)	Substantially all electric utility property is mortgaged under mortgage bond indentures.


(b)	Duke Energy includes $114 million and $731 million of capital lease purchase accounting adjustments related to Duke Energy Progress and Duke Energy Florida, respectively, related to power purchase agreements that are not accounted for as capital leases in their respective financial statements because of grandfathering provisions in GAAP.


(c)	Substantially all tax-exempt bonds are secured by first mortgage bonds or letters of credit.


(d)	Includes $625 million that was classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for commercial paper was 15 days.


(e)	Duke Energy includes $1,798 million in purchase accounting adjustments related to the merger with Progress Energy.


(f)	Duke Energy includes $59 million in purchase accounting adjustments primarily related to the merger with Progress Energy.


(g)	Refer to Note 17 for additional information on amounts from consolidated VIEs.

Current Maturities of Long-Term Debt

The following table shows the significant components of Current maturities of Long-Term Debt on the 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		December 31, 2016
Unsecured Debt
Duke Energy (Parent)	April 2017	1.226	%	$	400
Duke Energy (Parent)	August 2017	1.625	%	700
Piedmont Natural Gas	September 2017	8.510	%	35
First Mortgage Bonds
Duke Energy Progress	March 2017	1.146	%	250
Duke Energy Florida	September 2017	5.800	%	250
Duke Energy Progress	November 2017	1.111	%	200
Secured
Duke Energy	June 2017	2.365	%	45
Duke Energy	June 2017	2.260	%	34
Tax-exempt Bonds
Duke Energy Carolinas	February 2017	3.600	%	77
Duke Energy Carolinas	February 2017	0.810	%	10
Duke Energy Carolinas	February 2017	0.790	%	25
Other^(a)				293
Current maturities of long-term debt				$	2,319

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)


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

Maturities and Call Options

The following table shows the annual maturities of long-term debt for the next five years and thereafter. Amounts presented exclude short-term notes payable and commercial paper and money pool borrowings for the Subsidiary Registrants.



	December 31, 2016
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy^(a)		Carolinas		Energy		Progress		Florida		Ohio		Indiana
2017	$	2,319	$	116	$	778	$	452	$	326	$	1	$	3
2018	3,466		1,629		559		—		561		3		3
2019	3,316		5		1,992		902		292		551		63
2020	2,112		755		469		152		319		25		653
2021	3,699		501		1,473		602		372		49		70
Thereafter	31,090		6,597		12,270		4,903		4,255		1,255		2,994
Total long-term debt, including current maturities	$	46,002	$	9,603	$	17,541	$	7,011	$	6,125	$	1,884	$	3,786


(a)	Excludes $1,893 million in purchase accounting adjustments related to the Progress Energy merger and the Piedmont acquisition.

The Duke Energy Registrants have the ability under certain debt facilities to call and repay the obligation prior to its scheduled maturity. Therefore, the actual timing of future cash repayments could be materially different than as presented above.

Short-Term Obligations Classified as Long-Term Debt

Tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder and certain commercial paper issuances and money pool borrowings are classified as Long-Term Debt on the Consolidated Balance Sheets. These tax-exempt bonds, commercial paper issuances and money pool borrowings, which are short-term obligations by nature, are classified as long term due to Duke Energy’s intent and ability to utilize such borrowings as long-term financing. As Duke Energy’s Master Credit Facility and other bilateral letter of credit agreements have non-cancelable terms in excess of one year as of the balance sheet date, Duke Energy has the ability to refinance these short-term obligations on a long-term basis. The following tables show short-term obligations classified as long-term debt.



	December 31, 2016
			Duke		Duke		Duke		Duke
	Duke		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Progress		Ohio		Indiana
Tax-exempt bonds	$	347	$	35	$	—	$	27	$	285
Commercial paper^(a)	625		300		150		25		150
Total	$	972	$	335	$	150	$	52	$	435



	December 31, 2015
			Duke		Duke		Duke		Duke
	Duke		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Progress		Ohio		Indiana
Tax-exempt bonds	$	347	$	35	$	—	$	27	$	285
Commercial paper^(a)	625		300		150		25		150
Total	$	972	$	335	$	150	$	52	$	435


(a)	Progress Energy amounts are equal to Duke Energy Progress amounts.

Summary of Significant Debt Issuances

Piedmont Acquisition Financing

In August 2016, Duke Energy issued $3.75 billion of senior unsecured notes in three separate series. The net proceeds were used to finance a portion of the Piedmont acquisition. The $4.9 billion Bridge Facility was terminated following the issuance of this debt. See Note 2 for additional information on the Piedmont acquisition.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Nuclear Asset-Recovery Bonds

In June 2016, DEFPF issued $1,294 million of nuclear asset-recovery bonds and used the proceeds to acquire nuclear asset-recovery property from its parent, Duke Energy Florida. The nuclear asset-recovery bonds are payable only from and secured by the nuclear asset-recovery property. DEFPF is consolidated for financial reporting purposes; however, the nuclear asset-recovery bonds do not constitute a debt, liability or other legal obligation of, or interest in, Duke Energy Florida or any of its affiliates other than DEFPF. The assets of DEFPF, including the nuclear asset-recovery property, are not available to pay creditors of Duke Energy Florida or any of its affiliates. Duke Energy Florida used the proceeds from the sale to repay short-term borrowings under the intercompany money pool borrowing arrangement and make an equity distribution of $649 million to the ultimate parent, Duke Energy (Parent), which repaid short-term borrowings. See Notes 4 and 17 for additional information.

Solar Facilities Financing

In August 2016, Emerald State Solar, LLC, an indirect wholly owned subsidiary of Duke Energy, entered into a $333 million portfolio financing of approximately 22 North Carolina Solar facilities. Tranche A of $228 million is secured by substantially all the assets of the solar facilities and is nonrecourse to Duke Energy. Tranche B of $105 million is secured by an Equity Contribution Agreement with Duke Energy. Proceeds were used to reimburse Duke Energy for a portion of previously funded construction expenditures related to the Emerald State Solar, LLC portfolio. The initial interest rate on the loans was six months London Interbank Offered Rate (LIBOR) plus an applicable margin of 1.75 percent plus a 0.125 percent increase every three years thereafter. In connection with this debt issuance, Emerald State Solar, LLC entered into two interest rate swaps to convert the substantial majority of the loan interest payments from variable rates to fixed rates of approximately 1.81 percent for Tranche A and 1.38 percent for Tranche B, plus the applicable margin. See Note 14 for further information on the notional amounts of the interest rate swaps.

Duke Energy Florida Bond Issuance

In January 2017, Duke Energy Florida issued $900 million of first mortgage bonds. The issuance was split between a $250 million, three-year series and a $650 million, 10-year series. The net proceeds from the issuance were used to repay at maturity $250 million aggregate principal amount of bonds due September 2017, as well as to fund capital expenditures for ongoing construction and capital maintenance and for general corporate purposes.

The following tables summarize significant debt issuances (in millions).



				Year Ended December 31, 2016
						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
Unsecured Debt
April 2016^(a)	April 2023	2.875	%	$	350	$	350	$	—	$	—	$	—	$	—	$	—
August 2016	September 2021	1.800	%	750		750		—		—		—		—		—
August 2016	September 2026	2.650	%	1,500		1,500		—		—		—		—		—
August 2016	September 2046	3.750	%	1,500		1,500		—		—		—		—		—
Secured Debt
June 2016^(b)	March 2020	1.196	%	183		—		—		—		183		—		—
June 2016^(b)	September 2022	1.731	%	150		—		—		—		150		—		—
June 2016^(b)	September 2029	2.538	%	436		—		—		—		436		—		—
June 2016^(b)	March 2033	2.858	%	250		—		—		—		250		—		—
June 2016^(b)	September 2036	3.112	%	275		—		—		—		275		—		—
August 2016	June 2034	2.747	%	228		—		—		—		—		—		—
August 2016	June 2020	2.747	%	105		—		—		—		—		—		—
First Mortgage Bonds
March 2016^(c)	March 2023	2.500	%	500		—		500		—		—		—		—
March 2016^(c)	March 2046	3.875	%	500		—		500		—		—		—		—
May 2016^(d)	May 2046	3.750	%	500		—		—		—		—		—		500
June 2016^(c)	June 2046	3.700	%	250		—		—		—		—		250		—
September 2016^(e)	October 2046	3.400	%	600		—		—		—		600		—		—
September 2016^(c)	October 2046	3.700	%	450		—		—		450		—		—		—
November 2016^(f)	December 2026	2.950	%	600		—		600		—		—		—		—
Total issuances				$	9,127	$	4,100	$	1,600	$	450	$	1,894	$	250	$	500


(a)	Proceeds were used to pay down outstanding commercial paper and for general corporate purposes.


(b)	The nuclear asset recovery bonds are sequential pay amortizing bonds. The maturity date above represents the scheduled final maturity date for the bonds.


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

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)


(d)	Proceeds were used to repay $325 million of unsecured debt due June 2016, $150 million of first mortgage bonds due July 2016 and for general corporate purposes.


(e)	Proceeds were used to fund capital expenditures for ongoing construction, capital maintenance, to repay short-term borrowings under the intercompany money pool borrowing arrangement and for general corporate purposes.


(f)	Proceeds were used to repay at maturity $350 million aggregate principal amount of certain bonds due December 2016, as well as to fund capital expenditures for ongoing construction and capital maintenance and for general corporate purposes.



				Year Ended December 31, 2015
						Duke		Duke		Duke
	Maturity	Interest		Duke		Energy		Energy		Energy
Issuance Date	Date	Rate		Energy		(Parent)		Carolinas		Progress
Unsecured Debt
November 2015^(a)(b)	April 2024	3.750	%	$	400	$	400	$	—	$	—
November 2015^(a)(b)	December 2045	4.800	%	600		600		—		—
First Mortgage Bonds
March 2015^(c)	June 2045	3.750	%	500		—		500		—
August 2015^(a)(d)	August 2025	3.250	%	500		—		—		500
August 2015^(a)(d)	August 2045	4.200	%	700		—		—		700
Total issuances				$	2,700	$	1,000	$	500	$	1,200


(a)	Proceeds were used to repay short-term money pool and commercial paper borrowing issued to fund a portion of the NCEMPA acquisition, see Note 2 for further information.


(b)	Proceeds were used to refinance at maturity $300 million of unsecured notes at Progress Energy due January 2016.


(c)	Proceeds were used to redeem at maturity $500 million of first mortgage bonds due October 2015.


(d)	Proceeds were used to refinance at maturity $400 million of first mortgage bonds due December 2015.

Available Credit Facilities

Duke Energy has a Master Credit Facility with a capacity of $7.5 billion through January 2020. The Duke Energy Registrants, excluding Progress Energy (Parent) and Piedmont, have borrowing capacity under the Master Credit Facility up to specified sublimits for each borrower. Duke Energy has the unilateral ability at any time to increase or decrease the borrowing sublimits of each borrower, subject to a maximum sublimit for each borrower. The amount available under the Master Credit Facility has been reduced to backstop issuances of commercial paper, certain letters of credit and variable-rate demand tax-exempt bonds that may be put to the Duke Energy Registrants at the option of the holder. Duke Energy Carolinas and Duke Energy Progress are also required to each maintain $250 million of available capacity under the Master Credit Facility as security to meet obligations under plea agreements reached with the U.S. Department of Justice in 2015 related to violations at North Carolina facilities with ash basins.

Piedmont has a separate five-year revolving syndicated credit facility, with a capacity of $850 million through December 2020 and an expansion option of up to an additional $200 million. The facility provides a line of credit for letters of credit of $10 million.

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



	December 31, 2016
				Duke			Duke			Duke			Duke			Duke			Duke
	Duke			Energy			Energy			Energy			Energy			Energy			Energy
(in millions)	Energy^(a)			(Parent)			Carolinas			Progress			Florida			Ohio			Indiana
Facility size^(b)	$	8,350		$	3,400		$	1,100		$	1,000		$	950		$	450		$	600
Reduction to backstop issuances
Commercial paper^(c)	(2,022		)	(977		)	(300		)	(150		)	(84		)	(31		)	(150		)
Outstanding letters of credit	(78		)	(69		)	(4		)	(2		)	(1		)	—			—
Tax-exempt bonds	(116		)	—			(35		)	—			—			—			(81		)
Coal ash set-aside	(500		)	—			(250		)	(250		)	—			—			—
Available capacity	$	5,634		$	2,354		$	511		$	598		$	865		$	419		$	369


(a)	Includes amounts related to Piedmont's $850 million credit facility.


(b)	Represents the sublimit of each borrower.


(c)	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 in the Consolidated Balance Sheets.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Term Loan Facility

In 2016, Duke Energy (Parent) entered into a $1.5 billion term loan facility, as amended (Term Loan) maturing on July 31, 2017. During 2016, Duke Energy (Parent) drew the full amount available under the Term Loan and used $750 million of proceeds to fund a portion of the Piedmont acquisition and the remaining $750 million to manage short-term liquidity and for general corporate purposes. The terms and conditions of the Term Loan are generally consistent with those governing Duke Energy’s Master Credit Facility. In December 2016, Duke Energy (Parent) repaid the $1.5 billion term loan which terminated this credit facility.

Other Debt Matters

In September 2016, Duke Energy filed a Registration statement (Form S-3) with the SEC. Under this Form S-3, which is uncapped, the Duke Energy Registrants, excluding Progress Energy, may issue debt and other securities in the future at amounts, prices and with terms to be determined at the time of future offerings. The registration statement was filed to replace a similar prior filing upon expiration of its three-year term and also allows for the issuance of common stock by Duke Energy.

Duke Energy has an effective Form S-3 with the SEC to sell up to $3 billion of variable denomination floating-rate demand notes, called PremierNotes. The Form S-3 states that no more than $1.5 billion of the notes will be outstanding at any particular time. The notes are offered on a continuous basis and bear interest at a floating rate per annum determined by the Duke Energy PremierNotes Committee, or its designee, on a weekly basis. The interest rate payable on notes held by an investor may vary based on the principal amount of the investment. The notes have no stated maturity date, are non-transferable and may be redeemed in whole or in part by Duke Energy or at the investor’s option at any time. The balance as of December 31, 2016 and 2015 was $1,090 million and $1,121 million, respectively. The notes are short-term debt obligations of Duke Energy and are reflected as Notes payable and commercial paper on Duke Energy’s Consolidated Balance Sheets.

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

Duke Energy guaranteed debt issued by Duke Energy Carolinas of $762 million and $767 million, respectively, as of December 31, 2016 and 2015.

Money Pool

The Subsidiary Registrants, excluding Progress Energy, are eligible to receive support for their short-term borrowing needs through participation with Duke Energy and certain of its subsidiaries in a money pool arrangement. Under this arrangement, those companies with short-term funds may provide short-term loans to affiliates participating in this arrangement. The money pool is structured such that the Subsidiary Registrants, excluding Progress Energy, separately manage their cash needs and working capital requirements. Accordingly, there is no net settlement of receivables and payables between money pool participants. Duke Energy (Parent), may loan funds to its participating subsidiaries, but may not borrow funds through the money pool. Accordingly, as the money pool activity is between Duke Energy and its wholly owned subsidiaries, all money pool balances are eliminated within Duke Energy’s Consolidated Balance Sheets.

Money pool receivable balances are reflected within Notes receivable from affiliated companies on the Subsidiary Registrants’ Consolidated Balance Sheets. Money pool payable balances are reflected within either Notes payable to affiliated companies or Long-Term Debt Payable to Affiliated Companies on the Subsidiary Registrants’ Consolidated Balance Sheets.

Restrictive Debt Covenants

The Duke Energy Registrants’ debt and credit agreements contain various financial and other covenants. Duke Energy's Master Credit Facility contains a covenant requiring the debt-to-total capitalization ratio not to exceed 65 percent for each borrower. Piedmont's credit facility contains a debt-to-total capitalization ratio covenant not to exceed 70 percent. Failure to meet those covenants beyond applicable grace periods could result in accelerated due dates and/or termination of the agreements. As of December 31, 2016, each of the Duke Energy Registrants were in compliance with all covenants related to their debt agreements. In addition, some credit agreements may allow for acceleration of payments or termination of the agreements due to nonpayment, or acceleration of other significant indebtedness of the borrower or some of its subsidiaries. None of the debt or credit agreements contain material adverse change clauses.

Other Loans

As of December 31, 2016 and 2015, Duke Energy had loans outstanding of $661 million, including $39 million at Duke Energy Progress and $629 million, including $41 million at Duke Energy Progress, respectively, against the cash surrender value of life insurance policies it owns on the lives of its executives. The amounts outstanding were carried as a reduction of the related cash surrender value that is included in Other within Investments and Other Assets on the Consolidated Balance Sheets.

7. GUARANTEES AND INDEMNIFICATIONS

Duke Energy and Progress Energy have various financial and performance guarantees and indemnifications, which are issued in the normal course of business. As discussed below, these contracts include performance guarantees, stand-by letters of credit, debt guarantees, surety bonds and indemnifications. Duke Energy and Progress Energy enter into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party. At December 31, 2016, Duke Energy and Progress Energy do not believe conditions are likely for significant performance under these guarantees. To the extent liabilities are incurred as a result of the activities covered by the guarantees, such liabilities are included on the accompanying Consolidated Balance Sheets.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

On January 2, 2007, Duke Energy completed the spin-off of its natural gas businesses to shareholders. Guarantees issued by Duke Energy or its affiliates, or assigned to Duke Energy prior to the spin-off, remained with Duke Energy subsequent to the spin-off. Guarantees issued by Spectra Energy Capital, LLC (Spectra Capital) or its affiliates prior to the spin-off remained with Spectra Capital subsequent to the spin-off, except for guarantees that were later assigned to Duke Energy. Duke Energy has indemnified Spectra Capital against any losses incurred under certain of the guarantee obligations that remain with Spectra Capital. At December 31, 2016, the maximum potential amount of future payments associated with these guarantees was $205 million, the majority of which expires by 2028.

Duke Energy has issued performance guarantees to customers and other third parties that guarantee the payment and performance of other parties, including certain non-wholly owned entities, as well as guarantees of debt of certain non-consolidated entities and less than wholly owned consolidated entities. If such entities were to default on payments or performance, Duke Energy would be required under the guarantees to make payments on the obligations of the less than wholly owned entity. The maximum potential amount of future payments required under these guarantees as of December 31, 2016, was $333 million. Of this amount, $11 million relates to guarantees issued on behalf of less than wholly owned consolidated entities, with the remainder related to guarantees issued on behalf of third parties and unconsolidated affiliates of Duke Energy. Of the guarantees noted above, $215 million of the guarantees expire between 2017 and 2033, with the remaining performance guarantees having no contractual expiration.

Duke Energy has guaranteed certain issuers of surety bonds, obligating itself to make payment upon the failure of a wholly owned and former non-wholly owned entity to honor its obligations to a third party. Under these arrangements, Duke Energy has payment obligations that are triggered by a draw by the third party or customer due to the failure of the wholly owned or former non-wholly owned entity to perform according to the terms of its underlying contract. At December 31, 2016, Duke Energy had guaranteed $44 million of outstanding surety bonds, most of which have no set expiration.

Duke Energy uses bank-issued stand-by letters of credit to secure the performance of wholly owned and non-wholly owned entities to a third party or customer. Under these arrangements, Duke Energy has payment obligations to the issuing bank which are triggered by a draw by the third party or customer due to the failure of the wholly owned or non-wholly owned entity to perform according to the terms of its underlying contract. At December 31, 2016, Duke Energy had issued a total of $485 million in letters of credit, which expire between 2017 and 2020. The unused amount under these letters of credit was $77 million.

Duke Energy and Progress Energy have issued indemnifications for certain asset performance, legal, tax and environmental matters to third parties, including indemnifications made in connection with sales of businesses. At December 31, 2016, the estimated maximum exposure for these indemnifications was $96 million, the majority of which expires in 2017. Of this amount, $7 million has no contractual expiration. For certain matters for which Progress Energy receives timely notice, indemnity obligations may extend beyond the notice period. Certain indemnifications related to discontinued operations have no limitations as to time or maximum potential future payments.

The following table includes the liabilities recognized for the guarantees discussed above. These amounts are primarily recorded in Other within Deferred Credits and other Liabilities on the Consolidated Balance Sheets. As current estimates change, additional losses related to guarantees and indemnifications to third parties, which could be material, may be recorded by the Duke Energy Registrants in the future.



	December 31,
(in millions)	2016		2015
Duke Energy	$	13	$	21
Progress Energy	—		7
Duke Energy Florida	—		7

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Combined Notes To Consolidated Financial Statements – (Continued)

8. JOINT OWNERSHIP OF GENERATING AND TRANSMISSION FACILITIES

The Duke Energy Registrants maintain ownership interests in certain jointly owned generating and transmission facilities. The Duke Energy Registrants are entitled to a share of the generating capacity and output of each unit equal to their respective ownership interests. The Duke Energy Registrants pay their ownership share of additional construction costs, fuel inventory purchases and operating expenses. The Duke Energy Registrants share of revenues and operating costs of the jointly owned facilities is included within the corresponding line in the Consolidated Statements of Operations. Each participant in the jointly owned facilities must provide its own financing.

The following table presents the Duke Energy Registrants' interest of jointly owned plant or facilities and amounts included on the Consolidated Balance Sheets. All facilities are operated by the Duke Energy Registrants and are included in the Electric Utilities and Infrastructure segment.



	December 31, 2016
							Construction
	Ownership		Property, Plant		Accumulated		Work in
(in millions except for ownership interest)	Interest		and Equipment		Depreciation		Progress
Duke Energy Carolinas
Catawba Nuclear Station (units 1 and 2)^(a)	19.25	%	$	954	$	612	$	12
Duke Energy Ohio
Transmission facilities^(b)	Various		90		60		1
Duke Energy Indiana
Gibson Station (unit 5)^(c)	50.05	%	333		157		11
Vermillion Generating Station^(d)	62.5	%	154		111		—
Transmission and local facilities^(c)	Various		4,315		1,715		—


(a)	Jointly owned with North Carolina Municipal Power Agency Number 1, NCEMC and Piedmont Municipal Power Agency.


(b)	Jointly owned with America Electric Power Generation Resources and The Dayton Power and Light Company.


(c)	Jointly owned with Wabash Valley Power Association, Inc. (WVPA) and Indiana Municipal Power Agency.


(d)	Jointly owned with WVPA.

On August 31, 2016, Duke Energy Florida completed the purchase of Georgia Power Company's (GPC) ownership interest in Intercession City Station Unit 11 for an amount equal to GPC's net book value of the facility as of the transaction close date. Following the purchase, Duke Energy Florida controls the entire output of the facility.

At December 31, 2016, Duke Energy Florida owns 100 percent of the retired Crystal River Unit 3. Duke Energy Florida completed the purchase of 1.7 percent ownership interest from Seminole Electric Cooperative, Inc. on November 30, 2016. On October 30, 2015, Duke Energy Florida completed the purchase of 6.52 percent ownership interest from the Florida Municipal Joint Owners and settled other disputes for $55 million. All costs associated with Crystal River Unit 3 are included within Regulatory assets on the Consolidated Balance Sheets of Duke Energy, Progress Energy and Duke Energy Florida. See Note 4 for additional information.

9. ASSET RETIREMENT OBLIGATIONS

Duke Energy records an ARO when it has a legal obligation to incur retirement costs associated with the retirement of a long-lived asset and the obligation can be reasonably estimated. Certain assets of the Duke Energy Registrants’ have an indeterminate life, such as transmission and distribution facilities, and thus the fair value of the retirement obligation is not reasonably estimable. A liability for these AROs will be recorded when a fair value is determinable.

The Duke Energy Registrants’ regulated operations accrue costs of removal for property that does not have an associated legal retirement obligation based on regulatory orders from state commissions. These costs of removal are recorded as a regulatory liability in accordance with regulatory accounting treatment. The Duke Energy Registrants do not accrue the estimated cost of removal for any nonregulated assets. See Note 4 for the estimated cost of removal for assets without an associated legal retirement obligation, which are included in Regulatory liabilities on the Consolidated Balance Sheets.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

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



	December 31, 2016
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
Decommissioning of Nuclear Power Facilities^(a)	$	5,204	$	1,834	$	3,172	$	2,454	$	717	$	—	$	—
Closure of Ash Impoundments	5,150		2,032		2,228		2,209		19		43		847
Other^(b)	257		29		75		34		42		34		19
Total asset retirement obligation	$	10,611	$	3,895	$	5,475	$	4,697	$	778	$	77	$	866
Less: current portion	411		222		189		189		—		—		—
Total noncurrent asset retirement obligation	$	10,200	$	3,673	$	5,286	$	4,508	$	778	$	77	$	866


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


(b)	Primarily includes obligations related to asbestos removal and the closure of certain landfills at fossil generation facilities. Duke Energy Ohio also includes AROs related to the retirement of natural gas mains and services. Duke Energy includes AROs related to the removal of renewable energy generation assets and Piedmont's underground natural gas mains and services.

North Carolina Ash Basins

AROs recorded on the Duke Energy Carolinas and Duke Energy Progress Consolidated Balance Sheets include the legal obligation for closure of coal ash basins and the disposal of related ash as a result of the Coal Ash Act, the EPA CCR rule and other agreements.

In 2014 the Coal Ash Act became law and was amended on June 24, 2015, and July 14, 2016. The Coal Ash Act, as amended,

Prohibits construction of new and expansion of existing ash impoundments and use of existing impoundments at retired facilities;

Requires ash impoundments in North Carolina to be categorized as high risk, intermediate risk or low risk by the NCDEQ with the method of closure and timing to be based upon the assigned risk, with closure no later than December 31, 2029 (see below for category descriptions);

Classifies Duke Energy Progress' Asheville and Sutton plants and Duke Energy Carolinas' Riverbend and Dan River stations as high risk;

Requires dry disposal of fly ash at active plants, excluding the Asheville Plant, not retired by December 31, 2018;

Requires dry disposal of bottom ash at active plants, excluding the Asheville Plant, by December 31, 2019, or retirement of active plants;

Establishes requirements to deal with groundwater and surface water impacts from impoundments; and

Increases the level of regulation for structural fills utilizing coal ash.

High risk basins (Asheville, Sutton, Riverbend and Dan River) require closure through excavation, including a combination of transferring the ash to an appropriate engineered landfill or conversion of the ash for beneficial use. Closure of high risk basins is required to be completed no later than August 1, 2019, except for Asheville which is required to be completed no later than August 1, 2022.

Intermediate risk basins require closure through excavation including a combination of converting the basin to a lined industrial landfill, transferring of the ash to an appropriate engineered landfill or conversion of the ash for beneficial use. Closure of intermediate risk basins is required to be completed no later than December 31, 2024, except for H.F. Lee, Cape Fear and Weatherspoon to be completed no later than August 1, 2028.

Low risk basins require closure through either the combination of the installation and maintenance of a cap system and groundwater monitoring system designed to minimize infiltration and erosion or other closure options available to intermediate risk basins. Closure of low risk basins is required to be completed no later than December 31, 2029.

In January 2016, the NCDEQ published draft risk classifications for sites not specifically delineated by the Coal Ash Act as high risk. These risk rankings were generally determined based on three primary criteria: structural integrity of the impoundments and impacts to surface water and to groundwater. The NCDEQ's draft proposed classifications categorized 12 basins at four sites as intermediate risk and four basins at three sites as low risk. The NCDEQ's draft proposed classifications also categorized nine basins at six sites as “low-to-intermediate” risk, thereby not assigning a definitive risk ranking at that time. On May 18, 2016, the NCDEQ issued new proposed risk classifications, proposing to rank all originally proposed low risk and "low-to-intermediate" risk sites as intermediate.

On July 14, 2016, the former governor of North Carolina signed legislation which amended the Coal Ash Act and required Duke Energy to undertake dam improvement projects and to provide access to a permanent alternative drinking water source to certain residents within a half mile of coal ash basin compliance boundaries and to certain other potentially impacted residents. The new legislation also ranks basins at the H.F. Lee, Cape Fear and Weatherspoon stations as intermediate risk consistent with Duke Energy's previously announced plans to excavate those basins. These specific intermediate basins require closure through excavation including a combination of transferring ash to an appropriate engineered landfill or conversion of the ash for beneficial use. Closure of these specific intermediate basins is required to be completed no later than August 1, 2028. Upon satisfactory completion of the dam improvement projects and installation of alternative drinking water sources by October 15, 2018, the legislation requires the NCDEQ to reclassify sites proposed as intermediate risk, excluding H.F. Lee, Cape Fear and Weatherspoon, as low risk. In January 2017, NCDEQ issued preliminary approval of Duke Energy's plans for the alternative water sources.

Per the Coal Ash Act, final proposed classifications were to be subject to Coal Ash Management Commission (Coal Ash Commission) approval. In March 2016, the Coal Ash Commission created by the Coal Ash Act was disbanded by the former governor of North Carolina based on a North Carolina Supreme Court ruling regarding the constitutionality of the body. The July 2016 legislation eliminates the Coal Ash Commission and transfers responsibility for ash basin closure oversight to the NCDEQ.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Additionally, the July 2016 legislation requires the installation and operation of three large-scale coal ash beneficiation projects which are expected to produce reprocessed ash for use in the concrete industry. Closure of basins at sites with these beneficiation projects are required to be completed no later than December 31, 2029. On October 5, 2016, Duke Energy announced Buck Steam Station as a first location for one of the beneficiation projects. On December 13, 2016, Duke Energy announced H.F. Lee as the second location. Duke Energy intends to announce the third location by July 1, 2017.

The Coal Ash Act includes a variance procedure for compliance deadlines and other issues surrounding the management of CCR and CCR surface impoundments. Provisions of the Coal Ash Act prohibit cost recovery in customer rates for unlawful discharge of ash impoundment waters occurring after January 1, 2014. The Coal Ash Act leaves the decision on cost recovery determinations related to closure of ash impoundments to the normal ratemaking processes before utility regulatory commissions. Consistent with the requirements of the Coal Ash Act, Duke Energy has submitted CSAs and groundwater corrective action plans to NCDEQ and will submit to NCDEQ site-specific coal ash impoundment closure plans in advance of closure. These plans and all associated permits must be approved by NCDEQ before any closure work can begin.

Federal Coal Combustion Residuals Regulation

In April 2015, the EPA published a rule to regulate the disposal of CCR from electric utilities as solid waste. The federal regulation classifies CCR as nonhazardous waste and allows for beneficial use of CCR with some restrictions. The regulation applies to all new and existing landfills, new and existing surface impoundments receiving CCR and existing surface impoundments that are no longer receiving CCR but contain liquid located at stations currently generating electricity (regardless of fuel source). The rule establishes requirements regarding landfill design, structural integrity design and assessment criteria for surface impoundments, groundwater monitoring and protection procedures and other operational and reporting procedures to ensure the safe disposal and management of CCR. As a result of the EPA rule, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Ohio and Duke Energy Indiana recorded additional ARO amounts during 2015.

In addition to the requirements of the federal CCR regulation, CCR landfills and surface impoundments will continue to be independently regulated by most states.

In September 2014, Duke Energy Carolinas executed a consent agreement with the South Carolina Department of Health and Environmental Control (SCDHEC) requiring the excavation of an inactive ash basin and ash fill area at the W.S. Lee Steam Station. As part of this agreement, in December 2014, Duke Energy Carolinas filed an ash removal plan and schedule with SCDHEC. In April 2015, the federal CCR rules were published and Duke Energy Carolinas subsequently executed an agreement with the conservation groups Upstate Forever and Save Our Saluda that requires Duke Energy Carolinas to remediate all active and inactive ash storage areas at the W.S. Lee Steam Station. Coal-fired generation at W.S. Lee ceased in 2014 and unit 3 was converted to natural gas in March 2015. In July 2015, Duke Energy Progress executed a consent agreement with the SCDHEC requiring the excavation of an inactive ash fill area at the Robinson Plant within eight years. Coal ash impoundments at the Robinson Plant and W.S. Lee Station sites are required to be closed pursuant to the CCR rule and the provisions of these consent agreements are consistent with the federal CCR closure requirements.

Coal Ash Liability

The ARO amount recorded on the Consolidated Balance Sheets is based upon estimated closure costs for impacted ash impoundments. The amount recorded represents the discounted cash flows for estimated closure costs based upon either specific closure plans or the probability weightings of the potential closure methods as evaluated on a site-by-site basis. Actual costs to be incurred will be dependent upon factors that vary from site to site. The most significant factors are the method and time frame of closure at the individual sites. Closure methods considered include removing the water from the basins, consolidating material as necessary and capping the ash with a synthetic barrier, excavating and relocating the ash to a lined structural fill or lined landfill, or recycling the ash for concrete or some other beneficial use. The ultimate method and timetable for closure will be in compliance with standards set by federal and state regulations. The ARO amount will be adjusted as additional information is gained through the closure and post-closure process, including acceptance and approval of compliance approaches which may change management assumptions, and may result in a material change to the balance. See ARO Liability Rollforward section below for information about revisions made to the coal ash liability during 2016.

Asset retirement costs associated with the AROs for operating plants and retired plants are included in Net property, plant and equipment and Regulatory assets, respectively, on the Consolidated Balance Sheets. See Note 4 for additional information on Regulatory assets related to AROs.

Cost recovery for future expenditures will be pursued through the normal ratemaking process with federal and state utility commissions, which permit recovery of necessary and prudently incurred costs associated with Duke Energy’s regulated operations.

Nuclear Decommissioning Liability

AROs related to nuclear decommissioning are based on site-specific cost studies. The NCUC, PSCSC and FPSC require updated cost estimates for decommissioning nuclear plants every five years.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

The following table summarizes information about the most recent site-specific nuclear decommissioning cost studies. Decommissioning costs in the table below are presented in dollars of the year of the cost study and include costs to decommission plant components not subject to radioactive contamination.



	Annual Funding		Decommissioning
(in millions)	Requirement^(a)		Costs^(a)(b)		Year of Cost Study
Duke Energy	$	14	$	8,150	2013 and 2014
Duke Energy Carolinas	—		3,420		2013
Duke Energy Progress	14		3,550		2014
Duke Energy Florida	—		1,180		2013


(a)	Amounts for Progress Energy equal the sum of Duke Energy Progress and Duke Energy Florida.


(b)	Amounts include the Subsidiary Registrant's ownership interest in jointly owned reactors. Other joint owners are responsible for decommissioning costs related to their interest in the reactors.

Nuclear Decommissioning Trust Funds

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida each maintain NDTFs that are intended to pay for the decommissioning costs of the respective nuclear power plants. The NDTF investments are managed and invested in accordance with applicable requirements of various regulatory bodies including the NRC, FERC, NCUC, PSCSC, FPSC and the Internal Revenue Service (IRS).

Use of the NDTF investments is restricted to nuclear decommissioning activities including license termination, spent fuel and site restoration. The license termination and spent fuel obligations relate to contaminated decommissioning and are recorded as AROs. The site restoration obligation relates to non-contaminated decommissioning and is recorded to cost of removal within Regulatory liabilities on the Consolidated Balance Sheets.

The following table presents the fair value of NDTF assets legally restricted for purposes of settling AROs associated with nuclear decommissioning. Duke Energy Florida is actively decommissioning Crystal River Unit 3 and was granted an exemption from the NRC which allows for use of the NDTF for all aspects of nuclear decommissioning. Therefore, the entire balance of Duke Energy Florida's NDTF may be applied toward license termination, spent fuel and site restoration costs incurred to decommission Crystal River Unit 3.



	December 31,
(in millions)	2016		2015
Duke Energy	$	5,099	$	4,670
Duke Energy Carolinas	2,882		2,686
Duke Energy Progress	2,217		1,984

See Note 16 for additional information related to the fair value of the Duke Energy Registrants' NDTFs.

Intangible Assets

Intangible assets are included in Other in Investments and Other Assets on the Consolidated Balance Sheets. Generally, intangible assets are amortized using an amortization method that reflects the pattern in which the economic benefits of the intangible asset are consumed or on a straight-line basis if that pattern is not readily determinable. Amortization of intangibles is reflected in Depreciation and amortization on the Consolidated Statements of Operations. Intangible assets are subject to impairment testing and if impaired, the carrying value is accordingly reduced.

Emission allowances permit the holder of the allowance to emit certain gaseous byproducts of fossil fuel combustion, including sulfur dioxide (SO₂) and nitrogen oxide. Allowances are issued by the U.S. Environmental Protection Agency (EPA) at zero cost and may also be bought and sold via third-party transactions. Allowances allocated to or acquired by the Duke Energy Registrants are held primarily for consumption. Carrying amounts for emission allowances are based on the cost to acquire the allowances or, in the case of a business combination, on the fair value assigned in the allocation of the purchase price of the acquired business. Emission allowances are expensed to Fuel used in electric generation and purchased power on the Consolidated Statements of Operations.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Renewable energy certificates are used to measure compliance with renewable energy standards and are held primarily for consumption. See Note 11 for further information.

Long-Lived Asset Impairments

The Duke Energy Registrants evaluate long-lived assets, excluding goodwill, for impairment when circumstances indicate the carrying value of those assets may not be recoverable. An impairment exists when a long-lived asset’s carrying value exceeds the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. The estimated cash flows may be based on alternative expected outcomes that are probability weighted. If the carrying value of the long-lived asset is not recoverable based on these estimated future undiscounted cash flows, the carrying value of the asset is written-down to its then-current estimated fair value and an impairment charge is recognized.

The Duke Energy Registrants assess fair value of long-lived assets using various methods, including recent comparable third-party sales, internally developed discounted cash flow analysis and analysis from outside advisors. Significant changes in commodity prices, the condition of an asset or management’s interest in selling the asset are generally viewed as triggering events to reassess cash flows.

Property, Plant and Equipment

Property, plant and equipment are stated at the lower of depreciated historical cost net of any disallowances or fair value, if impaired. The Duke Energy Registrants capitalize all construction-related direct labor and material costs, as well as indirect construction costs such as general engineering, taxes and financing costs. See “Allowance for Funds Used During Construction (AFUDC) and Interest Capitalized” for information on capitalized financing costs. Costs of renewals and betterments that extend the useful life of property, plant and equipment are also capitalized. The cost of repairs, replacements and major maintenance projects, which do not extend the useful life or increase the expected output of the asset, are expensed as incurred. Depreciation is generally computed over the estimated useful life of the asset using the composite straight-line method. Depreciation studies are conducted periodically to update composite rates and are approved by state utility commissions and/or the FERC when required. The composite weighted average depreciation rates, excluding nuclear fuel, are included in the table that follows.



	Years Ended December 31,
	2016		2015		2014
Duke Energy	2.8	%	2.9	%	2.8	%
Duke Energy Carolinas	2.8	%	2.8	%	2.7	%
Progress Energy	2.7	%	2.6	%	2.5	%
Duke Energy Progress	2.6	%	2.6	%	2.5	%
Duke Energy Florida	2.8	%	2.7	%	2.7	%
Duke Energy Ohio	2.6	%	2.7	%	2.3	%
Duke Energy Indiana	3.1	%	3.0	%	3.0	%

In general, when the Duke Energy Registrants retire regulated property, plant and equipment, the original cost plus the cost of retirement, less salvage value, is charged to accumulated depreciation. However, when it becomes probable the asset will be retired substantially in advance of its original expected useful life or is abandoned, the cost of the asset and the corresponding accumulated depreciation is recognized as a separate asset. If the asset is still in operation, the net amount is classified as Generation facilities to be retired, net on the Consolidated Balance Sheets. If the asset is no longer operating, the net amount is classified in Regulatory Assets on the Consolidated Balance Sheets. When it becomes probable that meters or other regulated mass utility assets will be abandoned, the cost of the asset and accumulated depreciation is reclassified to regulatory assets for amounts recoverable in rates. The carrying value of the asset is based on historical cost if the Duke Energy Registrants are allowed to recover the remaining net book value and a return equal to at least the incremental borrowing rate. If not, an impairment is recognized to the extent the net book value of the asset exceeds the present value of future revenues discounted at the incremental borrowing rate.

When the Duke Energy Registrants sell entire regulated operating units, or retire or sell nonregulated properties, the original cost and accumulated depreciation and amortization balances are removed from Property, Plant and Equipment on the Consolidated Balance Sheets. Any gain or loss is recorded in earnings, unless otherwise required by the applicable regulatory body.

See Note 10 for further information.

Nuclear Fuel

Nuclear fuel is classified as Property, Plant and Equipment on the Consolidated Balance Sheets, except for Duke Energy Florida. Nuclear fuel amounts at Duke Energy Florida were reclassified to Regulatory assets pursuant to a settlement among Duke Energy Florida, the Florida Office of Public Counsel (Florida OPC) and other customer advocates (the 2013 Settlement). Portions of the nuclear fuel balances that were under contract for sale were subsequently moved to Other within Current Assets and Other within Investments and Other Assets on the Consolidated Balance Sheets.

Nuclear fuel in the front-end fuel processing phase is considered work in progress and not amortized until placed in service. Amortization of nuclear fuel is included within Fuel used in electric generation and purchased power on the Consolidated Statements of Operations. Amortization is recorded using the units-of-production method.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Allowance for Funds Used During Construction and Interest Capitalized

For regulated operations, the debt and equity costs of financing the construction of property, plant and equipment are reflected as AFUDC and capitalized as a component of the cost of property, plant and equipment. AFUDC equity is reported on the Consolidated Statements of Operations as non-cash income in Other income and expenses, net. AFUDC debt is reported as a non-cash offset to Interest Expense. After construction is completed, the Duke Energy Registrants are permitted to recover these costs through their inclusion in rate base and the corresponding subsequent depreciation or amortization of those regulated assets.

AFUDC equity, a permanent difference for income taxes, reduces the effective tax rate (ETR) when capitalized and increases the ETR when depreciated or amortized. See Note 22 for additional information.

For nonregulated operations, interest is capitalized during the construction phase with an offsetting non-cash credit to Interest Expense on the Consolidated Statements of Operations.

Asset Retirement Obligations

Asset retirement obligations (AROs) are recognized for legal obligations associated with the retirement of property, plant and equipment. Substantially all AROs are related to regulated operations. When recording an ARO, the present value of the projected liability is recognized in the period in which it is incurred, if a reasonable estimate of fair value can be made. The liability is accreted over time. For operating plants, the present value of the liability is added to the cost of the associated asset and depreciated over the remaining life of the asset. For retired plants, the present value of the liability is recorded as a regulatory asset unless determined not to be recoverable.

The present value of the initial obligation and subsequent updates are based on discounted cash flows, which include estimates regarding timing of future cash flows, selection of discount rates and cost escalation rates, among other factors. These estimates are subject to change. Depreciation expense is adjusted prospectively for any changes to the carrying amount of the associated asset. The Duke Energy Registrants receive amounts to fund the cost of the ARO for regulated operations through a combination of regulated revenues and earnings on the NDTF. As a result, amounts recovered in regulated revenues, earnings on the NDTF, accretion expense and depreciation of the associated asset are netted and deferred as a regulatory asset or liability.

Obligations for nuclear decommissioning are based on site-specific cost studies. Duke Energy Carolinas and Duke Energy Progress assume prompt dismantlement of the nuclear facilities after operations are ceased. Duke Energy Florida assumes Crystal River Unit 3 Nuclear Plant (Crystal River Unit 3) will be placed into a safe storage configuration until eventual dismantlement is completed by 2074. Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida also assume that spent fuel will be stored on-site until such time that it can be transferred to a yet to be built U.S. Department of Energy (DOE) facility.

Obligations for closure of ash basins are based upon discounted cash flows of estimated costs for site-specific plans, if known, or probability weightings of the potential closure methods if the closure plans are under development and multiple closure options are being considered and evaluated on a site-by-site basis. See Note 9 for additional information.

Revenue Recognition and Unbilled Revenue

Revenues on sales of electricity and natural gas are recognized when service is provided or the product is delivered. Unbilled revenues are recognized by applying customer billing rates to the estimated volumes of energy or natural gas delivered but not yet billed. Unbilled revenues can vary significantly from period to period as a result of seasonality, weather, customer usage patterns, customer mix, average price in effect for customer classes, timing of rendering customer bills and meter reading schedules.

Unbilled revenues are included within Receivables and Restricted receivables of VIEs on the Consolidated Balance Sheets as shown in the following table.



	December 31,
(in millions)	2016		2015
Duke Energy	$	831	$	677
Duke Energy Carolinas	313		283
Progress Energy	161		172
Duke Energy Progress	102		102
Duke Energy Florida	59		70
Duke Energy Ohio	2		3
Duke Energy Indiana	32		31

Additionally, Duke Energy Ohio and Duke Energy Indiana sell, on a revolving basis, nearly all of their retail accounts receivable, including receivables for unbilled revenues, to an affiliate, Cinergy Receivables Company LLC (CRC) and account for the transfers of receivables as sales. Accordingly, the receivables sold are not reflected on the Consolidated Balance Sheets of Duke Energy Ohio and Duke Energy Indiana. See Note 17 for further information. These receivables for unbilled revenues are shown in the table below.



	December 31,
(in millions)	2016		2015
Duke Energy Ohio	$	97	$	71
Duke Energy Indiana	123		97

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

DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Allowance for Doubtful Accounts

Allowances for doubtful accounts are presented in the following table.



	December 31,
(in millions)	2016		2015		2014
Allowance for Doubtful Accounts
Duke Energy	$	14	$	12	$	14
Duke Energy Carolinas	2		3		3
Progress Energy	6		6		8
Duke Energy Progress	4		4		7
Duke Energy Florida	2		2		2
Duke Energy Ohio	2		2		2
Duke Energy Indiana	1		1		1
Allowance for Doubtful Accounts – VIEs
Duke Energy	$	54	$	53	$	51
Duke Energy Carolinas	7		7		6
Progress Energy	7		8		8
Duke Energy Progress	5		5		5
Duke Energy Florida	2		3		3

Derivatives and Hedging

Derivative and non-derivative instruments may be used in connection with commodity price and interest rate activities, including swaps, futures, forwards and options. All derivative instruments, except those that qualify for the normal purchase/normal sale (NPNS) exception, are recorded on the Consolidated Balance Sheets at fair value. Qualifying derivative instruments may be designated as either cash flow hedges or fair value hedges. Other derivative instruments (undesignated contracts) either have not been designated or do not qualify as hedges. The effective portion of the change in the fair value of cash flow hedges is recorded in AOCI. The effective portion of the change in the fair value of a fair value hedge is offset in net income by changes in the hedged item. For activity subject to regulatory accounting, gains and losses on derivative contracts are reflected as regulatory assets or liabilities and not as other comprehensive income or current period income. As a result, changes in fair value of these derivatives have no immediate earnings impact.

See Note 14 for further information.

Captive Insurance Reserves

Duke Energy, through its captive insurance entities, also has reinsurance coverage with third parties for certain losses above a per occurrence and/or aggregate retention. Receivables for reinsurance coverage are recognized when realization is deemed probable.

Unamortized Debt Premium, Discount and Expense

Premiums, discounts and expenses incurred with the issuance of outstanding long-term debt are amortized over the term of the debt issue. The gain or loss on extinguishment associated with refinancing higher-cost debt obligations in the regulated operations is amortized. Amortization expense is recorded as Interest Expense in the Consolidated Statements of Operations and is reflected as Depreciation, amortization and accretion within Net cash provided by operating activities on the Consolidated Statements of Cash Flows.

Premiums, discounts and expenses are presented as an adjustment to the carrying value of the debt amount and included in Long-Term Debt on the Consolidated Balance Sheets presented.

Loss Contingencies and Environmental Liabilities

Contingent losses are recorded when it is probable a loss has occurred and can be reasonably estimated. When a range of the probable loss exists and no amount within the range is a better estimate than any other amount, the minimum amount in the range is recorded. Unless otherwise required by GAAP, legal fees are expensed as incurred.

Environmental liabilities are recorded on an undiscounted basis when environmental remediation or other liabilities become probable and can be reasonably estimated. Environmental expenditures related to past operations that do not generate current or future revenues are expensed. Environmental expenditures related to operations that generate current or future revenues are expensed or capitalized, as appropriate. Certain environmental expenditures receive regulatory accounting treatment and are recorded as regulatory assets.

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Combined Notes To Consolidated Financial Statements – (Continued)

See Notes 4 and 5 for further information.

Pension and Other Post-Retirement Benefit Plans

Severance and Special Termination Benefits

Guarantees

Stock-Based Compensation

Income Taxes

Tax-related interest and penalties are recorded in Interest Expense and Other Income and Expenses, net in the Consolidated Statements of Operations.

See Note 22 for further information.

Accounting for Renewable Energy Tax Credits and Cash Grants

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Combined Notes To Consolidated Financial Statements – (Continued)

Excise Taxes



	Years Ended December 31,
(in millions)	2016		2015		2014
Duke Energy	$	362	$	396	$	498
Duke Energy Carolinas	31		31		94
Progress Energy	213		229		263
Duke Energy Progress	18		16		56
Duke Energy Florida	195		213		207
Duke Energy Ohio	100		102		103
Duke Energy Indiana	17		34		38

Dividend Restrictions and Unappropriated Retained Earnings

New Accounting Standards

The following new accounting standards have been issued, but have not yet been adopted by the Duke Energy Registrants, as of December 31, 2016.

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Combined Notes To Consolidated Financial Statements – (Continued)

2. ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS

The Duke Energy Registrants consolidate assets and liabilities from acquisitions as of the purchase date and include earnings from acquisitions in consolidated earnings after the purchase date.

Acquisition of Piedmont Natural Gas

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Combined Notes To Consolidated Financial Statements – (Continued)

Preliminary Purchase Price Allocation

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



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

Accounting Charges Related to the Acquisition

Other transaction and integration costs of $101 million recorded to Operation, maintenance and other, including professional fees and severance.

Pro Forma Financial Information

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Combined Notes To Consolidated Financial Statements – (Continued)

Piedmont's Earnings

Acquisition Related Financings and Other Matters

Duke Energy financed the Piedmont acquisition with a combination of debt and equity issuances and other cash sources, including:

$3.75 billion of long-term debt issued in August 2016.

$750 million borrowed under the $1.5 billion short-term loan facility in September 2016, which was repaid in December 2016.

10.6 million shares of common stock issued in October 2016 for net cash proceeds of approximately $723 million.

Purchase of NCEMPA's Generation



(in millions)
Inventory	$	56
Net property, plant and equipment	845
Total assets	901
Acquisition adjustment, recorded within property, plant and equipment	350
Total purchase price	$	1,251

DISPOSITIONS

The following table summarizes the (Loss) Income from Discontinued Operations, net of tax recorded on Duke Energy's Consolidated Statements of Operations:



	Years Ended December 31,
(in millions)	2016			2015			2014
International Energy Disposal Group	$	(534	)	$	157		$	(73	)
Midwest Generation Disposal Group	36			33			(524		)
Other^(a)	90			(13		)	(52		)
(Loss) Income from Discontinued Operations, net of tax	$	(408	)	$	177		$	(649	)


(a)	Relates to previously sold businesses not related to the Disposal Groups. The amount for 2016 represents an income tax benefit resulting from immaterial out of period deferred tax liability adjustments. The amounts for 2015 and 2014 include indemnifications provided for certain legal, tax and environmental matters and foreign currency translation adjustments.

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Combined Notes To Consolidated Financial Statements – (Continued)

Sale of International Energy

Assets Held For Sale and Discontinued Operations



(in millions)	December 31, 2015
Current assets held for sale
Cash and cash equivalents	$	474
Receivables, net	188
Inventory	65
Other	19
Total current assets held for sale	746
Noncurrent assets held for sale
Property, Plant and Equipment
Cost	2,859
Accumulated depreciation and amortization	(930		)
Net property, plant and equipment	1,929
Goodwill	271
Other	213
Total noncurrent assets held for sale	2,413
Total assets held for sale	$	3,159
Current liabilities associated with assets held for sale
Accounts payable	$	51
Taxes accrued	60
Current maturities of long-term debt	48
Other	120
Total current liabilities associated with assets held for sale	279
Noncurrent liabilities associated with assets held for sale
Long-Term Debt	653
Deferred income taxes	157
Other	90
Total noncurrent liabilities associated with assets held for sale	900
Total liabilities associated with assets held for sale	$	1,179

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Combined Notes To Consolidated Financial Statements – (Continued)



	Years Ended December 31,
(in millions)	2016			2015		2014
Operating Revenues	$	988		$	1,088	$	1,417
Fuel used in electric generation and purchased power	227			306		486
Cost of natural gas	43			53		63
Operation, maintenance and other	341			334		352
Depreciation and amortization^(a)	62			92		97
Property and other taxes	15			7		9
Impairment charges^(b)	194			13		—
(Loss) Gains on Sales of Other Assets and Other, net	(3		)	6		6
Other Income and Expenses, net	58			23		47
Interest Expense	82			85		93
Pretax loss on disposal^(c)	(514		)	—		—
(Loss) Income before income taxes^(d)	(435		)	227		370
Income tax expense^(e)(f)	99			70		443
(Loss) Income from discontinued operations of the International Disposal Group	$	(534	)	$	157	$	(73	)


(a)	Upon meeting the criteria for assets held for sale, beginning in the fourth quarter of 2016 depreciation expense was ceased.

(b)


(c)	The pretax loss on disposal includes the recognition of cumulative foreign currency translation losses of $620 million as of the disposal date. See the Consolidated Statements of Changes in Equity for additional information.


(d)	Pretax (Loss) Income attributable to Duke Energy Corporation was $(445) million, $221 million and $360 million for the years ended December 31, 2016, 2015 and 2014, respectively.


(e)	2016 amount includes $126 million of income tax expense on the disposal, which primarily reflects in-country taxes incurred as a result of the sale. The after-tax loss on disposal was $640 million.


(f)	2016 amount includes an income tax benefit of $95 million and 2014 amount includes an income tax charge of $373 million related to historical undistributed foreign earnings. See Note 22, "Income Taxes," for additional information.



	Years Ended December 31,
(in millions)	2016			2015		2014
Cash flows provided by (used in):
Operating activities	$	204		$	248	$	339
Investing activities	(434		)	177		111

Other Sale Related Matters

Midwest Generation Exit

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Combined Notes To Consolidated Financial Statements – (Continued)



	Duke Energy									Duke Energy Ohio
	Years Ended December 31,									Years Ended December 31,
(in millions)	2016			2015			2014			2016			2015			2014
Operating Revenues	$	—		$	543		$	1,748		$	—		$	412		$	1,299
Pretax Loss on disposal^(a)	—			(45		)	(929		)	—			(52		)	(959		)

Income (loss) before income taxes^(b)	$	—		$	59		$	(818	)	$	—		$	44		$	(863	)
Income tax (benefit) expense^(c)	(36		)	26			(294		)	(36		)	21			(300		)
Income (loss) from discontinued operations	$	36		$	33		$	(524	)	$	36		$	23		$	(563	)


(a)	The Loss on disposal includes impairments recorded to adjust the carrying amount of the assets to the estimated fair value of the business, based on the selling price to Dynegy less cost to sell.


(b)	2015 amounts include the impact of an $81 million charge for the settlement agreement reached in a lawsuit related to the Midwest Generation Disposal Group. Refer to Note 5 for further information about the lawsuit.


(c)	2016 amounts result from immaterial out of period deferred tax liability adjustments.

3. BUSINESS SEGMENTS

Operating segments are determined based on information used by the chief operating decision-maker in deciding how to allocate resources and evaluate the performance of the business.

Products and services are sold between affiliate companies and reportable segments of Duke Energy at cost. Segment assets as presented in the tables that follow exclude all intercompany assets.

Duke Energy

Commercial Renewables is primarily comprised of nonregulated utility scale wind and solar generation assets located throughout the U.S.

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Combined Notes To Consolidated Financial Statements – (Continued)



	Year Ended December 31, 2016
	Electric		Gas					Total
	Utilities and		Utilities and		Commercial			Reportable
(in millions)	Infrastructure		Infrastructure		Renewables			Segments			Other			Eliminations			Total
Unaffiliated Revenues	$	21,336	$	875	$	484		$	22,695		$	48		$	—		$	22,743
Intersegment Revenues	30		26		—			56			69			(125		)	—
Total Revenues	$	21,366	$	901	$	484		$	22,751		$	117		$	(125	)	$	22,743
Interest Expense	$	1,136	$	46	$	53		$	1,235		$	693		$	(12	)	$	1,916
Depreciation and amortization	2,897		115		130			3,142			152			—			3,294
Equity in earnings (losses) of unconsolidated affiliates^(a)	5		19		(82		)	(58		)	43			—			(15		)
Income tax expense (benefit)	1,672		90		(160		)	1,602			(446		)	—			1,156
Segment income (loss)^(b)(c)	3,040		152		23			3,215			(645		)	1			2,571
Add back noncontrolling interest component																	7
Loss from discontinued operations, net of tax^(d)																	(408		)
Net income																	$	2,170
Capital investments expenditures and acquisitions^(e)	$	6,649	$	5,519	$	857		$	13,025		$	190		$	—		$	13,215
Segment assets	114,993		10,760		4,377			130,130			2,443			188			132,761

(a) Commercial Renewables includes a pretax impairment charge of $71 million. See Note 12 for additional information.


(b)	Other includes $329 million of after-tax costs to achieve mergers. Refer to Note 2 for additional information on costs related to the Piedmont merger.


(c)	Other includes after-tax charges of $57 million related to cost savings initiatives. Refer to Note 19 for further information.


(d)	Includes a loss on sale of the International Disposal Group. Refer to Note 2 for further information.


(e)	Other includes $26 million of capital investments expenditures related to the International Disposal Group. Gas Utilities and Infrastructure includes the Piedmont acquisition of $5 billion. Refer to Note 2 for more information on the Piedmont acquisition.



	Year Ended December 31, 2015
	Electric			Gas					Total
	Utilities and			Utilities and		Commercial			Reportable
(in millions)	Infrastructure			Infrastructure		Renewables			Segments			Other			Eliminations			Total
Unaffiliated Revenues	$	21,489		$	536	$	286		$	22,311		$	60		$	—		$	22,371
Intersegment Revenues	32			5		—			37			75			(112		)	—
Total Revenues	$	21,521		$	541	$	286		$	22,348		$	135		$	(112	)	$	22,371
Interest Expense	$	1,074		$	25	$	44		$	1,143		$	393		$	(9	)	$	1,527
Depreciation and amortization	2,735			79		104			2,918			135			—			3,053
Equity in earnings (losses) of unconsolidated affiliates	(2		)	1		(6		)	(7		)	76			—			69
Income tax expense (benefit)	1,602			44		(128		)	1,518			(262		)	—			1,256
Segment income (loss)^(a)(b)(c)	2,819			73		52			2,944			(299		)	—			2,645
Add back noncontrolling interest component																		9
Income from discontinued operations, net of tax^(d)																		177
Net income																		$	2,831
Capital investments expenditures and acquisitions^(e)	$	6,852		$	234	$	1,019		$	8,105		$	258		$	—		$	8,363
Segment assets^(f)	109,097			2,637		3,861			115,595			5,373			188			121,156

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Combined Notes To Consolidated Financial Statements – (Continued)


(a)	Electric Utilities and Infrastructure includes an after-tax charge of $58 million related to the Edwardsport settlement. Refer to Note 4 for further information.

(b) Other includes $60 million of after-tax costs to achieve mergers.


(c)	Other includes after-tax charges of $77 million related to cost savings initiatives. Refer to Note 19 for further information.


(d)	Includes the impact of a settlement agreement reached in a lawsuit related to the Midwest Generation Disposal Group. Refer to Note 5 for further information related to the lawsuit and Note 2 for further information on discontinued operations.


(e)	Other includes capital investment expenditures of $45 million related to the International Disposal Group.


(f)	Other includes Assets Held for Sale balances related to the International Disposal Group. Refer to Note 2 for further information.



	Year Ended December 31, 2014
	Electric			Gas					Total
	Utilities and			Utilities and		Commercial			Reportable
(in millions)	Infrastructure			Infrastructure		Renewables			Segments		Other			Eliminations			Total
Unaffiliated Revenues	$	21,655		$	573	$	235		$	22,463	$	46		$	—		$	22,509
Intersegment Revenues	36			5		1			42		70			(112		)	—
Total Revenues	$	21,691		$	578	$	236		$	22,505	$	116		$	(112	)	$	22,509
Interest Expense	$	1,057		$	37	$	50		$	1,144	$	409		$	(24	)	$	1,529
Depreciation and amortization	2,686			73		90			2,849		120			—			2,969
Equity in earnings (losses) of unconsolidated affiliates	(1		)	—		8			7		123			—			130
Income tax expense (benefit)	1,582			45		(88		)	1,539		(314		)	—			1,225
Segment income (loss)^(a)(b)	2,714			80		53			2,847		(332		)	18			2,533
Add back noncontrolling interest component																	5
Loss from discontinued operations, net of tax^(c)																	(649		)
Net income																	$	1,889
Capital investments expenditures and acquisitions^(d)	$	4,642		$	121	$	514		$	5,277	$	251		$	—		$	5,528
Segment assets^(e)	104,119			2,512		2,981			109,612		10,755			190			120,557


(a)	Other includes a $94 million pretax impairment charge related to Ohio Valley Electric Corporation (OVEC) and costs to achieve mergers.


(b)	Electric Utilities and Infrastructure includes pretax charges of $102 million related to the criminal investigation of the Dan River coal ash spill. See Note 5 for additional information.


(c)	Includes an impairment of the Midwest Generation Disposal Group. Refer to Note 2 for further information.


(d)	Other includes $67 million of capital investments expenditures and acquisitions of the International Disposal Group.


(e)	Other includes Assets Held for Sale balances related to the International Disposal Group and Midwest Generation Disposal Group. Refer to Note 2 for further information.

Geographical Information

For the years ended December 31, 2016, 2015 and 2014, all assets and revenues are within the U.S.

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Combined Notes To Consolidated Financial Statements – (Continued)

Products and Services

The following table summarizes revenues of the reportable segments by type.



	Retail		Wholesale		Retail					Total
(in millions)	Electric		Electric		Natural Gas		Other			Revenues
2016
Electric Utilities and Infrastructure	$	18,338	$	2,095	$	—	$	933		$	21,366
Gas Utilities and Infrastructure	—		—		871		30			901
Commercial Renewables	—		303		—		181			484
Total Reportable Segments	$	18,338	$	2,398	$	871	$	1,144		$	22,751
2015
Electric Utilities and Infrastructure	$	18,695	$	2,014	$	—	$	812		$	21,521
Gas Utilities and Infrastructure	—		—		546		(5		)	541
Commercial Renewables	—		245		—		41			286
Total Reportable Segments	$	18,695	$	2,259	$	546	$	848		$	22,348
2014
Electric Utilities and Infrastructure	$	19,007	$	1,879	$	—	$	805		$	21,691
Gas Utilities and Infrastructure	—		—		571		7			578
Commercial Renewables	—		236		—		—			236
Total Reportable Segments	$	19,007	$	2,115	$	571	$	812		$	22,505

Duke Energy Ohio

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

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Combined Notes To Consolidated Financial Statements – (Continued)



	Year Ended December 31, 2016
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Eliminations			Total
Total revenues	$	1,410	$	503	$	1,913	$	31		$	—		$	1,944
Interest expense	$	58	$	27	$	85	$	1		$	—		$	86
Depreciation and amortization	151		80		231		2			—			233
Income tax expense (benefit)	55		44		99		(21		)	—			78
Segment income (loss)	154		77		231		(39		)	—			192
Income from discontinued operations, net of tax													36
Net income													$	228
Capital expenditures	$	322	$	154	$	476	$	—		$	—		$	476
Segment assets	4,782		2,696		7,478		62			(12		)	7,528



	Year Ended December 31, 2015
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Eliminations			Total
Total revenues	$	1,331	$	541	$	1,872	$	33		$	—		$	1,905
Interest expense	$	53	$	25	$	78	$	1		$	—		$	79
Depreciation and amortization	147		79		226		1			—			227
Income tax expense (benefit)	59		45		104		(23		)	—			81
Segment income (loss)	118		73		191		(41		)	(1		)	149
Income from discontinued operations, net of tax													23
Net income													$	172
Capital expenditures	$	264	$	135	$	399	$	—		$	—		$	399
Segment assets	4,534		2,516		7,050		56			(9		)	7,097



	Year Ended December 31, 2014
	Electric		Gas		Total
	Utilities and		Utilities and		Reportable
(in millions)	Infrastructure		Infrastructure		Segments		Other			Eliminations			Total
Total revenues	$	1,317	$	578	$	1,895	$	19		$	(1	)	$	1,913
Interest expense	$	43	$	37	$	80	$	5		$	1		$	86
Depreciation and amortization	138		73		211		3			—			214
Income tax expense (benefit)	71		45		116		(73		)	—			43
Segment income (loss)^(a)	122		80		202		(133		)	(1		)	68
Loss from discontinued operations, net of tax^(b)													(563		)
Net loss													$	(495	)
Capital expenditures	$	193	$	107	$	300	$	22		$	—		$	322
Segment assets^(c)	4,428		2,487		6,915		3,321			(243		)	9,993


(a)	Other includes a $94 million pretax impairment charge related to OVEC.


(b)	Includes an impairment of the Midwest Generation Disposal Group. Refer to Note 2 for further information.


(c)	Other includes Assets Held for Sale balances related to the Midwest Generation Disposal Group. Refer to Note 2 for further information.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

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



	Years Ended December 31,
(in millions)	2016			2015			2014
Duke Energy Carolinas	$	(104	)	$	(95	)	$	(79	)
Progress Energy	(200		)	(159		)	(190		)
Duke Energy Progress	(56		)	(32		)	(31		)
Duke Energy Florida	(23		)	(16		)	(19		)
Duke Energy Indiana	(13		)	(10		)	(11		)

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

4. REGULATORY MATTERS

REGULATORY ASSETS AND LIABILITIES

The Duke Energy Registrants record regulatory assets and liabilities that result from the ratemaking process. See Note 1 for further information.

The following tables present the regulatory assets and liabilities recorded on the Consolidated Balance Sheets.



	December 31, 2016
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
Regulatory Assets
AROs – coal ash	$	3,761	$	1,536	$	1,830	$	1,822	$	8	$	12	$	276
AROs – nuclear and other	684		9		569		275		294		—		—
Accrued pension and OPEB	2,387		481		882		423		458		135		222
Retired generation facilities	534		39		422		165		257		—		73
Debt fair value adjustment	1,313		—		—		—		—		—		—
Net regulatory asset related to income taxes	894		484		231		7		224		63		119
Storm cost deferrals	153		—		148		148		—		5		—
Nuclear asset securitized balance, net	1,193		—		1,193		—		1,193		—		—
Hedge costs and other deferrals	217		93		91		66		25		7		26
Derivatives – gas supply contracts	187		—		—		—		—		—		—
Demand side management (DSM)/Energy efficiency (EE)	407		122		278		263		15		6		—
Grid Modernization	65		—		—		—		—		65		—
Vacation accrual	196		76		38		38		—		4		10
Deferred fuel and purchased power	156		—		111		24		87		5		40
Nuclear deferral	226		92		134		38		96		—		—
Post-in-service carrying costs and deferred operating expenses	413		70		42		42		—		20		281
Gasification services agreement buyout	8		—		—		—		—		—		8
Transmission expansion obligation	71		—		—		—		—		71		—
Manufactured gas plant (MGP)	99		—		—		—		—		99		—
Advanced metering infrastructure	218		172		—		—		—		—		46
NCEMPA deferrals	51		—		51		51		—		—		—
East Bend deferrals	32		—		—		—		—		32		—
Other	636		223		103		69		36		33		121
Total regulatory assets	13,901		3,397		6,123		3,431		2,693		557		1,222
Less: current portion	1,023		238		401		188		213		37		149
Total noncurrent regulatory assets	$	12,878	$	3,159	$	5,722	$	3,243	$	2,480	$	520	$	1,073

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)



	December 31, 2016
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
Regulatory Liabilities
Costs of removal	$	6,074	$	2,476	$	2,198	$	1,840	$	358	$	212	$	660
Amounts to be refunded to customers	45		—		—		—		—		—		45
Storm reserve	83		22		60		—		60		1		—
Accrued pension and OPEB	174		46		—		—		—		19		72
Deferred fuel and purchased power	192		105		81		64		17		6		—
Other	722		352		245		200		44		19		11
Total regulatory liabilities	7,290		3,001		2,584		2,104		479		257		788
Less: current portion	409		161		189		158		31		21		40
Total noncurrent regulatory liabilities	$	6,881	$	2,840	$	2,395	$	1,946	$	448	$	236	$	748



	December 31, 2015
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
Regulatory Assets
AROs – coal ash	$	2,555	$	1,120	$	1,394	$	1,386	$	8	$	4	$	37
AROs – nuclear and other	838		104		487		195		292		—		—
Accrued pension and OPEB	2,151		479		807		366		441		139		220
Retired generation facilities	509		49		409		179		230		—		51
Debt fair value adjustment	1,191		—		—		—		—		—		—
Net regulatory asset related to income taxes	1,075		564		318		106		212		55		120
Nuclear asset securitizable balance, net	1,237		—		1,237		—		1,237		—		—
Hedge costs and other deferrals	571		127		410		171		239		7		27
DSM/EE	340		80		250		237		13		10		—
Grid Modernization	68		—		—		—		—		68		—
Vacation accrual	192		79		38		38		—		5		10
Deferred fuel and purchased power	151		21		129		93		36		1		—
Nuclear deferral	245		107		138		62		76		—		—
Post-in-service carrying costs and deferred operating expenses	383		97		38		38		—		21		227
Gasification services agreement buyout	32		—		—		—		—		—		32
Transmission expansion obligation	72		—		—		—		—		72		—
MGP	104		—		—		—		—		104		—
NCEMPA deferrals	21		—		21		21		—		—		—
East Bend deferrals	16		—		—		—		—		16		—
Other	499		244		121		82		39		31		94
Total regulatory assets	12,250		3,071		5,797		2,974		2,823		533		818
Less: current portion	877		305		362		264		98		36		102
Total noncurrent regulatory assets	$	11,373	$	2,766	$	5,435	$	2,710	$	2,725	$	497	$	716

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)



	December 31, 2015
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
Regulatory Liabilities
Costs of removal	$	5,329	$	2,413	$	2,078	$	1,725	$	353	$	222	$	616
Amounts to be refunded to customers	71		—		—		—		—		—		71
Storm reserve	150		24		125		—		125		1		—
Accrued pension and OPEB	288		68		51		25		26		21		83
Deferred fuel and purchased power	311		55		255		58		197		1		—
Other	506		281		164		155		8		12		46
Total regulatory liabilities	6,655		2,841		2,673		1,963		709		257		816
Less: current portion	400		39		286		85		200		12		62
Total noncurrent regulatory liabilities	$	6,255	$	2,802	$	2,387	$	1,878	$	509	$	245	$	754

Descriptions of regulatory assets and liabilities, summarized in the tables above, as well as their recovery and amortization periods follow. Items are excluded from rate base unless otherwise noted.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Vacation accrual. Generally recovered within one year. Duke Energy Carolinas earns a return on the North Carolina balance.

Transmission expansion obligation. Represents transmission expansion obligations related to Duke Energy Ohio’s withdrawal from Midcontinent Independent System Operator, Inc. (MISO).

Amounts to be refunded to customers. Represents required rate reductions to retail customers by the applicable regulatory body. The period of refund for Duke Energy Indiana is through 2018.

RESTRICTIONS ON THE ABILITY OF CERTAIN SUBSIDIARIES TO MAKE DIVIDENDS, ADVANCES AND LOANS TO DUKE ENERGY

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

The restrictions discussed below were less than 25 percent of Duke Energy's net assets at December 31, 2016.

Duke Energy Carolinas

Duke Energy Progress

Duke Energy Ohio

Duke Energy Kentucky is required to pay dividends solely out of retained earnings and to maintain a minimum of 35 percent equity in its capital structure.

Duke Energy Indiana

Piedmont

RATE RELATED INFORMATION

Duke Energy Carolinas and Duke Energy Progress

Ash Basin Closure Costs Deferral

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

FERC Transmission Return on Equity Complaints

Duke Energy Carolinas

Advanced Metering Infrastructure Deferral

William States Lee Combined Cycle Facility

William States Lee III Nuclear Station

Duke Energy Progress

Storm Cost Deferral Filings

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

South Carolina Rate Case

Western Carolinas Modernization Plan

Shearon Harris Nuclear Plant Expansion

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Duke Energy Florida

Hines Chiller Uprate Project

Citrus County Combined Cycle Facility

Purchase of Osprey Energy Center

FPSC Settlement Agreements

Crystal River Unit 3

Crystal River Unit 3 Regulatory Asset

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

See Notes 6 and 17 for additional information.

Customer Rate Matters

Levy Nuclear Project

Crystal River 1 and 2 Coal Units

Duke Energy Ohio

East Bend Coal Ash Basin Filing

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Base Rate Case

Natural Gas Pipeline Extension

Advanced Metering Infrastructure

Accelerated Natural Gas Service Line Replacement Rider

Energy Efficiency Cost Recovery

2014 Electric Security Plan

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

2012 Natural Gas Rate Case/Manufactured Gas Plant Cost Recovery

Regional Transmission Organization Realignment



			Provisions/		Cash
(in millions)	December 31, 2015		Adjustments		Reductions			December 31, 2016
Duke Energy Ohio	$	92	$	3	$	(5	)	$	90

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Duke Energy Indiana

Coal Combustion Residual Plan

Edwardsport Integrated Gasification Combined Cycle Plant

FERC Transmission Return on Equity Complaint

Grid Infrastructure Improvement Plan

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Other Regulatory Matters

Atlantic Coast Pipeline

Sabal Trail Transmission Pipeline

Constitution Pipeline

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Progress Energy Merger FERC Mitigation

Potential Coal Plant Retirements



		Remaining Net
	Capacity	Book Value
	(in MW)	(in millions)
Duke Energy Carolinas
Allen Steam Station Units 1-3^(a)	585	$	168
Progress Energy and Duke Energy Florida
Crystal River Units 1 and 2	873	120
Duke Energy Indiana^(b)
Gallagher Units 2 and 4^(c)	280	136
Total Duke Energy	1,738	$	424


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


(b)	Duke Energy Indiana retired Wabash River Units 2 through 6 in 2016.


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

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

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

5. COMMITMENTS AND CONTINGENCIES

INSURANCE

General Insurance

The cost of the Duke Energy Registrants’ coverage can fluctuate from year to year reflecting claims history and conditions of the insurance and reinsurance markets.

Nuclear Insurance

Duke Energy Progress owns and operates the Robinson Nuclear Plant (Robinson), Brunswick and Harris. Robinson and Harris each have one reactor. Brunswick has two reactors.

Duke Energy Florida owns Crystal River Unit 3, which has been retired.

Nuclear Liability Coverage

Primary Liability Insurance

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Excess Liability Program

Nuclear Property and Accidental Outage Coverage

Potential Retroactive Premium Assessments

ENVIRONMENTAL

Remediation Activities

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)



				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Balance at December 31, 2013	$	74		$	11		$	27		$	8		$	19		$	27		$	7
Provisions/adjustments	32			(1		)	1			4			(3		)	28			4
Cash reductions	(14		)	—			(11		)	(7		)	(4		)	(1		)	(1		)
Balance at December 31, 2014	92			10			17			5			12			54			10
Provisions/adjustments	11			1			4			—			4			1			5
Cash reductions	(9		)	(1		)	(4		)	(2		)	(2		)	(1		)	(3		)
Balance at December 31, 2015	94			10			17			3			14			54			12
Provisions/adjustments	19			4			7			2			4			7			1
Cash reductions	(15		)	(4		)	(6		)	(2		)	(4		)	(2		)	(3		)
Balance at December 31, 2016	$	98		$	10		$	18		$	3		$	14		$	59		$	10



(in millions)
Duke Energy	$	69
Duke Energy Carolinas	22
Duke Energy Ohio	36
Duke Energy Indiana	7

North Carolina and South Carolina Ash Basins

LITIGATION

Duke Energy

Ash Basin Shareholder Derivative Litigation

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

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

Progress Energy Merger Shareholder Litigation

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Price Reporting Cases

Duke Energy Carolinas and Duke Energy Progress

NCDEQ Notice of Violation

NCDEQ State Enforcement Actions

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

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

Federal Citizens Suits

Five previously filed cases involving the Riverbend, Cape Fear, H.F. Lee, Sutton and Buck plants have been dismissed or settled during 2016.

North Carolina Ash Basin Grand Jury Investigation

Potential Groundwater Contamination Claims

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

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

Duke Energy Carolinas

Asbestos-related Injuries and Damages Claims

Duke Energy Progress and Duke Energy Florida

Spent Nuclear Fuel Matters

Duke Energy Florida

Class Action Lawsuit

Westinghouse Contract Litigation

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

MGP Cost Recovery Action

Duke Energy Ohio

Antitrust Lawsuit

W.C. Beckjord Fuel Release

Duke Energy Indiana

Benton County Wind Farm Dispute

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Other Litigation and Legal Proceedings



	December 31,
(in millions)	2016		2015
Reserves for Legal Matters
Duke Energy	$	98	$	156
Duke Energy Carolinas	23		11
Progress Energy	59		54
Duke Energy Progress	14		6
Duke Energy Florida	28		31
Duke Energy Ohio	4		80

OTHER COMMITMENTS AND CONTINGENCIES

General

Purchase Obligations

Purchased Power

The following table presents executory purchased power contracts with terms exceeding one year, excluding contracts classified as leases.



		Minimum Purchase Amount at December 31, 2016
	Contract
(in millions)	Expiration	2017		2018		2019		2020		2021		Thereafter		Total
Duke Energy Progress^(a)	2019-2031	$	66	$	67	$	67	$	50	$	51	$	267	$	568
Duke Energy Florida^(b)	2021-2043	341		357		377		394		376		1,211		3,056
Duke Energy Ohio^(c)(d)	2018	203		89		—		—		—		—		292

(a) Contracts represent between 15 percent and 100 percent of net plant output.

(b) Contracts represent between 81 percent and 100 percent of net plant output.

(d) Excludes PPA with OVEC. See Note 17 for additional information.

Gas Supply and Capacity Contracts

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

The following table presents future unconditional purchase obligations under natural gas supply and capacity contracts as of December 31, 2016.



(in millions)	Duke Energy		Duke Energy Ohio
2017	$	371	$	52
2018	308		35
2019	286		26
2020	269		22
2021	267		22
Thereafter	1,595		7
Total	$	3,096	$	164

Operating and Capital Lease Commitments

The following table presents rental expense for operating leases. These amounts are included in Operation, maintenance and other on the Consolidated Statements of Operations.



	Years Ended December 31,
(in millions)	2016		2015		2014
Duke Energy	$	242	$	313	$	350
Duke Energy Carolinas	45		41		41
Progress Energy	140		230		257
Duke Energy Progress	68		149		161
Duke Energy Florida	72		81		96
Duke Energy Ohio	16		13		17
Duke Energy Indiana	23		20		21

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



	December 31, 2016
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
2017	$	218	$	41	$	129	$	75	$	54	$	12	$	20
2018	205		35		126		73		53		11		17
2019	181		27		120		68		52		7		11
2020	164		23		109		58		51		6		10
2021	134		17		91		43		48		4		6
Thereafter	948		52		602		379		223		7		9
Total	$	1,850	$	195	$	1,177	$	696	$	481	$	47	$	73

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

The following table presents future minimum lease payments under capital leases.



	December 31, 2016
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
2017	$	148		$	6		$	46		$	21		$	25		$	4		$	1
2018	154			6			46			21			25			3			2
2019	154			6			45			20			25			1			1
2020	159			5			46			22			25			—			1
2021	163			1			45			20			25			—			1
Thereafter	784			30			322			250			71			—			41
Minimum annual payments	1,562			54			550			354			196			8			47
Less: amount representing interest	(462		)	(32		)	(265		)	(212		)	(53		)	(1		)	(36		)
Total	$	1,100		$	22		$	285		$	142		$	143		$	7		$	11

6. DEBT AND CREDIT FACILITIES

Summary of Debt and Related Terms

The following tables summarize outstanding debt.



	December 31, 2016
	Weighted
	Average					Duke						Duke			Duke			Duke			Duke
	Interest		Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Rate		Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Unsecured debt, maturing 2017 - 2073	4.30	%	$	17,812		$	1,150		$	3,551		$	—		$	150		$	810		$	415
Secured debt, maturing 2017 - 2037	2.60	%	3,909			425			1,819			300			1,519			—			—
First mortgage bonds, maturing 2017 - 2046^(a)	4.61	%	21,879			7,410			10,800			6,425			4,375			1,000			2,669
Capital leases, maturing 2018 - 2051^(b)	4.48	%	1,100			22			285			142			143			7			11
Tax-exempt bonds, maturing 2017 - 2041^(c)	2.84	%	1,053			355			48			48			—			77			572
Notes payable and commercial paper^(d)	1.01	%	3,112			—			—			—			—			—			—
Money pool/intercompany borrowings^(e)			—			300			1,902			150			297			41			150
Fair value hedge carrying value adjustment			6			6			—			—			—			—			—
Unamortized debt discount and premium, net^(f)			1,753			(20		)	(31		)	(16		)	(10		)	(28		)	(9		)
Unamortized debt issuance costs^(g)			(242		)	(45		)	(104		)	(38		)	(52		)	(7		)	(22		)
Total debt	4.07	%	$	50,382		$	9,603		$	18,270		$	7,011		$	6,422		$	1,900		$	3,786
Short-term notes payable and commercial paper			(2,487		)	—			—			—			—			—			—
Short-term money pool/intercompany borrowings			—			—			(729		)	—			(297		)	(16		)	—
Current maturities of long-term debt^(h)			(2,319		)	(116		)	(778		)	(452		)	(326		)	(1		)	(3		)
Total long-term debt^(h)			$	45,576		$	9,487		$	16,763		$	6,559		$	5,799		$	1,883		$	3,783


(a)	Substantially all electric utility property is mortgaged under mortgage bond indentures.


(b)	Duke Energy includes $98 million and $670 million of capital lease purchase accounting adjustments related to Duke Energy Progress and Duke Energy Florida, respectively, related to power purchase agreements that are not accounted for as capital leases in their respective financial statements because of grandfathering provisions in GAAP.


(c)	Substantially all tax-exempt bonds are secured by first mortgage bonds or letters of credit.

(d)


(e)	Progress Energy amount includes a $1 billion intercompany loan related to the sale of the International Disposal Group. See Note 2 for further discussion of the sale.


(f)	Duke Energy includes $1,653 million and $197 million in purchase accounting adjustments related to Progress Energy and Piedmont, respectively.


(g)	Duke Energy includes $53 million in purchase accounting adjustments primarily related to the merger with Progress Energy.


(h)	Refer to Note 17 for additional information on amounts from consolidated VIEs.

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Combined Notes To Consolidated Financial Statements – (Continued)



	December 31, 2015
	Weighted
	Average					Duke						Duke			Duke			Duke			Duke
	Interest		Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Rate		Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Unsecured debt, maturing 2016 - 2073	4.68	%	$	12,960		$	1,152		$	3,850		$	—		$	150		$	765		$	740
Secured debt, maturing 2016 - 2037	2.37	%	2,361			425			479			254			225			—			—
First mortgage bonds, maturing 2016 - 2045^(a)	4.74	%	18,980			6,161			9,750			5,975			3,775			750			2,319
Capital leases, maturing 2016 - 2051^(b)	5.39	%	1,335			24			300			144			156			13			14
Tax-exempt bonds, maturing 2017 - 2041^(c)	2.59	%	1,053			355			48			48			—			77			572
Notes payable and commercial paper^(d)	0.88	%	4,258			—			—			—			—			—			—
Money pool/intercompany borrowings			—			300			1,458			359			813			128			150
Fair value hedge carrying value adjustment			6			6			—			—			—			—			—
Unamortized debt discount and premium, net^(e)			1,712			(17		)	(28		)	(16		)	(8		)	(28		)	(8		)
Unamortized debt issuance costs^(f)			(164		)	(39		)	(85		)	(37		)	(32		)	(4		)	(19		)
Total debt	4.15	%	$	42,501		$	8,367		$	15,772		$	6,727		$	5,079		$	1,701		$	3,768
Short-term notes payable and commercial paper			(3,633		)	—			—			—			—			—			—
Short-term money pool/intercompany borrowings			—			—			(1,308		)	(209		)	(813		)	(103		)	—
Current maturities of long-term debt^(g)			(2,026		)	(356		)	(315		)	(2		)	(13		)	(106		)	(547		)
Total long-term debt^(g)			$	36,842		$	8,011		$	14,149		$	6,516		$	4,253		$	1,492		$	3,221


(a)	Substantially all electric utility property is mortgaged under mortgage bond indentures.


(b)	Duke Energy includes $114 million and $731 million of capital lease purchase accounting adjustments related to Duke Energy Progress and Duke Energy Florida, respectively, related to power purchase agreements that are not accounted for as capital leases in their respective financial statements because of grandfathering provisions in GAAP.


(c)	Substantially all tax-exempt bonds are secured by first mortgage bonds or letters of credit.


(d)	Includes $625 million that was classified as Long-Term Debt on the Consolidated Balance Sheets due to the existence of long-term credit facilities that backstop these commercial paper balances, along with Duke Energy’s ability and intent to refinance these balances on a long-term basis. The weighted average days to maturity for commercial paper was 15 days.


(e)	Duke Energy includes $1,798 million in purchase accounting adjustments related to the merger with Progress Energy.


(f)	Duke Energy includes $59 million in purchase accounting adjustments primarily related to the merger with Progress Energy.


(g)	Refer to Note 17 for additional information on amounts from consolidated VIEs.

Current Maturities of Long-Term Debt



(in millions)	Maturity Date	Interest Rate		December 31, 2016
Unsecured Debt
Duke Energy (Parent)	April 2017	1.226	%	$	400
Duke Energy (Parent)	August 2017	1.625	%	700
Piedmont Natural Gas	September 2017	8.510	%	35
First Mortgage Bonds
Duke Energy Progress	March 2017	1.146	%	250
Duke Energy Florida	September 2017	5.800	%	250
Duke Energy Progress	November 2017	1.111	%	200
Secured
Duke Energy	June 2017	2.365	%	45
Duke Energy	June 2017	2.260	%	34
Tax-exempt Bonds
Duke Energy Carolinas	February 2017	3.600	%	77
Duke Energy Carolinas	February 2017	0.810	%	10
Duke Energy Carolinas	February 2017	0.790	%	25
Other^(a)				293
Current maturities of long-term debt				$	2,319

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Combined Notes To Consolidated Financial Statements – (Continued)


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

Maturities and Call Options



	December 31, 2016
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy^(a)		Carolinas		Energy		Progress		Florida		Ohio		Indiana
2017	$	2,319	$	116	$	778	$	452	$	326	$	1	$	3
2018	3,466		1,629		559		—		561		3		3
2019	3,316		5		1,992		902		292		551		63
2020	2,112		755		469		152		319		25		653
2021	3,699		501		1,473		602		372		49		70
Thereafter	31,090		6,597		12,270		4,903		4,255		1,255		2,994
Total long-term debt, including current maturities	$	46,002	$	9,603	$	17,541	$	7,011	$	6,125	$	1,884	$	3,786


(a)	Excludes $1,893 million in purchase accounting adjustments related to the Progress Energy merger and the Piedmont acquisition.

Short-Term Obligations Classified as Long-Term Debt



	December 31, 2016
			Duke		Duke		Duke		Duke
	Duke		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Progress		Ohio		Indiana
Tax-exempt bonds	$	347	$	35	$	—	$	27	$	285
Commercial paper^(a)	625		300		150		25		150
Total	$	972	$	335	$	150	$	52	$	435



	December 31, 2015
			Duke		Duke		Duke		Duke
	Duke		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Progress		Ohio		Indiana
Tax-exempt bonds	$	347	$	35	$	—	$	27	$	285
Commercial paper^(a)	625		300		150		25		150
Total	$	972	$	335	$	150	$	52	$	435


(a)	Progress Energy amounts are equal to Duke Energy Progress amounts.

Summary of Significant Debt Issuances

Piedmont Acquisition Financing

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Combined Notes To Consolidated Financial Statements – (Continued)

Nuclear Asset-Recovery Bonds

Solar Facilities Financing

Duke Energy Florida Bond Issuance

The following tables summarize significant debt issuances (in millions).



				Year Ended December 31, 2016
						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
Unsecured Debt
April 2016^(a)	April 2023	2.875	%	$	350	$	350	$	—	$	—	$	—	$	—	$	—
August 2016	September 2021	1.800	%	750		750		—		—		—		—		—
August 2016	September 2026	2.650	%	1,500		1,500		—		—		—		—		—
August 2016	September 2046	3.750	%	1,500		1,500		—		—		—		—		—
Secured Debt
June 2016^(b)	March 2020	1.196	%	183		—		—		—		183		—		—
June 2016^(b)	September 2022	1.731	%	150		—		—		—		150		—		—
June 2016^(b)	September 2029	2.538	%	436		—		—		—		436		—		—
June 2016^(b)	March 2033	2.858	%	250		—		—		—		250		—		—
June 2016^(b)	September 2036	3.112	%	275		—		—		—		275		—		—
August 2016	June 2034	2.747	%	228		—		—		—		—		—		—
August 2016	June 2020	2.747	%	105		—		—		—		—		—		—
First Mortgage Bonds
March 2016^(c)	March 2023	2.500	%	500		—		500		—		—		—		—
March 2016^(c)	March 2046	3.875	%	500		—		500		—		—		—		—
May 2016^(d)	May 2046	3.750	%	500		—		—		—		—		—		500
June 2016^(c)	June 2046	3.700	%	250		—		—		—		—		250		—
September 2016^(e)	October 2046	3.400	%	600		—		—		—		600		—		—
September 2016^(c)	October 2046	3.700	%	450		—		—		450		—		—		—
November 2016^(f)	December 2026	2.950	%	600		—		600		—		—		—		—
Total issuances				$	9,127	$	4,100	$	1,600	$	450	$	1,894	$	250	$	500


(a)	Proceeds were used to pay down outstanding commercial paper and for general corporate purposes.


(b)	The nuclear asset recovery bonds are sequential pay amortizing bonds. The maturity date above represents the scheduled final maturity date for the bonds.


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

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)


(d)	Proceeds were used to repay $325 million of unsecured debt due June 2016, $150 million of first mortgage bonds due July 2016 and for general corporate purposes.


(e)	Proceeds were used to fund capital expenditures for ongoing construction, capital maintenance, to repay short-term borrowings under the intercompany money pool borrowing arrangement and for general corporate purposes.


(f)	Proceeds were used to repay at maturity $350 million aggregate principal amount of certain bonds due December 2016, as well as to fund capital expenditures for ongoing construction and capital maintenance and for general corporate purposes.



				Year Ended December 31, 2015
						Duke		Duke		Duke
	Maturity	Interest		Duke		Energy		Energy		Energy
Issuance Date	Date	Rate		Energy		(Parent)		Carolinas		Progress
Unsecured Debt
November 2015^(a)(b)	April 2024	3.750	%	$	400	$	400	$	—	$	—
November 2015^(a)(b)	December 2045	4.800	%	600		600		—		—
First Mortgage Bonds
March 2015^(c)	June 2045	3.750	%	500		—		500		—
August 2015^(a)(d)	August 2025	3.250	%	500		—		—		500
August 2015^(a)(d)	August 2045	4.200	%	700		—		—		700
Total issuances				$	2,700	$	1,000	$	500	$	1,200


(a)	Proceeds were used to repay short-term money pool and commercial paper borrowing issued to fund a portion of the NCEMPA acquisition, see Note 2 for further information.


(b)	Proceeds were used to refinance at maturity $300 million of unsecured notes at Progress Energy due January 2016.


(c)	Proceeds were used to redeem at maturity $500 million of first mortgage bonds due October 2015.


(d)	Proceeds were used to refinance at maturity $400 million of first mortgage bonds due December 2015.

Available Credit Facilities

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



	December 31, 2016
				Duke			Duke			Duke			Duke			Duke			Duke
	Duke			Energy			Energy			Energy			Energy			Energy			Energy
(in millions)	Energy^(a)			(Parent)			Carolinas			Progress			Florida			Ohio			Indiana
Facility size^(b)	$	8,350		$	3,400		$	1,100		$	1,000		$	950		$	450		$	600
Reduction to backstop issuances
Commercial paper^(c)	(2,022		)	(977		)	(300		)	(150		)	(84		)	(31		)	(150		)
Outstanding letters of credit	(78		)	(69		)	(4		)	(2		)	(1		)	—			—
Tax-exempt bonds	(116		)	—			(35		)	—			—			—			(81		)
Coal ash set-aside	(500		)	—			(250		)	(250		)	—			—			—
Available capacity	$	5,634		$	2,354		$	511		$	598		$	865		$	419		$	369


(a)	Includes amounts related to Piedmont's $850 million credit facility.


(b)	Represents the sublimit of each borrower.


(c)	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 in the Consolidated Balance Sheets.

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Term Loan Facility

Other Debt Matters

Duke Energy guaranteed debt issued by Duke Energy Carolinas of $762 million and $767 million, respectively, as of December 31, 2016 and 2015.

Money Pool

Restrictive Debt Covenants

Other Loans

7. GUARANTEES AND INDEMNIFICATIONS

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)



	December 31,
(in millions)	2016		2015
Duke Energy	$	13	$	21
Progress Energy	—		7
Duke Energy Florida	—		7

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DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

8. JOINT OWNERSHIP OF GENERATING AND TRANSMISSION FACILITIES



	December 31, 2016
							Construction
	Ownership		Property, Plant		Accumulated		Work in
(in millions except for ownership interest)	Interest		and Equipment		Depreciation		Progress
Duke Energy Carolinas
Catawba Nuclear Station (units 1 and 2)^(a)	19.25	%	$	954	$	612	$	12
Duke Energy Ohio
Transmission facilities^(b)	Various		90		60		1
Duke Energy Indiana
Gibson Station (unit 5)^(c)	50.05	%	333		157		11
Vermillion Generating Station^(d)	62.5	%	154		111		—
Transmission and local facilities^(c)	Various		4,315		1,715		—


(a)	Jointly owned with North Carolina Municipal Power Agency Number 1, NCEMC and Piedmont Municipal Power Agency.


(b)	Jointly owned with America Electric Power Generation Resources and The Dayton Power and Light Company.


(c)	Jointly owned with Wabash Valley Power Association, Inc. (WVPA) and Indiana Municipal Power Agency.


(d)	Jointly owned with WVPA.

9. ASSET RETIREMENT OBLIGATIONS

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Combined Notes To Consolidated Financial Statements – (Continued)

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



	December 31, 2016
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana
Decommissioning of Nuclear Power Facilities^(a)	$	5,204	$	1,834	$	3,172	$	2,454	$	717	$	—	$	—
Closure of Ash Impoundments	5,150		2,032		2,228		2,209		19		43		847
Other^(b)	257		29		75		34		42		34		19
Total asset retirement obligation	$	10,611	$	3,895	$	5,475	$	4,697	$	778	$	77	$	866
Less: current portion	411		222		189		189		—		—		—
Total noncurrent asset retirement obligation	$	10,200	$	3,673	$	5,286	$	4,508	$	778	$	77	$	866


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


(b)	Primarily includes obligations related to asbestos removal and the closure of certain landfills at fossil generation facilities. Duke Energy Ohio also includes AROs related to the retirement of natural gas mains and services. Duke Energy includes AROs related to the removal of renewable energy generation assets and Piedmont's underground natural gas mains and services.

North Carolina Ash Basins

In 2014 the Coal Ash Act became law and was amended on June 24, 2015, and July 14, 2016. The Coal Ash Act, as amended,

Prohibits construction of new and expansion of existing ash impoundments and use of existing impoundments at retired facilities;

Classifies Duke Energy Progress' Asheville and Sutton plants and Duke Energy Carolinas' Riverbend and Dan River stations as high risk;

Requires dry disposal of fly ash at active plants, excluding the Asheville Plant, not retired by December 31, 2018;

Requires dry disposal of bottom ash at active plants, excluding the Asheville Plant, by December 31, 2019, or retirement of active plants;

Establishes requirements to deal with groundwater and surface water impacts from impoundments; and

Increases the level of regulation for structural fills utilizing coal ash.

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Combined Notes To Consolidated Financial Statements – (Continued)

Federal Coal Combustion Residuals Regulation

In addition to the requirements of the federal CCR regulation, CCR landfills and surface impoundments will continue to be independently regulated by most states.

Coal Ash Liability

Nuclear Decommissioning Liability

AROs related to nuclear decommissioning are based on site-specific cost studies. The NCUC, PSCSC and FPSC require updated cost estimates for decommissioning nuclear plants every five years.

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Combined Notes To Consolidated Financial Statements – (Continued)



	Annual Funding		Decommissioning
(in millions)	Requirement^(a)		Costs^(a)(b)		Year of Cost Study
Duke Energy	$	14	$	8,150	2013 and 2014
Duke Energy Carolinas	—		3,420		2013
Duke Energy Progress	14		3,550		2014
Duke Energy Florida	—		1,180		2013


(a)	Amounts for Progress Energy equal the sum of Duke Energy Progress and Duke Energy Florida.


(b)	Amounts include the Subsidiary Registrant's ownership interest in jointly owned reactors. Other joint owners are responsible for decommissioning costs related to their interest in the reactors.

Nuclear Decommissioning Trust Funds



	December 31,
(in millions)	2016		2015
Duke Energy	$	5,099	$	4,670
Duke Energy Carolinas	2,882		2,686
Duke Energy Progress	2,217		1,984

See Note 16 for additional information related to the fair value of the Duke Energy Registrants' NDTFs.

Nuclear Operating Licenses

Operating licenses for nuclear units are potentially subject to extension. The following table includes the current expiration of nuclear operating licenses.



Unit	Year of Expiration
Duke Energy Carolinas
Catawba Units 1 and 2	2043
McGuire Unit 1	2041
McGuire Unit 2	2043
Oconee Units 1 and 2	2033
Oconee Unit 3	2034
Duke Energy Progress
Brunswick Unit 1	2036
Brunswick Unit 2	2034
Harris	2046
Robinson	2030

Duke Energy Florida has requested the NRC terminate the operating license for Crystal River Unit 3 as it permanently ceased operation in February 2013. Refer to Note 4 for further information on the Crystal River Unit 3 decommissioning activity and transition to SAFSTOR.

ARO Liability Rollforward

During 2016, the Duke Energy Registrants updated coal ash ARO liability estimates based on additional site-specific information about the related costs, methods and timing of work to be performed. Actual closure costs incurred could be materially different from current estimates that form the basis of the recorded AROs.

175

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

DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

The following table presents changes in the liability associated with AROs.



				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Balance at December 31, 2014	$	8,464		$	3,428		$	4,711		$	3,905		$	806		$	27		$	32
Acquisitions^(a)	226			—			226			204			23			—			—
Accretion expense^(b)	380			165			203			169			34			4			15
Liabilities settled^(c)	(422		)	(200		)	(195		)	(125		)	(70		)	(4		)	(23		)
Liabilities incurred in the current year^(d)	1,016			178			282			282			—			116			418
Revisions in estimates of cash flows	585			347			142			132			9			(18		)	83
Balance at December 31, 2015	10,249			3,918			5,369			4,567			802			125			525
Acquisitions	22			—			2			—			2			—			—
Accretion expense^(b)	400			187			230			194			35			5			24
Liabilities settled^(c)	(613		)	(287		)	(272		)	(212		)	(60		)	(5		)	(49		)
Liabilities incurred in the current year	51			—			3			3			—			—			29
Revisions in estimates of cash flows	502			77			143			145			(1		)	(48		)	337
Balance at December 31, 2016	$	10,611		$	3,895		$	5,475		$	4,697		$	778		$	77		$	866


(a)	Duke Energy Progress amount relates to the NCEMPA acquisition. See Note 2 for additional information.


(b)	Substantially all accretion expense for the years ended December 31, 2016 and 2015 relates to Duke Energy’s regulated electric operations and has been deferred in accordance with regulatory accounting treatment.


(c)	Amounts primarily relate to ash impoundment closures and nuclear decommissioning of Crystal River Unit 3.


(d)	Amounts primarily relate to AROs recorded as a result of the EPA's rule for disposal of CCR.

10. PROPERTY, PLANT AND EQUIPMENT

The following tables summarize the property, plant and equipment for Duke Energy and its subsidiary registrants.



	December 31, 2016
	Estimated
	Useful				Duke						Duke			Duke			Duke			Duke
	Life	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	(Years)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Land		$	1,501		$	432		$	735		$	393		$	342		$	150		$	106
Plant – Regulated
Electric generation, distribution and transmission	8 - 100	89,864			34,515			37,596			23,683			13,913			4,593			13,160
Natural gas transmission and distribution	12 - 67	7,738			—			—			—			—			2,456			—
Other buildings and improvements	15 - 100	1,692			502			634			293			341			211			197
Plant – Nonregulated
Electric generation, distribution and transmission	5 - 30	4,298			—			—			—			—			—			—
Other buildings and improvements	25 - 35	421			—			—			—			—			—			—
Nuclear fuel		3,572			2,092			1,480			1,480			—			—			—
Equipment	3 - 38	1,941			358			505			378			127			338			156
Construction in process		6,186			2,324			2,708			1,329			1,379			206			396
Other	5 - 40	4,184			904			1,206			863			332			172			226
Total property, plant and equipment^(a)(d)		121,397			41,127			44,864			28,419			16,434			8,126			14,241
Total accumulated depreciation – regulated^(b)(c)(d)		(37,831		)	(14,365		)	(15,212		)	(10,561		)	(4,644		)	(2,579		)	(4,317		)
Total accumulated depreciation – nonregulated^(c)(d)		(1,575		)	—			—			—			—			—			—
Generation facilities to be retired, net		529			—			529			529			—			—			—
Total net property, plant and equipment		$	82,520		$	26,762		$	30,181		$	18,387		$	11,790		$	5,547		$	9,924

176

PART II

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

DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

(a)

Includes capitalized leases of $1,355 million, $40 million, $288 million, $142 million, $146 million, $81 million and $35 million at Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana, respectively, primarily within Plant – Regulated. The Progress Energy, Duke Energy Progress and Duke Energy Florida amounts are net of $99 million, $9 million and $90 million, respectively, of accumulated amortization of capitalized leases.


(b)	Includes $1,922 million, $1,192 million, $730 million and $730 million of accumulated amortization of nuclear fuel at Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.


(c)	Includes accumulated amortization of capitalized leases of $50 million, $9 million, $19 million and $8 million at Duke Energy, Duke Energy Carolinas, Duke Energy Ohio and Duke Energy Indiana, respectively.


(d)	Includes gross property, plant and equipment cost of consolidated VIEs of $2,591 million and accumulated depreciation of consolidated VIEs of $411 million at Duke Energy.



	December 31, 2015
	Estimated
	Useful				Duke						Duke			Duke			Duke			Duke
	Life	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	(Years)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana
Land		$	1,391		$	407		$	719		$	392		$	327		$	118		$	108
Plant – Regulated
Electric generation, distribution and transmission	8 - 100	87,593			33,623			36,422			22,888			13,534			4,429			13,118
Natural gas transmission and distribution	12 - 67	2,322			—			—			—			—			2,322			—
Other buildings and improvements	15 - 100	1,480			477			621			294			322			204			179
Plant – Nonregulated
Electric generation, distribution and transmission	1 - 30	3,348			—			—			—			—			—			—
Other buildings and improvements	25 - 35	410			—			—			—			—			—			—
Nuclear fuel		3,194			1,827			1,367			1,367			—			—			—
Equipment	3 - 38	1,736			368			530			398			132			344			173
Construction in process		4,485			1,860			1,827			1,118			709			180			214
Other	5 - 60	4,008			836			1,180			856			319			153			215
Total property, plant and equipment^(a)(d)		109,967			39,398			42,666			27,313			15,343			7,750			14,007
Total accumulated depreciation – regulated^(b)(c)(d)		(35,367		)	(13,521		)	(14,867		)	(10,141		)	(4,720		)	(2,507		)	(4,484		)
Total accumulated depreciation – nonregulated^(c)(d)		(1,369		)	—			—			—			—			—			—
Generation facilities to be retired, net		548			—			548			548			—			—			—
Total net property, plant and equipment		$	73,779		$	25,877		$	28,347		$	17,720		$	10,623		$	5,243		$	9,523

(a)

Includes capitalized leases of $1,465 million, $40 million, $302 million, $144 million, $158 million, $96 million and $39 million at Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana, respectively, primarily in regulated plant. The Progress Energy, Duke Energy Progress and Duke Energy Florida amounts are net of $85 million, $7 million and $78 million, respectively, of accumulated amortization of capitalized leases.


(b)	Includes $1,621 million, $976 million, $645 million and $645 million of accumulated amortization of nuclear fuel at Duke Energy, Duke Energy Carolinas, Progress Energy and Duke Energy Progress, respectively.


(c)	Includes accumulated amortization of capitalized leases of $57 million, $11 million, $27 million and $7 million at Duke Energy, Duke Energy Carolinas, Duke Energy Ohio and Duke Energy Indiana, respectively.


(d)	Includes gross property, plant and equipment cost of consolidated VIEs of $2,033 million and accumulated depreciation of consolidated VIEs of $327 million at Duke Energy.

177

PART II

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

DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

The following table presents capitalized interest, which includes the debt component of AFUDC.



	Years Ended December 31,
(in millions)	2016		2015		2014
Duke Energy	$	100	$	98	$	75
Duke Energy Carolinas	38		38		38
Progress Energy	31		24		11
Duke Energy Progress	17		20		10
Duke Energy Florida	14		4		1
Duke Energy Ohio	8		10		10
Duke Energy Indiana	7		6		6

Operating Leases

Duke Energy's Commercial Renewables segment operates various renewable energy projects and sells the generated output to utilities, electric cooperatives, municipalities and commercial and industrial customers through long-term contracts. In certain situations, these long-term contracts and the associated renewable energy projects qualify as operating leases. Rental income from these leases is accounted for as Operating Revenues in the Consolidated Statements of Operations. There are no minimum lease payments as all payments are contingent based on actual electricity generated by the renewable energy projects. Contingent lease payments were $216 million, $172 million and $164 million for the years ended December 31, 2016, 2015 and 2014. As of December 31, 2016, renewable energy projects owned by Duke Energy and accounted for as operating leases had a cost basis of $3,127 million and accumulated depreciation of $347 million. These assets are principally classified as nonregulated electric generation and transmission assets.

11. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table presents goodwill by reportable operating segment for Duke Energy.

Duke Energy



	Electric Utilities		Gas Utilities		Commercial
(in millions)	and Infrastructure		and Infrastructure		Renewables		Total
Goodwill at December 31, 2015	$	15,656	$	294	$	122	$	16,072
Piedmont Acquisition^(a)	1,723		1,630		—		3,353
Goodwill at December 31, 2016	$	17,379	$	1,924	$	122	$	19,425

(a) Refer to Note 2 for more information on the purchase accounting related to the acquisition of Piedmont.

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 Consolidated Balance Sheets at December 31, 2016 and 2015.

Progress Energy

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

Impairment Testing

Duke Energy, Duke Energy Ohio and Progress Energy perform annual goodwill impairment tests each year as of August 31. Duke Energy, Duke Energy Ohio and Progress Energy 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 of Duke Energy, Duke Energy Ohio and Progress Energy’s reporting units exceeded their respective carrying values at the date of the annual impairment analysis, no impairment charges were recorded.

178

PART II

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

DUKE ENERGY PROGRESS, LLC – DUKE ENERGY FLORIDA, LLC – DUKE ENERGY OHIO, INC. – DUKE ENERGY INDIANA, LLC

Combined Notes To Consolidated Financial Statements – (Continued)

Intangible Assets

The following tables show the carrying amount and accumulated amortization of intangible assets included in Other within Investments and Other Assets on the Consolidated Balance Sheets of the Duke Energy Registrants at December 31, ~~2014~~2016 and ~~2013.~~2015.



	December 31, 2016
				Duke				Duke		Duke		Duke		Duke
	Duke			Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy			Carolinas		Energy		Progress		Florida		Ohio		Indiana
Emission allowances	$	19		$	1	$	6	$	2	$	4	$	—	$	13
Renewable energy certificates	125			36		84		84		—		4		—
Gas, coal and power contracts	24			—		—		—		—		—		24
Renewable operating and development projects	97			—		—		—		—		—		—
Other	6			—		—		—		—		—		—
Total gross carrying amounts	271			37		90		86		4		4		37
Accumulated amortization – gas, coal and power contracts	(17		)	—		—		—		—		—		(17		)
Accumulated amortization – renewable operating and development projects	(23		)	—		—		—		—		—		—
Accumulated amortization – other	(5		)	—		—		—		—		—		—
Total accumulated amortization	(45		)	—		—		—		—		—		(17		)
Total intangible assets, net	$	226		$	37	$	90	$	86	$	4	$	4	$	20



	December 31, 2015
				Duke				Duke		Duke		Duke		Duke
	Duke			Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy			Carolinas		Energy		Progress		Florida		Ohio		Indiana
Emission allowances	$	20		$	1	$	6	$	2	$	4	$	—	$	14
Renewable energy certificates	116			30		80		80		—		5		—
Gas, coal and power contracts	24			—		—		—		—		—		24
Renewable operating and development projects	115			—		—		—		—		—		—
Other	2			—		—		—		—		—		—
Total gross carrying amounts	277			31		86		82		4		5		38
Accumulated amortization – gas, coal and power contracts	(16		)	—		—		—		—		—		(16		)
Accumulated amortization – renewable operating and development projects	(18		)	—		—		—		—		—		—
Accumulated amortization – other	(1		)	—		—		—		—		—		—
Total accumulated amortization	(35		)	—		—		—		—		—		(16		)
Total intangible assets, net	$	242		$	31	$	86	$	82	$	4	$	5	$	22

December 31, 2014
(in millions) Duke Energy
Duke Energy Carolinas
Progress Energy
Duke Energy Progress
Duke Energy Florida

Duke Energy Ohio _(a)

Duke Energy Indiana
Emission allowances $ 23
$ 1
$ 7
$ 3
$ 4
$ —
$ 16
Renewable energy certificates 97
25
69
69
—
3
—
Gas, coal and power contracts 24
—
—
—
—
—
24
Wind development rights 97
—
—
—
—
—
—
Other 76
—
—
—
—
—
—
Total gross carrying amounts 317
26
76
72
4
3
40
Accumulated amortization - gas, coal and power contracts (15 ) —
—
—
—
—
(15 )
Accumulated amortization - wind development rights (14 ) —
—
—
—
—
—
Accumulated amortization - other (25 ) —
—
—
—
—
—
Total accumulated amortization (54 ) —
—
—
—
—
(15 )
Total intangible assets, net $ 263

$ 26

$ 76

$ 72

$ 4

$ 3

$ 25

~~(a)~~

During 2014, Duke Energy Ohio reduced the carrying amount of OVEC to zero. A charge of $94 million is recorded in Impairment Charges on Duke Energy Ohio's Consolidated Statement of Operations. In addition, Duke Energy Ohio has emission allowances and renewable energy certificates that have been reclassified to Assets Held For Sale pending the sale of the Disposal Group. See Note 17 for further information.

December 31, 2013
(in millions) Duke Energy
Duke Energy Carolinas
Progress Energy
Duke Energy Progress
Duke Energy Florida
Duke Energy Ohio
Duke Energy Indiana
Emission allowances $ 63
$ 1
$ 21
$ 3
$ 18
$ 20
$ 21
Renewable energy certificates 82
16
64
64
—
2
—
Gas, coal and power contracts 180
—
—
—
—
156
24
Wind development rights 86
—
—
—
—
—
—
Other 76
—
—
—
—
—
—
Total gross carrying amounts 487
17
85
67
18
178
45
Accumulated amortization - gas, coal and power contracts (73 ) —
—
—
—
(60 ) (13 )
Accumulated amortization - wind development rights (12 ) —
—
—
—
—
—
Accumulated amortization - other (24 ) —
—
—
—
—
—
Total accumulated amortization (109 ) —
—
—
—
(60 ) (13 )
Total intangible assets, net $ 378

$ 17

$ 85

$ 67

$ 18

$ 118

$ 32

~~167~~

~~PART II~~

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

~~DUKE ENERGY PROGRESS, INC. – DUKE ENERGY FLORIDA, INC. - DUKE ENERGY OHIO, INC. - DUKE ENERGY INDIANA, INC.~~

~~Combined Notes To Consolidated Financial Statements – (Continued)~~

Amortization Expense

The following table presents amortization expense for gas, coal and power contracts, ~~wind development rights~~renewable operating projects and other intangible assets.


	December 31,						December 31,
(in millions)	2014		2013		2012		2016		2015		2014
Duke Energy	$	6	$	13	$	14	$	6	$	5	$	6
Duke Energy Ohio	2		8		12		—		—		2
Duke Energy Indiana	1		1		1		1		1		1

Duke

Exhibit

Duke

Energy

Progress

Energy

Number

~~Duke~~ Energy

~~Duke Energy~~
Carolinas

~~Progress~~ Energy

~~Duke Energy~~ Progress

~~Duke Energy~~ Florida

~~Duke Energy~~ Ohio

~~Duke Energy~~
Indiana

2.1

Agreement and Plan of Merger between Duke Energy Corporation, Diamond Acquisition Corporation and Progress Energy, Inc., dated as of January 8, 2011 (incorporated by reference to Exhibit 2.1 to Duke Energy Corporation's Current Report on Form 8-K filed on January 11, 2011, File No. 1-32853).

2.2

Agreement and Plan of Merger between Piedmont Natural Gas Company, Duke Energy Corporation and Forest Subsidiary, Inc. (incorporated by reference to Exhibit 2.1 to Duke Energy Corporation's Current Report on Form 8-K filed on October 26, 2015, File No. 1-32853).

3.1

Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Duke Energy Corporation's Current Report on Form 8-K filed on May 20, 2014, File No. 1-32853).

3.2

Amended and Restated By-Laws of Duke Energy Corporation (incorporated by reference to Exhibit 3.1 to Duke Energy Corporation's Current Report on Form 8-K filed on January 4, 2016, File No. 1-32853).

3.3

Articles of Organization including Articles of Conversion (incorporated by reference to Exhibit 3.1 to Duke Energy Carolinas, LLC's Current Report on Form 8-K filed on April 7, 2006, File No. ~~1-04928)~~1-4928).

~~3.2.1~~3.3.1

Amended Articles of Organization, effective October 1, 2006 (incorporated by reference to Exhibit 3.1 to Duke Energy Carolinas, LLC's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 filed on November 13, 2006, File No. ~~1-04928)~~1-4928).

~~3.3~~3.4

Amended Articles of Consolidation of Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company), effective October 23, 1996 (incorporated by reference to Exhibit 3(a) to registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 filed on November 13, 1996, File No. ~~1-01232)~~1-1232).

~~3.3.1~~3.4.1

Amended Articles of Consolidation, effective October 1, 2006 (incorporated by reference to Exhibit 3.1 to Duke Energy Ohio, Inc.'s (formerly The Cincinnati Gas & Electric Company) Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 filed on November 17, 2006, File No. ~~1-01232)~~1-1232).

~~3.4~~3.5

~~Amended Articles~~Certificate of ~~Consolidation~~Conversion of Duke Energy Indiana, ~~Inc. (formerly PSI Energy Inc.), effective April 20, 1995,~~LLC (incorporated by reference to Exhibit ~~3(a)~~3.1 to registrant's ~~Quarterly~~Current Report on Form ~~10-Q for the quarter ended June 30, 1995~~8-K filed on ~~August 11, 1995,~~January 4, 2016, File No. ~~1-03543)~~1-3543).

~~3.4.1~~3.5.1

~~Amendment to Article D of the Amended~~ Articles of ~~Consolidation~~Entity Conversion of Duke Energy Indiana, ~~Inc. (formerly PSI Energy Inc.), effective July 10, 1997,~~LLC (incorporated by reference to Exhibit ~~3(f)~~3.2 to registrant's ~~Annual~~Current Report on Form ~~10-K for the year ended December 31, 1997~~8-K filed on ~~March 27, 1998,~~January 4, 2016, File No. ~~1-03543)~~1-3543).

~~3.4.2~~3.5.2

~~Amended Articles~~Plan of ~~Consolidation, effective October 1, 2006,~~Entity Conversion of Duke Energy Indiana, LLC (incorporated by reference to Exhibit ~~3.1~~3.3 to ~~Duke Energy Indiana, Inc.'s (formerly PSI Energy, Inc.) Quarterly~~registrant's Current Report on Form ~~10-Q for the quarter ended September 30, 2006~~8-K filed on ~~November 17, 2006,~~January 4, 2016, File No. ~~1-03543)~~1-3543).

~~3.5~~3.5.3

~~Amended and Restated By-Laws~~Articles of Organization of Duke Energy ~~Corporation~~Indiana, LLC (incorporated by reference to Exhibit ~~3.1~~3.4 to registrant's Current Report on Form 8-K filed on ~~November 3, 2014,~~January 4, 2016, File No. ~~1-32853)~~1-3543).

3.5.4

Limited Liability Company Operating Agreement of Duke Energy Indiana, LLC (incorporated by reference to Exhibit 3.5 to registrant's Current Report on Form 8-K filed on January 4, 2016, File No. 1-3543).

3.6

Limited Liability Company Operating Agreement of Duke Energy Carolinas, LLC (incorporated by reference to Exhibit 3.2 to registrant's Current Report on Form 8-K filed on April 7, 2006, File No. ~~1-04928)~~1-4928).

3.7

Regulations of Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company), effective July 23, 2003 (incorporated by reference to Exhibit 3.2 to registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 filed on August 13, 2003, File No. ~~1-01232)~~1-1232).

3.8

~~By-Laws~~Articles of Organization including Articles of Conversion for Duke Energy ~~Indiana, Inc. (formerly PSI Energy, Inc.), effective July 23, 2003,~~Progress, LLC (incorporated by reference to Exhibit 3.1 to registrant's ~~Quarterly~~Current Report on Form ~~10-Q for the quarter ended June 30, 2003~~8-K filed on August ~~13, 2003,~~4, 2015, File No. ~~1-03543).~~

~~3.9~~

Restated Charter of Duke Energy Progress (formerly Carolina Power & Light Company), effective May 10, 1996, (incorporated by reference to Exhibit 3(i) to registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 filed on August 13, 1997, File No. 1-03382)1-3382).

~~3.10~~3.8.1

Plan of Conversion of Duke Energy Progress, Inc. (incorporated by reference to Exhibit 3.2 to registrant's Current Report on Form 8-K filed on August 4, 2015, File No. 1-3382).

3.8.2

Limited Liability Company Operating Agreement of Duke Energy Progress, LLC (incorporated by reference to Exhibit 3.3 to registrant's Current Report on Form 8-K filed on August 4, 2015, File No. 1-3382).

3.9

Amended and Restated Articles of Incorporation of Progress Energy, Inc. (formerly CP&L Energy, Inc.), effective June 15, 2000 (incorporated by reference to Exhibit 3(a)(1) to registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 filed on August 14, 2000, File No. ~~1-03382)~~1-3382).

~~3.10.1~~3.9.1

Articles of Amendment to the Amended and Restated Articles of Incorporation of Progress Energy, Inc. (formerly CP&L Energy, Inc.), effective December 4, 2000 (incorporated by reference to Exhibit 3(b)(1) to registrant's Annual Report on Form 10-K for the year ended December 31, 2001 filed on March 28, 2002, File No. ~~1-03382)~~1-3382).

~~3.10.2~~3.9.2

Articles of Amendment to the Amended and Restated Articles of Incorporation of Progress Energy, Inc. (formerly CP&L Energy, Inc.), effective May 10, 2006 (incorporated by reference to Exhibit 3(a) to registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 filed on August 9, 2006, File No. 1-15929).

~~3.11~~

Amended Articles of Incorporation of Duke Energy Florida, Inc. (formerly Florida Power Corporation) (incorporated by reference to Exhibit 3(a) to registrant's Annual Report on Form 10-K for the year ended December 31, 1991 filed on March 30, 1992, File No. 1-03274).

~~3.12~~3.9.3

By-Laws of Progress Energy, Inc. (formerly CP&L Energy, Inc.), effective May 10, 2006 (incorporated by reference to Exhibit 3(b) to registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 filed on August 9, 2006, File No. 1-15929).

~~3.13~~4.1

~~By-Laws~~Articles of Conversion for Duke Energy ~~Progress, Inc. (formerly Carolina Power & Light Company), effective May 13, 2009,~~Florida, LLC (incorporated by reference to Exhibit ~~3(b) to registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 filed on August 7, 2009, File No. 1-15929).~~

~~3.14~~

~~By-Laws of Duke Energy Florida, Inc. (formerly Florida Power Corporation), effective September 20, 2010, (incorporated by reference to Exhibit 3.1~~3.4 to registrant's Current Report on Form 8-K filed on ~~September 20, 2010,~~August 4, 2015, File No. 1-3274).

~~4.1~~4.1.1

Articles of Organization for Duke Energy Florida, LLC (incorporated by reference to Exhibit 3.5 to registrant's Current Report on Form 8-K filed on August 4, 2015, File No. 1-3274).

4.1.2

Plan of Conversion of Duke Energy Florida, Inc. (incorporated by reference to Exhibit 3.6 to registrant's Current Report on Form 8-K filed on August 4, 2015, File No. 1-3274).

4.1.3

Limited Liability Company Operating Agreement of Duke Energy Florida, LLC (incorporated by reference to Exhibit 3.7 to registrant's Current Report on Form 8-K filed on August 4, 2015, File No. 1-3274).

4.2

Indenture between Duke Energy Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of June 3, 2008 (incorporated by reference to Exhibit 4.1 to ~~registrant's~~Duke Energy Corporation's Current Report on Form 8-K filed on June 16, 2008, File No. 1-32853).

~~4.1.1~~4.2.1

First Supplemental Indenture, dated as of June 16, 2008 (incorporated by reference to Exhibit 4.2 to Duke Energy Corporation's Current Report on Form 8-K filed on June 16, 2008, File No. 1-32853).

~~4.1.2~~4.2.2

Second Supplemental Indenture, dated as of January 26, 2009 (incorporated by reference to Exhibit 4.1 to Duke Energy Corporation's Current Report on Form 8-K filed on January 26, 2009, File No. 1-32853).

~~4.1.3~~4.2.3

Third Supplemental Indenture, dated as of August 28, 2009 (incorporated by reference to Exhibit 4.1 to Duke Energy Corporation's Current Report on Form 8-K filed on August 28, 2009, File No. 1-32853).

~~4.1.4~~4.2.4

Fourth Supplemental Indenture, dated as of March 25, 2010 (incorporated by reference to Exhibit 4.1 to Duke Energy Corporation's Current Report on Form 8-K filed on March 25, 2010, File No. 1-32853).

~~4.1.5~~4.2.5

Fifth Supplemental Indenture, dated as of August 25, 2011 (incorporated by reference to Exhibit 4.1 to Duke Energy Corporation's Current Report on Form 8-K filed on August 25, 2011, File No. 1-32853).

~~4.1.6~~4.2.6

Sixth Supplemental Indenture, dated as of November 17, 2011 (incorporated by reference to Exhibit 4.1 to Duke Energy Corporation's Current Report on Form 8-K filed on November 17, 2011, File No. 1-32853).

~~4.1.7~~4.2.7

Seventh Supplemental Indenture, dated as of August 16 , 2012 (incorporated by reference to Exhibit 4.1 to Duke Energy Corporation's Current Report on Form 8-K filed on August 16, 2012, File No. 1-32853).

~~4.1.8~~4.2.8

Eighth Supplemental Indenture, dated as of January 14, 2013 (incorporated by reference to Exhibit 2 to Duke Energy Corporation's Form 8-A filed on January 14, 2013, File No. 1-32853).

~~4.1.9~~4.2.9

Ninth Supplemental Indenture, dated as of June 13, 2013 (incorporated by reference to Exhibit 4.1 to Duke Energy Corporation's Current Report on Form 8-K filed on June 13, 2013, File No. 1-32853).

~~4.1.10~~4.2.10

Tenth Supplemental Indenture, dated as of October 11, 2013 (incorporated by reference to Exhibit 4.1 to Duke Energy Corporation's Current Report on Form 8-K filed on October 11, 2013, File ~~No.1-32853)~~No. 1-32853).

~~4.1.11~~4.2.11

Eleventh Supplemental Indenture, dated as of April 4, 2014 (incorporated by reference to Exhibit 4.1 to Duke Energy Corporation's Current Report on Form 8-K filed on April 4, 2014, File No. 1-32853).

4.2.12

Twelfth Supplemental Indenture, dated as of November 19, 2015 (incorporated by reference to Exhibit 4.2 to Duke Energy Corporation's Current Report on Form 8-K filed on November 19, 2015, File No. 1-32853).

4.2.13

Thirteenth Supplemental Indenture, dated as of April 18, 2016, to the indenture dated as of June 3, 2008, between Duke Energy Corporation and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to Duke Energy Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed on May 5, 2016, File No. 1-32853).

4.2.14

Fourteenth Supplemental Indenture, dated as of August 12, 2016 (incorporated by reference to Exhibit 4.1 to registrant's Current Report on Form 8-K filed on August 12, 2016, File No. 1-32853).

4.3

Senior Indenture between Duke Energy Carolinas, LLC and The Bank of New York Mellon Trust Company, N.A., as successor trustee to JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), dated as of September 1, 1998 (incorporated by reference to Exhibit 4-D-1 to registrant's Post-Effective Amendment No. 2 to Registration Statement on Form S-3 filed on April 7, 1999, File No. 333-14209).

~~4.2.1~~4.3.1

Fifteenth Supplemental Indenture, dated as of April 3, 2006 (incorporated by reference to Exhibit 4.4.1 to registrant's Registration Statement on Form S-3 filed on October 3, 2007, File No. 333-146483-03).

~~4.2.2~~4.3.2

Sixteenth Supplemental Indenture, dated as of June 5, 2007 (incorporated by reference to Exhibit 4.1 ~~to Duke Energy Carolinas, LLC’s~~registrant's Current Report on Form 8-K filed on June 6, 2007, File No. ~~1-04928)~~1-4928).

~~4.3~~4.4

First and Refunding Mortgage from Duke Energy Carolinas, LLC to The Bank of New York Mellon Trust Company, N.A., successor trustee to Guaranty Trust Company of New York, dated as of December 1, 1927 (incorporated by reference to Exhibit 7(a) to registrant's Form S-1, effective October 15, 1947, File No. 2-7224).

~~4.3.1~~4.4.1

Instrument of Resignation, Appointment and Acceptance among Duke Energy Carolinas, LLC, JPMorgan Chase Bank, N.A., as Trustee, and The Bank of New York Mellon Trust Company, N.A., as Successor Trustee, dated as of September 24, 2007 (incorporated by reference to Exhibit 4.6.1 to registrant's Registration Statement on Form S-3 filed on October 3, 2007, File No. 333-146483).

~~4.3.2~~4.4.2

Ninth Supplemental Indenture, dated as of February 1, 1949 (incorporated by reference to Exhibit ~~7 (j)~~7(j) to registrant's Form S-1 filed on February 3, 1949, File No. 2-7808).

~~4.3.3~~4.4.3

Twentieth Supplemental Indenture, dated as of June 15, 1964 (incorporated by reference to Exhibit 4-B-20 to registrant's Form S-1 filed on August 23, 1966, File No. 2-25367).

~~4.3.4~~4.4.4

Twenty-third Supplemental Indenture, dated as of February 1, 1968 (incorporated by reference to Exhibit 2-B-26 to registrant's Form S-9 filed on January 21, 1969, File No. 2-31304).

~~4.3.5~~4.4.5

Sixtieth Supplemental Indenture, dated as of March 1, 1990 (incorporated by reference to Exhibit 4-B-61 to registrant's Annual Report on Form 10-K for the year ended December 31, 1990, File ~~No.1-04928)~~No.1-4928).

~~4.3.6~~4.4.6

Sixty-third Supplemental Indenture, dated as of July 1, 1991 (incorporated by reference to Exhibit 4-B-64 to registrant's Registration Statement on Form S-3 filed on February 13, 1992, File No. 33-45501).

~~4.3.7~~4.4.7

Eighty-fourth Supplemental Indenture, dated as of March 20, 2006 (incorporated by reference to Exhibit 4.6.9 to registrant's Registration Statement on Form S-3 filed on October 3, 2007, File No. 333-146483-03).

~~4.3.8~~4.4.8

Eighty-fifth Supplemental Indenture, dated as of January 10, 2008 (incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s Current Report on Form 8-K filed on January 11, 2008, File ~~No.1-04928)~~No.1-4928).

~~4.3.9~~4.4.9

Eighty-seventh Supplemental Indenture, dated as of April 14, 2008 (incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s Current Report on Form 8-K filed on April 15, 2008, File ~~No.1-04928)~~No.1-4928).

~~4.3.10~~4.4.10

Eighty-eighth Supplemental Indenture, dated as of November 17, 2008 (incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s Current Report on Form 8-K filed on November 20, 2008, File ~~No.1-04928)~~No.1-4928).

~~4.3.11~~4.4.11

Ninetieth Supplemental Indenture, dated as of November 19, 2009 (incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s Current Report on Form 8-K filed on November 19, 2009, File ~~No.1-04928)~~No.1-4928).

~~4.3.12~~4.4.12

Ninety-first Supplemental Indenture, dated as of June 7, 2010 (incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s Current Report on Form 8-K filed on June 7, 2010, File ~~No.1-04928)~~No.1-4928).

~~4.3.13~~4.4.13

Ninety-third Supplemental Indenture, dated as of May 19, 2011 (incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s Current Report on Form 8-K filed on May 19, 2011, File ~~No.1-04928)~~No.1-4928).

~~4.3.14~~4.4.14

Ninety-fourth Supplemental Indenture, dated as of December 8, 2011 (incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s Current Report on Form 8-K filed on December 8, 2011, File ~~No.1-04928)~~No.1-4928).

~~4.3.15~~4.4.15

Ninety-fifth Supplemental Indenture, dated as of September 21, 2012 (incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC’s Current Report on Form 8-K filed on September 21, 2012, File ~~No.1-04928)~~No.1-4928).

~~4.4~~4.4.16

Ninety-sixth Supplemental Indenture, dated as of March 12, 2015, between Duke Energy Carolinas, LLC and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC's Current Report on Form 8-K filed on March 12, 2015, File No. 1-4928).

4.4.17

Ninety-seventh Supplemental Indenture, dated as of March 11, 2016 (incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC's Current Report on Form 8-K filed on March 11, 2016, File No. 1-4928).

4.4.18

Ninety-eighth Supplemental Indenture, dated as of November 17, 2016 (incorporated by reference to Exhibit 4.1 to Duke Energy Carolinas, LLC's Current Report on Form 8-K filed on November 17, 2016, File No. 1-4928).

4.5

Mortgage and Deed of Trust between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and The Bank of New York Mellon (formerly Irving Trust Company) and Frederick G. Herbst (Tina D. Gonzalez, successor), as Trustees, dated as of May 1, 1940.

~~4.4.1~~4.5.1

First through Fifth Supplemental Indentures thereto (Exhibit 2(b), File No. 2-64189); the Sixth through Sixty-sixth Supplemental Indentures (Exhibit 2(b)-5, File No. 2-16210; Exhibit 2(b)-6, File No. 2-16210; Exhibit 4(b)-8, File No. 2-19118; Exhibit 4(b)-2, File No. 2-22439; Exhibit 4(b)-2, File No. 2-24624; Exhibit 2(c), File No. 2-27297; Exhibit 2(c), File No. 2-30172; Exhibit 2(c), File No. 2-35694; Exhibit 2(c), File No. 2-37505; Exhibit 2(c), File No. 2-39002; Exhibit 2(c), File No. 2-41738; Exhibit 2(c), File No. 2-43439; Exhibit 2(c), File No. 2-47751; Exhibit 2(c), File No. 2-49347; Exhibit 2(c), File No. 2-53113; Exhibit 2(d), File No. 2-53113; Exhibit 2(c), File No. 2-59511; Exhibit 2(c), File No. 2-61611; Exhibit 2(d), File No. 2-64189; Exhibit 2(c), File No. 2-65514; Exhibits 2(c) and 2(d), File No. 2-66851; Exhibits 4(b)-1, 4(b)-2, and 4(b)-3, File No. 2-81299; Exhibits 4(c)-1 through 4(c)-8, File No. 2-95505; Exhibits 4(b) through 4(h), File No. 33-25560; Exhibits 4(b) and 4(c), File No. 33-33431; Exhibits 4(b) and 4(c), File No. 33-38298; Exhibits 4(h) and 4(i), File No. 33-42869; Exhibits 4(e)-(g), File No. 33-48607; Exhibits 4(e) and 4(f), File No. 33-55060; Exhibits 4(e) and 4(f), File No. 33-60014; Exhibits 4(a) and 4(b) to Post-Effective Amendment No. 1, File No. 33-38349; Exhibit 4(e), File No. 33-50597; Exhibit 4(e) and 4(f) to Registration Statement on Form S-3, File No. 33-57835, filed on February 24, 1995; Exhibit to the Current Report on Form 8-K filed on August 28, 1997, File No. ~~1-03382;~~1-3382; Exhibit 4(b) to Registration Statement on Form S-3, File No. 333-69237, filed on December 18, 1998; and Exhibit 4(c) to the Current Report on Form 8-K filed on March 19, 1999, File No. ~~1-03382)~~1-3382).

~~4.4.2~~4.5.2

Seventy-second Supplemental Indenture, dated as of September 1, 2003 (incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.'s (formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Current Report on Form 8-K filed on September 12, 2003, File No. ~~1-03382)~~1-3382).

~~4.4.3~~4.5.3

Seventy-third Supplemental Indenture, dated as of March 1, 2005 (incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.'s (formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Current Report on Form 8-K filed on March 22, 2005, File No. ~~1-03382)~~1-3382).

~~4.4.4~~4.5.4

Seventy-fourth Supplemental Indenture, dated as of November 1, 2005 (incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.'s (formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Current Report on Form 8-K filed on November 30, 2005, File No. ~~1-03382)~~1-3382).

~~4.4.5~~4.5.5

Seventy-fifth Supplemental Indenture, dated as of March 1, 2008 (incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.'s (formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Current Report on Form 8-K filed on March 13, 2008, File No. ~~1-03382)~~1-3382).

~~4.4.6~~4.5.6

Seventy-sixth Supplemental Indenture, dated as of January 1, 2009 (incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.'s (formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Current Report on Form 8-K filed on January 15, 2009, File No. ~~1-03382)~~1-3382).

~~4.4.7~~4.5.7

Seventy-seventh Supplemental Indenture, dated as of June 18, 2009 (incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.'s (formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Current Report on Form 8-K filed on June 23, 2009, File No. ~~1-03382)~~1-3382).

~~4.4.8~~4.5.8

Seventy-eighth Supplemental Indenture, dated as of September 1, 2011 (incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.'s (formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Current Report on Form 8-K filed on September 15, 2011, File No. ~~1-03382)~~1-3382).

~~4.4.9~~4.5.9

Seventy-ninth Supplemental Indenture, dated as of May 1, 2012 (incorporated by reference to Exhibit 4 to Duke Energy Progress, Inc.'s (formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Current Report on Form 8-K filed on May 18, 2012, File No. ~~1-03382)~~1-3382).

~~4.4.10~~4.5.10

Eightieth Supplemental Indenture, dated as of March 1, 2013 (incorporated by reference to Exhibit 4.1 to Duke Energy Progress, Inc.'s (formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Current Report on Form 8-K filed on March 12, 2013, File No. ~~1-03382)~~1-3382).

~~4.4.11~~4.5.11

~~Eighty Second~~Eighty-second Supplemental Indenture, dated as of March 1, 2014, between the Company and The Bank of New York Mellon (formerly Irving Trust Company) and Tina D. Gonzalez (successor to Frederick G. Herbst) and forms of global notes (incorporated by reference to Exhibit 4.1 to Duke Energy Progress, Inc.'s Current Report on Form 8-K filed on March 6, 2014, File No. ~~1-03382)~~1-3382).

~~4.4.12~~4.5.12

~~Eighty Third~~Eighty-third Supplemental Indenture, dated as of November 1, 2014, between the Company and The Bank of New York Mellon (formerly Irving Trust Company) and Tina D. Gonzalez (successor to Frederick G. Herbst) and forms of global notes (incorporated by reference to Exhibit 4.1 to Duke Energy Progress, Inc.'s Current Report on Form 8-K filed on November 20, 2014, File No. ~~1-03382)~~1-3382).

~~4.5~~4.5.13

Eighty-fifth Supplemental Indenture, dated as of August 1, 2015 (incorporated by reference to Exhibit 4.1 to Duke Energy Progress, LLC's Current Report on Form 8-K filed on August 13, 2015, File No. 1-3382).

4.5.14

Eighty-sixth Supplemental Indenture, dated as of September 1, 2016 (incorporated by reference to Exhibit 4.1 to registrant's Current Report on Form 8-K filed on September 16, 2016, File No. 1-15929).

4.6

Indenture (for Debt Securities) between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and The Bank of New York Mellon (successor in interest to The Chase Manhattan Bank), as Trustee (incorporated by reference to Exhibit 4(a) to registrant's Current Report on Form 8-K filed on November 5, 1999, File No. ~~1-03382)~~1-3382).

~~4.6~~4.7

Indenture (for [Subordinated] Debt Securities)~~(open~~ (open ended) (incorporated by reference to Exhibit 4(a)(2) to Duke Energy Progress, Inc.'s (formerly Carolina Power & Light Company (d/b/a Progress Energy Carolinas, Inc.)) Registration Statement on Form S-3 filed on November 18, 2008, File No. 333-155418).

~~4.7~~4.8

Indenture (for First Mortgage Bonds) between Duke Energy Florida, Inc. (formerly Florida Power Corporation) and The Bank of New York Mellon (as successor to Guaranty Trust Company of New York and The Florida National Bank of Jacksonville), as Trustee, dated as of January 1, 1944 (incorporated by reference to Exhibit B-18 to registrant's Form A-2, File No. ~~2-05293)~~2-5293).

~~4.7.1~~4.8.1

Seventh Supplemental Indenture (incorporated by reference to Exhibit 4(b) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on September 27, 1991, File No. 33-16788).

~~4.7.2~~4.8.2

Eighth Supplemental Indenture (incorporated by reference to Exhibit 4(c) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on September 27, 1991, File No. 33-16788).

~~4.7.3~~4.8.3

Sixteenth Supplemental Indenture (incorporated by reference to Exhibit 4(d) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on September 27, 1991, File No. 33-16788).

~~4.7.4~~4.8.4

Twenty-ninth Supplemental Indenture (incorporated by reference to Exhibit 4(c) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on September 17, 1982, File No. 2-79832).

~~4.7.5~~4.8.5

Thirty-eighth Supplemental Indenture, dated as of July 25, 1994 (incorporated by reference to exhibit 4(f) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation) Registration Statement on Form S-3 filed on August 29, 1994, File No. 33-55273).

~~4.7.6~~4.8.6

Forty-first Supplemental Indenture, dated as of February 1, 2003 (incorporated by reference to Exhibit 4 to Duke Energy Florida, Inc.'s (formerly Duke Energy Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Current Report on Form 8-K filed on February 21, 2003, File No. ~~1-03274)~~1-3274).

~~4.7.7~~4.8.7

Forty-second Supplemental Indenture, dated as of April 1, 2003 (incorporated by reference to Exhibit 4 to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 filed on August 11, 2003, File No. ~~1-03274)~~1-3274).

~~4.7.8~~4.8.8

Forty-third Supplemental Indenture, dated as of November 1, 2003 (incorporated by reference to Exhibit 4 to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Current Report on Form 8-K filed on November 21, 2003, File No. ~~1-03274)~~1-3274).

~~4.7.9~~4.8.9

Forty-fourth Supplemental Indenture, dated as of August 1, 2004 (incorporated by reference to Exhibit 4(m) to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Annual Report on Form 10-K for the year ended December 31, 2004 filed on March 16, 2005, File No. ~~1-03274)~~1-3274).

��

~~4.7.10~~4.8.10

Forty-sixth Supplemental Indenture, dated as of September 1, 2007 (incorporated by reference to Exhibit 4 to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Current Report on Form 8-K filed on September 19, 2007, File No. ~~1-03274)~~1-3274).

~~4.7.11~~4.8.11

Forty-seventh Supplemental Indenture, dated as of December 1, 2007 (incorporated by reference to Exhibit 4 to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Current Report on Form 8-K filed on December 13, 2007, File No. ~~1-03274)~~1-3274).

~~4.7.12~~4.8.12

Forty-eighth Supplemental Indenture, dated as of June 1, 2008 (incorporated by reference to Exhibit 4 to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Current Report on Form 8-K filed on June 18, 2008, File No. ~~1-03274)~~1-3274).

~~4.7.13~~4.8.13

Forty-ninth Supplemental Indenture, dated as of March 1, 2010 (incorporated by reference to Exhibit 4 to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Current Report on Form 8-K filed on March 25, 2010, File No. ~~1-03274)~~1-3274).

~~4.7.14~~4.8.14

Fiftieth Supplemental Indenture, dated as of August 11, 2011 (incorporated by reference to Exhibit 4 to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Current Report on Form 8-K filed on August 18, 2011, File No. ~~1-03274)~~1-3274).

~~4.7.15~~4.8.15

Fifty-first Supplemental Indenture, dated as of November 1, 2012 (incorporated by reference to Exhibit 4.1 to Duke Energy Florida, Inc.'s (formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Current Report on Form 8-K filed on November 20, 2012, File No. 1-3274).

4.8.16

Fifty-third Supplemental Indenture, dated as of September 1, 2016 (incorporated by reference to Exhibit 4.1 to registrant's Current Report on Form 8-K filed on September 9, 2016, File No. 1-03274).

~~4.8~~4.9

Indenture (for Debt Securities) between Duke Energy Florida, Inc. (formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) and The Bank of New York Mellon Trust Company, National Association (successor in interest to J.P. Morgan Trust Company, National Association), as Trustee, dated as of December 7, 2005 (incorporated by reference to Exhibit 4(a) to registrant's Current Report on Form 8-K filed on December 13, 2005, File No. ~~1-03274)~~1-3274).

~~4.9~~4.10

Indenture (for [Subordinated] Debt Securities)~~(open~~ (open ended) (incorporated by reference to Exhibit 4(a)(2) Duke Energy Florida, Inc.'s (formerly Florida Power Corporation (d/b/a Progress Energy Florida, Inc.)) Registration Statement on Form S-3 filed on November 18, 2008, File No. 333-155418).

~~4.10~~4.11

Original Indenture (Unsecured Debt Securities) between Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company) and The Bank of New York Mellon Trust Company, N.A., as Successor Trustee, dated as of May 15, 1995 (incorporated by reference to Exhibit 3 to registrant's Form 8-A filed on July 27, 1995, File No. ~~1-01232)~~1-1232).

~~4.10.1~~4.11.1

First Supplemental Indenture, dated as of June 1, 1995 (incorporated by reference to Exhibit 4 B to Duke Energy Ohio, Inc.'s (formerly The Cincinnati Gas & Electric Company) Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 filed on August 11, 1995, File No. ~~1-01232)~~1-1232).

~~4.10.2~~4.11.2

Seventh Supplemental Indenture, dated as of June 15, 2003 (incorporated by reference to Exhibit 4.1 to Duke Energy Ohio, Inc.'s (formerly The Cincinnati Gas & Electric Company) Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 filed on August 13, 2003, File No. ~~1-01232)~~1-1232).

~~4.11~~4.12

Original Indenture (First Mortgage Bonds) between Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company) and The Bank of New York Mellon Trust Company, N.A., as Successor Trustee, dated as of August 1, 1936 (incorporated by reference to an exhibit to registrant's Registration Statement No. 2-2374).

~~4.11.1~~4.12.1

Fortieth Supplemental Indenture, dated as of March 23, 2009 (incorporated by reference to Exhibit 4.1 to Duke Energy Ohio, Inc.’s (formerly The Cincinnati Gas & Electric Company) Current Report on Form 8-K filed on March 24, 2009, File No. ~~1-01232)~~1-1232).

~~4.11.2~~4.12.2

Forty-second Supplemental Indenture, dated as of September 6, 2013 (incorporated by reference to Exhibit 4.1 to Duke Energy Ohio, Inc.’s (formerly The Cincinnati Gas & Electric Company) Current Report on Form 8-K filed on September 6, 2013, File No. ~~1-01232)~~1-1232).

~~4.12~~4.12.3

Forty-fourth Supplemental Indenture, dated as of June 23, 2016 (incorporated by reference to Exhibit 4.1 registrant's Current Report on Form 8-K filed on June 23, 2016, File No. 1-1232).

4.13

Indenture between Duke Energy Indiana, ~~Inc.~~LLC (formerly PSI Energy, Inc.) and The Bank of New York Mellon Trust Company, N.A., as Successor Trustee, dated as of November 15, 1996 (incorporated by reference to Exhibit 4(v) to registrant's Annual Report on Form 10-K for the year ended December 31, 1996 filed on March 27, 1997, File No. ~~1-03543)~~1-3543).

~~4.12.1~~4.13.1

Third Supplemental Indenture, dated as of March 15, 1998 (incorporated by reference to Exhibit 4 to Duke Energy Indiana, ~~Inc.'s~~LLC's (formerly PSI Energy, Inc.) Annual Report on Form 10-K for the year ended December 31, 1997 filed on March 27, 1998, File No. ~~1-03543)~~1-3543).

~~4.12.2~~4.13.2

Eighth Supplemental Indenture, dated as of September 23, 2003 (incorporated by reference to Exhibit 4.2 to Duke Energy Indiana, ~~Inc.'s~~LLC's (formerly PSI Energy, Inc.) Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 filed on November 13, 2003, File No. ~~1-03543)~~1-3543).

~~4.12.3~~4.13.3

Ninth Supplemental Indenture, dated as of October 21, 2005 (incorporated by reference to Exhibit 4.7.3 to Duke Energy Indiana, ~~Inc.'s~~LLC's (formerly PSI Energy, Inc.) Registration Statement on Form S-3 filed on September 29, 2010, File No. 333-169633).

~~4.12.4~~4.13.4

Tenth Supplemental Indenture, dated as of June 9, 2006 (incorporated by reference to Exhibit 4.1 to Duke Energy Indiana, ~~Inc.’s~~LLC’s (formerly PSI Energy, Inc.) Current Report on Form 8-K filed on June 15, 2006, File No. ~~1-03543)~~1-3543).

~~4.13~~4.14

Original Indenture (First Mortgage Bonds) between Duke Energy Indiana, ~~Inc.~~LLC (formerly PSI Energy, Inc.) and Deutsche Bank National Trust Company, as Successor Trustee, dated as of September 1, 1939 (filed as an exhibit in File No. 70-258).

~~4.13.1~~4.14.1

Tenth Supplemental Indenture, dated as of July 1, 1952 (filed as an exhibit in File No. 2-9687).

~~4.13.2~~4.14.2

Twenty-third Supplemental Indenture, dated as of January 1, 1977 (filed as an exhibit in File No. 2-57828).

~~4.13.3~~4.14.3

Twenty-fifth Supplemental Indenture, dated as of September 1, 1978 (filed as an exhibit in File No. 2-62543).

~~4.13.4~~4.14.4

Twenty-sixth Supplemental Indenture, dated as of September 1, 1978 (filed as an exhibit in File No. 2-62543).

~~4.13.5~~4.14.5

Thirtieth Supplemental Indenture, dated as of August 1, 1980 (filed as an exhibit in File No. 2-68562).

~~4.13.6~~4.14.6

Thirty-fifth Supplemental Indenture, dated as of March 30, 1984 (filed as an exhibit to registrant's Annual Report on Form 10-K for the year ended December 31, 1984, File No. ~~1-03543)~~1-3543).

~~4.13.7~~4.14.7

Forty-sixth Supplemental Indenture, dated as of June 1, 1990 (filed as an exhibit to registrant's Annual Report on Form 10-K for the year ended December 31, 1991, File No. ~~1-03543)~~1-3543).

~~4.13.8~~4.14.8

Forty-seventh Supplemental Indenture, dated as of July 15, 1991 (filed as an exhibit to registrant's Annual Report on Form 10-K for the year ended December 31, 1991, File No. ~~1-03543)~~1-3543).

~~4.13.9~~4.14.9

Forty-eighth Supplemental Indenture, dated as of July 15, 1992 (filed as an exhibit to registrant's Annual Report on Form 10-K for the year ended December 31, 1992, File No. ~~1-03543)~~1-3543).

~~4.13.10~~4.14.10

Fifty-second Supplemental Indenture, dated as of April 30, 1999 (incorporated by reference to Exhibit 4 to Duke Energy Indiana, ~~Inc.’s~~LLC’s (formerly PSI Energy, Inc.) Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 filed on May 13, 1999, File No. ~~1-03543)~~1-3543).

~~4.13.11~~4.14.11

Fifty-seventh Supplemental Indenture, dated as of August 21, 2008 (incorporated by reference to Exhibit 4.1 to Duke Energy Indiana, ~~Inc.’s~~LLC’s (formerly PSI Energy, Inc.) Current Report Form 8-K filed on August 21, 2008, File No. ~~1-03543)~~1-3543).

~~4.13.12~~4.14.12

Fifty-eighth Supplemental Indenture, dated as of December 19, 2008 (incorporated by reference to Exhibit 4.8.12 to Duke Energy Indiana, ~~Inc.’s~~LLC’s (formerly PSI Energy, Inc.) Registration Statement on Form S-3 filed on September 29, 2010, File No. 333-169633-02).

~~4.13.13~~4.14.13

Fifty-ninth Supplemental Indenture, dated as of March 23, 2009 (incorporated by reference to Exhibit 4.1 to Duke Energy Indiana, ~~Inc.’s~~LLC’s (formerly PSI Energy, Inc.) Current Report on Form 8-K filed on March 24, 2009, File No. ~~1-03543)~~1-3543).

~~4.13.14~~4.14.14

Sixtieth Supplemental Indenture, dated as of June 1, 2009 (incorporated by reference to Exhibit 4.8.14 to Duke Energy Indiana, ~~Inc.’s~~LLC’s (formerly PSI Energy, Inc.) Registration Statement on Form S-3 filed on September 29, 2010, File No. 333-169633-02).

~~4.13.15~~4.14.15

Sixty-first Supplemental Indenture, dated as of October 1, 2009 (incorporated by reference to Exhibit 4.8.15 to Duke Energy Indiana, ~~Inc.’s~~LLC’s (formerly PSI Energy, Inc.) Registration Statement on Form S-3 filed on September 29, 2010, File No. 333-169633-02).

~~4.13.16~~4.14.16

Sixty-second Supplemental Indenture, dated as of July 9, 2010 (incorporated by reference to Exhibit 4.1 to Duke Energy Indiana, ~~Inc.’s~~LLC’s (formerly PSI Energy, Inc.) Current Report on Form 8-K filed on July 9, 2010, File No. ~~1-03543)~~1-3543).

~~4.13.17~~4.14.17

Sixty-third Supplemental Indenture, dated as of September 23, 2010 (incorporated by reference to Exhibit 4.8.17 to Duke Energy Indiana, ~~Inc.’s~~LLC’s (formerly PSI Energy, Inc.) Registration Statement on Form S-3 filed on September 29, 2010, File No. 333-169633-02).

~~4.13.18~~4.14.18

Sixty-fourth Supplemental Indenture, dated as of December 1, 2011 (incorporated by reference to Exhibit 4(d)(2)(xviii) to Duke Energy Indiana, ~~Inc.’s~~LLC’s (formerly PSI Energy, Inc.) Registration Statement on Form S-3 filed on September 30, 2013, File ~~No.333-191462-03)~~No. 333-191462-03).

~~4.13.19~~4.14.19

Sixty-fifth Supplemental Indenture, dated as of March 15, 2012 (incorporated by reference to Exhibit 4.1 to Duke Energy Indiana, ~~Inc.’s~~LLC’s (formerly PSI Energy, Inc.) Current Report on Form 8-K filed on March 15, 2012, File No. ~~1-03543)~~1-3543).

~~4.13.20~~4.14.20

Sixty-sixth Supplemental Indenture, dated as of July 11, 2013 (incorporated by reference to Exhibit 4.1 to Duke Energy Indiana, ~~Inc.’s~~LLC’s (formerly PSI Energy, Inc.) Current Report on Form 8-K filed on July 11, 2013, File No. ~~1-03543)~~1-3543).

~~4.14~~4.14.21

Sixty-seventh Supplemental Indenture, dated as of January 1, 2016, between Duke Energy Indiana, Inc. and Deutsche Bank National Trust Company, as Trustee, supplementing and amending the Indenture of Mortgage or Deed of Trust, dated September 1, 1939, between Duke Energy Indiana, Inc. and Deutsche Bank National Trust Company, as Trustee (incorporated by reference to Exhibit 4.2 to Duke Energy Indiana, LLC's (formerly PSI Energy, Inc.) Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 filed on May 5, 2016, File No. 1-3543).

4.14.22

Sixty-eighth Supplemental Indenture, dated as of May 12, 2016 (incorporated by reference to Exhibit 4.1 to registrant's Current Report on Form 8-K filed on May 12, 2016, File No. 1-3543).

4.15

Repayment Agreement between Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company) and The Dayton Power and Light Company, dated as of December 23, 1992, (filed with registrant's Annual Report on Form 10-K for the year ended December 31, 1992, File No. ~~1-01232)~~1-1232).

~~4.15~~4.16

Unsecured Promissory Note between Duke Energy Indiana, ~~Inc.~~LLC (formerly PSI Energy, Inc.) and the Rural Utilities Service, dated as of October 14, 1998 (incorporated by reference to Exhibit 4 to registrant's Annual Report on Form 10-K for the year ended December 31, 1998 filed on March 8, 1999, File No. ~~1-03543).~~

~~4.16~~

6.302% Subordinated Note between Duke Energy Indiana, Inc. (formerly PSI Energy, Inc.) and Cinergy Corp., dated as of February 5, 2003, (incorporated by reference to Exhibit 4 (yyy) to registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 filed on May 12,2003, File No. 1-03543)1-3543).

4.17

~~6.403%~~6.302% Subordinated Note between Duke Energy Indiana, ~~Inc.~~LLC (formerly PSI Energy, Inc.) and Cinergy Corp., dated as of February 5, 2003 (incorporated by reference to Exhibit ~~4 (zzz)~~4(yyy) to registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 filed on May ~~12, 2003,~~12,2003, File No. ~~1-03543)~~1-3543).

4.18

6.403% Subordinated Note between Duke Energy Indiana, LLC (formerly PSI Energy, Inc.) and Cinergy Corp., dated as of February 5, 2003 (incorporated by reference to Exhibit 4(zzz) to registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 filed on May 12, 2003, File No. 1-3543).

4.19

Form of Duke Energy InterNote (Fixed Rate), dated as of November 13, 2012 (incorporated by reference to Exhibit 4.1 to Duke Energy Corporation's Current Report on Form 8-K filed on November 14, 2012, File No. 1-32853).

~~4.19~~4.20

Form of Duke Energy InterNote (Floating Rate), dated as of November 13, 2012 (incorporated by reference to Exhibit 4.2 to Duke Energy Corporation's Current Report on Form 8-K filed on November 14, 2012, File No. 1-32853).

~~4.20~~4.21

Contingent Value Obligation Agreement between Progress Energy, Inc. (formerly CP&L Energy, Inc.) and The Chase Manhattan Bank, as Trustee, dated as of November 30, 2000 (incorporated by reference to Exhibit 4.1 to registrant's Current Report on Form 8-K filed on December 1, 2000, File No. ~~1-03382)~~1-3382).

~~4.21~~

Forty-second Supplemental Indenture between Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company) and The Bank of New York Mellon Trust Company, N.A., as Trustee, dated as of September 6, 2013, (incorporated by reference to Exhibit 4.1 to registrant's Current Report on Form 8-K filed on September 6, 2013, File No. 1-01232).

~~4.22~~

Sixty-sixth Supplemental Indenture between Duke Energy Indiana, Inc. (formerly PSI Energy, Inc.) and Deutsche Bank National Trust Company, as Trustee, dated as of July 11, 2013, (incorporated by reference to Exhibit 4.1 to registrant's Current Report on Form 8-K filed on July 11, 2013, File No. 1-03543).

10.1

Purchase and Sale Agreement between Duke Energy Americas, LLC and LSP Bay II Harbor Holding, LLC, dated as of January 8, 2006 (incorporated by reference to Exhibit 10.2 to registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 filed on May 10, 2006, File No. 1-32853).

10.1.1

Amendment to Purchase and Sale Agreement between Duke Energy Americas, LLC, LS Power Generation, LLC (formerly LSP Bay II Harbor Holding, LLC), LSP Gen Finance Co, LLC, LSP South Bay Holdings, LLC, LSP Oakland Holdings, LLC, and LSP Morro Bay Holdings, LLC, dated as of May 4, 2006 (incorporated by reference to Exhibit 10.2.1 to registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 filed on May 10, 2006, File No.1-32853).

10.2**

Directors’ Charitable Giving Program (incorporated by reference to Exhibit 10-P to Duke Energy Carolinas, LLC's Annual Report on Form 10-K for the year ended December 31, 1992, File No. ~~1-04928)~~1-4928).

10.2.1**

Amendment to Directors’ Charitable Giving Program, dated as of June 18, 1997 (incorporated by reference to Exhibit 1-1.1 to Duke Energy Carolinas, LLC's Annual Report on Form 10-K for the year ended December 31, 2003 filed on March 15, 2004, File No. ~~1-04928)~~1-4928).

10.2.2**

Amendment to Directors’ Charitable Giving Program, dated as of July 28, 1997 (incorporated by reference to Exhibit 10-1.2 to Duke Energy Carolinas, LLC's Annual Report on Form 10-K for the year ended December 31, 2003 filed on March 15, 2004, File No. ~~1-04928)~~1-4928).

10.2.3**

Amendment to Directors’ Charitable Giving Program, dated as of February 18, 1998 (incorporated by reference to Exhibit 10-1.3 to Duke Energy Carolinas, LLC's Annual Report on Form 10-K for the year ended December 31, 2003 filed on March 15, 2004, File No. ~~1-04928)~~1-4928).

10.3

Agreements with Piedmont Electric Membership Corporation, Rutherford Electric Membership Corporation and Blue Ridge Electric Membership Corporation to provide wholesale electricity and related power scheduling services from September 1, 2006 through December 31, 2021 (incorporated by reference to Exhibit 10.15 to Duke Energy Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 filed on August 9, 2006, File No. 1-32853).

10.4

Asset Purchase Agreement between Saluda River Electric Cooperative, Inc., as Seller, and Duke Energy Carolinas, LLC, as Purchaser, dated as of December 20, 2006 (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on December 27, 2006, File No. ~~1-04928)~~1-4928).

10.5

Settlement between Duke Energy Corporation, Duke Energy Carolinas, LLC and the U.S. Department of Justice resolving Duke Energy's used nuclear fuel litigation against the U.S. Department of Energy, dated as of March 6, 2007 (incorporated by reference to Item 8.01 to registrant's Current Report on Form 8-K filed on March 12, 2007, File No. ~~1-04928)~~1-4928).

10.6

Engineering, Procurement and Construction Agreement between Duke Energy Carolinas, LLC and Stone & Webster National Engineering P.C., dated as of July 11, 2007 (incorporated by reference to Exhibit 10.1 to registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, filed on November 12, 2007, File No. ~~1-04928)~~1-4928). (Portions of the exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.)

10.7

Amended and Restated Engineering, Procurement and Construction Agreement between Duke Energy Carolinas, LLC and Stone & Webster National Engineering P.C., dated as of February 20, 2008 (incorporated by reference to Exhibit 10.1 to registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, filed on May 14, 2008, File No. ~~1-04928)~~1-4928). (Portions of the exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as ~~amended).~~amended.)

10.8

Asset Purchase Agreement between Cinergy Capital & Trading, Inc. (Capital & Trading), CinCap Madison, LLC and Duke Energy Indiana, ~~Inc.~~LLC (formerly PSI Energy, Inc.), dated as of February 5, 2003 (incorporated by reference to Exhibit 10(tt) to registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 filed on May 12, 2003, File No. ~~1-03543)~~1-3543).

10.9

Amended and Restated Engineering and Construction Agreement between Duke Energy Carolinas, LLC and Shaw North Carolina, Inc., dated as of December 21, 2009 (incorporated by reference to Item 1.01 to registrant's Current Report on Form 8-K filed on December 28, 2009, File No. ~~1-04928)~~1-4928).

10.10

Asset Purchase Agreement between Capital & ~~Trading.,~~Trading, CinCap VII, LLC and Duke Energy Indiana, ~~Inc.~~LLC (formerly PSI Energy, Inc.), dated as of February 5, 2003 (incorporated by reference to Exhibit 10(uu) to registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 filed on May 12, 2003, File No. ~~1-03543)~~1-3543).

10.11

Asset Purchase Agreement between Duke Energy Indiana, ~~Inc.~~LLC (formerly PSI Energy, Inc.) and Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company) and Allegheny Energy Supply Company, LLC, Allegheny Energy Supply Wheatland Generating Facility, LLC and Lake Acquisition Company, L.L.C., dated as of May 6, 2005 (incorporated by reference to registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 filed on August 4, 2005, File No. ~~1-01232)~~1-1232).

10.12

Asset Purchase Agreement between Duke Energy Indiana, ~~Inc.~~LLC (formerly PSI Energy, Inc.) and CG&E and Allegheny Energy Supply Company, LLC, Allegheny Energy Supply Wheatland Generating Facility, LLC and Lake Acquisition Company, L.L.C., dated as of May 6, 2005 (incorporated by reference to Exhibit 10(kkkk) to registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 filed on August 4, 2005, File No. ~~1-03543)~~1-3543).

10.13

Keepwell Agreement between Duke Capital LLC and Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company), dated as of April 10, 2006 (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on April 14, 2006, File No. ~~1-01232)~~1-1232).

10.14

Agreements between Piedmont Electric Membership Corporation, Rutherford Electric Membership Corporation and Blue Ridge Electric Membership Corporation to provide wholesale electricity and related power scheduling services from September 1, 2006 through December 31, 2021 (incorporated by reference to Exhibit 10.15 to Duke Energy Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 filed on August 9, 2006, File No. 1-32853).

10.15

Asset Purchase Agreement between Duke Energy Indiana, ~~Inc.,~~LLC, (formerly PSI Energy, Inc.), as Seller, and Wabash Valley Power Association, Inc., as Buyer, dated as of December 1, 2006 (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on December 7, 2006, File No. ~~1-03543)~~1-3543).

10.16

Purchase and Sale Agreement between Cinergy Capital & Trading, Inc., as Seller, and Fortis Bank, S.A./N.V., as Buyer, dated as of June 26, 2006 (incorporated by reference to Exhibit 10.1 to Duke Energy Corporation's Current Report on Form 8-K filed on June 30, 2006, File No. 1-32853).

10.17

Engineering, Procurement and Construction Management Agreement between Duke Energy Indiana, ~~Inc.~~LLC (formerly PSI Energy, Inc.) and Bechtel Power Corporation, dated as of December 15, 2008 (incorporated by reference to Exhibit 10.16 to registrant's Annual Report on Form 10-K for the year ended December 31, 2008, filed on March 13, 2009, File No. ~~1-03543)~~1-3543). (Portions of the exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as ~~amended).~~amended.)

10.18

Formation and Sale Agreement between Duke Ventures, LLC, Crescent Resources, LLC, Morgan Stanley Real Estate Fund V U.S. L.P., Morgan Stanley Real Estate Fund V Special U.S., L.P., Morgan Stanley Real Estate Investors V U.S., L.P., MSP Real Estate Fund V, L.P., and Morgan Stanley Strategic Investments, Inc., dated as of September 7, 2006 (incorporated by reference to Exhibit 10.3 to Duke Energy Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 filed on November 9, 2006, File No. 1-32853).

10.19

Engineering, Procurement and Construction Agreement between Duke Energy Carolinas, LLC and Stone & Webster National Engineering P.C., dated as of July 11, 2007 (incorporated by reference to Exhibit 10.2 to Duke Energy Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 filed on November 9, 2007, File No. 1-32853). (Portions of the exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as ~~amended).~~amended.)

10.20

Amended and Restated Engineering, Procurement and Construction Agreement between Duke Energy Carolinas, LLC and Stone & Webster National Engineering P.C., dated as of February 20, 2008, (incorporated by reference to Exhibit 10.1 to Duke Energy Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, filed on May 9, 2008, File No. 1-32853). (Portions of the exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as ~~amended).~~amended.)

10.21

Agreement and Plan of Merger between DEGS Wind I, LLC, DEGS Wind Vermont, Inc., Catamount Energy Corporation, dated as of June 25, 2008 (incorporated by reference to Exhibit 10.2 to Duke Energy Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 filed on August 11, 2008, File No. 1-32853).

10.22

Amended and Restated Engineering and Construction Agreement between Duke Energy Carolinas, LLC and Shaw North Carolina, Inc., dated as of December 21, 2009 (incorporated by reference to Exhibit 10.41 to Duke Energy Corporation's Annual Report on Form 10-K for the year ended December 31, 2009 filed on February 26, 2010, File No.1-32853).

10.23

Operating Agreement of Pioneer Transmission, LLC (incorporated by reference to Exhibit 10.1 to Duke Energy Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 filed on November 7, 2008, File No. 1-32853).

10.24**

Amended and Restated Duke Energy Corporation Directors' Saving Plan, dated as of January 1, 2014 (incorporated by reference to Exhibit 10.32 to Duke Energy Corporation's Annual Report on Form 10-K for the year ended December 31, 2013 filed on February 28, 2014, File No. 1-32853).

10.25

Engineering, Procurement and Construction Management Agreement between Duke Energy Indiana, ~~Inc.~~LLC (formerly PSI Energy, Inc.) and Bechtel Power Corporation, dated as of December 15, 2008 (incorporated by reference to Item 1.01 to registrant's Current Report on Form 8-K filed on December 19, 2008, File Nos. 1-32853 and ~~1-03543)~~1-3543). (Portions of the exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as ~~amended).~~amended.)

10.26

Amended and Restated Engineering and Construction Agreement between Duke Energy Carolinas, LLC and Shaw North Carolina, Inc., dated as of March 8, 2010 (incorporated by reference to Exhibit 10.1 to registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed on May 7, 2010, File Nos. 1-32853 and ~~1-04928)~~1-4928).

10.27**

~~Form of Performance Award Agreement of Duke Energy Corporation (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on February 22, 2011, File No. 1-32853).~~

10.28**

~~Form of Phantom Stock Award of Duke Energy Corporation (incorporated by reference to Exhibit 10.2 to registrant's Current Report on Form 8-K filed on February 22, 2011, File No. 1-32853).~~

10.29**

Duke Energy Corporation Executive Severance Plan (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on January 10, 2011, File No. 1-32853).

~~10.30~~10.28

$6,000,000,000 Five-Year Credit Agreement between Duke Energy Corporation, Duke Energy Carolinas, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, ~~Inc.,~~LLC, Duke Energy Kentucky, Inc., Carolina Power and Light Company d/b/a Duke Energy Progress, Inc. and Florida Power Corporation, d/b/a Duke Energy Florida, Inc., as Borrowers, the lenders listed therein, Wells Fargo Bank, National Association, as Administrative Agent, Bank of America, N.A. and The Royal Bank of Scotland plc, as Co-Syndication Agents and Bank of China, New York Branch, Barclays Bank PLC, Citibank, N.A., Credit Suisse AG, Cayman Islands Branch, Industrial and Commercial Bank of China Limited, New York Branch, JPMorgan Chase Bank, N.A. and UBS Securities LLC, as Co-Documentation Agents, dated as of November 18, 2011 (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on November 25, 2011, File Nos. 1-32853, ~~1-04928, 1-01232~~1-4928, 1-1232 and ~~1-03543)~~1-3543).

10.31**10.28.1

~~Form of Performance Award Agreement of~~Amendment No. 1 and Consent between Duke Energy Corporation, ~~under the~~ Duke Energy ~~Corporation 2010 Long-Term Incentive Plan~~Carolinas, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, LLC, Duke Energy Kentucky, Inc., Duke Energy Progress, Inc., Duke Energy Florida, Inc., and Wells Fargo Bank, National Association, dated as of December 18, 2013 (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on ~~February 22, 2011,~~December 23, 2013, File ~~No. 1-32853)~~Nos. 1-32853, 1-4928, 1-3382, 1-3274, 1-1232 and 1-3543).

10.32**10.28.2

~~Form of Phantom Stock Award Agreement of~~Amendment No. 2 and Consent between Duke Energy Corporation, ~~under the~~ Duke Energy ~~Corporation 2010 Long-Term Incentive Plan~~Carolinas, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, LLC, Duke Energy Kentucky, Inc., Duke Energy Progress, Inc., and Duke Energy Florida, Inc., the Lenders party hereto, the issuing Lenders party hereto, Wells Fargo Bank, National Association, as Administrative Agent and Swingline Lender, dated as of January 30, 2015 (incorporated by reference to Exhibit ~~10.2 to~~10.1 of registrant's Current Report on Form 8-K filed on February ~~22, 2011,~~5, 2015, File ~~No. 1-32853)~~Nos. 1-32853, 1-4928, 1-1232, 1-3543, 1-3382 and 1-3274).

10.33*10.29**

Duke Energy Corporation 2010 ~~Long-term~~Long-Term Incentive Plan (incorporated by reference to Appendix A to registrant's Form DEF 14A filed on March 22, 2010, File No. 1-32853).

10.33.1*10.29.1**

Amendment to Duke Energy Corporation 2010 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 filed on August 8, 2012, File No. 1-32853).

~~10.34~~10.30**

Duke Energy Corporation 2015 Long-Term Incentive Plan (incorporated by reference to Appendix A to registrant's DEF 14A filed on March 26, 2015, File No. 1-32853).

10.31**

Form of Restricted Stock Unit Award Agreement of Duke Energy Corporation under the Duke Energy Corporation 2015 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on May 12, 2015, File No. 1-32853).

10.32**

Form of Performance Award Agreement of Duke Energy Corporation under the Duke Energy Corporation 2015 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to registrant's Current Report on Form 8-K filed on May 12, 2015, File No. 1-32853).

10.33**

Form of Performance Award Agreement of Duke Energy Corporation under the Duke Energy Corporation 2015 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on February 18, 2016, File No. 1-32853).

10.34**

Form of Restricted Stock Unit Award Agreement of Duke Energy Corporation under the Duke Energy Corporation 2015 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to registrant's Current Report on Form 8-K filed on February 18, 2016, File No. 1-32853).

10.35

Settlement Agreement between Duke Energy Corporation, the North Carolina Utilities Commission Staff and the North Carolina Public Staff, dated as of November 28, 2012 (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on November 29, 2012, File No. 1-32853).

~~10.35~~10.36

Settlement Agreement between Duke Energy Corporation and the North Carolina Attorney General, dated as of December 3, 2012 (incorporated by reference Item 7.01 to registrant's Current Report on Form 8-K filed on December 3, 2012, ~~File No. 1-32853).~~

10.36**

Retention Award Agreement between Duke Energy Corporation and Lloyd Yates, dated as of July 9, 2012, (incorporated by reference to Exhibit 10.56 to registrant's Annual Report on Form 10-K for the year ended December 31, 2012 filed on March 1, 2013, File No. 1-32853).

10.37**

Form of Change-in-Control Agreement (incorporated by reference to Exhibit 10.58 to Duke Energy Corporation's Annual Report on Form 10-K for the year ended December 31, 2012 filed on March 1, 2013, File No. 1-32853).

10.38**

Form of Performance Share Award (incorporated by reference to Exhibit 10.64 to Duke Energy Corporation's Annual Report on Form 10-K for the year ended December 31, 2012 filed on March 1, 2013, File No. 1-32853).

10.39**

Amended and Restated Duke Energy Corporation Executive Cash Balance Plan, dated as of January 1, 2014 (incorporated by reference to Exhibit 10.52 to Duke Energy Corporation's Annual Report on Form 10-K for the year ended December 31, 2013 filed on February 28, 2014, File No. 1-32852).

~~10.40~~10.39

Purchase, Construction and Ownership Agreement, dated as of July 30, 1981, between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and North Carolina Municipal Power Agency Number 3 and Exhibits, together with resolution, dated as of December 16, 1981, changing name to North Carolina Eastern Municipal Power Agency, amending letter, dated as of February 18, 1982, and amendment, dated as of February 24, 1982 (incorporated by reference to Exhibit 10(a) to registrant's File No. 33-25560).

~~10.41~~10.40

Operating and Fuel Agreement, dated as of July 30, 1981, between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and North Carolina Municipal Power Agency Number 3 and Exhibits, together with resolution, dated as of December 16, 1981, changing name to North Carolina Eastern Municipal Power Agency, amending letters, dated as of August 21, 1981 and December 15, 1981, and amendment, dated as of February 24, 1982 (incorporated by reference to Exhibit 10(b) to registrant's File No. 33-25560).

~~10.42~~10.41

Power Coordination Agreement, dated as of July 30, 1981, between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and North Carolina Municipal Power Agency Number 3 and Exhibits, together with resolution, dated as of December 16, 1981, changing name to North Carolina Eastern Municipal Power Agency and amending letter, dated as of January 29, 1982 (incorporated by reference to Exhibit 10(c) to registrant's File No. 33-25560).

~~10.43~~10.42

Amendment, dated as of December 16, 1982, to Purchase, Construction and Ownership Agreement, dated as of July 30, 1981, between Duke Energy Progress, Inc. (formerly Carolina Power & Light Company) and North Carolina Eastern Municipal Power Agency (incorporated by reference to Exhibit 10(d) to registrant's File No. 33-25560).

~~10.44+~~

Amended and Restated Broad-Based Performance Share Sub-Plan, Exhibit B to the 2002 Progress Energy, Inc. Equity Incentive Plan, effective January 1, 2007, (incorporated by reference to Exhibit 10c(6) to registrant's Annual Report on Form 10-K for the year ended December 31, 2006 filed on March 1, 2007, File Nos. 1-15929, 1-03382 and 1-03274).

~~10.45+~~

Amended and Restated Executive and Key Manager Performance Share Sub-Plan, Exhibit A to the 2002 Progress Energy, Inc. Equity Incentive Plan, effective January 1, 2007, (incorporated by reference to Exhibit 10(c)(7) to registrant's Annual Report on Form 10-K for the year ended December 31, 2006 filed on March 1, 2007, File Nos. 1-15929, 1-03382 and 1-03274).

~~10.46+~~10.43**

Progress Energy, Inc. 2007 Equity Incentive Plan (incorporated by reference to Exhibit C to registrant's Form DEF 14A filed on March 30, 2007, File No. 1-15929).

~~10.47+~~

Executive and Key Manager 2007 Performance Share Sub-Plan, Exhibit A to the 2007 Equity Incentive Plan, effective January 1, 2007, (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on July 16, 2007, File Nos. 1- 15929, 1-03382 and 1-03274).

~~10.48+~~

Form of Executive and Key Manager 2008 Performance Share Sub-Plan (incorporated by reference to Exhibit 10(a) to registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 filed on May 12, 2008, File No. 1-15929, 1-03382 and 1-03274).

~~10.49+~~10.44**

Form of Letter Agreement executed by certain officers of Progress Energy, Inc., waiving certain rights under Progress Energy, Inc.’s Management Change-in-Control Plan and their employment agreements, dated as of January 8, 2011 (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on January 8, 2011, File No. 1-15929).

~~10.50+~~

Executive and Key Manager 2009 Performance Share Sub-Plan, Exhibit A to 2007 Equity Incentive Plan, Amended and Restated, effective July 12, 2011, (incorporated by reference to Exhibit 10(b) to registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed on November 8, 2011, File Nos. 1-15929, 1-03382 and 1-03274.

~~10.51+~~10.45**

Progress Energy, Inc. Management Change-in-Control Plan, Amended and Restated, effective July 13, 2011 (incorporated by reference to Exhibit 10(d) to registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 filed on November 8, 2011, File Nos. 1-15929, ~~1-03382~~1-3382 and ~~1-03274)~~1-3274).

~~10.52+~~

~~Form of Progress Energy, Inc. Restricted Stock Unit Award Agreement (Graded Vesting), effective September 15, 2011.~~

~~10.53+~~

~~Form of Progress Energy, Inc. Restricted Stock Unit Award Agreement (Cliff Vesting), effective September 15, 2011.~~

~~10.54~~10.46

Precedent and Related Agreements between Duke Energy Florida, Inc. (formerly Florida Power

Corporation d/b/a Progress Energy Florida, Inc. (“PEF”)), Southern Natural Gas Company, Florida

Gas Transmission Company (“FGT”), and BG LNG Services, LLC (“BG”), including:

a) Precedent Agreement between Southern Natural Gas Company and PEF, dated as of

December 2, 2004;

b) Gas Sale and Purchase Contract between BG and PEF, dated as of December 1, 2004;

c) Interim Firm Transportation Service Agreement by and between FGT and PEF, dated as of

December 2, 2004;

d) Letter Agreement between FGT and PEF, dated as of December 2, 2004 and

Firm Transportation Service Agreement between FGT and PEF to be entered into upon satisfaction

of certain conditions precedent;

e) Discount Agreement between FGT and PEF, dated as of December 2, 2004;

f) Amendment to Gas Sale and Purchase Contract between BG and PEF, dated as of January 28,

2005; and

g) Letter Agreement between FGT and PEF, dated as of January 31, 2005 (incorporated by

reference to Exhibit 10.1 to registrant's Current Report on Form 8-K/A filed on March 15, 2005, File

Nos. 1-15929 and ~~1-03274)~~1-3274). (Portions of the exhibit have been omitted and filed separately with the

Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as ~~amended).~~

amended.)

~~10.55~~10.47

Engineering, Procurement and Construction Agreement between Duke Energy Florida, Inc. (formerly Florida Power Corporation d/b/a/ Progress Energy Florida, Inc.), as owner, and a consortium consisting of Westinghouse Electric Company LLC and Stone & Webster, Inc., as contractor, for a two-unit AP1000 Nuclear Power Plant, dated as of December 31, 2008 (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on March 2, 2009, File Nos. 1-15929 and ~~1-03274)~~1-3274). (Portions of the exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as ~~amended).~~amended.)

~~10.56~~

Amendment No. 1 and Consent between Duke Energy Corporation, Duke Energy Carolinas, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, Inc., Duke Energy Kentucky, Inc., Duke Energy Progress, Inc., Duke Energy Florida, Inc., and Wells Fargo Bank, National Association, dated as of December 18, 2013, (incorporated by reference to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on December 23, 2013, File Nos. 1-32853, 1-04928, 1-03382, 1-03274, 1-01232 and 1-03543).

10.57*10.48**

Employment Agreement between Duke Energy Corporation and Lynn J. Good, dated as of June 17, 2013 (incorporated by reference to Exhibit 10.1 to ~~registrant's~~Duke Energy Corporation's Current Report on Form 8-K filed on June 18, 2013, File No. 1-32853).

10.58*10.48.1**

Amendment to Employment Agreement between Duke Energy Corporation and Lynn J. Good, dated as of June 25, 2015 (incorporated by reference to Exhibit 10.1 to Duke Energy Corporation's Current Report on Form 8-K filed on June 29, 2015, File No. 1-32853).

10.49**

Duke Energy Corporation Executive Short-Term Incentive Plan, effective February 25, 2013 (incorporated by reference to Exhibit 10.1 to ~~registrant's~~Duke Energy Corporation's Current Report on Form 8-8-K filed on May 7, 2013, File No. 1-32853).

10.59*10.50**

Duke Energy Corporation ~~2013~~2016 Director Compensation Program Summary (incorporated by reference to Exhibit ~~10.81 To~~10.55 to Duke Energy Corporation's Annual Report on Form 10-K for the year ended December 31, ~~2013~~2015 filed on February ~~28, 2014,~~25, 2016, File No. 1-32853).

10.60*10.51**

Amended and Restated Duke Energy Corporation Executive Savings Plan, dated as of January 1, 2014 (incorporated by reference to Exhibit 10.82 to Duke Energy Corporation's Annual Report on Form 10-K for the year ended December 31, 2013 filed on February 28, 2014, File No. 1-32853).

*10.6110.52

Agreement between Duke Energy SAM, LLC, Duke Energy Ohio, Inc., Duke Energy Commercial Enterprise, Inc. and Dynegy Resource I, LLC, dated as of August 21, ~~2014.~~2014 (incorporated by reference to Exhibit 10.61 to Duke Energy Corporation's Annual Report on Form 10-K for the year ended December 31, 2014 filed on March 2, 2015, File No. 1-32853).

*10.6210.53

Asset Purchase Agreement between Duke Energy Progress, Inc. and North Carolina Eastern Municipal Power Agency, dated as of September 5, ~~2014.~~2014 (incorporated by reference to Exhibit 10.62 to Duke Energy Corporation's Annual Report on Form 10-K for the year ended December 31, 2014 filed on March 2, 2015, File No. 1-32853).

~~10.63~~10.54

Change in Control Agreement between Duke Energy Corporation and Lloyd M. Yates, dated as of April 30, 2014 (incorporated by reference to Exhibit 10.1 to Duke Energy Corporation's Current Report on Form 8-K filed on May 6, 2014, File No. 1-32853).

10.55

Accelerated Stock Repurchase Program executed by Goldman, Sachs & Co., and JPMorgan Chase Bank, N.A. on April 6, 2015, under an agreement with Duke Energy Corporation (incorporated by reference to Exhibit 10.1 to Duke Energy Corporation's Current Report on Form 8-K filed on April 6, 2015, File No. 1-32853).

10.56

Plea Agreement between Duke Energy Corporation and the Court of the Eastern District of North Carolina in connection with the May 14, 2015, Dan River Grand Jury Settlement (incorporated by reference to Exhibit 10.3 to Duke Energy Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed on August 7, 2015, File No. 1-32853).

10.57

Plea Agreement between Duke Energy Corporation and the Court of the Eastern District of North Carolina in connection with the May 14, 2015, Dan River Grand Jury Settlement (incorporated by reference to Exhibit 10.4 to Duke Energy Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed on August 7, 2015, File No. 1-32853).

10.58

$1,500,000,000 Amended and Restated Term Loan Agreement among Duke Energy Corporation, as Borrower, the Lenders listed therein, The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Administrative Agent, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., Santander Bank, N.A. and TD Bank, N.A., as Joint Lead Arrangers and Bookrunners, dated as of August 1, 2016 (incorporated by reference to Exhibit 10.1 to Duke Energy Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30,2016 filed on August 4, 2016, File No. 1-32853).

10.59

Purchase and Sale Agreement by and among Duke Energy International Group S.à.r.l., Duke Energy International Brazil Holdings S.à.r.l. and China Three Gorges (Luxembourg) Energy S.à.r.l., dated as of October 10, 2016 (incorporated by reference to Exhibit 2.1 to registrant's Current Report on Form 8-K filed on October 13, 2016, File No. 1-32853).

10.60

Purchase and Sale Agreement by and among Duke Energy Brazil Holdings II, C.V., Duke Energy International Uruguay Investments SRL, Duke Energy International Group S.à.r.l., Duke Energy International España Holdings SL, Duke Energy International Investments No. 2 Ltd., ISQ Enerlam Aggregator, L.P., and Enerlam (UK) Holdings Ltd., dated as of October 10, 2016 (incorporated by reference to Exhibit 2.2. to registrant's Current Report on Form 8-K filed on October 13, 2016, File No. 1-32853).

10.61**

Amended and Restated Employment Agreement, dated May 25, 2012, between Piedmont Natural Gas Company, Inc. and Franklin H. Yoho (incorporated by reference to Exhibits 10.12 and 10.13 to registrant's Annual Report on Form 10-K for the year ended October 31, 2015 filed on December 23, 2015, File No. 1-06196).

10.62**

Severance Agreements with Thomas E. Skains and Franklin H. Yoho, dated September 4, 2007 (incorporate by reference to Exhibits 10.2 and 10.3, respectively, to registrant's Annual Report on Form 10-K for the year ended October 31, 2015 filed on December 23, 2015, File No. 1-06196).

10.63**

Piedmont Natural Gas Company, Inc. Defined Contribution Restoration Plan, dated as of December 8, 2008, effective January 1, 2009 (incorporated by reference to Exhibit 10.2 to registrant's Quarterly Report on Form 10-Q for the quarter ended January 31, 2009 filed on March 9, 2009, File No. 1-06196).

10.63.1**

Instrument of Amendment for Piedmont Natural Gas Company, Inc. Defined Contribution Restoration Plan, dated as of January 23, 2012, by Piedmont Natural Gas Company, Inc. (incorporated by reference to Exhibit 10.1 to registrant's Quarterly Report on Form 10-Q for the quarter ended January 31, 2012 filed on March 9, 2012, File No. 1-06196).

*10.63.2**

Instrument of Second Amendment for Piedmont Natural Gas Company, Inc. Defined Contribution Restoration Plan, dated September 15, 2016.

*10.64**

Piedmont Natural Gas Company, Inc. Incentive Compensation Plan.

10.64.1**

First Amendment to Piedmont Natural Gas Company, Inc. Incentive Compensation Plan (incorporated by reference to Exhibit 4.2 to registrant's Registration Statement on Form S-8 filed on October 3, 2016, File No. 1-32853).

10.65**

Form of Performance Unit Award Agreement (incorporated by reference to Exhibit 10.4 to registrant's Quarterly Report on Form 10-Q for the quarter ended January 31, 2016 filed on March 9, 2016, File No. 1-06196).

*10.66**

Waiver of Certain Rights to Terminate for Good Reason between Duke Energy Corporation and Franklin H. Yoho.

*10.67**

Notice of Non-Renewal of Employment Agreement between Duke Energy Corporation and Franklin H. Yoho.

*10.68**

Retention Award Agreement, dated as of October 24, 2015, between Duke Energy Corporation and Franklin H. Yoho.

10.69

Confirmation of Forward Sale Transaction, dated as of March 1, 2016, between Duke Energy Corporation and Barclays Capital Inc. (incorporated by referenced to Exhibit 10.1 to registrant's Current Report on Form 8-K filed on March 7, 2016, File No. 1-32853).

10.69.1

Additional Confirmation of Forward Sale Transaction, dated as of March 2, 2016, between Duke Energy Corporation and Barclays Capital Inc. (incorporated by reference to Exhibit 10.2 to registrant's Current Report on Form 8-K filed on March 7, 2016, File No. 1-32853).

*12.1

Computation of Ratio of Earnings to Fixed Charges -– DUKE ENERGY CORPORATION

*12.2

Computation of Ratio of Earnings to Fixed Charges -– DUKE ENERGY CAROLINAS, LLC

*12.3

Computation of Ratio of Earnings to Fixed Charges -– PROGRESS ENERGY, ~~INC~~INC.

*12.4

Computation of Ratio of Earnings to Fixed Charges -– DUKE ENERGY PROGRESS, ~~INC~~LLC

*12.5

Computation of Ratio of Earnings to Fixed Charges -– DUKE ENERGY FLORIDA, ~~INC~~LLC

*12.6

Computation of Ratio of Earnings to Fixed Charges -– DUKE ENERGY OHIO, INC.

*12.7

Computation of Ratio of Earnings to Fixed Charges -– DUKE ENERGY INDIANA, ~~INC.~~LLC

*21

List of Subsidiaries

*23.1.1

Consent of Independent Registered Public Accounting Firm.

*23.1.2

Consent of Independent Registered Public Accounting Firm.

*23.1.3

Consent of Independent Registered Public Accounting Firm.

*23.1.4

Consent of Independent Registered Public Accounting Firm.

*23.1.5

Consent of Independent Registered Public Accounting Firm.

*23.1.6

~~Consent of Independent Registered Public Accounting Firm.~~

*~~23.1.7~~23.1.6

Consent of Independent Registered Public Accounting Firm.

*24.1

Power of attorney authorizing Lynn J. Good and others to sign the annual report on behalf of the registrant and certain of its directors and officers.

*24.2

Certified copy of resolution of the Board of Directors of the registrant authorizing power of attorney.

*31.1.1

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.2

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.3

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.4

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.5

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.6

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.1.7

Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*31.2.1

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

*31.2.2

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

*31.2.3

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

*31.2.4

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

*31.2.5

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

*31.2.6

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

*31.2.7

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

��

*32.1.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.3

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.4

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.5

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.6

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.1.7

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.2

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.3

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.4

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.5

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.6

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*32.2.7

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*101.INS

XBRL Instance Document

*101.SCH

XBRL Taxonomy Extension Schema Document

*101.CAL

XBRL Taxonomy Calculation Linkbase Document

*101.LAB

XBRL Taxonomy Label Linkbase Document

*101.PRE

XBRL Taxonomy Presentation Linkbase Document

*101.DEF

XBRL Taxonomy Definition Linkbase Document



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

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



Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and ~~Telephone~~IRS Employer Identification Number	Commission file number	Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and ~~Telephone~~IRS Employer Identification Number
1-4928	DUKE ENERGY CAROLINAS, LLC (a North Carolina limited liability company) 526 South Church Street Charlotte, North Carolina 28202-1803 704-382-3853 56-0205520	1-3274	DUKE ENERGY FLORIDA, ~~INC.~~LLC (a Florida ~~corporation)~~limited liability company) 299 First Avenue North St. Petersburg, Florida 33701 704-382-3853 59-0247770
1-15929	PROGRESS ENERGY, INC. (a North Carolina corporation) 410 South Wilmington Street Raleigh, North Carolina 27601-1748 704-382-3853 56-2155481	1-1232	DUKE ENERGY OHIO, INC. (an Ohio corporation) 139 East Fourth Street Cincinnati, Ohio 45202 704-382-3853 31-0240030
1-3382	DUKE ENERGY PROGRESS, ~~INC.~~LLC (a North Carolina ~~corporation)~~limited liability company) 410 South Wilmington Street Raleigh, North Carolina 27601-1748 704-382-3853 56-0165465	1-3543	DUKE ENERGY INDIANA, ~~INC.~~LLC (an Indiana ~~corporation)~~limited liability company) 1000 East Main Street Plainfield, Indiana 46168 704-382-3853 35-0594457



SECURITIES REGISTERED PURSUANT TO SECTION ~~12(B)~~12(b) OF THE ACT:
Registrant	Title of each class	Name of each exchange on which registered
Duke Energy Corporation ~~(Duke~~ (Duke Energy)	Common Stock, $0.001 par value	New York Stock Exchange, Inc.
Duke Energy	5.125% Junior Subordinated Debentures due January 15, 2073	New York Stock Exchange, Inc.
~~Duke Energy Carolinas, LLC (Duke Energy Carolinas)~~	~~All of the registrant's limited liability company member interests are directly owned by Duke Energy.~~
~~Progress Energy, Inc. (Progress Energy)~~	~~All of the registrant's common stock is directly owned by Duke Energy.~~
~~Duke Energy Progress, Inc. (Duke Energy Progress)~~	~~All of the registrant's common stock is indirectly owned by Duke Energy.~~
~~Duke Energy Florida, Inc. (Duke Energy Florida)~~	~~All of the registrant's common stock is indirectly owned by Duke Energy.~~
~~Duke Energy Ohio, Inc. (Duke Energy Ohio)~~	~~All of the registrant's common stock is indirectly owned by Duke Energy.~~
~~Duke Energy Indiana, Inc. (Duke Energy Indiana)~~	~~All of the registrant's common stock is indirectly owned by Duke Energy.~~



Duke Energy	Yes x	No ¨	Duke Energy Florida, LLC (Duke Energy Florida)	Yes x	No ¨
Duke Energy Carolinas, LLC (Duke Energy Carolinas)	Yes x	No ¨	Duke Energy Ohio, Inc. (Duke Energy Ohio)	Yes ¨x	No x¨
Progress Energy, Inc. (Progress Energy)	Yes ¨	No x	Duke Energy Indiana, LLC (Duke Energy Indiana)	Yes ¨x	No x¨
Duke Energy Progress, LLC (Duke Energy Progress)	Yes x	No ¨



~~Duke Energy~~	~~Yes~~ ¨ (Only applicable to Duke Energy)x	No ¨	~~Duke Energy Florida~~	~~Yes~~ x	No ¨
~~Duke Energy Carolinas~~	~~Yes~~ x	No ¨	~~Duke Energy Ohio~~	~~Yes~~ x	No ¨
~~Progress Energy~~	~~Yes~~ x	No ¨	~~Duke Energy Indiana~~	~~Yes~~ x	No ¨
~~Duke Energy Progress~~	~~Yes~~ x	No ¨



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



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



~~Estimated aggregate market value of the common equity held by nonaffiliates of Duke Energy at June 30, 2014.~~	~~52,431,523,340~~
~~Number of shares of Common Stock, $0.001 par value, outstanding at February 24, 2015.~~	~~707,554,168~~



Estimated aggregate market value of the common equity held by nonaffiliates of Duke Energy at June 30, 2016.	$	59,060,642,963
Number of shares of Common Stock, $0.001 par value, outstanding at January 31, 2017.	699,607,929


Item		Page		Page

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION	CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION		CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

GLOSSARY OF TERMS	GLOSSARY OF TERMS		GLOSSARY OF TERMS

PART I.
1.	BUSINESS	9	BUSINESS	9
	DUKE ENERGY	9
	GENERAL	9	DUKE ENERGY	9
	BUSINESS SEGMENTS	9	GENERAL	9
	GEOGRAPHIC REGIONS	17	BUSINESS SEGMENTS	9
	EMPLOYEES	17	EMPLOYEES	19
	EXECUTIVE OFFICERS	17	EXECUTIVE OFFICERS	20
	ENVIRONMENTAL MATTERS	18	ENVIRONMENTAL MATTERS	20
	DUKE ENERGY CAROLINAS	18	DUKE ENERGY CAROLINAS	21
	PROGRESS ENERGY	18	PROGRESS ENERGY	21
	DUKE ENERGY PROGRESS	18	DUKE ENERGY PROGRESS	21
	DUKE ENERGY FLORIDA	19	DUKE ENERGY FLORIDA	21
	DUKE ENERGY OHIO	19	DUKE ENERGY OHIO	22
	DUKE ENERGY INDIANA	19	DUKE ENERGY INDIANA	22

1A.	RISK FACTORS	19	RISK FACTORS	22

1B.	UNRESOLVED STAFF COMMENTS	25	UNRESOLVED STAFF COMMENTS	29

2.	PROPERTIES	26	PROPERTIES	30

3.	LEGAL PROCEEDINGS	30	LEGAL PROCEEDINGS	34

4.	MINE SAFETY DISCLOSURES	30	MINE SAFETY DISCLOSURES	34

PART II.
5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	31	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	35

6.	SELECTED FINANCIAL DATA	33	SELECTED FINANCIAL DATA	37

7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	38

7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	74	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	82

8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	75	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	83

9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	240	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	243

9A.	CONTROLS AND PROCEDURES	240	CONTROLS AND PROCEDURES	243

PART III.
10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	241	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	244

11.	EXECUTIVE COMPENSATION	241	EXECUTIVE COMPENSATION	244

12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	241	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	244

13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	241	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	245

14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	241	PRINCIPAL ACCOUNTING FEES AND SERVICES	245

PART IV.
15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	243	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	246
	SIGNATURES	245	SIGNATURES	248
	EXHIBIT INDEX	Exhibit-1	EXHIBIT INDEX	Exhibit-1



Term or Acronym	Definition

the ~~2010 Plan~~	~~Duke Energy’s 2010 Long-Term Incentive Plan~~

~~the 2012 Edwardsport settlement~~	~~Settlement agreement in 2012 among Duke Energy Indiana, the OUCC, the Duke Energy Indiana Industrial Group and Nucor Steel-Indiana~~

~~the~~ 2012 Settlement	Settlement agreement in 2012 among Duke Energy Florida, the Florida OPC and other customer advocates

the 2013 Settlement	Settlement agreement in 2013 among Duke Energy Florida, the Florida OPC and other customer advocates

2013 Agreement	2013 revised and restated stipulation and settlement agreement

the 2015 Plan	Duke Energy Corporation 2015 Long-Term Incentive Plan

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

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

AFUDC	Allowance for ~~Funds Used During Construction~~

~~Aguaytia~~	~~Aguaytia Integrated Energy Project~~funds used during construction

AHFS	Assets held for sale

ALJ	Administrative Law Judge

~~ANEEL~~Amended Complaint	~~Brazilian electricity regulatory agency~~Amended Verified Consolidated Shareholder Derivative Complaint

AMI	Advanced Metering Infrastructure

AOCI	Accumulated Other Comprehensive Income (Loss)

~~ASU~~ARO	~~Accounting standard update~~Asset Retirement Obligation

ARP	Alternative Revenue Programs

the ASR	Accelerated Stock Repurchase Program

ASRP	Accelerated natural gas service line replacement program

Barclays	Barclays Capital Inc.

BCWF	Benton County Wind Farm, LLC

Beckjord	Beckjord Generating Station

Bison	Bison Insurance Company Limited

Board of Directors	Duke Energy Board of Directors

~~Bison~~Bresalier Complaint	~~Bison Insurance Company Limited~~Shareholder derivative lawsuit filed by Saul Bresalier related to ash basin management practices

Bresalier Defendants	Several current and former Duke Energy officers and directors named in the Bresalier Complaint

Bridge Facility	$4.9 billion senior secured financing facility with Barclays Capital Inc.

Brunswick	Brunswick Nuclear ~~Station~~Plant

CAA	Clean Air Act

~~CAIR~~Calpine	~~Clean Air Interstate Rule~~Calpine Corporation

~~Calpine~~Cardinal	~~Calpine Corporation~~Cardinal Pipeline Company, LLC

Catawba	Catawba Nuclear Station

~~Catawba Riverkeeper~~CC	~~Catawba Riverkeeper Foundation, Inc.~~Combined Cycle

CCR	Coal Combustion Residuals

CCS	Carbon Capture and Storage

CECPCN	Certificate of Environmental Compatibility and Public Convenience and Necessity

CEO	Chief Executive Officer

Cinergy	Cinergy Corp. (collectively with its subsidiaries)

CO₂	Carbon Dioxide



Coal Ash Act	North Carolina Coal Ash Management Act of 2014

Coal Ash Commission	Coal Ash Management Commission

COL	Combined ~~Construction and~~ Operating License

the Company	Duke Energy Corporation and ~~its'~~its subsidiaries

Consolidated Complaint	Corrected Verified Consolidated Shareholder Derivative Complaint

Constitution	Constitution Pipeline Company, LLC

CPCN	Certificate of Public Convenience and Necessity

CPP	Clean Power Plan

CRC	Cinergy Receivables Company LLC

~~CRES~~	~~Competitive Retail Electric Supplier~~

~~Crescent~~	~~Crescent Resources LLC~~

Crystal River Unit 3	Crystal River Unit 3 Nuclear ~~Station~~Plant

CSA	Comprehensive Site Assessment

CSAPR	Cross-State Air Pollution Rule

CT	Combustion Turbine

CTG	China Three Gorges Energy S.à.r.l.

CWA	Clean Water Act

DBDATC	~~Defined Benefit (Pension Plan)~~Duke-American Transmission Co.

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

the Dealers	Goldman, Sachs & Co. and JP Morgan Chase Bank

DEBS	Duke Energy Business Services, LLC

DECAM	Duke Energy Commercial Asset Management, ~~Inc.~~LLC

~~DECS~~DEFPF	Duke Energy ~~Corporate Services~~Florida Project Finance, LLC

DEFR	Duke Energy Florida Receivables, ~~Company,~~ LLC

~~DEGS~~	~~Duke Energy Generation Services, Inc.~~

~~DEIGP~~	~~Duke Energy International Geracao Paranapenema S.A.~~

Deloitte	Deloitte & Touche LLP, and the member firms of Deloitte Touche Tohmatsu and their respective affiliates

~~DENR~~	~~Department of Environment and Natural Resources~~

DEPR	Duke Energy Progress Receivables, ~~Company,~~ LLC

DERF	Duke Energy Receivables Finance Company, LLC

~~Disposal Group~~DETM	Duke Energy ~~Ohio’s nonregulated Midwest generation business~~Trading and ~~Duke Energy Retail Sales,~~Marketing, LLC

DHHS	North Carolina Department of Health and Human Services

DOE	U.S. Department of Energy

DOJ	Department of Justice

Dominion	Dominion Resources

DSM	Demand Side Management

Dth	Dekatherm

Duke Energy	Duke Energy Corporation (collectively with its subsidiaries)

~~Duke Energy Audit Committee~~	~~Audit Committee of the Board of Directors~~

Duke Energy Carolinas	Duke Energy Carolinas, LLC

Duke Energy Defendants	Several current and former Duke Energy officers and directors named as defendants in the Consolidated Complaint

Duke Energy Florida	Duke Energy Florida, ~~Inc.~~LLC

Duke Energy Indiana	Duke Energy Indiana, ~~Inc.~~LLC

Duke Energy Kentucky	Duke Energy Kentucky, Inc.

Duke Energy Ohio	Duke Energy Ohio, Inc.

Duke Energy Progress	Duke Energy Progress, ~~Inc.~~LLC



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

~~Duke Energy Retail~~	~~Duke Energy Retail Sales, LLC~~

~~Duke Energy Vermillion~~	~~Duke Energy Vermillion II, LLC~~

~~DukeNet~~	~~DukeNet Communications Holdings, LLC~~ and Piedmont

Dynegy	Dynegy Inc.

East Bend	East Bend Generating Station

EE	Energy efficiency

EGU	Electric Generating Units

~~EIP~~EIS	~~Progress Energy’s Equity Incentive Plan~~

~~Electric Settlement~~	~~Settlement agreement in 2013 among Duke Energy Ohio and all intervening parties~~Environmental Impact Statement

ELG	Effluent ~~Limitation~~Limitations Guidelines

~~EMC~~	~~North Carolina Environmental Management Commission~~

EPA	U.S. Environmental Protection Agency

EPC	Engineering, Procurement and Construction agreement

EPS	Earnings Per Share

ESP	Electric Security Plan

ETR	Effective tax rate

Exchange Act	Exchange Act of 1934

FASB	Financial Accounting Standards Board

FERC	Federal Energy Regulatory Commission



Fitch	Fitch Ratings, Inc.

~~Florida Global Case~~FirstEnergy	~~Litigation case filed in the Circuit Court for Broward County, Florida by U.S. Global, LLC~~FirstEnergy Corp.

Florida ~~Municipal Joint Owners~~OPC	~~Seminole Electric Cooperative, Inc., City~~Florida Office of ~~Ocala, Orlando Utilities Commission, City of Gainesville, City of Leesburg, Kissimmee Utility Authority, Utilities Commission of the City of New Smyrna Beach, City of Alachua and City of Bushnell~~Public Counsel

Form S-3	~~registration~~Registration statement

FP&L	Florida Power & Light Company

FPSC	Florida Public Service Commission

~~FRR~~	~~Fixed Resource Requirement~~

FTR	Financial transmission rights

GAAP	Generally Accepted Accounting Principles in the United States

~~Gas Settlement~~	~~Settlement agreement in 2013 among Duke Energy Ohio, PUCO Staff and intervening parties~~

~~GBRA~~	~~Generation Base Rate Adjustment recovery mechanism~~

GHG	Greenhouse Gas

~~Global~~	~~U.S. Global, LLC~~

GPC	Georgia Power Company

GWh	Gigawatt-hours

Harris	Shearon Harris Nuclear ~~Station~~Plant

HB 998	North Carolina House Bill 998, or the North Carolina Tax Simplification and Rate Reduction Act

Hines	Hines Energy Complex

~~IAP~~I Squared	~~State Environmental Agency of Parana~~

~~IBAMA~~	~~Brazil Institute of Environment~~ISQ Enerlam Aggregator, L.P. and ~~Renewable Natural Resources~~

~~Ibener~~	~~Iberoamericana de Energia Ibener, S.A.~~Enerlam Holding Ltd.

IBNR	Incurred but not yet reported

ICICPA	~~Internal combustion~~Inter-company Power Agreement

IGCC	Integrated Gasification Combined Cycle

IGCC Rider	Tracking mechanism used to recover costs related to the Edwardsport IGCC plant from retail electric customers

IGCC Settlement	2015 Settlement to resolve disputes with intervenors related to 5 IGCC riders

IMR	Integrity Management Rider

Interim FERC Mitigation	Interim firm power sale agreements mitigation plans related to the Progress Energy merger

International Disposal Group	Duke Energy's international business, excluding National Methanol Company

IRP	Integrated Resource Plans

IRS	Internal Revenue Service


(d)	Primary general service sectors include retail, financial, ~~healthcare~~health care and education services. Primary industrial sectors include ~~primary and fabricated~~ metals, transportation, ~~equipment,~~ building materials, food and beverage ~~stone/clay/glass,~~ and chemicals.



	Generation by Source^(a)(e)						Cost of Delivered Fuel per Net Kilowatt-hour Generated (Cents)^(a)(e)
	2014		2013		2012		2014	2013	2012
Coal^(b)	36.5	%	35.7	%	39.1	%	3.54	3.67	3.55
Nuclear^(b)	28.4	%	28.7	%	30.8	%	0.65	0.66	0.62
Gas and oil^(b)	20.8	%	21.3	%	14.0	%	4.70	4.18	4.03
All fuels (cost-based on weighted average)^(b)	85.7	%	85.7	%	83.9	%	2.86	2.79	2.55
Hydroelectric and solar^(c)	0.9	%	1.5	%	0.8	%
Total generation	86.6	%	87.2	%	84.7	%
Purchased power and net interchange^(d)	13.4	%	12.8	%	15.3	%
Total sources of energy	100.0	%	100.0	%	100.0	%



							Cost of Delivered Fuel per Net
	Generation by Source						Kilowatt-hour Generated (Cents)
	2016		2015		2014		2016	2015	2014
Coal^(a)	27.1	%	29.0	%	33.5	%	3.07	3.24	3.54
Nuclear^(a)	27.4	%	27.0	%	26.1	%	0.66	0.65	0.65
Natural gas and oil^(a)	22.9	%	23.1	%	19.0	%	3.07	3.74	4.70
All fuels (cost-based on weighted average)^(a)	77.4	%	79.1	%	78.6	%	2.22	2.50	2.86
Hydroelectric and solar^(b)	0.7	%	0.8	%	0.8	%
Total generation	78.1	%	79.9	%	79.4	%
Purchased power and net interchange	21.9	%	20.1	%	20.6	%
Total sources of energy	100.0	%	100.0	%	100.0	%



ISFSI	Independent Spent Fuel Storage Installation

ISO	Independent System Operator

ITC	Investment Tax Credit

IURC	Indiana Utility Regulatory Commission

Investment Trusts	Grantor trusts of Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana

JDA	Joint Dispatch Agreement

~~Joint Intervenors~~KO Transmission	~~Intervenors in matters related to the Edwardsport IGCC Plan, including the Citizens Action Coalition of Indiana, Inc., Sierra Club, Inc., Save the Valley, Inc., and Valley Watch, Inc.~~KO Transmission Company

KPSC	Kentucky Public Service Commission

kV	Kilovolt

kWh	Kilowatt-hour

~~Lee Nuclear Station~~LDC	~~William States Lee III Nuclear Station~~

~~Levy~~	~~Duke Energy Florida’s proposed nuclear plant in Levy County, Florida~~Local Distribution Company

Legacy Duke Energy Directors	Members of the pre-merger Duke Energy Board of Directors

Levy	Duke Energy Florida’s proposed nuclear plant in Levy County, Florida

LIBOR	London Interbank Offered Rate

Long-Term FERC Mitigation	The revised market power mitigation plan related to the Progress Energy merger

MATS	Mercury and Air Toxics Standards ~~(previously referred to as the Utility MACT Rule)~~




Mcf	Thousand cubic feet

McGuire	McGuire Nuclear Station

Merger Chancery Litigation	Four shareholder derivative lawsuits filed in the Delaware Chancery Court related to the Progress Energy merger

Mesirov Complaint	Shareholder derivative complaint file by Judy Mesirov

MGP	Manufactured gas plant

Midwest Generation Disposal Group	Duke Energy Ohio’s nonregulated Midwest generation business and Duke Energy Retail Sales, LLC

MISO	Midcontinent Independent System Operator, Inc.

MMBtu	Million British Thermal Unit

MPP	Money Purchase Pension

Moody’s	Moody’s ~~Investor~~Investors Service, Inc.

MTBE	Methyl tertiary butyl ether

MTEP	MISO Transmission Expansion Planning

MW	Megawatt

MVP	Multi Value Projects

MWh	Megawatt-hour

~~NASDAQ~~	~~Nasdaq Composite~~

~~NCAG~~NCDEQ	North Carolina ~~Attorney General~~Department of Environmental Quality (formerly the North Carolina Department of Environment and Natural Resources)

NCEMC	North Carolina Electric Membership Corporation

NCEMPA	North Carolina Eastern Municipal Power Agency

NCRC	Florida’s Nuclear Cost Recovery Clause

~~NCSC~~NCRS	~~North Carolina Supreme Court~~Nuclear Power Plant Cost Recovery Statutes

NCUC	North Carolina Utilities Commission

NC WARN	N.C. Waste Awareness and Reduction Network

NDTF	Nuclear decommissioning trust funds



NEIL	Nuclear Electric Insurance Limited

NYSDEC	New York State Department of Environmental Conservation

NMC	National Methanol Company

NOL	Net operating loss

NOV	Notice of violation

NO_x	Nitrogen oxide

NPNS	Normal purchase/normal sale

NRC	U.S. Nuclear Regulatory Commission

~~NSR~~	~~New Source Review~~

NWPA	Nuclear Waste Policy Act of 1982

NYAG	New York Attorney General

NYSE	New York Stock Exchange

Oconee	Oconee Nuclear Station

~~Ohio EPA~~	~~Ohio Environmental Protection Agency~~

~~OPC~~	~~Florida Office of Public Counsel~~

OPEB	Other Post-Retirement Benefit Obligations

OPEB Assets	Other post-retirement plan assets are comprised of the Retirement Plan of Piedmont 401(h) Medical Plan, and the following Voluntary Employees' Beneficiary Association Trusts: Duke Energy Corporation Employee Benefits Trust, Piedmont Natural Gas Company 501(c)(9) Trust for Retired Bargaining Unit Employees and the Piedmont Natural Gas Company 501(c)(9) Trust for Retired Non-Bargaining Unit Employees.

ORS	~~South Carolina~~ Office of Regulatory Staff

Osprey Plant acquisition	Duke Energy Florida's ~~proposed acquisition~~purchase of a Calpine Corporation's 599 MW ~~combined cycle~~combined-cycle natural gas plant in Auburndale, FLFlorida

~~OUCC~~OTTI	~~Office of Utility Consumer Counselor~~Other-than-temporary impairment

OVEC	Ohio Valley Electric Corporation

the Parent	Duke Energy Corporation Holding Company

~~PESC~~the Payments	~~Progress~~Fines and restitution related to the North Carolina Ash Basin Grand Jury Investigation

PGA	Purchased Gas Adjustments

Phase I CCR Compliance Projects	Duke Energy ~~Service~~Indiana's federally mandated compliance projects to comply with the EPA's CCR rule

Piedmont	Piedmont Natural Gas Company, Inc.

Piedmont Pension Assets	Qualified pension plan assets associated with the Retirement Plan of Piedmont

Pioneer	Pioneer Transmission, LLC

PJM	PJM Interconnection, LLC

~~Plea Agreements~~PPA	Plea Agreements entered into by Duke Energy Carolinas and Duke Energy Progress in connection with a criminal investigation related to the Dan River ash basin release and the management of coal ash basins in North CarolinaPurchase Power Agreement

Progress Energy	Progress Energy, Inc.




~~PSA~~	~~Purchase sale agreement~~

PSCSC	Public Service Commission of South Carolina

~~Public Staff~~PTC	~~North Carolina Utilities Commission Public Staff~~Production Tax Credits

PUCO	Public Utilities Commission of Ohio

PUCO Order	Order issued by PUCO approving a settlement of Duke Energy Ohio’s natural gas base rate case and authorizing the recovery of certain MGP costs

PURPA	Public Utility Regulatory Policies Act of 1978

QF	Qualifying Facility

~~QUIPS~~	~~Quarterly Income Preferred Securities~~

RCA	Revolving Credit Agreement

RCRA	Resource Conservation and Recovery Act

RFP	Requests for Proposal

Relative TSR	TSR of Duke Energy stock relative to a pre-defined peer group

~~the Resolutions~~		~~Proposed resolutions promulgated by the Brazilian electricity regulatory agency~~

Robinson	Robinson Nuclear ~~Station~~Plant

RTO	Regional Transmission Organization

Sabal Trail	Sabal Trail Transmission, LLC

Sabal Trail Pipeline	Sabal Trail Natural Gas Pipeline

SACE	Southern Alliance of Clean Energy

SAFSTOR	A method of decommissioning in which a nuclear facility is placed and maintained in a condition that allows the facility to be safely stored and subsequently decontaminated to levels that permit release for unrestricted use.

S.C. Court of Appeals	Court of Appeals of South Carolina

SCCL	South Carolina Coastal Conservation League

SCDHEC	South Carolina Department of Health and Environmental Control

SEC	Securities and Exchange Commission

SELC	Southern Environmental Law Center

Segment Income	Income from continuing operations net of income attributable to noncontrolling interests

SO₂	Sulfur dioxide

~~SOA~~	~~Society of actuaries~~

~~Spectra Energy~~	~~Spectra Energy Corp.~~

Spectra Capital	Spectra Energy Capital, LLC ~~(formerly Duke Capital LLC)~~

S&P	Standard & Poor’s Rating Services

SSO	Standard Service Offer

State Utility Commissions	NCUC, PSCSC, FPSC, PUCO, IURC, KPSC and TRA (Collectively)

State Electric Utility Commissions	NCUC, PSCSC, FPSC, PCO, IURC and KPSC (Collectively)

State Gas Utility Commissions	NCUC, PSCSC, PUCO, TRA and KPSC (Collectively)

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

~~Supreme Court~~	~~U.S. Supreme Court~~ and Piedmont

Sutton	L.V. Sutton combined cycle facility

~~Suwannee project~~T&D Rider	~~Proposed 320 MW combustion turbine plant at~~ Tracking mechanism to recover grid infrastructure improvement costs in Indiana

Term Loan	Duke Energy ~~Florida's Suwannee generating~~(Parent) $1.5 billion term loan facility, as amended maturing on July 31, 2017

TRA	Tennessee Regulatory Authority

TSR	Total shareholder return

Uprate Project	Hines Chiller Uprate Project

U.S.	United States

U.S. Court of Appeals	U.S. Court of Appeals for the Second Circuit

USDOJ	United States Department of Justice Environmental Crimes Section and the United States Attorneys for the Eastern District of North Carolina, the Middle District of North Carolina and the Western District of North Carolina, collectively

~~VDEQ~~	~~Virginia Department of Environmental Quality~~

~~VEBA I~~	~~Duke Energy Corporation Employee Benefits Trust~~

~~Vermillion~~	~~Vermillion Generating Station~~

VIE	Variable Interest Entity

~~VSP~~	~~Voluntary Severance Plan~~

WACC	Weighted Average Cost of Capital

WVPA	Wabash Valley Power Association, Inc.



		Megawatts	Fuel	Commercial Operation	Cost (in millions)
Duke Energy Carolinas	Cliffside Unit 6	844	Coal	2012	$	2,100
Duke Energy Carolinas	Dan River Combined Cycle	637	Natural Gas	2012	675
Duke Energy Progress	H.F. Lee Combined Cycle	916	Natural Gas	2012	725
Duke Energy Progress	L.V. Sutton Combined Cycle	622	Natural Gas	2013	575
Duke Energy Indiana	Edwardsport IGCC	595	Coal	2013	3,550
Total		3,614			$	7,625


(a)	Statistics ~~include Duke Energy Progress and Duke Energy Florida beginning July 2, 2012.~~


~~(b)~~	~~Statistics~~ related to all fuels reflect ~~Regulated Utilities'~~Electric Utilities and Infrastructure's ownership interest in jointly owned generation facilities.


~~(c)~~(b)	Generating figures are net of output required to replenish pumped storage facilities during off-peak periods.


~~(d)~~	~~Purchased power includes renewable energy purchases.~~


~~(e)~~	~~Includes the effect of the Joint Dispatch Agreement (JDA) and Mitigation sales. Mitigation sales are excluded from the Regulated Utilities segment.~~


(a)	Represents approximately 7 percent of total system requirements for 2016 and 6 percent for 2015 and 2014.


	NDTF							NDTF^(a)
(in millions)	December 31, 2014		December 31, 2013		Decommissioning Costs_(a)(b)		Year of Cost Study	December 31, 2016		December 31, 2015		Decommissioning Costs_(a)(b)		Year of Cost Study
Duke Energy								$	6,205	$	5,825	$	8,150	2013 and 2014
Duke Energy Carolinas	$	3,042	$	2,840	$	3,420	2013	3,273		3,050		3,420		2013
Duke Energy Progress	1,701		1,539		3,062		2014	2,217		2,035		3,550		2014
Duke Energy Florida	803		753		1,083		2013
Duke Energy Florida^(c)								715		740		1,180		2013


~~(a)~~	Represents cost per the most recent site-specific nuclear decommissioning cost studies, including costs to decommission plant components not subject to radioactive contamination. Amounts are in dollars of the year of cost study.


(b)	~~Includes~~Amounts include the Subsidiary Registrants' ownership interest in jointly owned reactors. Other joint owners are responsible for decommissioning costs related to their interest in the reactors.


(c)	Duke Energy Florida received reimbursements form the NDTF for costs related to ongoing decommissioning activity of Crystal River Unit 3 during 2016.



	Annual Increase (in millions)		Return on Equity		Equity Component of Capital Structure		Effective Date	Other
Duke Energy Carolinas 2013 North Carolina Rate Case^(a)	$	234	10.2	%	53	%	September 2013	^(b)
Duke Energy Carolinas 2013 South Carolina Rate Case^(a)	118		10.2	%	53	%	September 2013	^(c)
Duke Energy Carolinas 2011 North Carolina Rate Case	309		10.5	%	53	%	February 2012
Duke Energy Carolinas 2011 South Carolina Rate Case	93		10.5	%	53	%	February 2012
Duke Energy Progress 2012 North Carolina Rate Case^(a)	178		10.2	%	53	%	June 2013	^(d)
Duke Energy Ohio 2012 Electric Rate Case	49		9.84	%	53	%	May 2013
Duke Energy Ohio 2012 Natural Gas Rate Case	—		9.84	%	53	%	December 2013	^(e)
Duke Energy Florida 2013 FPSC Settlement	—		10.5	%	49	%	October 2013	^(f)(h)
Duke Energy Florida 2012 FPSC Settlement	150		10.5	%	49	%	January 2013	^(g)(h)


~~(a)~~	~~Rates increase over a two or three year period as approved by the NCUC and PSCSC. Annual increase amounts represent the total increase once effective.~~


~~(d)~~	Terms of this rate case include (i) recognition of nuclear outage expenses over the refueling cycle rather than when the outage occurs, (ii) a $20 million shareholder contribution to agencies providing energy assistance to low-income customers, and (iii) a reduction in the regulatory liability for costs of removal of $20 million for the first year.


~~(f)~~	Terms of this settlement include (i) no additional base rate increases until 2019, (ii) partial recovery of Crystal River Unit 3 beginning in 2014, and (iii) full recovery of Crystal River Unit 3, not to exceed $1,466 million, plus the cost to build a dry cask storage facility, beginning no later than 2017.

Years Ended December 31,

(in millions)

Operating Revenues

Net Income Attributable to Duke Energy Corporation