a $37 million increase primarily due to residential and commercial customer revenue, net of natural gas costs passed through to customers, due to customer growth and IMR rate adjustments and new power generation customers.

~~Partially offset by:~~

~~a $51 million decrease primarily due to revenues subject to refund to customers associated with the lower statutory corporate tax rate under the Tax Act.~~



MD&A	PIEDMONT

~~Operating Expenses.The variance was driven~~an $11 million increase due to NCUC approval related to tax reform accounting from fixed rate contracts.

Partially offset by:

a ~~$60~~$52 million ~~increase in cost of natural gas primarily~~decrease due to ~~higher volumes sold and higher~~lower natural gas costs passed through to ~~customers~~customers.

Operating Expenses.The variance was driven primarily by:

a $52 million decrease in cost of natural gas due to ~~the higher price per dekatherm of~~lower natural ~~gas;~~gas prices; and

a ~~$53~~$29 million ~~increase~~decrease in ~~operations,~~operation, maintenance and other expense ~~primarily~~ due to ~~increased shared~~lower information technology outside services ~~cost to achieve merger expenses~~ and ~~pension settlement charge; and~~labor costs.

~~an $11~~Partially offset by:

a $13 million increase in depreciation and amortization expense due to additional plant in service.

~~Partially offset by:~~

~~a $7 million decrease in impairment charges due to an impairment of software recorded in the prior year.~~

~~Other Income and Expenses.~~ ~~The variance was driven by:~~

a $25 million increase in other income and expenses, net primarily due to higher income from non-service components of employee benefit costs in the current year. For additional information on employee benefit costs, see Note 22 to the Consolidated Financial Statements, "Employee Benefit Plans"; and

a $13 million increase in equity earnings of unconsolidated affiliates from pipeline investments primarily due to favorable earnings partially offset by unfavorable impacts of the Tax Act in the prior year.

~~Income Tax Expense.~~ The variance was primarily due to the lower statutory federal corporate tax rate under the Tax Act. The effective tax rates for the years ended December 31, 2018, and 2017 were 22.3 percent and 30.8 percent, respectively. The decrease in the effective tax rate was primarily due to the lower statutory federal corporate tax rate under the Tax Act.

Matters Impacting Future Results

Within this Item 7, see ~~the Tax Act section above as well as~~ Liquidity and Capital Resources ~~below~~ for discussion of risks associated with the Tax Act.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Preparation of financial statements requires the application of accounting policies, judgments, assumptions and estimates that can significantly affect the reported results of operations, cash flows or the amounts of assets and liabilities recognized in the financial statements. Judgments made include the likelihood of success of particular projects, possible legal and regulatory challenges, earnings assumptions on pension and other benefit fund investments and anticipated recovery of costs, especially through regulated operations.

Management discusses these policies, estimates and assumptions with senior members of management on a regular basis and provides periodic updates on management decisions to the Audit Committee. Management believes the areas described below require significant judgment in the application of accounting policy or in making estimates and assumptions that are inherently uncertain and that may change in subsequent periods.

For further information, see Note 1 to the Consolidated Financial Statements, "Summary of Significant Accounting Policies."

Regulated Operations Accounting

Substantially all of Duke Energy’s regulated operations meet the criteria for application of regulated operations accounting treatment. As a result, Duke Energy is required to record assets and liabilities that would not be recorded for nonregulated entities. Regulatory assets generally represent incurred costs that have been deferred because such costs are probable of future recovery in customer rates. Regulatory liabilities are recorded when it is probable that a regulator will require Duke Energy to make refunds to customers or reduce rates to customers for previous collections or deferred revenue for costs that have yet to be incurred.

Management continually assesses whether recorded regulatory assets are probable of future recovery by considering factors such as:

applicable regulatory environment changes;

historical regulatory treatment for similar costs in Duke Energy’s jurisdictions;

litigation of rate orders;

recent rate orders to other regulated entities;

levels of actual return on equity compared to approved rates of return on equity; and

the status of any pending or potential deregulation legislation.

If future recovery of costs ceases to be probable, asset write-offs would be recognized in operating income. Additionally, regulatory agencies can provide flexibility in the manner and timing of the depreciation of property, plant and equipment, recognition of asset retirement costs and amortization of regulatory assets, or may disallow recovery of all or a portion of certain assets.

As required by regulated operations accounting rules, significant judgment can be required to determine if an otherwise recognizable incurred cost qualifies to be deferred for future recovery as a regulatory asset. Significant judgment can also be required to determine if revenues previously recognized are for entity specific costs that are no longer expected to be incurred or have not yet been incurred and are therefore a regulatory liability.



~~MD&A~~	~~CRITICAL ACCOUNTING POLICIES AND ESTIMATES~~

Goodwill Impairment Assessments

Duke Energy performed its annual goodwill impairment tests for all reporting units as of August 31, ~~2018,~~2019. Additionally, Duke Energy monitors all relevant events and circumstances during the year to determine if an interim impairment test is required. Such events and circumstances include an adverse regulatory outcome, declining financial performance and deterioration of industry or market conditions. As of August 31, 2019, all of the reporting units' estimated fair value of equity substantially exceeded the carrying value of ~~equity, except for the Commercial Renewables reporting units, which recorded impairment charges of $93 million.~~equity. The fair values of the reporting units were calculated using a weighted combination of the income approach, which estimates fair value based on discounted cash flows, and the market approach, which estimates fair value based on market comparables within the utility and energy industries.



MD&A	CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Estimated future cash flows under the income approach are based on Duke Energy’s internal business plan. Significant assumptions used are growth rates, future rates of return expected to result from ongoing rate regulation and discount rates. Management determines the appropriate discount rate for each of its reporting units based on the WACC for each individual reporting unit. The WACC takes into account both the after-tax cost of debt and cost of equity. A major component of the cost of equity is the current risk-free rate on 20-year U.S. Treasury bonds. In the ~~2018~~2019 impairment tests, Duke Energy considered implied WACCs for certain peer companies in determining the appropriate WACC rates to use in its analysis. As each reporting unit has a different risk profile based on the nature of its operations, including factors such as regulation, the WACC for each reporting unit may differ. Accordingly, the WACCs were adjusted, as appropriate, to account for company specific risk premiums. The discount rates used for calculating the fair values as of August 31, ~~2018,~~2019, for each of Duke Energy’s reporting units ranged from ~~5.5 percent~~5.2% to ~~6.9 percent.~~5.9%. The underlying assumptions and estimates are made as of a point in time. Subsequent changes, particularly changes in the discount rates, authorized regulated rates of return or growth rates inherent in management’s estimates of future cash flows, could result in future impairment charges.

One of the most significant assumptions utilized in determining the fair value of reporting units under the market approach is implied market multiples for certain peer companies. Management selects comparable peers based on each peer’s primary business mix, operations, and market capitalization compared to the applicable reporting unit and calculates implied market multiples based on available projected earnings guidance and peer company market values as of August 31.

Duke Energy primarily operates in environments that are rate-regulated. In such environments, revenue requirements are adjusted periodically by regulators based on factors including levels of costs, sales volumes and costs of capital. Accordingly, Duke Energy’s regulated utilities operate to some degree with a buffer from the direct effects, positive or negative, of significant swings in market or economic conditions. However, significant changes in discount rates over a prolonged period may have a material impact on the fair value of equity.

For further information, see Note 1112 to the Consolidated Financial Statements, "Goodwill and Intangible Assets."

Asset Retirement Obligations

AROs are recognized for legal obligations associated with the retirement of property, plant and equipment at the present value of the projected liability in the period in which it is incurred, if a reasonable estimate of fair value can be made.

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.

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. During 2019, Duke Energy Florida, ~~assumes~~entered into an agreement for the accelerated decommissioning of the Crystal River Unit 3 ~~will be placed into a safe storage configuration until eventual dismantlement~~nuclear power station. Closing of this agreement is ~~completed by~~contingent upon approval of the NRC and FPSC. The retirement obligations for the decommissioning of Crystal River Unit 3 nuclear power station are measured using probability weightings of an obligation based on accelerated decommissioning from 2020 continuing through 2027 and an obligation based on the unit in SAFSTOR, with decommissioning beginning in 2067 and ending in 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 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~~plans. During 2019, Duke Energy reached a settlement agreement with the NCDEQ and SELC to excavate 7 and partially excavate 2 of the ~~potential closure methods if~~remaining ash basins in Duke Energy Carolinas and Duke Energy Progress service territories. In 2019, Duke Energy Carolinas and Duke Energy Progress remeasured their obligations to reflect the ~~closure plans are under development and multiple closure options are being considered and evaluated on a site-by-site basis.~~results of the settlement.

For further information, see ~~Note 9~~Notes 4, 5 and 10 to the Consolidated Financial Statements, "Regulatory Matters," "Commitments and Contingencies" and "Asset Retirement Obligations."

Long-Lived Asset Impairment Assessments, Excluding Regulated Operations

Duke Energy evaluates property, plant and equipment for impairment when events or changes in circumstances (such as a significant change in cash flow projections or the determination that it is more likely than not that an asset or asset group will be sold) indicate the carrying value of such assets may not be recoverable. The determination of whether an impairment has occurred is based on an estimate of undiscounted future cash flows attributable to the assets, as compared with their carrying value.

Performing an impairment evaluation involves a significant degree of estimation and judgment in areas such as identifying circumstances that indicate an impairment may exist, identifying and grouping affected assets and developing the undiscounted future cash flows. If an impairment has occurred, the amount of the impairment recognized is determined by estimating the fair value and recording a loss if the carrying value is greater than the fair value. Additionally, determining fair value requires probability weighting future cash flows to reflect expectations about possible variations in their amounts or timing and the selection of an appropriate discount rate. Although cash flow estimates are based on relevant information available at the time the estimates are made, estimates of future cash flows are, by nature, highly uncertain and may vary significantly from actual results.

When determining whether an asset or asset group has been impaired, management groups assets at the lowest level that has discrete cash flows.

~~For further information, see Note 10~~During 2019, Duke Energy sold a minority interest in a portion of certain Commercial Renewable assets. Following the sale, Duke Energy evaluated recoverability of the assets included in the sale as the fair value of consideration received for the portfolio was less than the carrying value of the assets. It was determined the assets were all recoverable. Additionally, Duke Energy evaluated recoverability of certain renewable merchant plants during 2019 due to declining market pricing and declining long-term forecasted energy prices. It was determined the ~~Consolidated Financial Statements, "Property, Plant and Equipment."~~

assets were all recoverable as the carrying value of the assets approximated the aggregate estimated future cash flows.



MD&A	CRITICAL ACCOUNTING POLICIES AND ESTIMATES

For further information, see Notes 3 and 11 to the Consolidated Financial Statements, "Business Segments" and "Property, Plant and Equipment."

Equity Method Investments

Equity method investments are assessed for impairment when conditions exist that indicate that the fair value of the investment is less than book value. If the decline in value is considered to be other-than-temporary, an impairment charge is recorded and the investment is written down to its estimated fair value, which establishes a new cost basis in the investment.

Events or changes in circumstances are monitored that may indicate, in management’s judgment, the carrying value of such investments may have experienced an other-than-temporary decline in value. The fair value of equity method investments is generally estimated using an income approach where significant judgments and assumptions include expected future cash flows, the appropriate discount rate, and probability weighted-scenarios, if applicable. In certain instances, a market approach may also be used to estimate the fair value of the equity method investment.

Events or changes in circumstances that may be indicative of an other-than-temporary decline in value will vary by investment, but may include:

Significant delays in or failure to complete significant growth projects of investees;

Adverse regulatory actions expected to substantially reduce the investee’s product demand or profitability;

Expected financial performance significantly worse than anticipated when initially invested;

Prolonged period the fair value is below carrying value;

A significant or sustained decline in the market value of an investee;

Lower than expected cash distributions from investees;

Significant asset impairments or operating losses recognized by investees; and

Loss of significant customers or suppliers with no immediate prospects for replacement.

ACP

As of December 31, ~~2018,~~2019, the carrying value of the equity method investment in ACP is ~~$0.8~~$1.2 billion, and Duke Energy's maximum exposure to loss for its guarantee of the ACP revolving credit facility is ~~$0.7 billion.~~$827 million. During ~~the fourth quarter of~~ 2018 and 2019, ACP received several adverse court rulings as described in Note 4 to the Consolidated Financial Statements, "Regulatory Matters." As a result, Duke Energy evaluated this investment for impairment and determined that fair value approximated carrying value and therefore no impairment was necessary.

Duke Energy estimated the fair value of its investment in ACP using an income approach that primarily considered probability-weighted scenarios of discounted future net cash flows based on the most recent estimate of total construction costs and revenues. These scenarios included assumptions of various court decisions and the impact those decisions may have on the timing and extent of investment, including scenarios assuming the full resolution of permitting issues in addition to a scenario where the project does not proceed. ~~Most of the scenarios reflect phased in-service date assumptions.~~ Certain scenarios within the analysis ~~also~~ included growth expectations from additional compression or other expansion opportunities and reopeners for pricing. AAn after-tax discount rate of ~~6.1 percent~~5.9% was used in the analysis. The discount rate was derived using a market participant approach with an adjusted risk premium for the underlying investment. Higher probabilities were generally assigned to those scenarios where court approvals were received and the project moves forward ~~under reasonable timelines~~ reflecting interim rates ~~and either current contracted pricing provisions, or~~at prices subject to the reopeners. A ~~very~~ low probability was assigned to the scenario where the project does not proceed.

Judgments and assumptions are inherent in our estimates of future cash flows, discount rates, growth assumptions, and the likelihood of various scenarios. It is reasonably possible that future unfavorable developments, such as a reduced likelihood of success with court approvals, increased estimates of construction costs, material increases in the discount rate, important feedback on customer price increases or further significant delays, could result in a future impairment. The use of alternate judgments and assumptions could result in a different calculation of fair value, which could ultimately result in the recognition of an impairment charge in the consolidated financial statements.

For further information on ACP, see ~~Note 12~~Notes 4 and 13 to the Consolidated Financial Statements, ~~“Investments~~"Regulatory Matters" and "Investments in Unconsolidated ~~Affiliates.”~~Affiliates".

Pension and Other Post-Retirement Benefits

The calculation of pension expense, other post-retirement benefit expense and net pension and other post-retirement assets or liabilities require the use of assumptions and election of permissible accounting alternatives. Changes in assumptions can result in different expense and reported asset or liability amounts and future actual experience can differ from the assumptions. Duke Energy believes the most critical assumptions for pension and other post-retirement benefits are:

the expected long-term rate of return on plan assets;

the assumed discount rate applied to future projected benefit payments; and

the heath care cost trend rate.

Duke Energy elects to amortize net actuarial gain or loss amounts that are in excess of ~~10 percent~~10% of the greater of the market-related value of plan assets or the plan's projected benefit obligation, into net pension or other post-retirement benefit expense over the average remaining service period of active participants expected to benefit under the plan. If all or almost all of a plan's participants are inactive, the average remaining life expectancy of the inactive participants is used instead of average remaining service period. Prior service cost or credit, which represents an increase or decrease in a plan's pension benefit obligation resulting from plan amendment, is amortized on a straight-line basis over the average expected remaining service period of active participants expected to benefit under the plan. If all or almost all of a plan's participants are inactive, the average remaining life expectancy of the inactive participants is used instead of average remaining service period.



MD&A	CRITICAL ACCOUNTING POLICIES AND ESTIMATES

As of December 31, ~~2018,~~2019, Duke Energy assumes pension and other post-retirement plan assets will generate a long-term rate of return of ~~6.85 percent.~~6.85%. The expected long-term rate of return was developed using a weighted average calculation of expected returns based primarily on future expected returns across asset classes considering the use of active asset managers, where applicable. The asset allocation targets were set after considering the investment objective and the risk profile. Equity securities are held for their higher expected returns. Debt securities are primarily held to hedge the qualified pension liability. Real assets, return-seeking fixed income, hedge funds and other global securities are held for diversification. Investments within asset classes are diversified to achieve broad market participation and reduce the impact of individual managers on investments.

Duke Energy discounted its future U.S. pension and other post-retirement obligations using a rate of ~~4.3 percent~~3.3% as of December 31, ~~2018.~~2019. Discount rates used to measure benefit plan obligations for financial reporting purposes reflect rates at which pension benefits could be effectively settled. As of December 31, ~~2018,~~2019, Duke Energy determined its discount rate for U.S. pension and other post-retirement obligations using a bond selection-settlement portfolio approach. This approach develops a discount rate by selecting a portfolio of high quality corporate bonds that generate sufficient cash flow to provide for projected benefit payments of the plan. The selected bond portfolio is derived from a universe of non-callable corporate bonds rated Aa quality or higher. After the bond portfolio is selected, a single interest rate is determined that equates the present value of the plan’s projected benefit payments discounted at this rate with the market value of the bonds selected.

Future changes in plan asset returns, assumed discount rates and various other factors related to the participants in Duke Energy’s pension and post-retirement plans will impact future pension expense and liabilities. Duke Energy cannot predict with certainty what these factors will be in the future. The following table presents the approximate effect on Duke Energy’s ~~2018~~2019 pretax pension expense, pretax other post-retirement expense, pension obligation and other post-retirement benefit obligation if a ~~0.25 percent~~0.25% change in rates were to occur.


	Qualified and Non-						Other Post-Retirement						Qualified and Non-						Other Post-Retirement
	Qualified Pension Plans						Plans						Qualified Pension Plans						Plans
(in millions)	0.25		%	(0.25		)%	0.25		%	(0.25		)%	0.25		%	(0.25		)%	0.25		%	(0.25		)%
Effect on 2018 pretax pension and other post-retirement expense
Effect on 2019 pretax pension and other post-retirement expense
Expected long-term rate of return	$	(22	)	$	22		$	(1	)	$	1		$	(21	)	$	21		$	(1	)	$	1
Discount rate	(12		)	12			1			(1		)	(9		)	9			—			(1		)
Effect on pension and other post-retirement benefit obligation at December 31, 2018
Effect on pension and other post-retirement benefit obligation at December 31, 2019
Discount rate	(183		)	188			(13		)	13			(197		)	201			(14		)	14

Duke Energy’s other post-retirement plan uses a health care cost trend rate covering both pre- and post-age 65 retired plan participants, which is comprised of a medical care cost trend rate, which reflects the near- and long-term expectation of increases in medical costs, and a prescription drug cost trend rate, which reflects the near- and long-term expectation of increases in prescription drug costs. As of December 31, ~~2018,~~2019, the health care cost trend rate was ~~6.5 percent,~~6.0%, trending down to ~~4.75 percent~~4.75% by 2024. The following table presents the approximate effect on Duke Energy’s 2018 pretax other post-retirement expense and other post-retirement benefit obligation if a 1 percentage point change in the health care cost trend rate were to occur.2026. These plans are closed to new employees.

Other Post-Retirement
Plans
(in millions) 1 % (1 )%
Effect on 2018 other post-retirement expense $ 1
$ (1 )
Effect on other post-retirement benefit obligation at December 31, 2018 22
(20 )

For further information, see Note 2223 to the Consolidated Financial Statements, “Employee Benefit Plans.”

LIQUIDITY AND CAPITAL RESOURCES

Sources and Uses of Cash

Duke Energy relies primarily upon cash flows from operations, debt and equity issuances and its existing cash and cash equivalents to fund its liquidity and capital requirements. Duke Energy’s capital requirements arise primarily from capital and investment expenditures, repaying long-term debt and paying dividends to shareholders.

Among other provisions, the Tax Act ~~lowers~~lowered the corporate federal income tax rate from 3535% to ~~21 percent~~21% and ~~eliminates~~eliminated bonus depreciation for regulated utilities. For Duke Energy’s regulated operations, the reduction in federal income taxes ~~is expected to~~will result in lower regulated customer rates. However, due to its existing NOL position and other tax credits, Duke Energy does not expect to be a significant federal cash tax payer through at least ~~2022.~~2027. As a result, any reduction in customer rates could cause a material reduction in consolidated cash flows from operations in the short term. Over time, the reduction in deferred tax liabilities resulting from the Tax Act will increase Duke Energy’s regulated rate base investments and customer rates. Impacts of Tax Act to Duke Energy’s cash flows and credit metrics are subject to the regulatory actions of its state commissions, of which a substantial amount remain uncertain through ongoing rate case activity, and the FERC. See Note 4 to the Consolidated Financial Statements, “Regulatory Matters,” for additional information.

The Subsidiary Registrants generally maintain minimal cash balances and use short-term borrowings to meet their working capital needs and other cash requirements. The Subsidiary Registrants, excluding Progress Energy, ~~(Parent),~~ support their short-term borrowing needs through participation with Duke Energy and certain of its other subsidiaries in a money pool arrangement. The companies with short-term funds may provide short-term loans to affiliates participating under this arrangement. See Note 67 to the Consolidated Financial Statements, “Debt and Credit Facilities,” for additional discussion of the money pool arrangement.



~~MD&A~~	~~LIQUIDITY AND CAPITAL RESOURCES~~

Duke Energy and the Subsidiary Registrants, excluding Progress Energy, ~~(Parent),~~ may also use short-term debt, including commercial paper and the money pool, as a bridge to long-term debt financings. The levels of borrowing may vary significantly over the course of the year due to the timing of long-term debt financings and the impact of fluctuations in cash flows from operations. From time to time, Duke Energy’s current liabilities exceed current assets resulting from the use of short-term debt as a funding source to meet scheduled maturities of long-term debt, as well as cash needs, which can fluctuate due to the seasonality of its businesses.



MD&A	LIQUIDITY AND CAPITAL RESOURCES

Equity Issuance

In order to strengthen its balance sheet and credit metrics and bolster cash flows, in November 2019, Duke Energy entered into forward sales agreements for $2.5 billion of common stock equity expected to be settled in late 2020. Duke Energy plans to issue $500 million of common stock equity per year through ~~2023~~at least 2022 through the DRIP and ATM programs. Additionally, Duke Energy will utilize other instruments as needed. See Note 1920 to the Consolidated Financial Statements, ~~"Common Stock,~~"Stockholders' Equity," for further information regarding Duke Energy's equity issuances in ~~2018.~~2019.

Credit Facilities and Registration Statements

See Note 67 to the Consolidated Financial Statements, "Debt and Credit Facilities," for further information regarding credit facilities and shelf registration statements available to Duke Energy and the Duke Energy Registrants.

CAPITAL EXPENDITURES

Duke Energy continues to focus on reducing risk and positioning its business for future success and will invest principally in its strongest business sectors. Duke Energy’s projected capital and investment expenditures, including AFUDC debt ~~AFUDC~~ and capitalized interest, for the next three fiscal years are included in the table below.


(in millions)	2019		2020		2021		2020		2021		2022
New generation	$	375	$	125	$	220	$	115	$	230	$	475
Regulated renewables	415		410		710		515		450		410
Environmental	240		125		35		975		725		750
Nuclear fuel	430		505		390		465		410		415
Major nuclear	305		315		250		405		285		175
Customer additions	505		480		475		630		630		620
Grid modernization and other transmission and distribution projects	2,835		3,160		2,980		3,345		3,845		4,380
Maintenance and other	3,395		2,605		2,390		2,275		1,925		2,050
Total Electric Utilities and Infrastructure	8,500		7,725		7,450		8,725		8,500		9,275
Gas Utilities and Infrastructure	1,675		2,000		1,600		2,275		1,950		1,150
Commercial Renewables and Other	925		825		625		825		875		725
Total projected capital and investment expenditures	$	11,100	$	10,550	$	9,675	$	11,825	$	11,325	$	11,150



~~FINANCIAL STATEMENTS~~(c)	~~REGULATORY MATTERS~~On July 1, 2019, Duke Energy Indiana filed its 2018 IRP with the IURC. The 2018 IRP included scenarios evaluating the potential retirement of coal-fired generating units at Gibson and Cayuga. The rate case filed July 2, 2019, includes proposed depreciation rates reflecting retirement dates from 2026 to 2038.

Duke Energy continues to evaluate the potential need to retire generating facilities earlier than the current estimated useful lives, and plans to seek regulatory recovery, as necessary, for amounts that would not be otherwise recovered when any of these assets are retired. However, such recovery, including recovery of carrying costs on remaining book values, could be subject to future approvals and therefore cannot be assured.

Duke Energy Carolinas and Duke Energy Progress are evaluating the potential for coal-fired generating unit retirements with a net carrying value of approximately $721 million and $1.2 billion, respectively, included in Net property, plant and equipment on the Consolidated Balance Sheets as of December 31, 2019.

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 McGuire and Oconee and operates and has a partial ownership interest in Catawba. McGuire and Catawba each have ~~two~~2 reactors. Oconee has ~~three~~3 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 Robinson, Brunswick and Harris. Robinson and Harris each have ~~one~~1 reactor. Brunswick has ~~two~~2 reactors.

Duke Energy Florida owns Crystal River Unit 3, which permanently ceased operation in 2013 and reached a SAFSTOR condition in January 2018 after the successful transfer of all used nuclear fuel assemblies to an on-site dry cask storage facility.



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

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 ~~$14.1~~$13.9 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 U.S. Congress could impose revenue-raising measures on the nuclear industry to pay claims.

Primary Liability Insurance

Duke Energy Carolinas and Duke Energy Progress have purchased the maximum reasonably available private primary nuclear liability insurance as required by law, which is $450 million per station. Duke Energy Florida has purchased $100 million primary nuclear liability insurance in compliance with the law.

Excess Liability Program

This program provides ~~$13.6~~$13.5 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 $138 million times the current 9998 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 $20.5 million per year per licensed reactor for each incident. The assessment may be subject to state premium taxes.

~~166~~



~~FINANCIAL STATEMENTS~~	~~COMMITMENTS AND CONTINGENCIES~~

Nuclear Property and Accidental Outage Coverage

Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida are members of ~~NEIL,~~Nuclear Electric Insurance Limited (NEIL), an industry mutual insurance company, which provides property damage, nuclear accident 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 accidental outage coverage ~~for each station~~ for losses in the event of a major accidental outage at an insured nuclear station.

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 $1.8 billion.

Each nuclear facility has accident property damage, nuclear accident 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 coverage, ~~such as~~similar to business interruption, 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~~100% of the ~~available~~applicable weekly limits for 52 weeks and ~~80 percent~~80% of the ~~available~~applicable weekly limits for up to the next 110 weeks. Coverage is provided until these ~~available~~applicable weekly periods are met, where the accidental outage policy limit will not exceed $490 million for McGuire and Catawba, ~~and Harris, $476~~$462 million for Brunswick ~~$462~~and Harris, $406 million for Oconee and ~~$392~~$364 million for Robinson. NEIL sublimits the accidental outage recovery up 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 ~~$159~~$155 million, ~~$97~~$94 million and $1 million, respectively. Duke Energy Carolinas' maximum assessment amount includes ~~100 percent~~100% 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~~laws regarding air and water quality, hazardous and solid waste disposal, coal ash and other environmental matters. These ~~regulations~~laws can be changed from time to time, imposing new obligations on the Duke Energy Registrants. The following environmental matters impact all of the Duke Energy Registrants.



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

Remediation Activities

In addition to the ARO recorded as a result of various environmental regulations, discussed in Note 9,10, 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.

~~167~~



~~FINANCIAL STATEMENTS~~	~~COMMITMENTS AND CONTINGENCIES~~

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



				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Balance at December 31, 2016	$	98		$	10		$	18		$	3		$	14		$	59		$	10		$	1
Provisions/adjustments	8			3			3			2			2			3			(4		)	1
Cash reductions	(25		)	(3		)	(6		)	(2		)	(4		)	(15		)	(1		)	—
Balance at December 31, 2017	81			10			15			3			12			47			5			2
Provisions/adjustments	26			3			2			3			(2		)	21			1			1
Cash reductions	(30		)	(2		)	(6		)	(2		)	(4		)	(20		)	(1		)	(1		)
Balance at December 31, 2018	77			11			11			4			6			48			5			2
Provisions/adjustments	33			6			9			2			5			11			—			7
Cash reductions	(52		)	(6		)	(4		)	(2		)	(2		)	(40		)	(1		)	(1		)
Balance at December 31, 2019	$	58		$	11		$	16		$	4		$	9		$	19		$	4		$	8

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, 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
Provisions/adjustments 8
3
3
2
2
3
(4 )
Cash reductions (25 ) (3 ) (6 ) (2 ) (4 ) (15 ) (1 )
Balance at December 31, 2017 81
10
15
3
12
47
5
Provisions/adjustments 26
3
2
3
(2 ) 21
1
Cash reductions (30 ) (2 ) (6 ) (2 ) (4 ) (20 ) (1 )
Balance at December 31, 2018 $ 77
$ 11
$ 11
$ 4
$ 6
$ 48
$ 5

~~As of December 31, 2016, and October 31, 2016 and 2015, Piedmont's environmental reserve was $1 million. As of December 31, 2018, and 2017, the reserve was $2 million.~~

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



(in millions)
Duke Energy	$	59
Duke Energy Carolinas	11
Duke Energy Ohio	42
Piedmont	2

(in millions)
Duke Energy $ 46
Duke Energy Carolinas 17
Duke Energy Ohio 19
Piedmont 2

~~North Carolina and South Carolina Ash Basins~~

In February 2014, a break in a stormwater pipe beneath an ash basin at Duke Energy Carolinas’ retired Dan River Steam Station caused a release of ash basin water and ash into the Dan River. In July 2014, Duke Energy completed remediation work identified by the EPA and continues to cooperate with the EPA's civil enforcement process. The NCDEQ has historically assessed Duke Energy Carolinas and Duke Energy Progress with NOVs 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 Sutton and Dan River Steam Station. Duke Energy Carolinas and Duke Energy Progress continue to resolve violations through corrective actions, and associated penalties related to existing unresolved NOVs are not expected to be material.

LITIGATION

Duke Energy Carolinas and Duke Energy Progress

NCDEQ Closure Litigation

The Coal Ash Act requires CCR surface impoundments in North Carolina to be closed, with the closure method and timing based on a risk ranking classification determined by legislation or state regulators. The NCDEQ previously classified the impoundments at Allen, Belews Creek, Rogers, Marshall, Mayo and Roxboro as low risk. The Coal Ash Act allowed a range of closure options for low risk rated basins. On April 1, 2019, NCDEQ issued a closure determination (NCDEQ's April 1 Order) requiring Duke Energy Carolinas and Duke Energy Progress to excavate all remaining coal ash impoundments at these facilities. On April 26, 2019, Duke Energy Carolinas and Duke Energy Progress filed Petitions for Contested Case Hearings in the Office of Administrative Hearings to challenge NCDEQ's April 1 Order. On May 9, 2019, NCDEQ issued a supplemental order requiring that closure plans be submitted on December 31, 2019, but providing that the corrective action plans are not due until March 31, 2020. Duke Energy Carolinas and Duke Energy Progress filed amended petitions on May 24, 2019, incorporating the May 9, 2019, order.

On December 31, 2019, the parties executed a settlement agreement resolving the closure method for each of these sites. Duke Energy Carolinas and Duke Energy Progress agreed to excavate 7 of the 9 remaining coal ash basins at these sites with ash moved to on-site lined landfills, including 2 at Allen, 1 at Belews Creek, 1 at Mayo, 1 at Roxboro, and 2 at Rogers. At the 2 remaining basins at Marshall and Roxboro, uncapped basin ash will be excavated and moved to lined landfills. Those portions of the basins at Marshall and Roxboro, which were previously filled with ash and on which permitted facilities were constructed, will not be disturbed and will be closed pursuant to other state regulations. On February 5, 2020, the North Carolina Superior court entered a consent order, after which this litigation was dismissed on February 11, 2020.



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

Coal Ash Insurance Coverage Litigation

In March 2017, Duke Energy Carolinas and Duke Energy Progress filed a civil action in the North Carolina Superior Court against various insurance providers. The lawsuit seeks payment for coal ash-related liabilities covered by third-party liability insurance policies. The insurance policies were issued between 1971 and 1986 and provide third-party liability insurance for property damage. The civil action seeks damages for breach of contract and indemnification for costs arising from the Coal Ash Act and the EPA CCR rule at 15 coal-fired plants in North Carolina and South Carolina. ~~On January 23, 2019, the court granted the parties’ joint motion for~~Despite a ~~four month~~ stay of the ~~proceedings, until June 3,~~litigation from May 2019 through September 2019 to allow the parties to discuss potential ~~resolution. If~~resolution, no resolution was reached, and litigation resumed. In February and March 2020, the ~~case~~Court will hear arguments on numerous cross motions filed by the parties to seek legal determinations concerning, among other issues, the appropriate insurance allocation methods, the trigger of the applicable coverages and several coverage defenses raised by the insurance providers. Trial is ~~not fully resolved at that time, litigation will resume. The trial remains~~ scheduled for ~~August 2020.~~February 2021. Duke Energy Carolinas and Duke Energy Progress cannot predict the outcome of this matter.

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 coal-fired power plants in North Carolina. The NCDEQ filed enforcement actions against Duke Energy Carolinas and Duke Energy Progress alleging violations of water discharge permits and North Carolina groundwater standards. The cases have been consolidated and are being heard before a single judge in the North Carolina Superior Court.

On August 16, 2013, the NCDEQ filed an enforcement action against Duke Energy Carolinas and Duke Energy Progress related to the remaining coal-fired power 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.

~~168~~



~~FINANCIAL STATEMENTS~~	~~COMMITMENTS AND CONTINGENCIES~~

The court issued orders in 2016 granting Motions for Partial Summary Judgment for ~~seven~~7 of the 14 North Carolina plants with coal ash basins named in the enforcement actions. On February 13, 2017, the court issued an order denying motions for partial summary judgment brought by both the environmental groups and Duke Energy Carolinas and Duke Energy Progress for the remaining ~~seven~~7 plants. On March 15, 2017, Duke Energy Carolinas and Duke Energy Progress filed a Notice of Appeal with the North Carolina Court of Appeals to challenge the trial court’s order. The parties were unable to reach an agreement at mediation in April 2017 and submitted briefs to the trial court on remaining issues to be tried. On August 1, 2018, the Court of Appeals dismissed the ~~appeal and~~appeal.

Pursuant to the ~~matter is proceeding before~~terms of the ~~trial court. No trial date has been scheduled.~~December 31, 2019, settlement agreement, discussed above, between Duke Energy Carolinas, ~~and~~ Duke Energy Progress, ~~cannot predict~~NCDEQ and the ~~outcome~~community groups represented by the SELC, this litigation was dismissed on February 5, 2020, upon entry of ~~this matter.~~the consent order in the North Carolina Superior Court.

Federal Citizens Suits

On June 13, 2016, ~~RRBA~~Roanoke River Basin Association (RRBA) filed a federal citizen suit in the Middle District of North Carolina alleging unpermitted discharges to surface water and groundwater violations at the Mayo Plant. On August 19, 2016, Duke Energy Progress filed a Motion to Dismiss. On April 26, 2017, the court entered an order dismissing ~~four~~4 of the claims in the federal citizen suit. ~~Two~~NaN claims relating to alleged violations of ~~NPDES~~National Pollution Discharge Elimination System (NPDES) permit provisions survived the motion to dismiss, and Duke Energy Progress filed its response on May 10, 2017. Duke Energy Progress and RRBA each filed motions for summary judgment on March 23, 2018. ~~The court has not yet ruled on these motions.~~

On May 16, 2017, RRBA filed a federal citizen suit in the U.S. District Court for the Middle District of North Carolina, which asserts ~~two~~2 claims relating to alleged violations of NPDES permit provisions at the Roxboro Plant and ~~one~~1 claim relating to the use of nearby water bodies. Duke Energy Progress and RRBA each filed motions for summary judgment on April 17, ~~2018, and the court has not yet ruled on these motions.~~2018.

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

On ~~June 20, 2017, RRBA filed a federal citizen suit in the U.S. District Court for the Middle District of North Carolina challenging the closure plans at the Mayo Plant under the EPA CCR Rule.~~April 5, 2019, Duke Energy Progress filed a motion to ~~dismiss, which was granted by~~stay the ~~court on March 30, 2018. RRBA had until~~case following the NCDEQ’s April ~~30, 2018, to file an appeal to the Fourth Circuit but did not do so.~~

1 Order. On August 2, 2017, RRBA filed a federal citizen suit in the U.S. District Court for the Middle District of North Carolina challenging the closure plans at the Roxboro Plant under the EPA CCR Rule. Duke Energy Progress filed a motion to dismiss on October 2, 2017, which was granted by2019, the court ~~on May 29, 2018. RRBA had until June 28, 2018, to file an appeal to the Fourth Circuit but did not do so.~~ordered that this case is stayed.

On December 5, 2017, various parties filed a federal citizen suit in the U.S. District Court for the Middle District of North Carolina for alleged violations at Duke Energy Carolinas' Belews Creek under the CWA. Duke Energy Carolinas' answer to the complaint was filed on August 27, 2018. On October 10, 2018, Duke Energy Carolinas filed Motions to Dismiss for lack of standing, Motion for Judgment on the Pleadings and Motion to Stay Discovery. On January 9, 2019, the court entered an order denying Duke Energy Carolinas' motion to stay discovery. There has been no ruling on the other pending motions.

On April 5, 2019, Duke Energy Carolinas ~~and~~filed a motion to stay the case following the NCDEQ’s April 1 Order. On August 2, 2019, the court ordered that this case is stayed.

On December 31, 2019, Duke Energy Carolinas, Duke Energy Progress, ~~cannot predict~~ the ~~outcome~~NCDEQ and various community groups including RRBA entered into a comprehensive settlement that, among other things, resolves the method of ~~these matters.~~

~~Groundwater Contamination Claims~~

~~Beginning in May 2015, a number of residents living in~~closure at the ~~vicinity of~~Mayo, Roxboro and Belews Creek ash basins. On February 5, 2020, 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 DHHS. Results of CSAs testing performed by Duke Energy under the Coal Ash Act have been consistent with historical data provided to state regulators over many years. The DHHS and NCDEQ sent follow-up letters on October 15, 2015, to residents near coal ash basins who 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 led investigators to believe these constituents are naturally occurring. In March 2016, DHHS rescinded the advisories.

Duke Energy Carolinas and Duke Energy Progress have received formal demand letters from residents near Duke Energy Carolinas' and Duke Energy Progress' coal ash basins. The residents claim damages for nuisance and diminution in property value, among other things. The parties held three days of mediation discussions, 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 that the plan is offered. Payments are being made and the remaining reserves are not material.

~~On August 23, 2017, a class-action suit was filed in Wake County~~ Superior Court North Carolina, against Duke Energy Carolinas and Duke Energy Progress on behalf of certain property owners living near coal ash impoundments at Allen, Asheville, Belews Creek, Buck, Cliffside, Lee, Marshall, Mayo and Roxboro. The class is defined as those who are well-eligible underentered a consent order confirming the Coal Ash Act or those to whom Duke Energy has promised a permanent replacement water supply and seeks declaratory and injunctive relief, along with compensatory damages. Plaintiffs allege that Duke Energy’s improper maintenance of coal ash impoundments caused harm, particularly through groundwater contamination. Despite NCDEQ’s preliminary approval, Plaintiffs contend that Duke Energy’s proposed permanent water solutions plan fails to comply with the Coal Ash Act. On September 28, 2017, Duke Energy Carolinas and Duke Energy Progress filed a Motion to Dismiss and Motion to Strike the class designation. The parties entered into a Settlement Agreement on January 24, 2018, which resulted in the dismissalterms of the ~~underlying class action~~settlement agreement, upon which RRBA filed stipulations on ~~January 25, 2018.~~

February 11, 2020 voluntarily dismissing all 3 of these federal citizen suits with prejudice.

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FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

On September 14, 2017, a complaint was filed against Duke Energy Progress in New Hanover County Superior Court by a group of homeowners residing approximately 1 mile from Duke Energy Progress' Sutton Steam Plant. The homeowners allege that coal ash constituents have been migrating from ash impoundments at Sutton into their groundwater for decades and that in 2015, Duke Energy Progress discovered these releases of coal ash, but failed to notify any officials or neighbors and failed to take remedial action. The homeowners claim unspecified physical and mental injuries as a result of consuming their well water and seek actual damages for personal injury, medical monitoring and punitive damages. On March 6, 2018, Plaintiffs' counsel voluntarily dismissed the action without prejudice.

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, ~~2018,~~2019, there were ~~164~~123 asserted claims for non-malignant cases with the cumulative relief sought of up to ~~$42~~$32 million and 8749 asserted claims for malignant cases with the cumulative relief sought of up to ~~$21~~$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 ~~$630~~$604 million and ~~$489~~$630 million at December 31, ~~2018,~~2019, and ~~2017,~~2018, respectively. These reserves are classified in Other within Other Noncurrent Liabilities and Other within Current Liabilities on the Consolidated Balance Sheets. These reserves are based upon Duke Energy Carolinas' best estimate for current and future asbestos claims through ~~2038~~2039 and are recorded on an undiscounted basis. In light of the uncertainties inherent in a longer-term forecast, management does not believe they can reasonably estimate the indemnity and medical costs that might be incurred after ~~2038~~2039 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 ~~$764~~$747 million in excess of the self-insured retention. Receivables for insurance recoveries were ~~$739~~$742 million and ~~$585~~$739 million at December 31, ~~2018,~~2019, and ~~2017,~~2018, respectively. These amounts are classified in Other within Other Noncurrent Assets and Receivables within Current Assets 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,~~June 18, 2018, Duke Energy Progress and Duke Energy Florida sued the U.S. in the U.S. Court of Federal ~~Claims.~~Claims for damages incurred for the period 2014 through 2018. The lawsuit claimed the Department of Energy breached a contract in failing to accept spent nuclear fuel under the Nuclear Waste Policy Act of 1982 and asserted damages for the cost of on-site ~~storage.~~storage in the amount of $100 million and $203 million for Duke Energy Progress and Duke Energy Florida, ~~asserted damages for the period January 1, 2011, through December 31, 2013, of $48 million~~respectively. Discovery is ongoing and ~~$25 million, respectively. On November 17, 2017, the Court awarded Duke Energy Progress and Duke Energy Florida $48 million and $21 million, respectively, subject~~a trial is expected to ~~appeal. No appeals were filed and Duke Energy Progress and Duke Energy Florida recognized the recoveries~~occur in the first quarter of 2018. Claims for all periods through 2013 have been resolved. On June 22, 2018, Duke Energy Progress and Duke Energy Florida filed a complaint for damages incurred for 2014 through first quarter 2018.

~~Duke Energy Progress~~

~~Gypsum Supply Agreements Matter~~

On June 30, 2017, CertainTeed filed a declaratory judgment action against Duke Energy Progress in the North Carolina Business Court relating to a gypsum supply agreement. In its complaint, CertainTeed sought an order from the court declaring that the minimum amount of gypsum Duke Energy Progress must provide to CertainTeed under the supply agreement was 50,000 tons per month through 2029. Trial in this matter was completed on July 16, 2018. On August 29, 2018, the court issued an order and opinion finding that Duke Energy Progress is required to supply ~~50,000~~ tons of gypsum/month, but that CertainTeed’s sole remedy for Duke Energy Progress’ long-term discontinuance under the agreement is liquidated damages. On November 14, 2018, the parties reached a settlement agreement. The amount owed under the liquidated damages provision is approximately ~~$90 million~~ on an undiscounted basis over 10 years. Approximately $3 million was paid in 2018. As of December 31, 2018, $9 million is recorded in Accounts payable within Current Liabilities and $63 million in Other within Other Noncurrent Liabilities on the Consolidated Balance Sheets. The liability is recorded on a discounted basis at a rate of approximately 4 percent. These costs are probable of recovery from customers and are recorded in Regulatory Assets within Other Noncurrent Assets on the Consolidated Balance Sheets.

~~170~~



~~FINANCIAL STATEMENTS~~	~~COMMITMENTS AND CONTINGENCIES~~

early 2021.

Duke Energy Florida

Fluor Contract Litigation

On January 29, 2019, Fluor filed a breach of contract lawsuit in the U.S. District Court for the Middle District of Florida against Duke Energy Florida related to an EPC agreement for the ~~combined-cycle~~CC natural gas plant in Citrus County, Florida. Fluor filed an amended complaint on February 13, 2019. Fluor’s multicount complaint seeks civil, statutory and contractual remedies related to Duke Energy Florida’s $67 million draw in early 2019, on Fluor’s letter of credit and offset of invoiced amounts. Duke Energy Florida ~~is attempting~~moved to ~~recover from~~dismiss all counts of Fluor's amended complaint, and on April 16, 2019, the court dismissed Fluor's complaint without prejudice. On April 26, 2019, Fluor ~~$110 million in additional costs incurred by Duke Energy Florida. Duke Energy Florida cannot predict the outcome of this matter. See Note 4 for additional information.~~

~~Class-Action Lawsuit~~filed a second amended complaint.

On ~~February 22, 2016, a lawsuit was filed in the U.S. District Court for the Southern District of Florida on behalf of a class of~~August 1, 2019, Duke Energy Florida and ~~FP&L’s customers in Florida. The suit alleges~~Fluor reached a settlement to resolve the ~~State~~pending litigation and other outstanding issues related to completing the Citrus County CC. Pursuant to the terms of ~~Florida’s NCRS are unconstitutional~~the settlement, Fluor filed a notice of voluntary dismissal, 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~~on August 27, 2019, the court dismissed the case with prejudice. 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.~~settlement with Fluor, Duke Energy Florida ~~and FP&L filed motions~~recorded a $36 million reduction to ~~dismiss the complaint~~a prior-year impairment within Impairment charges 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 noticeDuke Energy's Consolidated Statements of appeal to the Eleventh Circuit U.S. Court of Appeals (Eleventh Circuit). On July 11, 2018, the Eleventh Circuit affirmed the U.S. District Court's dismissal of the lawsuit. The deadline to file a petition for cert was October 9, 2018, and no petition was filed; therefore, the dismissal of the lawsuit is final.

~~Westinghouse Contract Litigation~~

~~On March 28, 2014, Duke Energy Florida filed a lawsuit against Westinghouse~~Operations in the U.S. District Court for the Western District of North Carolina. The lawsuit seeks recovery of $54 million in milestone payments in excess of work performed under an EPC for Levy as well as a determination by the court of the amounts due to Westinghouse as a result of the termination of an EPC contract. Duke Energy Florida recognized an exit obligation as a result of the termination of the EPC. On March 31, 2014, Westinghouse filed a separate lawsuit against Duke Energy Florida in U.S. District Court for the Western District of Pennsylvania alleging damages under the same EPC contract in excess of $510 million for engineering and design work, costs to end supplier contracts and an alleged termination fee. On June 9, 2014, the judge in the North Carolina case ruled that the litigation will proceed in the Western District of North Carolina.2019.

On July 11, 2016, Duke Energy Florida and Westinghouse filed separate Motions for Summary Judgment. On September 29, 2016, the court issued its ruling, granting Westinghouse a $30 million termination fee claim and dismissing Duke Energy Florida's $54 million refund claim. Westinghouse's claim for termination costs continued to trial. Following a trial on the matter, the court issued an order in December 2016 denying Westinghouse’s claim for termination costs and reaffirming its earlier ruling in favor of Westinghouse on the $30 million termination fee. Judgment was entered against Duke Energy Florida in the amount of approximately $34 million, which includes prejudgment interest. Westinghouse appealed the trial court's order to the Fourth Circuit and Duke Energy Florida cross-appealed.

On March 29, 2017, Westinghouse filed Chapter 11 bankruptcy in the Southern District of New York, which automatically stayed the appeal. On May 23, 2017, the bankruptcy court entered an order lifting the stay with respect to the appeal. Westinghouse and Duke Energy Florida executed a settlement agreement resolving this matter on April 5, 2018. The bankruptcy court approved the settlement and Duke Energy Florida paid approximately ~~$34 million~~ ~~to Westinghouse in July 2018 pursuant to this agreement. At the request of the parties, the Fourth Circuit has dismissed the appeal.~~

~~MGP Cost Recovery Action~~

On December 30, 2011, Duke Energy Florida filed a lawsuit against FirstEnergy to recover investigation and remediation costs incurred by Duke Energy Florida in connection with the restoration of two former MGP sites in Florida. Duke Energy Florida alleged that FirstEnergy, as the successor to Associated Gas & Electric Co., owes past and future contribution and response costs of up to $43 million for the investigation and remediation of MGP sites. On December 6, 2016, the trial court entered judgment against Duke Energy Florida in the case. In January 2017, Duke Energy Florida appealed the decision to the U.S. Court of Appeals for the Sixth Circuit, which affirmed the trial court's ruling on April 10, 2018. The dismissal of the lawsuit is therefore final.

Other Litigation and Legal Proceedings

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

~~171~~



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

The table below presents recorded reserves based on management’s best estimate of probable loss for legal matters, excluding asbestos-related ~~reserves, the CertainTeed liquidated damages obligation and the exit obligation in 2017 related to the termination of an EPC contract.~~reserves. Reserves are classified on the Consolidated Balance Sheets in Other within Other Noncurrent Liabilities 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)	2019		2018
Reserves for Legal Matters
Duke Energy	$	62	$	65
Duke Energy Carolinas	2		9
Progress Energy	55		54
Duke Energy Progress	12		12
Duke Energy Florida	22		24
Piedmont	1		1

December 31,
(in millions)
2018
2017
Reserves for Legal Matters
Duke Energy $ 65
$ 88
Duke Energy Carolinas 9
30
Progress Energy 54
55
Duke Energy Progress 12
13
Duke Energy Florida 24
24
Piedmont 1
2

OTHER COMMITMENTS AND CONTINGENCIES

General

As part of their normal business, the Duke Energy Registrants are party to various financial guarantees, performance guarantees and other contractual commitments to extend guarantees of credit and other assistance to various subsidiaries, investees and other third parties. These guarantees involve elements of performance and credit risk, which are not fully recognized on the Consolidated Balance Sheets and have ~~unlimited~~uncapped maximum potential payments. ~~However, the Duke Energy Registrants do not believe these guarantees will have a material effect on their results of operations, cash flows or financial position.~~See Note 8 for more information.

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, 2018															Minimum Purchase Amount at December 31, 2019
	Contract															Contract
(in millions)	Expiration	2019		2020		2021		2022		2023		Thereafter		Total		Expiration	2020		2021		2022		2023		2024		Thereafter		Total
Duke Energy Progress^(a)	2022-2031	$	51	$	52	$	53	$	30	$	25	$	215	$	426	2021-2032	$	46	$	66	$	63	$	55	$	56	$	123	$	409
Duke Energy Florida^(b)	2021-2025	363		380		365		363		382		361		2,214		2021-2025	374		356		354		374		262		91		1,811
Duke Energy Ohio^(c)(d)	2020-2022	146		117		53		11		—		—		327		2021-2022	132		107		32		—		—		—		271


(a)	Contracts represent ~~100 percent~~either 100% of net plant ~~output.~~output or vary.


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


(c)	Contracts represent between ~~1 percent~~1% and ~~8 percent~~9% of net plant output.


(d)	Excludes PPA with OVEC. See Note 1718 for additional information.

Gas Supply and Capacity Contracts

Duke Energy Ohio and Piedmont routinely enter into long-term natural 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 1615 years. The time periods for fixed payments under natural gas supply contracts are up to ~~seven~~six years. The time period for the natural gas supply purchase commitments is up to 1211 years.

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.

~~172~~



FINANCIAL STATEMENTS	COMMITMENTS AND CONTINGENCIES

The following table presents future unconditional purchase obligations under natural gas supply and capacity contracts as of December 31, ~~2018.~~2019.



(in millions)	Duke Energy		Duke Energy Ohio		Piedmont
2020	$	297	$	39	$	258
2021	280		33		247
2022	225		14		211
2023	129		3		126
2024	118		—		118
Thereafter	714		—		714
Total	$	1,763	$	89	$	1,674

(in millions) Duke Energy Duke Energy Ohio Piedmont
2019 $ 314
$ 38
$ 276
2020 287
30
257
2021 255
29
226
2022 225
11
214
2023 148
4
144
Thereafter 1,067
—
1,067
Total $ 2,296
$ 112
$ 2,184

~~Operating and Capital Lease Commitments~~

~~The~~



FINANCIAL STATEMENTS	LEASES

6. LEASES

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



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

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

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

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

Duke Energy Carolinas entered into a sale-leaseback arrangement in December 2019, to construct and occupy an office tower. The lease agreement was evaluated as ~~Long-Term Debt or Other within Current Liabilities~~a sale-leaseback of real estate and it was determined that the transaction did not qualify for sale-leaseback accounting. As a result, the transaction is being accounted for as a financing. For this transaction, Duke Energy Carolinas will continue to record the real estate on the Consolidated Balance ~~Sheets. Amortization~~Sheets within Property, Plant and Equipment as if it were the legal owner and will continue to recognize depreciation expense over the estimated useful life. In addition, a liability will be recorded for the failed sale-leaseback obligation within Long-Term Debt on the Consolidated Balance Sheets, with the monthly lease payments commencing after the construction phase being split between interest expense and principal pay down of ~~assets recorded under capital~~the debt.

Duke Energy operates various renewable energy projects and sells the generated output to utilities, electric cooperatives, municipalities and commercial and industrial customers through long-term PPAs. In certain situations, these PPAs and the associated renewable energy projects qualify as operating leases. Rental income from these leases is ~~included~~accounted for as Nonregulated electric and other revenues in ~~Depreciation and amortization and Fuel used in electric generation and purchased power on~~ 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 $264 million, $268 million and $262 million for the years ended December 31, 2019, 2018, and 2017, respectively. Renewable energy projects owned by Duke Energy and accounted for as operating leases had a cost basis of $3,349 million and $3,358 million and accumulated depreciation of $721 million and $602 million at December 31, 2019, and 2018, respectively. These assets are principally classified as nonregulated electric generation and transmission assets.

Piedmont has an agreement with Duke Energy Carolinas for the construction and transportation of natural gas pipelines to supply its natural gas plant needs. Piedmont accounts for this pipeline lateral contract as a lessor and sales-type lease since the present value of the sum of the lease payments equals the fair value of the asset. As of December 31, 2019, the pipeline lateral assets owned by Piedmont had a current net investment basis of $4 million and a long-term net investment basis of $70 million. These assets are classified in Other, within Current Assets and Other Noncurrent Assets, respectively, on Piedmont's Consolidated Balance Sheets. Duke Energy Carolinas accounts for the contract as a finance lease. The activity for this contract is eliminated in consolidation at Duke Energy.



FINANCIAL STATEMENTS	LEASES

The following ~~tables present~~table presents the components of lease expense.



	Year Ended December 31, 2019
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Operating lease expense^(a)	$	292	$	47	$	161	$	69	$	92	$	11	$	20	$	5
Short-term lease expense^(a)	16		5		9		4		5		1		2		—
Variable lease expense^(a)	47		22		22		16		6		—		1		1
Finance lease expense
Amortization of leased assets^(b)	111		6		21		5		16		1		—		—
Interest on lease liabilities^(c)	61		15		42		33		9		—		1		—
Total finance lease expense	172		21		63		38		25		1		1		—
Total lease expense	$	527	$	95	$	255	$	127	$	128	$	13	$	24	$	6


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


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


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

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


	Years Ended December 31,						Years Ended December 31,
(in millions)	2018		2017		2016		2018		2017
Duke Energy	$	268	$	241	$	242	$	268	$	241
Duke Energy Carolinas	49		44		45		49		44
Progress Energy	143		130		140		143		130
Duke Energy Progress	75		75		68		75		75
Duke Energy Florida	68		55		72		68		55
Duke Energy Ohio	13		15		16		13		15
Duke Energy Indiana	21		23		23		21		23
Piedmont							11		7

Years Ended December 31, Two Months Ended December 31, Year Ended October 31,
(in millions) 2018 2017 2016 2016
Piedmont $ 11
$ 7
$ 1
$ 5
The following table presents operating lease maturities and a reconciliation of the undiscounted cash flows to operating lease liabilities.



	December 31, 2019
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
2020	$	268		$	31		$	123		$	51		$	72		$	2		$	5		$	5
2021	216			19			99			44			55			2			4			5
2022	201			19			95			40			55			2			4			5
2023	191			17			95			41			54			2			4			5
2024	176			13			95			41			54			2			4			5
Thereafter	984			57			462			283			179			21			64			5
Total operating lease payments	2,036			156			969			500			469			31			85			30
Less: present value discount	(396		)	(27		)	(177		)	(109		)	(68		)	(9		)	(27		)	(3		)
Total operating lease liabilities^(a)	$	1,640		$	129		$	792		$	391		$	401		$	22		$	58		$	27


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



FINANCIAL STATEMENTS	LEASES

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

year, as reported under the former lease standard.



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

~~177~~



FINANCIAL STATEMENTS	DEBT AND CREDIT FACILITIES

Summary of Significant Debt Issuances

In January 2019, Duke Energy Ohio issued $800 million of first mortgage bonds. The issuance was split between a $400 million, 10-year tranche at 3.65 percent and a $400 million, 30-year tranche at 4.30 percent. The net proceeds will be used to refinance $450 million of Duke Energy Ohio bonds maturing in April 2019, to pay down short-term debt and for general corporate purposes.

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

Year Ended December 31, 2018
Duke
Duke
Duke
Duke
Maturity Interest
Duke
Energy
Energy
Energy
Energy
Issuance Date Date Rate
Energy
(Parent)
Carolinas
Progress
Florida
Unsecured Debt
March 2018^(a)
April 2025 3.950 % $ 250
$ 250
$ —
$ —
$ —
May 2018^(b)
May 2021 3.114 % 500
500
—
—
—
September 2018^(c)
September 2078 5.625 % 500
500
—
—
—
First Mortgage Bonds

March 2018^(d)
March 2023 3.050 % 500
—
500
—
—
March 2018^(d)
March 2048 3.950 % 500
—
500
—
—
June 2018^(e)
July 2028 3.800 % 600
—
—
—
600
June 2018^(e)
July 2048 4.200 %
400
—
—
—
400
August 2018^(f)
September 2023 3.375 % 300
—
—
300
—
August 2018^(f)
September 2028 3.700 % 500
—
—
500
—
November 2018^(g)
May 2022 3.350 % 350
—
350
—
—
November 2018^(g)
November 2028 3.950 % 650
—
650
—
—
Total issuances $ 5,050
$ 1,250

$ 2,000
$ 800
$ 1,000



					Year Ended December 31, 2019
							Duke		Duke		Duke		Duke		Duke		Duke
	Maturity	Interest			Duke		Energy		Energy		Energy		Energy		Energy		Energy
Issuance Date	Date	Rate			Energy		(Parent)		Carolinas		Progress		Florida		Ohio		Indiana		Piedmont
Unsecured Debt
March 2019^(a)	Mar 2022	2.538	%	^(b)	$	300	$	300	$	—	$	—	$	—	$	—	$	—	$	—
March 2019^(a)	Mar 2022	3.227	%		300		300		—		—		—		—		—		—
May 2019^(e)	Jun 2029	3.500	%		600		—		—		—		—		—		—		600
June 2019^(a)	Jun 2029	3.400	%		600		600		—		—		—		—		—		—
June 2019^(a)	Jun 2049	4.200	%		600		600		—		—		—		—		—		—
July 2019^(g)	Jul 2049	4.320	%		40		—		—		—		—		40		—		—
September 2019^(g)	Oct 2025	3.230	%		95		—		—		—		—		95		—		—
September 2019^(g)	Oct 2029	3.560	%		75		—		—		—		—		75		—		—
November 2019^(h)	Nov 2021	2.167	%	^(b)	200		—		—		—		200		—		—		—
First Mortgage Bonds
January 2019^(c)	Feb 2029	3.650	%		400		—		—		—		—		400		—		—
January 2019^(c)	Feb 2049	4.300	%		400		—		—		—		—		400		—		—
March 2019^(d)	Mar 2029	3.450	%		600		—		—		600		—		—		—		—
August 2019^(a)	Aug 2029	2.450	%		450		—		450		—		—		—		—		—
August 2019^(a)	Aug 2049	3.200	%		350		—		350		—		—		—		—		—
September 2019^(f)	Oct 2049	3.250	%		500		—		—		—		—		—		500		—
November 2019⁽ⁱ⁾	Dec 2029	2.500	%		700		—		—		—		700		—		—		—
Total issuances					$	6,210	$	1,800	$	800	$	600	$	900	$	1,010	$	500	$	600


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


(b)	Debt issuance has a floating interest rate.


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


(d)	Debt issued to fund eligible green energy projects in the Carolinas.


(e)	Debt issued to repay in full the outstanding $350 million Piedmont unsecured term loan due September 2019, pay down short-term debt and for general corporate purposes.


(f)	Debt issued to retire $150 million of pollution control bonds, pay down short-term debt and for general corporate purposes.


(g)	Debt issued to repay at maturity $100 million debentures due October 2019, pay down short-term debt and for general corporate purposes.


(h)	Debt issued to fund storm restoration costs and for general corporate purposes.


(i)	Debt issued to reimburse the payment of existing and new Eligible Green Expenditures in Florida.

In January 2020, Duke Energy Carolinas closed and funded $900 million of first mortgage bonds of which $500 million carry a fixed interest rate of 2.45% and mature February 2030 and $400 million carry a fixed interest rate of 3.20% and mature August 2049. The proceeds will be used to repay at maturity $450 million, 4.30% debentures maturing June 2020, and for general corporate purposes.



FINANCIAL STATEMENTS	DEBT AND CREDIT FACILITIES



				Year Ended December 31, 2018
						Duke		Duke		Duke		Duke
	Maturity	Interest		Duke		Energy		Energy		Energy		Energy
Issuance Date	Date	Rate		Energy		(Parent)		Carolinas		Progress		Florida
Unsecured Debt
March 2018^(a)	April 2025	3.950	%	$	250	$	250	$	—	$	—	$	—
May 2018^(b)	May 2021	3.114	%	500		500		—		—		—
September 2018^(c)	September 2078	5.625	%	500		500		—		—		—
First Mortgage Bonds
March 2018^(d)	March 2023	3.050	%	500		—		500		—		—
March 2018^(d)	March 2048	3.950	%	500		—		500		—		—
June 2018^(e)	July 2028	3.800	%	600		—		—		—		600
June 2018^(e)	July 2048	4.200	%	400		—		—		—		400
August 2018^(f)	September 2023	3.375	%	300		—		—		300		—
August 2018^(f)	September 2028	3.700	%	500		—		—		500		—
November 2018^(g)	May 2022	3.350	%	350		—		350		—		—
November 2018^(g)	November 2028	3.950	%	650		—		650		—		—
Total issuances				$	5,050	$	1,250	$	2,000	$	800	$	1,000


(a)	Debt issued to pay down short-term debt.


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


(c)	Callable after September 2023 at par. Junior subordinated hybrid debt issued to pay down short-term debt and for general corporate purposes.

~~purposes.~~


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


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


(f)	Debt issued to repay short-term debt and for general corporate purposes.


(g)	Debt issued to fund eligible green energy projects, including zero-carbon solar and energy storage, in the Carolinas.

~~178~~



~~FINANCIAL STATEMENTS~~	~~DEBT AND CREDIT FACILITIES~~

Year Ended December 31, 2017
Duke
Duke
Duke
Duke
Duke
Maturity Interest
Duke
Energy
Energy
Energy
Energy
Energy
Issuance Date Date Rate
Energy
(Parent)
Carolinas
Progress
Florida
Ohio
Unsecured Debt
April 2017^(a)
April 2025 3.364 % $ 420
$ 420
$ —
$ —
$ —
$ —
June 2017^(b)
June 2020 2.100 % 330
330
—
—
—
—
August 2017^(c)
August 2022 2.400 % 500
500
—
—
—
—
August 2017^(c)
August 2027 3.150 % 750
750
—
—
—
—
August 2017^(c)
August 2047 3.950 % 500
500
—
—
—
—
December 2017^(d)
December 2019
^(k)
2.100 % 400
—
—
—
400
—
Secured Debt

February 2017^(e)
June 2034 4.120 % 587
—
—
—
—
—
August 2017^(f)
December 2036 4.110 % 233
—
—
—
—
—
First Mortgage Bonds

January 2017^(g)
January 2020 1.850 % 250
—
—
—
250
—
January 2017^(g)
January 2027 3.200 % 650
—
—
—
650
—
March 2017^(h)
June 2046 3.700 % 100
—
—
—
—
100
September 2017⁽ⁱ⁾
September 2020 1.500 %
^(l)
300
—
—
300
—
—
September 2017⁽ⁱ⁾
September 2047 3.600 % 500
—
—
500
—
—
November 2017^(j)
December 2047 3.700 % 550
—
550
—
—
—
Total issuances $ 6,070
$ 2,500

$ 550
$ 800

$ 1,300

$ 100


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


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


~~(c)~~	~~Debt issued to repay at maturity $700 million of unsecured debt, to repay outstanding commercial paper and for general corporate purposes.~~


~~(d)~~	~~Debt issued to fund storm restoration costs related to Hurricane Irma and for general corporate purposes.~~


~~(e)~~	Portfolio financing of four Texas and Oklahoma wind facilities. Duke Energy pledged substantially all of the assets of these wind facilities and is nonrecourse to Duke Energy. Proceeds were used to reimburse Duke Energy for a portion of previously funded construction expenditures.


~~(f)~~	Portfolio financing of eight solar facilities located in California, Colorado and New Mexico. Duke Energy pledged substantially all of the assets of these solar facilities and is nonrecourse to Duke Energy. Proceeds were used to reimburse Duke Energy for a portion of previously funded construction expenditures.


~~(g)~~	~~Debt issued to fund capital expenditures for ongoing construction and capital maintenance, to repay a $250 million aggregate principal amount of bonds at maturity and for general corporate purposes.~~


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


~~(i)~~	Debt issued to repay at maturity a $200 million aggregate principal amount of bonds at maturity, pay down intercompany short-term debt and for general corporate purposes, including capital expenditures.


~~(j)~~	~~Debt issued to refinance $400 million aggregate principal amount of bonds due January 2018, pay down intercompany short-term debt and for general corporate purposes.~~


~~(k)~~	~~Principal balance will be repaid in equal quarterly installments beginning in March 2018.~~


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

Available Credit Facilities

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

~~179~~



~~FINANCIAL STATEMENTS~~	~~DEBT AND CREDIT FACILITIES~~

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



	December 31, 2019
				Duke			Duke			Duke			Duke		Duke			Duke
	Duke			Energy			Energy			Energy			Energy		Energy			Energy
(in millions)	Energy			(Parent)			Carolinas			Progress			Florida		Ohio			Indiana			Piedmont
Facility size^(a)	$	8,000		$	2,650		$	1,500		$	1,250		$	800	$	600		$	600		$	600
Reduction to backstop issuances
Commercial paper^(b)	(2,537		)	(1,119		)	(325		)	(207		)	—		(296		)	(176		)	(414		)
Outstanding letters of credit	(50		)	(42		)	(4		)	(2		)	—		—			—			(2		)
Tax-exempt bonds	(81		)	—			—			—			—		—			(81		)	—
Coal ash set-aside	(500		)	—			(250		)	(250		)	—		—			—			—
Available capacity	$	4,832		$	1,489		$	921		$	791		$	800	$	304		$	343		$	184

December 31, 2018
Duke
Duke
Duke
Duke
Duke
Duke

Duke
Energy
Energy
Energy
Energy
Energy
Energy

(in millions) Energy
(Parent)
Carolinas
Progress
Florida
Ohio
Indiana
Piedmont
Facility size^(a)
$ 8,000
$ 2,650
$ 1,750
$ 1,400
$ 650
$ 450
$ 600
$ 500
Reduction to backstop issuances
Commercial paper^(b)
(3,022 ) (917 ) (739 ) (444 ) (108 ) (299 ) (317 ) (198 )
Outstanding letters of credit (53 ) (45 ) (4 ) (2 ) —
—
—
(2 )
Tax-exempt bonds (81 ) —
—
—
—
—
(81 ) —
Coal ash set-aside (500 ) —
(250 ) (250 ) —
—
—
—
Available capacity $ 4,344

$ 1,688

$ 757

$ 704

$ 542

$ 151

$ 202
$ 300


(a)	Represents the sublimit of each borrower.


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



FINANCIAL STATEMENTS	DEBT AND CREDIT FACILITIES

Three-Year Revolving Credit Facility

Duke Energy (Parent) has a ~~$1.0~~$1 billion revolving credit facility. The facility ~~through~~had an initial termination date of June ~~2020.~~2020, but in May 2019, Duke Energy extended the termination date of the facility to May 2022. Borrowings under this facility will be used for general corporate purposes. As of December 31, ~~2018,~~2019, $500 million has been drawn under ~~the Three Year Revolver.~~this facility. This balance is classified as Long-term debt on Duke Energy's Consolidated Balance Sheets. Any undrawn commitments can be drawn, and borrowings can be prepaid, at any time throughout the term of the facility. The terms and conditions of the ~~Three Year Revolver~~facility are generally consistent with those governing Duke Energy's Master Credit Facility.

Duke Energy Progress Term Loan Facility

In December 2018, Duke Energy Progress entered into a two-year term loan facility with commitments totaling $700 million. Borrowings under the facility ~~will be~~were used to pay storm-related costs, pay down commercial paper and to partially finance an upcoming bond maturity. As of December 31, ~~2018, $50~~2019, the entire $700 million has been drawn under the term loan. ~~The balance is classified as Long-term debt on Duke Energy Progress' Consolidated Balance Sheets. In January and February 2019, the remaining $650 million was drawn under the term loan.~~

~~Piedmont Term Loan Facility~~

In September 2018, Piedmont executed an amendment to its existing senior unsecured term loan facility. The amendment increased commitments from $250 million to $350 million and extended the maturity date to September 2019. Borrowings under the facility will be used for general corporate purposes. As of December 31, 2018, the entire $350 million has been drawn under the Piedmont Term Loan. This balance is classified as Current maturities of long-term debt on ~~Piedmont's~~Duke Energy Progress' Consolidated Balance Sheets. ~~The terms and conditions of the~~

Piedmont Term Loan ~~are generally consistent~~Facility

In May 2019, the $350 million Piedmont term loan was paid off in full with ~~those governing Duke Energy's Master Credit Facility.~~proceeds from the $600 million Piedmont debt offering.

Other Debt Matters

In September ~~2016,~~2019, Duke Energy filed a 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 and preferred stock by Duke Energy. The expired Form S-3 was amended in March 2019, to allow Duke Energy to issue preferred stock.

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, 2019, and 2018, ~~and 2017~~ was ~~$1,010~~$1,049 million and ~~$986~~$1,010 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.

Money Pool

The Subsidiary Registrants, excluding Progress Energy, ~~(Parent),~~ 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, ~~(Parent),~~ 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.

~~180~~



~~FINANCIAL STATEMENTS~~	~~DEBT AND CREDIT FACILITIES~~

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~~65% for each borrower, excluding Piedmont, and ~~70 percent~~70% for Piedmont. 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, ~~2018,~~2019, each of the Duke Energy Registrants was in compliance with all covenants related to their debt agreements. In addition, some credit agreements may allow for acceleration of payments or termination of the agreements due to nonpayment, or acceleration of other significant indebtedness of the borrower or some of its subsidiaries. None of the debt or credit agreements contain material adverse change clauses.

Other Loans

As of December 31, ~~2018,~~2019, and ~~2017,~~2018, Duke Energy had loans outstanding of ~~$741~~$777 million, including ~~$37~~$36 million at Duke Energy Progress and ~~$701~~$741 million, including ~~$38~~$37 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 Other Noncurrent Assets on the Consolidated Balance Sheets.



FINANCIAL STATEMENTS	GUARANTEES AND INDEMNIFICATIONS

8. GUARANTEES AND INDEMNIFICATIONS

Duke Energy ~~and Progress Energy have~~has various financial and performance guarantees and indemnifications with non-consolidated entities, which are issued in the normal course of business. As discussed below, these contracts include performance guarantees, standby letters of credit, debt guarantees ~~surety bonds~~ and indemnifications. Duke Energy ~~and Progress Energy enter~~enters into these arrangements to facilitate commercial transactions with third parties by enhancing the value of the transaction to the third party. At December 31, ~~2018,~~2019, Duke Energy ~~and Progress Energy do~~does 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.

On January 2, 2007, Duke Energy completed the spin-off of its previously wholly-owned 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 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, ~~2018,~~2019, the maximum potential amount of future payments associated with these guarantees ~~was $205~~were $65 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, 2018, was $296 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, $248 million of the guarantees expire between 2019 and 2030, with the remaining performance guarantees having no contractual expiration.

In October 2017, ACP executed a $3.4 billion revolving credit facility with a stated maturity date of October 2021. Duke Energy entered into a guarantee agreement to support its share of the ACP revolving credit facility. Duke Energy's maximum exposure to loss under the terms of the guarantee is ~~$677~~$827 million as of December 31, ~~2018.~~2019. This amount represents ~~47 percent~~47% of the outstanding borrowings under the credit facility.

In addition to the Spectra Capital and ACP revolving credit facility guarantees above, Duke Energy ~~guaranteed~~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 ~~issued by~~of certain non-consolidated entities. If such entities were to default on payments or performance, Duke Energy ~~Carolinas~~would be required under the guarantees to make payments on the obligations of ~~$650 million~~these entities. The maximum potential amount of future payments required under these guarantees as of December 31, ~~2018,~~2019, was $128 million, of which, $114 million expire between 2020 and ~~2017.~~

2030, with the remaining performance guarantees having no contractual expiration. Additionally, certain guarantees have uncapped maximum potential payments; however, Duke Energy ~~has guaranteed certain issuers~~does not believe these guarantees will have a material effect on its results 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 partyoperations, cash flows 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, 2018, Duke Energy had guaranteed $63 million of outstanding surety bonds, most of which have no set expiration.financial position.

Duke Energy uses bank-issued standby 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 that 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, ~~2018,~~2019, Duke Energy had issued a total of ~~$454~~$634 million in letters of credit, which expire between ~~2019~~2020 and 2022. The unused amount under these letters of credit was ~~$60~~$81 million.

Duke Energy recognized $23 million ~~and $21 million,~~ as of December 31, ~~2018,~~2019, and ~~2017, respectively,~~2018, primarily in Other within Other Noncurrent Liabilities on the Consolidated Balance Sheets, for the guarantees discussed above. 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.

~~181~~



~~FINANCIAL STATEMENTS~~	~~JOINT OWNERSHIP OF GENERATING AND TRANSMISSION FACILITIES~~

8.9. 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, 2019
							Construction
	Ownership		Property, Plant		Accumulated		Work in
(in millions except for ownership interest)	Interest		and Equipment		Depreciation		Progress
Duke Energy Carolinas
Catawba (units 1 and 2)^(a)	19.25	%	$	1,011	$	510	$	21
W.S. Lee CC^(b)	87.27	%	609		32		1
Duke Energy Indiana
Gibson (unit 5)^(c)	50.05	%	410		183		3
Vermillion^(d)	62.50	%	172		119		—
Transmission and local facilities^(c)	Various		5,421		1,436		172

December 31, 2018
Construction
Ownership
Property, Plant
Accumulated
Work in
(in millions except for ownership interest) Interest
and Equipment
Depreciation
Progress
Duke Energy Carolinas

Catawba (units 1 and 2)^(a)
19.25 % $ 989
$ 483
$ 17
W.S. Lee CC^(b)
86.67 % 593
12
4
Duke Energy Indiana

Gibson (unit 5)^(c)
50.05 % 390
173
3
Vermillion^(d)
62.50 % 168
135
—
Transmission and local facilities^(c)
Various
5,037
1,769
—


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


(b)	Jointly owned with NCEMC.


(c)	Jointly owned with WVPA and ~~Indiana Municipal Power Agency.~~IMPA.


(d)	Jointly owned with WVPA.

Effective June 30, 2018, Duke Energy Ohio, Ohio Power Company, and The Dayton Power and Light Company, completed an asset exchange that reallocated their ownership interest in certain jointly owned transmission facilities. This transaction was approved by FERC and PUCO. The transaction eliminated the joint owner relationships for these assets. Assets were exchanged at net book value and the net increase in Duke Energy Ohio's assets are shown within Capital expenditures in Duke Energy Ohio's Consolidated Statements of Cash Flows.



FINANCIAL STATEMENTS	ASSET RETIREMENT OBLIGATIONS

10. 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.

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


	December 31, 2018																December 31, 2019
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Decommissioning of nuclear power facilities^(a)	$	5,696	$	2,335	$	3,209	$	2,679	$	530	$	—	$	—	$	—	$	6,633	$	2,551	$	4,028	$	3,499	$	529	$	—	$	—	$	—
Closure of ash impoundments	4,446		1,568		2,123		2,103		20		52		702		—		6,333		3,118		2,368		2,352		16		41		805		—
Other^(b)	325		46		79		38		41		41		20		19		352		65		75		42		33		39		27		17
Total asset retirement obligation	$	10,467	$	3,949	$	5,411	$	4,820	$	591	$	93	$	722	$	19	$	13,318	$	5,734	$	6,471	$	5,893	$	578	$	80	$	832	$	17
Less: current portion	919		290		514		509		5		6		109		—		881		206		485		485		—		1		189		—
Total noncurrent asset retirement obligation	$	9,548	$	3,659	$	4,897	$	4,311	$	586	$	87	$	613	$	19	$	12,437	$	5,528	$	5,986	$	5,408	$	578	$	79	$	643	$	17



	December 31, 2018
	Duke Energy										Duke		Duke
	Pipeline			Commercial		Other					Energy		Energy
(in millions)	Investments			Renewables		VIEs		Total			Ohio		Indiana
Receivables from affiliated companies	$	—		$	—	$	—	$	—		$	93	$	118
Investments in equity method unconsolidated affiliates	822			190		48		1,060			—		—
Total assets	$	822		$	190	$	48	$	1,060		$	93	$	118
Taxes accrued	(1		)	—		—		(1		)	—		—
Other current liabilities	—			—		4		4			—		—
Deferred income taxes	21			—		—		21			—		—
Other noncurrent liabilities	—			—		12		12			—		—
Total liabilities	$	20		$	—	$	16	$	36		$	—	$	—
Net assets	$	802		$	190	$	32	$	1,024		$	93	$	118

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

The Duke Energy Registrants are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying values shown above except for the ~~power purchase agreement~~PPA with OVEC, which is discussed below, and various guarantees, including Duke Energy's guarantee agreement to support its share of the ACP revolving credit facility. Duke Energy's maximum exposure to loss under the terms of the guarantee is ~~$677~~$827 million, which represents 47% of the outstanding borrowings under the credit facility as of December 31, ~~2018.~~2019. For more information on various guarantees, refer to Note 7.8.

~~Pipeline~~Electric Utilities and Infrastructure

Duke Energy owns a 50% interest in DATC and in Pioneer, which build, own and operate electric transmission facilities in North America.

Gas Utilities and Infrastructure

The table below outlines Duke Energy's ownership interests in natural gas pipeline companies and natural gas storage facilities.



			Investment Amount (in millions)
	Ownership		December 31,		December 31,
Entity Name	Interest		2019		2018
Pipeline Investments
ACP	47	%	$	1,179	$	797
Sabal Trail	7.5	%	121		112		^(c)
Constitution	24	%	—		25
Cardinal^(a)	21.49	%	9		10
Storage Facilities
Pine Needle^(a)	45	%	28		13
Hardy Storage^(a)	50	%	51		46
Total Investments^(b)			$	1,388	$	1,003


(a)	Piedmont owns the Cardinal, Pine Needle and Hardy Storage investments.


(b)	Duke Energy includes purchase accounting adjustments related to Piedmont.


(c)	Sabal Trail returned capital of $112 million during the year ended December 31, 2018.

In October 2017, Duke Energy entered into a guarantee agreement to support its share of the ACP revolving credit facility. See Note 8 for additional information. As a result of the financing, ACP returned capital of $265 million to Duke Energy.

During 2018 and 2019, ACP received several adverse court rulings as described in Note 4. As a result, Duke Energy evaluated this investment for impairment and determined that fair value approximated carrying value and therefore no impairment was necessary.

For regulatory matters and other information on the ACP, Sabal Trail and Constitution investments, see Notes 4 and 18.

Commercial Renewables

DS Cornerstone, LLC, which owns wind farm projects in the U.S. was part of a sale of minority interest in a certain portion of renewable assets to John Hancock in 2019. See Note 2 for more information on the sale. Prior to the sale, Duke Energy had a 50% interest in DS Cornerstone, LLC. After the sale, Duke Energy has a 26% interest in the investment.

In 2019, Duke Energy acquired a majority ownership in a portfolio of distributed fuel cell projects from Bloom Energy Corporation. Duke Energy is not the primary beneficiary of the assets within the portfolio and does not consolidate the assets in the portfolio.



FINANCIAL STATEMENTS	INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Impairment of Equity Method Investments

Duke Energy recorded OTTIs of the Constitution investment within Equity in earnings of unconsolidated affiliates on Duke Energy's Consolidated Statements of Operations of $25 million and $55 million for the years ended December 31, 2019, and 2018, respectively. The current year charge resulted in the full write-down of Duke Energy's investment in Constitution. The impairments were primarily due to the continued delay in resolving project uncertainty through the courts and regulatory bodies, as well as recent pricing concerns between the customers and owners. For additional information on the Constitution investment, see Note 4.

Other

Duke Energy owns a 17.5% indirect interest in NMC, which owns and operates a methanol and MTBE business in Jubail, Saudi Arabia. Duke Energy's economic ownership interest decreased from 25% to 17.5% with the successful startup of NMC's polyacetal production facility in 2017. Duke Energy retains 25% of the board representation and voting rights of NMC.

14. RELATED PARTY TRANSACTIONS

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



	Years Ended December 31,
(in millions)	2019		2018		2017
Duke Energy Carolinas
Corporate governance and shared service expenses^(a)	$	841	$	985	$	858
Indemnification coverages^(b)	20		22		23
Joint Dispatch Agreement (JDA) revenue^(c)	60		84		49
JDA expense^(c)	186		207		145
Intercompany natural gas purchases^(d)	15		15		9
Progress Energy
Corporate governance and shared service expenses^(a)	$	778	$	906	$	736
Indemnification coverages^(b)	37		34		38
JDA revenue^(c)	186		207		145
JDA expense^(c)	60		84		49
Intercompany natural gas purchases^(d)	76		78		77
Duke Energy Progress
Corporate governance and shared service expenses^(a)	$	462	$	577	$	438
Indemnification coverages^(b)	15		13		15
JDA revenue^(c)	186		207		145
JDA expense^(c)	60		84		49
Intercompany natural gas purchases^(d)	76		78		77
Duke Energy Florida
Corporate governance and shared service expenses^(a)	$	316	$	329	$	298
Indemnification coverages^(b)	22		21		23
Duke Energy Ohio
Corporate governance and shared service expenses^(a)	$	354	$	374	$	363
Indemnification coverages^(b)	4		5		5
Duke Energy Indiana
Corporate governance and shared service expenses^(a)	$	412	$	405	$	370
Indemnification coverages^(b)	7		7		8
Piedmont
Corporate governance and shared service expenses^(a)	$	138	$	170	$	50
Indemnification coverages^(b)	3		2		2
Intercompany natural gas sales^(d)	91		93		86
Natural gas storage and transportation costs^(e)	23		25		25



FINANCIAL STATEMENTS	RELATED PARTY TRANSACTIONS

(a)

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


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

(c)

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

(d)

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


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

In addition to the amounts presented above, the Subsidiary Registrants have other affiliate transactions, including rental of office space, participation in a money pool arrangement, other operational transactions and their proportionate share of certain charged expenses. See Note 7 for more information regarding money pool. These transactions of the Subsidiary Registrants are incurred in the ordinary course of business and are eliminated in consolidation.

As discussed in Note 18, certain trade receivables have been sold by Duke Energy Ohio and Duke Energy Indiana to CRC, an affiliate formed by a subsidiary of Duke Energy. The proceeds obtained from the sales of receivables are largely cash but do include a subordinated note from CRC for a portion of the purchase price.

Intercompany Income Taxes

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



	Duke				Duke		Duke		Duke		Duke
	Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
December 31, 2019
Intercompany income tax receivable	$	—	$	125	$	28	$	—	$	9	$	28	$	13
Intercompany income tax payable	5		—		—		2		—		—		—

December 31, 2018
Intercompany income tax receivable	$	52	$	47	$	29	$	—	$	—	$	8	$	—
Intercompany income tax payable	—		—		—		16		3		—		45

15. DERIVATIVES AND HEDGING

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

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

INTEREST RATE RISK

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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

Cash Flow Hedges

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

Undesignated Contracts

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

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

The following tables show notional amounts of outstanding derivatives related to interest rate risk.



	December 31, 2019
			Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio
Cash flow hedges	$	993	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	1,277		450		800		250		550		27
Total notional amount^(a)	$	2,270	$	450	$	800	$	250	$	550	$	27



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


(a)	Duke Energy includes amounts related to consolidated VIEs of $693 million in cash flow hedges as of December 31, 2019, and $422 million in cash flow hedges and $194 million in undesignated contracts as of December 31, 2018.

COMMODITY PRICE RISK

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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

Volumes

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



	December 31, 2019
		Duke		Duke	Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont
Electricity (GWh)	15,858	—	—	—	—	1,887	13,971	—
Natural gas (millions of Dth)	704	130	160	160	—	—	3	411



	December 31, 2018
		Duke		Duke	Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont
Electricity (GWh)	15,286	—	—	—	—	1,786	13,500	—
Natural gas (millions of Dth)	739	121	169	166	3	—	1	448

U.S. EQUITY SECURITIES RISK

In May 2019, Duke Energy Florida entered into a Decommissioning Services Agreement for the accelerated decommissioning of Crystal River Unit 3 with ADP CR3, LLC and ADP SF1, LLC. See Note 4 for additional information on the accelerated decommissioning. Duke Energy Florida executed U.S. equity option collars within the NDTF in May 2019 to preserve the U.S. equity portfolio value in the Duke Energy Florida NDTF in the event the accelerated decommissioning is approved. These option collars were executed as a purchase of a put option and the sale of a call option on certain U.S. equity index funds. The put and call options create a collar to guarantee a minimum and maximum investment value for the Duke Energy Florida NDTF U.S. equity portfolio. The put and call options were entered into at zero-cost, with the price to purchase the puts offset entirely by the funds received to sell the calls. As of December 31, 2019, the aggregate notional amount of both the put and call options was 305,000 units in U.S. equity security index funds. The options are not designated as hedging instruments. Substantially all of Duke Energy Florida’s NDTF qualifies for regulatory accounting. With regulatory accounting, the mark-to-market gains or losses on the options are deferred as regulatory liabilities or regulatory assets, respectively.



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

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

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



Derivative Assets	December 31, 2019
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	17	$	—	$	—	$	—	$	—	$	3	$	13	$	1
Noncurrent	1		—		—		—		—		1		—		—
Total Derivative Assets – Commodity Contracts	$	18	$	—	$	—	$	—	$	—	$	4	$	13	$	1
Interest Rate Contracts
Not Designated as Hedging Instruments
Current	6		—		6		—		6		—		—		—
Total Derivative Assets – Interest Rate Contracts	$	6	$	—	$	6	$	—	$	6	$	—	$	—	$	—
Equity Securities Contracts
Not Designated as Hedging Instruments
Current	1		—		1		—		1		—		—		—
Total Derivative Assets – Equity Securities Contracts	$	1	$	—	$	1	$	—	$	1	$	—	$	—	$	—
Total Derivative Assets	$	25	$	—	$	7	$	—	$	7	$	4	$	13	$	1



Derivative Liabilities	December 31, 2019
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	67	$	33	$	26	$	26	$	—	$	—	$	1	$	7
Noncurrent	156		10		37		22		—		—		—		110
Total Derivative Liabilities – Commodity Contracts	$	223	$	43	$	63	$	48	$	—	$	—	$	1	$	117
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	19	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	21		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	8		6		1		1		—		1		—		—
Noncurrent	5		—		—		—		—		5		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	53	$	6	$	1	$	1	$	—	$	6	$	—	$	—
Equity Securities Contracts
Not Designated as Hedging Instruments
Current	24		—		24		—		24		—		—		—
Total Derivative Liabilities – Equity Security Contracts	$	24	$	—	$	24	$	—	$	24	$	—	$	—	$	—
Total Derivative Liabilities	$	300	$	49	$	88	$	49	$	24	$	6	$	1	$	117



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING



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



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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

OFFSETTING ASSETS AND LIABILITIES

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



Derivative Assets	December 31, 2019
				Duke					Duke		Duke			Duke		Duke
	Duke			Energy		Progress			Energy		Energy			Energy		Energy
(in millions)	Energy			Carolinas		Energy			Progress		Florida			Ohio		Indiana		Piedmont
Current
Gross amounts recognized	$	24		$	—	$	7		$	—	$	7		$	3	$	13	$	1
Gross amounts offset	(1		)	—		(1		)	—		(1		)	—		—		—
Net amounts presented in Current Assets: Other	$	23		$	—	$	6		$	—	$	6		$	3	$	13	$	1
Noncurrent
Gross amounts recognized	$	1		$	—	$	—		$	—	$	—		$	1	$	—	$	—
Gross amounts offset	—			—		—			—		—			—		—		—
Net amounts presented in Other Noncurrent Assets: Other	$	1		$	—	$	—		$	—	$	—		$	1	$	—	$	—



Derivative Liabilities	December 31, 2019
				Duke					Duke		Duke			Duke		Duke
	Duke			Energy		Progress			Energy		Energy			Energy		Energy
(in millions)	Energy			Carolinas		Energy			Progress		Florida			Ohio		Indiana		Piedmont
Current
Gross amounts recognized	$	118		$	39	$	51		$	27	$	24		$	1	$	1	$	7
Gross amounts offset	(24		)	—		(24		)	—		(24		)	—		—		—
Net amounts presented in Current Liabilities: Other	$	94		$	39	$	27		$	27	$	—		$	1	$	1	$	7
Noncurrent
Gross amounts recognized	$	182		$	10	$	37		$	22	$	—		$	5	$	—	$	110
Gross amounts offset	—			—		—			—		—			—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	$	182		$	10	$	37		$	22	$	—		$	5	$	—	$	110



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING



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



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

OBJECTIVE CREDIT CONTINGENT FEATURES

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



	December 31, 2019
			Duke				Duke
	Duke		Energy		Progress		Energy
(in millions)	Energy		Carolinas		Energy		Progress
Aggregate fair value of derivatives in a net liability position	$	79	$	35	$	44	$	44
Fair value of collateral already posted	—		—		—		—
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered	79		35		44		44



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

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



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

16. INVESTMENTS IN DEBT AND EQUITY SECURITIES

Duke Energy's investments in ~~various joint ventures~~debt and equity securities are primarily comprised of investments held in (i) the NDTF at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, (ii) the grantor trusts at Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana related to OPEB plans and (iii) Bison. The Duke Energy Registrants classify investments in debt securities as AFS and investments in equity securities as FV-NI.

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

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

Investment Trusts

The investments within the Investment Trusts are managed by independent investment managers with ~~pipeline projects currently under construction. These entities~~discretion to buy, sell and invest pursuant to the objectives set forth by the trust agreements. The Duke Energy Registrants have limited oversight of the day-to-day management of these investments. As a result, the ability to hold investments in unrealized loss positions is outside the control of the Duke Energy Registrants. Accordingly, all unrealized losses associated with debt securities within the Investment Trusts are considered ~~VIEs due~~OTTIs and are recognized immediately and deferred to ~~having insufficient equity to finance their own activities without subordinated financial support.~~regulatory accounts where appropriate.

Other AFS Securities

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

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

DUKE ENERGY

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



	December 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	101	$	—	$	—	$	88
Equity securities	3,523		55		5,661		2,402		95		4,475
Corporate debt securities	37		1		603		4		13		566
Municipal bonds	13		—		368		1		4		353
U.S. government bonds	33		1		1,256		14		12		1,076
Other debt securities	3		—		141		—		2		148
Total NDTF Investments	$	3,609	$	57	$	8,130	$	2,421	$	126	$	6,706
Other Investments
Cash and cash equivalents	$	—	$	—	$	52	$	—	$	—	$	22
Equity securities	57		—		122		36		1		99
Corporate debt securities	3		—		67		—		2		60
Municipal bonds	4		—		94		—		1		85
U.S. government bonds	2		—		41		1		—		45
Other debt securities	—		—		56		—		1		58
Total Other Investments	$	66	$	—	$	432	$	37	$	5	$	369
Total Investments	$	3,675	$	57	$	8,562	$	2,458	$	131	$	7,075



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2019
Due in one year or less	$	372
Due after one through five years	550
Due after five through 10 years	452
Due after 10 years	1,252
Total	$	2,626

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the years ended December 31, 2019, and 2018, and from sales of AFS securities for the year ended December 31, 2017, were as follows.



	Years Ended December 31,
(in millions)	2019		2018
FV-NI:
Realized gains	$	172	$	168
Realized losses	151		126
AFS:
Realized gains	94		22
Realized losses	67		51



	Year Ended December 31,
(in millions)	2017
Realized gains	$	202
Realized losses	160

DUKE ENERGY CAROLINAS

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



	December 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	21	$	—	$	—	$	29
Equity securities	1,914		8		3,154		1,309		54		2,484
Corporate debt securities	21		1		361		2		9		341
Municipal bonds	3		—		96		—		1		81
U.S. government bonds	16		1		578		5		8		475
Other debt securities	3		—		137		—		2		143
Total NDTF Investments	$	1,957	$	10	$	4,347	$	1,316	$	74	$	3,553

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2019
Due in one year or less	$	51
Due after one through five years	253
Due after five through 10 years	181
Due after 10 years	687
Total	$	1,172



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES



	Years Ended December 31,
(in millions)	2019		2018
FV-NI:
Realized gains	$	113	$	89
Realized losses	107		73
AFS:
Realized gains	55		19
Realized losses	38		35



	Year Ended December 31,
(in millions)	2017
Realized gains	$	135
Realized losses	103

PROGRESS ENERGY

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



	December 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	80	$	—	$	—	$	59
Equity securities	1,609		47		2,507		1,093		41		1,991
Corporate debt securities	16		—		242		2		4		225
Municipal bonds	10		—		272		1		3		272
U.S. government bonds	17		—		678		9		4		601
Other debt securities	—		—		4		—		—		5
Total NDTF Investments	$	1,652	$	47	$	3,783	$	1,105	$	52	$	3,153
Other Investments
Cash and cash equivalents	$	—	$	—	$	49	$	—	$	—	$	17
Municipal bonds	3		—		51		—		—		47
Total Other Investments	$	3	$	—	$	100	$	—	$	—	$	64
Total Investments	$	1,655	$	47	$	3,883	$	1,105	$	52	$	3,217

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2019
Due in one year or less	$	311
Due after one through five years	256
Due after five through 10 years	211
Due after 10 years	469
Total	$	1,247



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES



	Years Ended December 31,
(in millions)	2019		2018
FV-NI:
Realized gains	$	59	$	79
Realized losses	44		53
AFS:
Realized gains	36		3
Realized losses	29		15



	Year Ended December 31,
(in millions)	2017
Realized gains	$	65
Realized losses	56

DUKE ENERGY PROGRESS

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



	December 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	53	$	—	$	—	$	46
Equity securities	1,258		21		2,077		833		30		1,588
Corporate debt securities	16		—		242		2		3		171
Municipal bonds	10		—		272		1		3		271
U.S. government bonds	16		—		403		6		3		415
Other debt securities	—		—		4		—		—		3
Total NDTF Investments	$	1,300	$	21	$	3,051	$	842	$	39	$	2,494
Other Investments
Cash and cash equivalents	$	—	$	—	$	2	$	—	$	—	$	6
Total Other Investments	$	—	$	—	$	2	$	—	$	—	$	6
Total Investments	$	1,300	$	21	$	3,053	$	842	$	39	$	2,500

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2019
Due in one year or less	$	34
Due after one through five years	247
Due after five through 10 years	204
Due after 10 years	436
Total	$	921



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES



	Years Ended December 31,
(in millions)	2019		2018
FV-NI:
Realized gains	$	38	$	68
Realized losses	33		48
AFS:
Realized gains	7		2
Realized losses	5		10



	Year Ended December 31,
(in millions)	2017
Realized gains	$	54
Realized losses	48

DUKE ENERGY FLORIDA

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



	December 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	27	$	—	$	—	$	13
Equity securities	351		26		430		260		11		403
Corporate debt securities	—		—		—		—		1		54
Municipal bonds	—		—		—		—		—		1
U.S. government bonds	1		—		275		3		1		186
Other debt securities	—		—		—		—		—		2
Total NDTF Investments^(a)	$	352	$	26	$	732	$	263	$	13	$	659
Other Investments
Cash and cash equivalents	$	—	$	—	$	4	$	—	$	—	$	1
Municipal bonds	3		—		51		—		—		47
Total Other Investments	$	3	$	—	$	55	$	—	$	—	$	48
Total Investments	$	355	$	26	$	787	$	263	$	13	$	707


(a)	During the year ended December 31, 2019, Duke Energy Florida continued to receive reimbursements from the NDTF for costs related to ongoing decommissioning activity of the Crystal River Unit 3.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2019
Due in one year or less	$	277
Due after one through five years	9
Due after five through 10 years	7
Due after 10 years	33
Total	$	326



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES



	Years Ended December 31,
(in millions)	2019		2018
FV-NI:
Realized gains	$	21	$	11
Realized losses	11		5
AFS:
Realized gains	29		1
Realized losses	24		5



	Year Ended December 31,
(in millions)	2017
Realized gains	$	11
Realized losses	8

DUKE ENERGY INDIANA

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



	December 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
Investments
Equity securities	$	43	$	—	$	81	$	29	$	—	$	67
Corporate debt securities	—		—		6		—		—		8
Municipal bonds	1		—		36		—		1		33
U.S. government bonds	—		—		2		—		—		—
Total Investments	$	44	$	—	$	125	$	29	$	1	$	108

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2019
Due in one year or less	$	4
Due after one through five years	16
Due after five through 10 years	7
Due after 10 years	17
Total	$	44

Realized gains and losses, which were determined on a specific identification basis, from sales of FV-NI and AFS securities for the year ended December 31, 2019, and 2018, and from sales of AFS securities for the year ended December 31, 2017, were insignificant.

17. FAIR VALUE MEASUREMENTS

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

Fair value measurements are classified in three levels based on the fair value hierarchy as defined by GAAP. Certain investments are not ~~have~~categorized within the ~~power~~fair value hierarchy. These investments are measured at fair value using the NAV per share practical expedient. The net asset value is derived based on the investment cost, less any impairment, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer.



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

Fair value accounting guidance permits entities to ~~direct the activities~~elect to measure certain financial instruments that ~~most significantly impact the economic performance, the obligation~~are not required to ~~absorb losses~~be accounted for at fair value, such as equity method investments or the ~~right~~company’s own debt, at fair value. The Duke Energy Registrants have not elected to ~~receive benefits~~record any of these ~~VIEs~~items at fair value.

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

Investments in equity securities

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

Investments in debt securities

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

Commodity derivatives

Commodity derivatives with clearinghouses are classified as Level 1. If forward price curves are not ~~consolidate these entities.~~observable for the full term of the contract and the unobservable period had more than an insignificant impact on the valuation, the commodity derivative is classified as Level 3. In isolation, increases (decreases) in natural gas forward prices result in favorable (unfavorable) fair value adjustments for natural gas purchase contracts; and increases (decreases) in electricity forward prices result in unfavorable (favorable) fair value adjustments for electricity sales contracts. Duke Energy regularly evaluates and validates pricing inputs used to estimate the fair value of natural gas commodity contracts by a market participant price verification procedure. This procedure provides a comparison of internal forward commodity curves to market participant generated curves.

Interest rate derivatives

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

Other fair value considerations

See Note 12 for a discussion of the valuation of goodwill and intangible assets.

DUKE ENERGY

The following tables provide recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets. Derivative amounts in the tables below for all Duke Energy Registrants exclude cash collateral, which is disclosed in Note 15. See Note 16 for additional information related to investments by major security type for the Duke Energy Registrants.



	December 31, 2019
(in millions)	Total Fair Value			Level 1			Level 2			Level 3			Not Categorized
NDTF equity securities	$	5,684		$	5,633		$	—		$	—		$	51
NDTF debt securities	2,469			826			1,643			—			—
Other equity securities	122			122			—			—			—
Other debt securities	310			91			219			—			—
Derivative assets	25			3			7			15			—
Total assets	8,610			6,675			1,869			15			51
NDTF equity security contracts	(23		)	—			(23		)	—			—
Derivative liabilities	(277		)	(15		)	(145		)	(117		)	—
Net assets (liabilities)	$	8,310		$	6,660		$	1,701		$	(102	)	$	51

~~211~~



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS



	December 31, 2018
(in millions)	Total Fair Value			Level 1			Level 2			Level 3			Not Categorized
NDTF equity securities	$	4,475		$	4,410		$	—		$	—		$	65
NDTF debt securities	2,231			576			1,655			—			—
Other equity securities	99			99			—			—			—
Other debt securities	270			67			203			—			—
Derivative assets	57			4			25			28			—
Total assets	7,132			5,156			1,883			28			65
Derivative liabilities	(242		)	(11		)	(90		)	(141		)	—
Net assets (liabilities)	$	6,890		$	5,145		$	1,793		$	(113	)	$	65

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



	December 31, 2019			December 31, 2018

(in millions)	Derivatives (net)			Derivatives (net)
Balance at beginning of period	$	(113	)	$	(114	)
Purchases, sales, issuances and settlements:
Purchases	37			57
Settlements	(44		)	(57		)
Total gains included on the Consolidated Balance Sheet	18			1
Balance at end of period	$	(102	)	$	(113	)

DUKE ENERGY CAROLINAS

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



	December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Not Categorized
NDTF equity securities	$	3,154		$	3,103	$	—		$	51
NDTF debt securities	1,193			227		966			—
Total assets	4,347			3,330		966			51
Derivative liabilities	(49		)	—		(49		)	—
Net assets	$	4,298		$	3,330	$	917		$	51



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



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

PROGRESS ENERGY

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



	December 31, 2019								December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	2,530		$	2,530	$	—		$	1,991		$	1,991	$	—
NDTF debt securities	1,276			599		677			1,162			427		735
Other debt securities	100			49		51			64			17		47
Derivative assets	7			—		7			4			—		4
Total assets	3,913			3,178		735			3,221			2,435		786
NDTF equity security contracts	(23		)	—		(23		)	—			—		—
Derivative liabilities	(65		)	—		(65		)	(44		)	—		(44		)
Net assets	$	3,825		$	3,178	$	647		$	3,177		$	2,435	$	742

DUKE ENERGY PROGRESS

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



	December 31, 2019								December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	2,077		$	2,077	$	—		$	1,588		$	1,588	$	—
NDTF debt securities	974			297		677			906			294		612
Other debt securities	2			2		—			6			6		—
Derivative assets	—			—		—			4			—		4
Total assets	3,053			2,376		677			2,504			1,888		616
Derivative liabilities	(49		)	—		(49		)	(27		)	—		(27		)
Net assets	$	3,004		$	2,376	$	628		$	2,477		$	1,888	$	589

DUKE ENERGY FLORIDA

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



	December 31, 2019								December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	453		$	453	$	—		$	403		$	403	$	—
NDTF debt securities	302			302		—			256			133		123
Other debt securities	55			4		51			48			1		47
Derivative assets	7			—		7			—			—		—
Total assets	817			759		58			707			537		170
NDTF equity security contracts	(23		)	—		(23		)	—			—		—
Derivative liabilities	(1		)	—		(1		)	(9		)	—		(9		)
Net assets	$	793		$	759	$	34		$	698		$	537	$	161

DUKE ENERGY OHIO

The recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets were not material at December 31, 2019, and 2018.



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

DUKE ENERGY INDIANA

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



	December 31, 2019										December 31, 2018
(in millions)	Total Fair Value			Level 1			Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3
Other equity securities	$	81		$	81		$	—	$	—	$	67	$	67	$	—	$	—
Other debt securities	44			—			44		—		41		—		41		—
Derivative assets	13			2			—		11		23		1		—		22
Total assets	138			83			44		11		131		68		41		22
Derivative liabilities	(1		)	(1		)	—		—		—		—		—		—
Total assets	$	137		$	82		$	44	$	11	$	131	$	68	$	41	$	22

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



	Derivatives (net)
	Years Ended December 31,
(in millions)	2019			2018
Balance at beginning of period	$	22		$	27
Purchases, sales, issuances and settlements:
Purchases	28			50
Settlements	(36		)	(53		)
Total losses included on the Consolidated Balance Sheet	(3		)	(2		)
Balance at end of period	$	11		$	22

PIEDMONT

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



	December 31, 2019								December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 3			Total Fair Value			Level 1		Level 3
Derivative assets	$	1		$	1	$	—		$	3		$	3	$	—
Derivative liabilities	(117		)	—		(117		)	(141		)	—		(141		)
Net (liabilities) assets	$	(116	)	$	1	$	(117	)	$	(138	)	$	3	$	(141	)

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



	Derivatives (net)
	Years Ended December 31,
(in millions)	2019			2018
Balance at beginning of period	$	(141	)	$	(142	)
Total gains and settlements	24			1
Balance at end of period	$	(117	)	$	(141	)



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS

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



	December 31, 2019
												Weighted
	Fair Value											Average
Investment Type	(in millions)			Valuation Technique	Unobservable Input	Range						Range
Duke Energy Ohio
FTRs	$	4		RTO auction pricing	FTR price – per MWh	$	0.59		–	$	3.47	$	2.07
Duke Energy Indiana
FTRs	11			RTO auction pricing	FTR price – per MWh	(0.66		)	–	9.24		1.15
Piedmont
Natural gas contracts	(117		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.59			–	2.46		1.91
Duke Energy
Total Level 3 derivatives	$	(102	)



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

OTHER FAIR VALUE DISCLOSURES

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



	December 31, 2019				December 31, 2018
(in millions)	Book Value		Fair Value		Book Value		Fair Value
Duke Energy^(a)	$	58,126	$	63,062	$	54,529	$	54,534
Duke Energy Carolinas	11,900		13,516		10,939		11,471
Progress Energy	19,634		22,291		18,911		19,885
Duke Energy Progress	9,058		9,934		8,204		8,300
Duke Energy Florida	7,987		9,131		7,321		7,742
Duke Energy Ohio	2,619		2,964		2,165		2,239
Duke Energy Indiana	4,057		4,800		3,782		4,158
Piedmont	2,384		2,642		2,138		2,180


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

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



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

18. VARIABLE INTEREST ENTITIES

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

CONSOLIDATED VIEs

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

NaN financial support was provided to any of the consolidated VIEs during the years ended December 31, 2019, 2018, and 2017, or is expected to be provided in the future, that was not previously contractually required.

Receivables Financing – DERF/DEPR/DEFR

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

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

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

Receivables Financing – CRC

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

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

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

Receivables Financing – Credit Facilities

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



	Duke Energy
			Duke Energy		Duke Energy		Duke Energy
			Carolinas		Progress		Florida
(in millions)	CRC		DERF		DEPR		DEFR
Expiration date	February 2023		December 2022		February 2021		April 2021
Credit facility amount	$	350	$	475	$	325	$	250
Amounts borrowed at December 31, 2019	350		474		325		250
Amounts borrowed at December 31, 2018	325		450		300		225
Restricted Receivables at December 31, 2019	522		642		489		336
Restricted Receivables at December 31, 2018	564		699		547		357

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



~~(a)~~FINANCIAL STATEMENTS	At December 31, 2017, Sabal Trail was considered a VIE due to having insufficient equity to finance their own activities without subordinated financial support. However, Sabal Trail is now a fully operational, well capitalized entity. As a result, Sabal Trail has sufficient equity to finance its own activities, and therefore, is no longer considered a VIE. Duke Energy's investment in Sabal Trail was $112 million at December 31, 2018.VARIABLE INTEREST ENTITIES


~~(b)~~	During the year ended December 31, 2018, Duke Energy recorded an OTTI of $55 million related to Constitution within Equity in earnings of unconsolidated affiliates on Duke Energy's Consolidated Statements of Income. See Note 4 for additional information.

~~See discussion under~~Energy's Consolidated ~~VIEs for additional information~~Balance Sheets related to ~~CRC.~~Commercial Renewables VIEs.



	December 31,
(in millions)	2019			2018
Current Assets: Other	$	203		$	123
Property, Plant and Equipment: Cost	5,747			4,007
Accumulated depreciation and amortization	(1,041		)	(698		)
Other Noncurrent Assets: Other	106			261
Current maturities of long-term debt	162			174
Long-Term Debt	1,541			1,587
Other Noncurrent Liabilities: AROs	127			106
Other Noncurrent Liabilities: Other	228			212

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

~~212~~



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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

NON-CONSOLIDATED VIEs

Duke Energy Ohio Duke Energy Indiana
2018
2017
2018
2017
Anticipated credit loss ratio 0.5 % 0.5 % 0.3 % 0.3 %
Discount rate 3.0 % 2.1 % 3.0 % 2.1 %
Receivable turnover rate 13.5 % 13.5 % 11.0 % 10.7 %

The following ~~table shows~~tables summarize the ~~gross and net receivables sold.~~

Duke Energy Ohio Duke Energy Indiana
(in millions) 2018
2017
2018
2017
Receivables sold $ 269
$ 273
$ 336
$ 312
Less: Retained interests 93
87
118
106
Net receivables sold $ 176
$ 186
$ 218
$ 206

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

Duke Energy Ohio Duke Energy Indiana
Years Ended December 31, Years Ended December 31,
(in millions) 2018
2017
2016
2018
2017
2016
Sales
Receivables sold $ 1,987
$ 1,879
$ 1,926
$ 2,842
$ 2,711
$ 2,635
Loss recognized on sale 13
10
9
16
12
11
Cash Flows
Cash proceeds from receivables sold 1,967
1,865
1,882
2,815
2,694
2,583
Collection fees received 1
1
1
1
1
1
Return received on retained interests 6
3
2
9
7
5

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

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



	December 31, 2019
	Duke Energy												Duke		Duke
	Pipeline			Commercial			Other						Energy		Energy
(in millions)	Investments			Renewables			VIEs^(a)			Total			Ohio		Indiana
Receivables from affiliated companies	$	—		$	(1	)	$	—		$	(1	)	$	64	$	77
Investments in equity method unconsolidated affiliates	1,179			300			—			1,479			—		—
Total assets	$	1,179		$	299		$	—		$	1,478		$	64	$	77
Taxes accrued	(1		)	—			—			(1		)	—		—
Other current liabilities	—			—			4			4			—		—
Deferred income taxes	59			—			—			59			—		—
Other noncurrent liabilities	—			—			11			11			—		—
Total liabilities	$	58		$	—		$	15		$	73		$	—	$	—
Net assets (liabilities)	$	1,121		$	299		$	(15	)	$	1,405		$	64	$	77

~~18. REVENUE~~

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

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

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

~~213~~



~~FINANCIAL STATEMENTS~~(a)	~~REVENUE~~Duke Energy holds a 50% equity interest in Pioneer. As of December 31, 2018, Pioneer was considered a VIE due to having insufficient equity to finance its own activities without subordinated financial support. In October 2019, Pioneer closed on a private placement debt offering that gave Pioneer sufficient equity to finance its own activities and, therefore, is no longer considered a VIE. Duke Energy's investment in Pioneer was $57 million at December 31, 2019.



	December 31, 2018
	Duke Energy										Duke		Duke
	Pipeline			Commercial		Other					Energy		Energy
(in millions)	Investments			Renewables		VIEs		Total			Ohio		Indiana
Receivables from affiliated companies	$	—		$	—	$	—	$	—		$	93	$	118
Investments in equity method unconsolidated affiliates	822			190		48		1,060			—		—
Total assets	$	822		$	190	$	48	$	1,060		$	93	$	118
Taxes accrued	(1		)	—		—		(1		)	—		—
Other current liabilities	—			—		4		4			—		—
Deferred income taxes	21			—		—		21			—		—
Other noncurrent liabilities	—			—		12		12			—		—
Total liabilities	$	20		$	—	$	16	$	36		$	—	$	—
Net assets	$	802		$	190	$	32	$	1,024		$	93	$	118

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

The Duke Energy ~~earns substantially all~~Registrants are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying values shown above except for the PPA with OVEC, which is discussed below, and various guarantees, including Duke Energy's guarantee agreement to support its ~~revenues through its reportable segments, Electric Utilities and Infrastructure, Gas Utilities and Infrastructure and Commercial Renewables.~~share of the ACP revolving credit facility. Duke Energy's maximum exposure to loss under the terms of the guarantee is $827 million, which represents 47% of the outstanding borrowings under the credit facility as of December 31, 2019. For more information on various guarantees, refer to Note 8.

Electric Utilities and Infrastructure

Duke Energy owns a 50% interest in DATC and in Pioneer, which build, own and operate electric transmission facilities in North America.

Gas Utilities and Infrastructure

The table below outlines Duke Energy's ownership interests in natural gas pipeline companies and natural gas storage facilities.



			Investment Amount (in millions)
	Ownership		December 31,		December 31,
Entity Name	Interest		2019		2018
Pipeline Investments
ACP	47	%	$	1,179	$	797
Sabal Trail	7.5	%	121		112		^(c)
Constitution	24	%	—		25
Cardinal^(a)	21.49	%	9		10
Storage Facilities
Pine Needle^(a)	45	%	28		13
Hardy Storage^(a)	50	%	51		46
Total Investments^(b)			$	1,388	$	1,003


(a)	Piedmont owns the Cardinal, Pine Needle and Hardy Storage investments.


(b)	Duke Energy includes purchase accounting adjustments related to Piedmont.


(c)	Sabal Trail returned capital of $112 million during the year ended December 31, 2018.

For regulatory matters and other information on the ACP, Sabal Trail and Constitution investments, see Notes 4 and 18.

Commercial Renewables



FINANCIAL STATEMENTS	INVESTMENTS IN UNCONSOLIDATED AFFILIATES

Impairment of Equity Method Investments

Other

14. RELATED PARTY TRANSACTIONS



	Years Ended December 31,
(in millions)	2019		2018		2017
Duke Energy Carolinas
Corporate governance and shared service expenses^(a)	$	841	$	985	$	858
Indemnification coverages^(b)	20		22		23
Joint Dispatch Agreement (JDA) revenue^(c)	60		84		49
JDA expense^(c)	186		207		145
Intercompany natural gas purchases^(d)	15		15		9
Progress Energy
Corporate governance and shared service expenses^(a)	$	778	$	906	$	736
Indemnification coverages^(b)	37		34		38
JDA revenue^(c)	186		207		145
JDA expense^(c)	60		84		49
Intercompany natural gas purchases^(d)	76		78		77
Duke Energy Progress
Corporate governance and shared service expenses^(a)	$	462	$	577	$	438
Indemnification coverages^(b)	15		13		15
JDA revenue^(c)	186		207		145
JDA expense^(c)	60		84		49
Intercompany natural gas purchases^(d)	76		78		77
Duke Energy Florida
Corporate governance and shared service expenses^(a)	$	316	$	329	$	298
Indemnification coverages^(b)	22		21		23
Duke Energy Ohio
Corporate governance and shared service expenses^(a)	$	354	$	374	$	363
Indemnification coverages^(b)	4		5		5
Duke Energy Indiana
Corporate governance and shared service expenses^(a)	$	412	$	405	$	370
Indemnification coverages^(b)	7		7		8
Piedmont
Corporate governance and shared service expenses^(a)	$	138	$	170	$	50
Indemnification coverages^(b)	3		2		2
Intercompany natural gas sales^(d)	91		93		86
Natural gas storage and transportation costs^(e)	23		25		25



FINANCIAL STATEMENTS	RELATED PARTY TRANSACTIONS

(a)


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

(c)

(d)


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

Intercompany Income Taxes



	Duke				Duke		Duke		Duke		Duke
	Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
December 31, 2019
Intercompany income tax receivable	$	—	$	125	$	28	$	—	$	9	$	28	$	13
Intercompany income tax payable	5		—		—		2		—		—		—

December 31, 2018
Intercompany income tax receivable	$	52	$	47	$	29	$	—	$	—	$	8	$	—
Intercompany income tax payable	—		—		—		16		3		—		45

15. DERIVATIVES AND HEDGING

INTEREST RATE RISK



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

Cash Flow Hedges

Undesignated Contracts

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

The following tables show notional amounts of outstanding derivatives related to interest rate risk.



	December 31, 2019
			Duke				Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio
Cash flow hedges	$	993	$	—	$	—	$	—	$	—	$	—
Undesignated contracts	1,277		450		800		250		550		27
Total notional amount^(a)	$	2,270	$	450	$	800	$	250	$	550	$	27



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


(a)	Duke Energy includes amounts related to consolidated VIEs of $693 million in cash flow hedges as of December 31, 2019, and $422 million in cash flow hedges and $194 million in undesignated contracts as of December 31, 2018.

COMMODITY PRICE RISK



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

Volumes



	December 31, 2019
		Duke		Duke	Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont
Electricity (GWh)	15,858	—	—	—	—	1,887	13,971	—
Natural gas (millions of Dth)	704	130	160	160	—	—	3	411



	December 31, 2018
		Duke		Duke	Duke	Duke	Duke
	Duke	Energy	Progress	Energy	Energy	Energy	Energy
	Energy	Carolinas	Energy	Progress	Florida	Ohio	Indiana	Piedmont
Electricity (GWh)	15,286	—	—	—	—	1,786	13,500	—
Natural gas (millions of Dth)	739	121	169	166	3	—	1	448

U.S. EQUITY SECURITIES RISK



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

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



Derivative Assets	December 31, 2019
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	17	$	—	$	—	$	—	$	—	$	3	$	13	$	1
Noncurrent	1		—		—		—		—		1		—		—
Total Derivative Assets – Commodity Contracts	$	18	$	—	$	—	$	—	$	—	$	4	$	13	$	1
Interest Rate Contracts
Not Designated as Hedging Instruments
Current	6		—		6		—		6		—		—		—
Total Derivative Assets – Interest Rate Contracts	$	6	$	—	$	6	$	—	$	6	$	—	$	—	$	—
Equity Securities Contracts
Not Designated as Hedging Instruments
Current	1		—		1		—		1		—		—		—
Total Derivative Assets – Equity Securities Contracts	$	1	$	—	$	1	$	—	$	1	$	—	$	—	$	—
Total Derivative Assets	$	25	$	—	$	7	$	—	$	7	$	4	$	13	$	1



Derivative Liabilities	December 31, 2019
			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Commodity Contracts
Not Designated as Hedging Instruments
Current	$	67	$	33	$	26	$	26	$	—	$	—	$	1	$	7
Noncurrent	156		10		37		22		—		—		—		110
Total Derivative Liabilities – Commodity Contracts	$	223	$	43	$	63	$	48	$	—	$	—	$	1	$	117
Interest Rate Contracts
Designated as Hedging Instruments
Current	$	19	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Noncurrent	21		—		—		—		—		—		—		—
Not Designated as Hedging Instruments
Current	8		6		1		1		—		1		—		—
Noncurrent	5		—		—		—		—		5		—		—
Total Derivative Liabilities – Interest Rate Contracts	$	53	$	6	$	1	$	1	$	—	$	6	$	—	$	—
Equity Securities Contracts
Not Designated as Hedging Instruments
Current	24		—		24		—		24		—		—		—
Total Derivative Liabilities – Equity Security Contracts	$	24	$	—	$	24	$	—	$	24	$	—	$	—	$	—
Total Derivative Liabilities	$	300	$	49	$	88	$	49	$	24	$	6	$	1	$	117



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING



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



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



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING

OFFSETTING ASSETS AND LIABILITIES



Derivative Assets	December 31, 2019
				Duke					Duke		Duke			Duke		Duke
	Duke			Energy		Progress			Energy		Energy			Energy		Energy
(in millions)	Energy			Carolinas		Energy			Progress		Florida			Ohio		Indiana		Piedmont
Current
Gross amounts recognized	$	24		$	—	$	7		$	—	$	7		$	3	$	13	$	1
Gross amounts offset	(1		)	—		(1		)	—		(1		)	—		—		—
Net amounts presented in Current Assets: Other	$	23		$	—	$	6		$	—	$	6		$	3	$	13	$	1
Noncurrent
Gross amounts recognized	$	1		$	—	$	—		$	—	$	—		$	1	$	—	$	—
Gross amounts offset	—			—		—			—		—			—		—		—
Net amounts presented in Other Noncurrent Assets: Other	$	1		$	—	$	—		$	—	$	—		$	1	$	—	$	—



Derivative Liabilities	December 31, 2019
				Duke					Duke		Duke			Duke		Duke
	Duke			Energy		Progress			Energy		Energy			Energy		Energy
(in millions)	Energy			Carolinas		Energy			Progress		Florida			Ohio		Indiana		Piedmont
Current
Gross amounts recognized	$	118		$	39	$	51		$	27	$	24		$	1	$	1	$	7
Gross amounts offset	(24		)	—		(24		)	—		(24		)	—		—		—
Net amounts presented in Current Liabilities: Other	$	94		$	39	$	27		$	27	$	—		$	1	$	1	$	7
Noncurrent
Gross amounts recognized	$	182		$	10	$	37		$	22	$	—		$	5	$	—	$	110
Gross amounts offset	—			—		—			—		—			—		—		—
Net amounts presented in Other Noncurrent Liabilities: Other	$	182		$	10	$	37		$	22	$	—		$	5	$	—	$	110



FINANCIAL STATEMENTS	DERIVATIVES AND HEDGING



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



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

OBJECTIVE CREDIT CONTINGENT FEATURES



	December 31, 2019
			Duke				Duke
	Duke		Energy		Progress		Energy
(in millions)	Energy		Carolinas		Energy		Progress
Aggregate fair value of derivatives in a net liability position	$	79	$	35	$	44	$	44
Fair value of collateral already posted	—		—		—		—
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered	79		35		44		44



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



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

16. INVESTMENTS IN DEBT AND EQUITY SECURITIES

Duke Energy's investments in debt and equity securities are primarily comprised of investments held in (i) the NDTF at Duke Energy Carolinas, Duke Energy Progress and Duke Energy Florida, (ii) the grantor trusts at Duke Energy Progress, Duke Energy Florida and Duke Energy Indiana related to OPEB plans and (iii) Bison. The Duke Energy Registrants classify investments in debt securities as AFS and investments in equity securities as FV-NI.

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

Investment Trusts

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

Other AFS Securities

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

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

DUKE ENERGY

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



	December 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	101	$	—	$	—	$	88
Equity securities	3,523		55		5,661		2,402		95		4,475
Corporate debt securities	37		1		603		4		13		566
Municipal bonds	13		—		368		1		4		353
U.S. government bonds	33		1		1,256		14		12		1,076
Other debt securities	3		—		141		—		2		148
Total NDTF Investments	$	3,609	$	57	$	8,130	$	2,421	$	126	$	6,706
Other Investments
Cash and cash equivalents	$	—	$	—	$	52	$	—	$	—	$	22
Equity securities	57		—		122		36		1		99
Corporate debt securities	3		—		67		—		2		60
Municipal bonds	4		—		94		—		1		85
U.S. government bonds	2		—		41		1		—		45
Other debt securities	—		—		56		—		1		58
Total Other Investments	$	66	$	—	$	432	$	37	$	5	$	369
Total Investments	$	3,675	$	57	$	8,562	$	2,458	$	131	$	7,075



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2019
Due in one year or less	$	372
Due after one through five years	550
Due after five through 10 years	452
Due after 10 years	1,252
Total	$	2,626



	Years Ended December 31,
(in millions)	2019		2018
FV-NI:
Realized gains	$	172	$	168
Realized losses	151		126
AFS:
Realized gains	94		22
Realized losses	67		51



	Year Ended December 31,
(in millions)	2017
Realized gains	$	202
Realized losses	160

DUKE ENERGY CAROLINAS

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



	December 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	21	$	—	$	—	$	29
Equity securities	1,914		8		3,154		1,309		54		2,484
Corporate debt securities	21		1		361		2		9		341
Municipal bonds	3		—		96		—		1		81
U.S. government bonds	16		1		578		5		8		475
Other debt securities	3		—		137		—		2		143
Total NDTF Investments	$	1,957	$	10	$	4,347	$	1,316	$	74	$	3,553

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2019
Due in one year or less	$	51
Due after one through five years	253
Due after five through 10 years	181
Due after 10 years	687
Total	$	1,172



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES



	Years Ended December 31,
(in millions)	2019		2018
FV-NI:
Realized gains	$	113	$	89
Realized losses	107		73
AFS:
Realized gains	55		19
Realized losses	38		35



	Year Ended December 31,
(in millions)	2017
Realized gains	$	135
Realized losses	103

PROGRESS ENERGY

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



	December 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	80	$	—	$	—	$	59
Equity securities	1,609		47		2,507		1,093		41		1,991
Corporate debt securities	16		—		242		2		4		225
Municipal bonds	10		—		272		1		3		272
U.S. government bonds	17		—		678		9		4		601
Other debt securities	—		—		4		—		—		5
Total NDTF Investments	$	1,652	$	47	$	3,783	$	1,105	$	52	$	3,153
Other Investments
Cash and cash equivalents	$	—	$	—	$	49	$	—	$	—	$	17
Municipal bonds	3		—		51		—		—		47
Total Other Investments	$	3	$	—	$	100	$	—	$	—	$	64
Total Investments	$	1,655	$	47	$	3,883	$	1,105	$	52	$	3,217

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2019
Due in one year or less	$	311
Due after one through five years	256
Due after five through 10 years	211
Due after 10 years	469
Total	$	1,247



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES



	Years Ended December 31,
(in millions)	2019		2018
FV-NI:
Realized gains	$	59	$	79
Realized losses	44		53
AFS:
Realized gains	36		3
Realized losses	29		15



	Year Ended December 31,
(in millions)	2017
Realized gains	$	65
Realized losses	56

DUKE ENERGY PROGRESS

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



	December 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	53	$	—	$	—	$	46
Equity securities	1,258		21		2,077		833		30		1,588
Corporate debt securities	16		—		242		2		3		171
Municipal bonds	10		—		272		1		3		271
U.S. government bonds	16		—		403		6		3		415
Other debt securities	—		—		4		—		—		3
Total NDTF Investments	$	1,300	$	21	$	3,051	$	842	$	39	$	2,494
Other Investments
Cash and cash equivalents	$	—	$	—	$	2	$	—	$	—	$	6
Total Other Investments	$	—	$	—	$	2	$	—	$	—	$	6
Total Investments	$	1,300	$	21	$	3,053	$	842	$	39	$	2,500

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2019
Due in one year or less	$	34
Due after one through five years	247
Due after five through 10 years	204
Due after 10 years	436
Total	$	921



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES



	Years Ended December 31,
(in millions)	2019		2018
FV-NI:
Realized gains	$	38	$	68
Realized losses	33		48
AFS:
Realized gains	7		2
Realized losses	5		10



	Year Ended December 31,
(in millions)	2017
Realized gains	$	54
Realized losses	48

DUKE ENERGY FLORIDA

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



	December 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
NDTF
Cash and cash equivalents	$	—	$	—	$	27	$	—	$	—	$	13
Equity securities	351		26		430		260		11		403
Corporate debt securities	—		—		—		—		1		54
Municipal bonds	—		—		—		—		—		1
U.S. government bonds	1		—		275		3		1		186
Other debt securities	—		—		—		—		—		2
Total NDTF Investments^(a)	$	352	$	26	$	732	$	263	$	13	$	659
Other Investments
Cash and cash equivalents	$	—	$	—	$	4	$	—	$	—	$	1
Municipal bonds	3		—		51		—		—		47
Total Other Investments	$	3	$	—	$	55	$	—	$	—	$	48
Total Investments	$	355	$	26	$	787	$	263	$	13	$	707


(a)	During the year ended December 31, 2019, Duke Energy Florida continued to receive reimbursements from the NDTF for costs related to ongoing decommissioning activity of the Crystal River Unit 3.

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2019
Due in one year or less	$	277
Due after one through five years	9
Due after five through 10 years	7
Due after 10 years	33
Total	$	326



FINANCIAL STATEMENTS	INVESTMENTS IN DEBT AND EQUITY SECURITIES



	Years Ended December 31,
(in millions)	2019		2018
FV-NI:
Realized gains	$	21	$	11
Realized losses	11		5
AFS:
Realized gains	29		1
Realized losses	24		5



	Year Ended December 31,
(in millions)	2017
Realized gains	$	11
Realized losses	8

DUKE ENERGY INDIANA

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



	December 31, 2019						December 31, 2018
	Gross		Gross				Gross		Gross
	Unrealized		Unrealized				Unrealized		Unrealized
	Holding		Holding		Estimated		Holding		Holding		Estimated
(in millions)	Gains		Losses		Fair Value		Gains		Losses		Fair Value
Investments
Equity securities	$	43	$	—	$	81	$	29	$	—	$	67
Corporate debt securities	—		—		6		—		—		8
Municipal bonds	1		—		36		—		1		33
U.S. government bonds	—		—		2		—		—		—
Total Investments	$	44	$	—	$	125	$	29	$	1	$	108

The table below summarizes the maturity date for debt securities.



(in millions)	December 31, 2019
Due in one year or less	$	4
Due after one through five years	16
Due after five through 10 years	7
Due after 10 years	17
Total	$	44

17. FAIR VALUE MEASUREMENTS

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



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

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

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

Investments in equity securities

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

Investments in debt securities

Commodity derivatives

Commodity derivatives with clearinghouses are classified as Level 1. If forward price curves are not observable for the full term of the contract and the unobservable period had more than an insignificant impact on the valuation, the commodity derivative is classified as Level 3. In isolation, increases (decreases) in natural gas forward prices result in favorable (unfavorable) fair value adjustments for natural gas purchase contracts; and increases (decreases) in electricity forward prices result in unfavorable (favorable) fair value adjustments for electricity sales contracts. Duke Energy regularly evaluates and validates pricing inputs used to estimate the fair value of natural gas commodity contracts by a market participant price verification procedure. This procedure provides a comparison of internal forward commodity curves to market participant generated curves.

Interest rate derivatives

Other fair value considerations

See Note 12 for a discussion of the valuation of goodwill and intangible assets.

DUKE ENERGY



	December 31, 2019
(in millions)	Total Fair Value			Level 1			Level 2			Level 3			Not Categorized
NDTF equity securities	$	5,684		$	5,633		$	—		$	—		$	51
NDTF debt securities	2,469			826			1,643			—			—
Other equity securities	122			122			—			—			—
Other debt securities	310			91			219			—			—
Derivative assets	25			3			7			15			—
Total assets	8,610			6,675			1,869			15			51
NDTF equity security contracts	(23		)	—			(23		)	—			—
Derivative liabilities	(277		)	(15		)	(145		)	(117		)	—
Net assets (liabilities)	$	8,310		$	6,660		$	1,701		$	(102	)	$	51



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS



	December 31, 2018
(in millions)	Total Fair Value			Level 1			Level 2			Level 3			Not Categorized
NDTF equity securities	$	4,475		$	4,410		$	—		$	—		$	65
NDTF debt securities	2,231			576			1,655			—			—
Other equity securities	99			99			—			—			—
Other debt securities	270			67			203			—			—
Derivative assets	57			4			25			28			—
Total assets	7,132			5,156			1,883			28			65
Derivative liabilities	(242		)	(11		)	(90		)	(141		)	—
Net assets (liabilities)	$	6,890		$	5,145		$	1,793		$	(113	)	$	65

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



	December 31, 2019			December 31, 2018

(in millions)	Derivatives (net)			Derivatives (net)
Balance at beginning of period	$	(113	)	$	(114	)
Purchases, sales, issuances and settlements:
Purchases	37			57
Settlements	(44		)	(57		)
Total gains included on the Consolidated Balance Sheet	18			1
Balance at end of period	$	(102	)	$	(113	)

DUKE ENERGY CAROLINAS

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



	December 31, 2019
(in millions)	Total Fair Value			Level 1		Level 2			Not Categorized
NDTF equity securities	$	3,154		$	3,103	$	—		$	51
NDTF debt securities	1,193			227		966			—
Total assets	4,347			3,330		966			51
Derivative liabilities	(49		)	—		(49		)	—
Net assets	$	4,298		$	3,330	$	917		$	51



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



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

PROGRESS ENERGY

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



	December 31, 2019								December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	2,530		$	2,530	$	—		$	1,991		$	1,991	$	—
NDTF debt securities	1,276			599		677			1,162			427		735
Other debt securities	100			49		51			64			17		47
Derivative assets	7			—		7			4			—		4
Total assets	3,913			3,178		735			3,221			2,435		786
NDTF equity security contracts	(23		)	—		(23		)	—			—		—
Derivative liabilities	(65		)	—		(65		)	(44		)	—		(44		)
Net assets	$	3,825		$	3,178	$	647		$	3,177		$	2,435	$	742

DUKE ENERGY PROGRESS

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



	December 31, 2019								December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	2,077		$	2,077	$	—		$	1,588		$	1,588	$	—
NDTF debt securities	974			297		677			906			294		612
Other debt securities	2			2		—			6			6		—
Derivative assets	—			—		—			4			—		4
Total assets	3,053			2,376		677			2,504			1,888		616
Derivative liabilities	(49		)	—		(49		)	(27		)	—		(27		)
Net assets	$	3,004		$	2,376	$	628		$	2,477		$	1,888	$	589

DUKE ENERGY FLORIDA

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



	December 31, 2019								December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 2			Total Fair Value			Level 1		Level 2
NDTF equity securities	$	453		$	453	$	—		$	403		$	403	$	—
NDTF debt securities	302			302		—			256			133		123
Other debt securities	55			4		51			48			1		47
Derivative assets	7			—		7			—			—		—
Total assets	817			759		58			707			537		170
NDTF equity security contracts	(23		)	—		(23		)	—			—		—
Derivative liabilities	(1		)	—		(1		)	(9		)	—		(9		)
Net assets	$	793		$	759	$	34		$	698		$	537	$	161

DUKE ENERGY OHIO

The recorded balances for assets and liabilities measured at fair value on a recurring basis on the Consolidated Balance Sheets were not material at December 31, 2019, and 2018.



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

DUKE ENERGY INDIANA

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



	December 31, 2019										December 31, 2018
(in millions)	Total Fair Value			Level 1			Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3
Other equity securities	$	81		$	81		$	—	$	—	$	67	$	67	$	—	$	—
Other debt securities	44			—			44		—		41		—		41		—
Derivative assets	13			2			—		11		23		1		—		22
Total assets	138			83			44		11		131		68		41		22
Derivative liabilities	(1		)	(1		)	—		—		—		—		—		—
Total assets	$	137		$	82		$	44	$	11	$	131	$	68	$	41	$	22

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



	Derivatives (net)
	Years Ended December 31,
(in millions)	2019			2018
Balance at beginning of period	$	22		$	27
Purchases, sales, issuances and settlements:
Purchases	28			50
Settlements	(36		)	(53		)
Total losses included on the Consolidated Balance Sheet	(3		)	(2		)
Balance at end of period	$	11		$	22

PIEDMONT

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



	December 31, 2019								December 31, 2018
(in millions)	Total Fair Value			Level 1		Level 3			Total Fair Value			Level 1		Level 3
Derivative assets	$	1		$	1	$	—		$	3		$	3	$	—
Derivative liabilities	(117		)	—		(117		)	(141		)	—		(141		)
Net (liabilities) assets	$	(116	)	$	1	$	(117	)	$	(138	)	$	3	$	(141	)

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



	Derivatives (net)
	Years Ended December 31,
(in millions)	2019			2018
Balance at beginning of period	$	(141	)	$	(142	)
Total gains and settlements	24			1
Balance at end of period	$	(117	)	$	(141	)



FINANCIAL STATEMENTS	FAIR VALUE MEASUREMENTS

QUANTITATIVE INFORMATION ABOUT UNOBSERVABLE INPUTS

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



	December 31, 2019
												Weighted
	Fair Value											Average
Investment Type	(in millions)			Valuation Technique	Unobservable Input	Range						Range
Duke Energy Ohio
FTRs	$	4		RTO auction pricing	FTR price – per MWh	$	0.59		–	$	3.47	$	2.07
Duke Energy Indiana
FTRs	11			RTO auction pricing	FTR price – per MWh	(0.66		)	–	9.24		1.15
Piedmont
Natural gas contracts	(117		)	Discounted cash flow	Forward natural gas curves – price per MMBtu	1.59			–	2.46		1.91
Duke Energy
Total Level 3 derivatives	$	(102	)



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

OTHER FAIR VALUE DISCLOSURES



	December 31, 2019				December 31, 2018
(in millions)	Book Value		Fair Value		Book Value		Fair Value
Duke Energy^(a)	$	58,126	$	63,062	$	54,529	$	54,534
Duke Energy Carolinas	11,900		13,516		10,939		11,471
Progress Energy	19,634		22,291		18,911		19,885
Duke Energy Progress	9,058		9,934		8,204		8,300
Duke Energy Florida	7,987		9,131		7,321		7,742
Duke Energy Ohio	2,619		2,964		2,165		2,239
Duke Energy Indiana	4,057		4,800		3,782		4,158
Piedmont	2,384		2,642		2,138		2,180


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



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

18. VARIABLE INTEREST ENTITIES

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

CONSOLIDATED VIEs

Receivables Financing – DERF/DEPR/DEFR

Receivables Financing – CRC

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

Receivables Financing – Credit Facilities

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



	Duke Energy
			Duke Energy		Duke Energy		Duke Energy
			Carolinas		Progress		Florida
(in millions)	CRC		DERF		DEPR		DEFR
Expiration date	February 2023		December 2022		February 2021		April 2021
Credit facility amount	$	350	$	475	$	325	$	250
Amounts borrowed at December 31, 2019	350		474		325		250
Amounts borrowed at December 31, 2018	325		450		300		225
Restricted Receivables at December 31, 2019	522		642		489		336
Restricted Receivables at December 31, 2018	564		699		547		357



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

Nuclear Asset-Recovery Bonds – Duke Energy Florida Project Finance, LLC (DEFPF)

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

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

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

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



	December 31,
(in millions)	2019		2018
Receivables of VIEs	$	5	$	5
Regulatory Assets: Current	52		52
Current Assets: Other	39		39
Other Noncurrent Assets: Regulatory assets	989		1,041
Current Liabilities: Other	10		10
Current maturities of long-term debt	54		53
Long-Term Debt	1,057		1,111

Commercial Renewables

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

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



	December 31,
(in millions)	2019			2018
Current Assets: Other	$	203		$	123
Property, Plant and Equipment: Cost	5,747			4,007
Accumulated depreciation and amortization	(1,041		)	(698		)
Other Noncurrent Assets: Other	106			261
Current maturities of long-term debt	162			174
Long-Term Debt	1,541			1,587
Other Noncurrent Liabilities: AROs	127			106
Other Noncurrent Liabilities: Other	228			212



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

NON-CONSOLIDATED VIEs

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



	December 31, 2019
	Duke Energy												Duke		Duke
	Pipeline			Commercial			Other						Energy		Energy
(in millions)	Investments			Renewables			VIEs^(a)			Total			Ohio		Indiana
Receivables from affiliated companies	$	—		$	(1	)	$	—		$	(1	)	$	64	$	77
Investments in equity method unconsolidated affiliates	1,179			300			—			1,479			—		—
Total assets	$	1,179		$	299		$	—		$	1,478		$	64	$	77
Taxes accrued	(1		)	—			—			(1		)	—		—
Other current liabilities	—			—			4			4			—		—
Deferred income taxes	59			—			—			59			—		—
Other noncurrent liabilities	—			—			11			11			—		—
Total liabilities	$	58		$	—		$	15		$	73		$	—	$	—
Net assets (liabilities)	$	1,121		$	299		$	(15	)	$	1,405		$	64	$	77

(a)

Duke Energy holds a 50% equity interest in Pioneer. As of December 31, 2018, Pioneer was considered a VIE due to having insufficient equity to finance its own activities without subordinated financial support. In October 2019, Pioneer closed on a private placement debt offering that gave Pioneer sufficient equity to finance its own activities and, therefore, is no longer considered a VIE. Duke Energy's investment in Pioneer was $57 million at December 31, 2019.



	December 31, 2018
	Duke Energy										Duke		Duke
	Pipeline			Commercial		Other					Energy		Energy
(in millions)	Investments			Renewables		VIEs		Total			Ohio		Indiana
Receivables from affiliated companies	$	—		$	—	$	—	$	—		$	93	$	118
Investments in equity method unconsolidated affiliates	822			190		48		1,060			—		—
Total assets	$	822		$	190	$	48	$	1,060		$	93	$	118
Taxes accrued	(1		)	—		—		(1		)	—		—
Other current liabilities	—			—		4		4			—		—
Deferred income taxes	21			—		—		21			—		—
Other noncurrent liabilities	—			—		12		12			—		—
Total liabilities	$	20		$	—	$	16	$	36		$	—	$	—
Net assets	$	802		$	190	$	32	$	1,024		$	93	$	118

The Duke Energy Registrants are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying values shown above except for the PPA with OVEC, which is discussed below, and various guarantees, including Duke Energy's guarantee agreement to support its share of the ACP revolving credit facility. Duke Energy's maximum exposure to loss under the terms of the guarantee is $827 million, which represents 47% of the outstanding borrowings under the credit facility as of December 31, 2019. For more information on various guarantees, refer to Note 8.

Pipeline Investments

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



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

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



			VIE Investment Amount (in millions)
	Ownership		December 31,		December 31,
Entity Name	Interest		2019		2018
ACP^(a)	47	%	$	1,179	$	797
Constitution^(b)	24	%	—		25
Total			$	1,179	$	822


(a)	Duke Energy evaluated this investment for impairment as of December 31, 2019, and 2018, and determined that fair value approximated carrying value and therefore no impairment was necessary.

(b)

During the years ended December 31, 2019, and 2018, Duke Energy recorded an OTTI of $25 million and $55 million, respectively, related to Constitution within Equity in earnings of unconsolidated affiliates on Duke Energy's Consolidated Statements of Income. The current year charge resulted in the full write-down of Duke Energy's investment in Constitution. See Notes 4 and 13 for additional information.

Commercial Renewables

Duke Energy has investments in various renewable energy project entities. Some of these entities are VIEs due to Duke Energy issuing guarantees for debt service and operations and maintenance reserves in support of debt financings. Duke Energy does not consolidate these VIEs because power to direct and control key activities is shared jointly by Duke Energy and other owners. In 2019, Duke Energy acquired a majority ownership in a portfolio of distributed fuel cell projects from Bloom Energy Corporation. Duke Energy is not the primary beneficiary of the assets within the portfolio and does not consolidate the assets in the portfolio.

OVEC

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

As a counterparty to an Inter-Company Power Agreement (ICPA), Duke Energy Ohio has a contractual arrangement to receive entitlements to capacity and energy from OVEC’s power plants through June 2040 commensurate with its power participation ratio, which is equivalent to Duke Energy Ohio's ownership interest. Costs, including fuel, operating expenses, fixed costs, debt amortization and interest expense, are allocated to counterparties to the ICPA based on their power participation ratio. The value of the ICPA is subject to variability due to fluctuation in power prices and changes in OVEC's cost of business. On March 31, 2018, FES, a subsidiary of FirstEnergy Corp. and an ICPA counterparty with a power participation ratio of 4.85%, filed for Chapter 11 bankruptcy, which could increase costs allocated to the counterparties. On July 31, 2018, the bankruptcy court rejected the FES ICPA, which means OVEC is an unsecured creditor in the FES bankruptcy proceeding. Duke Energy Ohio cannot predict the impact of the bankruptcy filing on its OVEC interests. In addition, certain proposed environmental rulemaking could result in future increased OVEC cost allocations. See Note 4 for additional information.

CRC

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

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

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



	Duke Energy Ohio				Duke Energy Indiana
	2019		2018		2019		2018
Anticipated credit loss ratio	0.6	%	0.5	%	0.3	%	0.3	%
Discount rate	3.3	%	3.0	%	3.3	%	3.0	%
Receivable turnover rate	13.4	%	13.5	%	11.5	%	11.0	%



FINANCIAL STATEMENTS	VARIABLE INTEREST ENTITIES

The following table shows the gross and net receivables sold.



	Duke Energy Ohio				Duke Energy Indiana
	December 31,				December 31,
(in millions)	2019		2018		2019		2018
Receivables sold	$	253	$	269	$	307	$	336
Less: Retained interests	64		93		77		118
Net receivables sold	$	189	$	176	$	230	$	218

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



	Duke Energy Ohio						Duke Energy Indiana
	Years Ended December 31,						Years Ended December 31,
(in millions)	2019		2018		2017		2019		2018		2017
Sales
Receivables sold	$	1,979	$	1,987	$	1,879	$	2,837	$	2,842	$	2,711
Loss recognized on sale	14		13		10		17		16		12
Cash flows
Cash proceeds from receivables sold	1,993		1,967		1,865		2,860		2,815		2,694
Collection fees received	1		1		1		1		1		1
Return received on retained interests	6		6		3		9		9		7

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

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

19. REVENUE

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

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

Electric Utilities and Infrastructure

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



FINANCIAL STATEMENTS	REVENUE

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

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

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



	Remaining Performance Obligations
(in millions)	2020		2021		2022		2023		2024		Thereafter		Total
Progress Energy	$	121	$	92	$	87	$	44	$	45	$	58	$	447
Duke Energy Progress	8		8		8		8		8		—		40
Duke Energy Florida	113		84		79		36		37		58		407
Duke Energy Indiana	10		5		—		—		—		—		15

Remaining Performance Obligations
(in millions) 2019
2020
2021
2022
2023
Thereafter
Total
Progress Energy $ 112
$ 121
$ 80
$ 82
$ 39
$ 42
$ 476
Duke Energy Progress 9
9
9
9
9
9
54
Duke Energy Florida 103
112
71
73
30
33
422
Duke Energy Indiana 9
10
5
—
—
—
24

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

Gas Utilities and Infrastructure

Gas Utilities and Infrastructure earns its revenue through retail and wholesale natural gas service through the transportation, distribution and sale of natural gas. Duke Energy generally provides retail and wholesale natural gas service customers with all natural gas load requirements. Additionally, while natural gas can be stored, substantially all natural gas provided by Duke Energy is consumed by customers simultaneously with receipt of delivery.

Retail natural gas service is marketed throughout Duke Energy's natural gas service territory using published tariff rates. The tariff rates are established by regulators in Duke Energy's service territories. Each tariff, which is assigned to customers based on customer class, have multiple components, such as a commodity charge, demand charge, customer or monthly charge and transportation costs. Duke Energy considers each of these components to be aggregated into a single performance obligation for providing natural gas service. For contracts where Duke Energy provides all of the customer’s natural gas needs, the delivery of natural gas is considered a single performance obligation satisfied over time, and revenue is recognized monthly based on billings and unbilled estimates as service is provided and the commodity is consumed over the billing period. Additionally, natural gas service is typically at-will and customers can cancel service at any time, without a substantive penalty. Duke Energy also adheres to applicable regulatory requirements to ensure the collectability of amounts billed and receivable and appropriate mitigating procedures are followed when necessary.

~~214~~



~~FINANCIAL STATEMENTS~~	~~REVENUE~~

Certain long-term individually negotiated contracts exist to provide natural gas service. These contracts are regulated and approved by state commissions. The negotiated contracts have multiple components, including a natural gas and a demand charge, similar to retail natural gas contracts. Duke Energy considers each of these components to be a single performance obligation for providing natural gas service. This service represents consumption over the billing period, generally one month.

Fixed capacity payments under long-term contracts for the Gas Utilities and Infrastructure segment include minimum margin contracts and supply arrangements with municipalities and power generation facilities. Revenues for related sales are recognized monthly as natural gas is delivered and stand-ready service is provided, consistent with invoiced amounts and unbilled estimates. Estimated remaining performance obligations are as follows:



	Remaining Performance Obligations
(in millions)	2020		2021		2022		2023		2024		Thereafter		Total
Piedmont	$	69	$	64	$	64	$	61	$	58	$	372	$	688

Remaining Performance Obligations
(in millions) 2019
2020
2021
2022
2023
Thereafter
Total
Piedmont $ 70
$ 68
$ 63
$ 63
$ 60
$ 430
$ 754



FINANCIAL STATEMENTS	REVENUE

Commercial Renewables

Commercial Renewables earns the majority of its revenues through long-term PPAs and generally sells all of its wind and solar facility output, electricity and RECs to customers. The majority of these PPAs have historically been accounted for as leases. For PPAs that are not accounted for as leases, the delivery of electricity and the delivery of RECs are considered separate performance obligations.

The delivery of electricity is a performance obligation satisfied over time and represents generation and consumption of the electricity over the billing period, generally one month. The delivery of RECs is a performance obligation satisfied at a point in time and represents delivery of each REC generated by the wind or solar facility. The majority of self-generated RECs are bundled with energy in Duke Energy’s contracts and, as such, related revenues are recognized as energy is generated and delivered as that pattern is consistent with Duke Energy’s performance. Commercial Renewables recognizes revenue based on the energy generated and billed for the period, generally one month, at contractual rates (including unbilled estimates) according to the invoice practical expedient. Amounts are typically due within 30 days of invoice.

Commercial Renewables also earns revenues from installation of distributed solar generation resources, which is primarily composed of EPC projects to deliver functioning solar power systems, generally completed within two to 12 months from commencement of construction. The installation of distributed solar generation resources is a performance obligation that is satisfied over time. Revenue from fixed-price EPC contracts is recognized using the input method as work is performed based on the estimated ratio of incurred costs to estimated total costs.

Other

The remainder of Duke Energy’s operations is presented as Other, which does not include material revenues from contracts with customers.

~~215~~



FINANCIAL STATEMENTS	REVENUE

Disaggregated Revenues

For the Electric and Gas Utility and Infrastructure segments, revenue by customer class is most meaningful to Duke Energy as each respective customer class collectively represents unique customer expectations of service, generally has different energy and demand requirements, and operates under tailored, regulatory approved pricing structures. Additionally, each customer class is impacted differently by weather and a variety of economic factors including the level of population growth, economic investment, employment levels, and regulatory activities in each of Duke Energy’s jurisdictions. As such, analyzing revenues disaggregated by customer class allows Duke Energy to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. For the Commercial Renewables segment, the majority of revenues from contracts with customers are from selling all of the unit-contingent output at contractually defined pricing under long-term PPAs with consistent expectations regarding the timing and certainty of cash flows. Disaggregated revenues are presented as follows:


	Year Ended December 31, 2018																Year Ended December 31, 2019
			Duke				Duke		Duke		Duke		Duke						Duke				Duke		Duke		Duke		Duke
(in millions)	Duke		Energy		Progress		Energy		Energy		Energy		Energy				Duke		Energy		Progress		Energy		Energy		Energy		Energy
By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont		Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Electric Utilities and Infrastructure
Residential	$	9,587	$	2,981	$	4,785	$	2,019	$	2,766	$	743	$	1,076	$	—	$	9,863	$	3,044	$	4,998	$	2,144	$	2,854	$	733	$	1,087	$	—
General	6,127		2,119		2,809		1,280		1,529		422		778		—		6,431		2,244		2,935		1,368		1,567		451		802		—
Industrial	2,974		1,180		904		642		262		131		760		—		3,071		1,215		934		675		259		147		774		—
Wholesale	2,324		508		1,462		1,303		159		57		298		—		2,212		462		1,468		1,281		187		46		235		—
Other revenues	717		320		502		320		182		73		91		—		770		276		548		317		231		80		89		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	21,729	$	7,108	$	10,462	$	5,564	$	4,898	$	1,426	$	3,003	$	—	$	22,347	$	7,241	$	10,883	$	5,785	$	5,098	$	1,457	$	2,987	$	—

Gas Utilities and Infrastructure
Residential	$	1,000	$	—	$	—	$	—	$	—	$	331	$	—	$	669	$	976	$	—	$	—	$	—	$	—	$	315	$	—	$	661
Commercial	514		—		—		—		—		135		—		378		508		—		—		—		—		130		—		378
Industrial	147		—		—		—		—		18		—		128		141		—		—		—		—		19		—		122
Power Generation	—		—		—		—		—		—		—		54		—		—		—		—		—		—		—		51
Other revenues	139		—		—		—		—		19		—		120		129		—		—		—		—		19		—		110
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	1,800	$	—	$	—	$	—	$	—	$	503	$	—	$	1,349	$	1,754	$	—	$	—	$	—	$	—	$	483	$	—	$	1,322

Commercial Renewables
Revenue from contracts with customers	$	209	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	223	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other
Revenue from contracts with customers	$	19	$	—	$	—	$	—	$	—	$	1	$	—	$	—	$	24	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total revenue from contracts with customers	$	23,757	$	7,108	$	10,462	$	5,564	$	4,898	$	1,930	$	3,003	$	1,349	$	24,348	$	7,241	$	10,883	$	5,785	$	5,098	$	1,940	$	2,987	$	1,322

Other revenue sources^(a)	$	764	$	192	$	266	$	135	$	123	$	27	$	56	$	26	$	731	$	154	$	319	$	172	$	133	$	—	$	17	$	59
Total revenues	$	24,521	$	7,300	$	10,728	$	5,699	$	5,021	$	1,957	$	3,059	$	1,375	$	25,079	$	7,395	$	11,202	$	5,957	$	5,231	$	1,940	$	3,004	$	1,381


(a)	Other revenue sources include revenues from leases, derivatives and alternative revenue programs that are not considered revenues from contracts with customers. Alternative revenue programs in certain jurisdictions include regulatory mechanisms that periodically adjust for over or under collection of related revenues.



FINANCIAL STATEMENTS	REVENUE



	Year Ended December 31, 2018
			Duke				Duke		Duke		Duke		Duke
(in millions)	Duke		Energy		Progress		Energy		Energy		Energy		Energy
By market or type of customer	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Electric Utilities and Infrastructure
Residential	$	9,587	$	2,981	$	4,785	$	2,019	$	2,766	$	743	$	1,076	$	—
General	6,127		2,119		2,809		1,280		1,529		422		778		—
Industrial	2,974		1,180		904		642		262		131		760		—
Wholesale	2,324		508		1,462		1,303		159		57		298		—
Other revenues	717		320		502		320		182		73		91		—
Total Electric Utilities and Infrastructure revenue from contracts with customers	$	21,729	$	7,108	$	10,462	$	5,564	$	4,898	$	1,426	$	3,003	$	—

Gas Utilities and Infrastructure
Residential	$	1,000	$	—	$	—	$	—	$	—	$	331	$	—	$	669
Commercial	514		—		—		—		—		135		—		378
Industrial	147		—		—		—		—		18		—		128
Power Generation	—		—		—		—		—		—		—		54
Other revenues	139		—		—		—		—		19		—		120
Total Gas Utilities and Infrastructure revenue from contracts with customers	$	1,800	$	—	$	—	$	—	$	—	$	503	$	—	$	1,349

Commercial Renewables
Revenue from contracts with customers	$	209	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Other
Revenue from contracts with customers	$	19	$	—	$	—	$	—	$	—	$	1	$	—	$	—

Total revenue from contracts with customers	$	23,757	$	7,108	$	10,462	$	5,564	$	4,898	$	1,930	$	3,003	$	1,349

Other revenue sources^(a)	$	764	$	192	$	266	$	135	$	123	$	27	$	56	$	26
Total revenues	$	24,521	$	7,300	$	10,728	$	5,699	$	5,021	$	1,957	$	3,059	$	1,375


(a)	Other revenue sources include revenues from leases, derivatives and alternative revenue programs that are not considered revenues from contracts with customers. Alternative revenue programs in certain jurisdictions include regulatory mechanisms that periodically adjust for over or under collection of related revenues.

IMPACT OF WEATHER AND THE TIMING OF BILLING PERIODS

Revenues and costs are influenced by seasonal weather patterns. Peak sales of electricity occur during the summer and winter months, which results in higher revenue and cash flows during these periods. By contrast, lower sales of electricity occur during the spring and fall, allowing for scheduled plant maintenance. Residential and general service customers are more impacted by weather than industrial customers. Estimated weather impacts are based on actual current period weather compared to normal weather conditions. Normal weather conditions are defined as the long-term average of actual historical weather conditions. ~~Heating-degree~~Heating degree days measure the variation in weather based on the extent the average daily temperature falls below a base temperature. ~~Cooling-degree~~Cooling degree days measure the variation in weather based on the extent the average daily temperature rises above the base temperature. Each degree of temperature below the base temperature counts as one ~~heating-degree~~heating degree day and each degree of temperature above the base temperature counts as one ~~cooling-degree~~cooling degree day.

~~216~~



~~FINANCIAL STATEMENTS~~	~~REVENUE~~

The estimated impact of weather on earnings for Electric Utilities and Infrastructure is based on the temperature variances from a normal condition and customers' historic usage patterns. The methodology used to estimate the impact of weather does not consider all variables that may impact customer response to weather conditions, such as humidity in the summer or wind chill in the winter. The precision of this estimate may also be impacted by applying long-term weather trends to shorter-term periods.

Gas Utilities and Infrastructure's costs and revenues are influenced by seasonal patterns due to peak natural gas sales occurring during the winter months as a result of space heating requirements. Residential customers are the most impacted by weather. There are certain regulatory mechanisms for the North Carolina, South Carolina, Tennessee, Ohio and ~~Ohio~~Kentucky service territories that normalize the margins collected from certain customer classes during the winter. In North Carolina, rate design provides protection from both weather and other usage variations such as conservation, while South Carolina, Tennessee and ~~Tennessee~~Kentucky revenues are adjusted solely based on weather. Ohio primarily employs a fixed charge each month regardless of the season and usage.



FINANCIAL STATEMENTS	REVENUE

UNBILLED REVENUE

Unbilled revenues are recognized by applying customer billing rates to the estimated volumes of energy or natural gas delivered but not yet billed. Unbilled revenues can vary significantly from period to period as a result of seasonality, weather, customer usage patterns, customer mix, average price in effect for customer classes, timing of rendering customer bills and meter reading schedules, and the impact of weather normalization or margin decoupling mechanisms.

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



	December 31,
(in millions)	2019		2018
Duke Energy	$	843	$	896
Duke Energy Carolinas	298		313
Progress Energy	217		244
Duke Energy Progress	122		148
Duke Energy Florida	95		96
Duke Energy Ohio	1		2
Duke Energy Indiana	16		23
Piedmont	78		73

December 31,
(in millions) 2018
2017
Duke Energy $ 896
$ 944
Duke Energy Carolinas 313
342
Progress Energy 244
228
Duke Energy Progress 148
143
Duke Energy Florida 96
85
Duke Energy Ohio 2
4
Duke Energy Indiana 23
21
Piedmont 73
86

Additionally, Duke Energy Ohio and Duke Energy Indiana sell, on a revolving basis, nearly all of their retail accounts receivable, including receivables for unbilled revenues, to an affiliate, CRC and ~~accounts~~account for the transfers of receivables as sales. Accordingly, the receivables sold are not reflected on the Consolidated Balance Sheets of Duke Energy Ohio and Duke Energy Indiana. See Note 1718 for further information. These receivables for unbilled revenues are shown in the table below.



	December 31,
(in millions)	2019		2018
Duke Energy Ohio	$	82	$	86
Duke Energy Indiana	115		128

December 31,
(in millions) 2018
2017
Duke Energy Ohio $ 86
$ 104
Duke Energy Indiana 128
132

~~19. COMMON STOCK~~20. STOCKHOLDERS' EQUITY

Basic EPS is computed by dividing net income ~~attributable~~available to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income ~~attributable~~available to Duke Energy common stockholders, as adjusted for distributed and undistributed earnings allocated to participating securities, by the diluted weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other agreements to issue common ~~shares,~~stock, such as stock options and equity forward sale agreements, were exercised or settled. Duke Energy’s participating securities are ~~restricted stock units~~RSUs that are entitled to dividends declared on Duke Energy common stock during the ~~restricted~~RSUs vesting periods. Dividends declared on preferred stock ~~unit’s vesting periods.~~are recorded on the Consolidated Statements of Operations as a reduction of net income to arrive at net income available to Duke Energy common stockholders. Dividends accumulated on preferred stock are a reduction to net income used in the calculation of basic and diluted EPS.

~~217~~



~~FINANCIAL STATEMENTS~~	~~COMMON STOCK~~

The following table presents Duke Energy’s basic and diluted EPS calculations, ~~and reconciles~~ the weighted average number of common ~~stock~~shares outstanding ~~to the diluted weighted average number of~~and common ~~stock outstanding.~~and preferred share dividends declared.

Years Ended December 31,
(in millions, except per share amounts) 2018
2017
2016
Income from continuing operations attributable to Duke Energy common stockholders excluding impact of participating securities $ 2,642
$ 3,059
$ 2,567
Weighted average shares outstanding – basic 708
700
691
Weighted average shares outstanding – diluted 708
700
691
Earnings per share from continuing operations attributable to Duke Energy common stockholders
Basic $ 3.73
$ 4.37
$ 3.71
Diluted $ 3.73
$ 4.37
$ 3.71
Potentially dilutive items excluded from the calculation^(a)
2
2
2
Dividends declared per common share $ 3.64
$ 3.49
$ 3.36



	Years Ended December 31,
(in millions, except per share amounts)	2019		2018		2017
Income from continuing operations available to Duke Energy common stockholders excluding impact of participating securities and including accumulated preferred stock dividends	$	3,694	$	2,642	$	3,059
Weighted average common shares outstanding – basic and diluted	729		708		700
EPS from continuing operations available to Duke Energy common stockholders
Basic and diluted	$	5.07	$	3.73	$	4.37
Potentially dilutive items excluded from the calculation^(a)	2		2		2
Dividends declared per common share	$	3.75	$	3.64	$	3.49
Dividends declared on Series A preferred stock per depositary share	$	1.03	$	—	$	—


(a)	Performance stock awards were not included in the dilutive securities calculation because the performance measures related to the awards had not been met.

~~Equity Issuances~~Common Stock

OnIn February ~~20,~~ 2018, Duke Energy filed a prospectus supplement and executed an ~~EDA~~Equity Distribution Agreement (EDA) under which it may sell up to $1 billion of its common stock through an ATM offering program, including an equity forward sales component. ~~The EDA was entered into with Wells Fargo Securities, LLC, Citigroup Global Markets Inc., and J.P. Morgan Securities LLC (the Agents).~~ Under the terms of the EDA, Duke Energy ~~may~~was allowed to issue and sell ~~through any of the Agents,~~ shares of common ~~stock during the period ending~~stock. The existing ATM offering program expired in September ~~23,~~ 2019.



FINANCIAL STATEMENTS	STOCKHOLDERS' EQUITY

In June 2018, Duke Energy marketed two separate tranches, each for 1.3 million shares, of common ~~stock. The first tranche was marketed with Wells Fargo Bank at an initial forward price of~~ ~~$72.02~~ ~~per share and the second tranche was marketed with Citibank at an initial forward price of~~ ~~$78.71~~ ~~per share~~stock through equity forward transactions under the ATM program. In December 2018, Duke Energy physically settled these equity forwards by delivering 2.6 million shares of common stock in exchange for net proceeds of approximately $195 million.

In March 2018, Duke Energy marketed an equity offering of 21.3 million shares of common stock through an Underwriting Agreement. In connection with the offering, Duke Energy entered into equity forward sale agreements. The ~~Equity Forwards require~~equity forwards required Duke Energy to either physically settle the transactions by issuing ~~2.6~~21.3 million shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreements, or net settle in whole or in part through the delivery or receipt of cash or shares. The settlement alternative was at Duke Energy's election. In December 2018, Duke Energy physically settled these equity forwards by delivering 2.6 million shares of common stock in exchange for net proceeds of approximately $195 million.

Separately, in March 2018, Duke Energy marketed an equity offering of 21.3 million shares of common stock through an Underwriting Agreement with Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Barclays Capital Inc. and Goldman Sachs & Co. LLC, as representatives of several underwriters, Credit Suisse Capital LLC and J.P. Morgan Securities LLC as Forward Sellers, and Credit Suisse Capital LLC and J.P. Morgan Chase Bank, National Association, acting as forward purchasers. In connection with the offering, Duke Energy entered into equity forward sale agreements with Credit Suisse Securities (USA) LLC as Agent for Credit Suisse Capital LLC and J.P. Morgan Chase Bank, National Association. The sale price was ~~$75~~ ~~per share less certain net adjustments for an initial forward price of~~ ~~$74.07~~ ~~per share. The Equity Forwards require Duke Energy to either physically settle the transactions by issuing~~ ~~21.3 million~~ shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreements, or net settle in whole or in part through the delivery or receipt of cash or shares. The settlement alternative was at Duke Energy's election. In June 2018, Duke Energy physically settled one-half of the equity forwards by delivering approximately 10.6 million shares of common stock in exchange for net cash proceeds of approximately $781 million. In December 2018, Duke Energy physically settled the remaining equity forward by delivering 10.6 million shares of common stock in exchange for net cash proceeds of approximately $766 million.

~~For the year ended December 31, 2018, Duke Energy issued 2.2 million shares through its DRIP with an increase in additional paid-in capital of approximately $174 million.~~

In March ~~2016,~~and April 2019, Duke Energy marketed ~~an equity offering of 10.6~~two separate tranches, each for 1.1 million shares, of common ~~stock.~~stock through equity forward transactions under the ATM program. The first tranche had an initial forward price of $89.83 per share and the second tranche had an initial forward price of $88.82 per share. In ~~lieu~~May and June 2019, a third tranche of ~~issuing~~1.6 million shares of common stock was marketed and had an initial forward price of $86.23. The equity ~~at the time of the offering, Duke Energy entered into Equity Forwards with Barclays. The Equity Forwards~~forwards required Duke Energy to either physically settle the ~~transactions~~transaction by issuing ~~10.6 million~~ shares in exchange for net proceeds at the then-applicable forward sale price specified by the agreements or net settle in whole or in part through the delivery or receipt of cash or shares. ~~On October 5, 2016, following the close of the Piedmont acquisition,~~The settlement alternative was at Duke Energy's election. In December 2019, Duke Energy physically settled the ~~Equity Forwards in full~~equity forwards by delivering ~~10.6~~3.8 million shares of common stock in exchange for net cash proceeds of approximately ~~$723~~$331 million.

In November 2019, Duke Energy filed a prospectus supplement and executed an EDA under which it may sell up to $1.5 billion of its common stock through a new ATM offering program, including an equity forward sales component. Under the terms of the EDA, Duke Energy may issue and sell shares of common stock through September 2022.

In November 2019, Duke Energy marketed an equity offering of 28.75 million shares of common stock through an Underwriting Agreement. In connection with the offering, Duke Energy entered into equity forward sales agreements with an initial forward price of $85.99 per share. The equity forward sales agreements require Duke Energy to either physically settle the transaction by issuing shares in exchange for net proceeds ~~were~~at the then-applicable forward sale price specified by the agreement, or net settle in whole or in part through the delivery or receipt of cash or shares. The settlement alternatives are at Duke Energy's election. Settlement of the forward sales agreements are expected to occur on or prior to December 31, 2020. If Duke Energy had elected to net share settle these contracts as of December 31, 2019, Duke Energy would have been required to deliver 1.6 million shares.

For the years ended December 31, 2019, and 2018, Duke Energy issued 1.8 million and 2.2 million shares, respectively, through its DRIP with an increase in additional paid-in capital of approximately $160 million and $174 million, respectively.

Preferred Stock

On March 29, 2019, Duke Energy completed the issuance of 40 million depositary shares, each representing 1/1,000th share of its Series A Cumulative Redeemable Perpetual Preferred Stock, at a price of $25 per depositary share. The transaction resulted in net proceeds of $973 million after issuance costs with proceeds used for general corporate purposes and to reduce short-term debt. The preferred stock has a $25 liquidation preference per depositary share and earns dividends on a cumulative basis at a rate of 5.75% per annum. Dividends are payable quarterly in arrears on the 16th day of March, June, September and December, and began on June 16, 2019.

The Series A Preferred Stock has no maturity or mandatory redemption date, is not redeemable at the option of the holders and includes separate call options. The first call option allows Duke Energy to call the Series A Preferred Stock at a redemption price of $25.50 per depositary share prior to June 15, 2024, in whole but not in part, at any time within 120 days after a ratings event where a rating agency amends, clarifies or changes the criteria it uses to assign equity credit for securities such as the preferred stock. The second call option allows Duke Energy to call the preferred stock, in whole or in part, at any time, on or after June 15, 2024, at a redemption price of $25 per depositary share. Duke Energy is also required to redeem all accumulated and unpaid dividends if either call option is exercised.

On September 12, 2019, Duke Energy completed the issuance of 1 million shares of its Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, at a price of $1,000 per share. The transaction resulted in net proceeds of $989 million after issuance costs with proceeds being used to ~~finance~~pay down short-term debt, repay at maturity $500 million senior notes due September 2019, and for general corporate purposes. The preferred stock has a ~~portion~~$1,000 liquidation preference per share and earns dividends on a cumulative basis at an initial rate of 4.875% per annum. Dividends are payable semiannually in arrears on the 16th day of March and September, beginning on March 16, 2020. On September 16, 2024, the First Call Date, and any fifth anniversary of the ~~Piedmont acquisition. As~~First Call Date (each a ~~result~~Reset Date), the dividend rate will reset based on the then current five-year U.S. treasury rate plus a spread of 3.388%.

The Series B Preferred Stock has no maturity or mandatory redemption date, is not redeemable at the option of the ~~acquisition,~~holders and includes separate call options. The first call option allows Duke Energy to call the Series B Preferred Stock at a redemption price of $1,020 per share, in whole but not in part, at any time within 120 days after a ratings event. The second call option allows Duke Energy to call the preferred stock, in whole or in part, on the First Call Date or any subsequent Reset Date at a redemption price in cash equal to $1,000 per share. Duke Energy is also required to redeem all accumulated and unpaid dividends if either call option is exercised.

Dividends issued on its Series A and Series B Preferred Stock are subject to approval by the Board of ~~Piedmont's issued~~Directors. However, the deferral of dividend payments on the preferred stock prohibits the declaration of common stock dividends.



FINANCIAL STATEMENTS	STOCKHOLDERS' EQUITY

The Series A and Series B Preferred Stock rank, with respect to dividends and distributions upon liquidation or dissolution:

senior to Common Stock and to each other class or series of capital stock established after the original issue date of the Series A and Series B Preferred Stock that is expressly made subordinated to the Series A and Series B Preferred Stock;

on a parity with any class or series of capital stock established after the original issue date of the Series A and Series B Preferred Stock that is not expressly made senior or subordinated to the Series A or Series B Preferred Stock;

junior to any class or series of capital stock established after the original issue date of the Series A and Series B Preferred Stock that is expressly made senior to the Series A or Series B Preferred Stock;

junior to all existing and future indebtedness (including indebtedness outstanding ~~stock became the issued~~under Duke Energy's credit facilities, unsecured senior notes, junior subordinated debentures and ~~outstanding shares of a wholly owned subsidiary~~commercial paper) and other liabilities with respect to assets available to satisfy claims against Duke Energy; and

structurally subordinated to existing and future indebtedness and other liabilities of Duke ~~Energy. See Note 2~~Energy's subsidiaries and future preferred stock of subsidiaries.

Holders of Series A and Series B Preferred Stock have no voting rights with respect to matters that generally require the approval of voting stockholders. The limited voting rights of holders of Series A and Series B Preferred Stock include the right to vote as a single class, respectively, on certain matters that may affect the preference or special rights of the preferred stock, except in the instance that Duke Energy elects to defer the payment of dividends for a total of six quarterly full dividend periods for Series A Preferred Stock or three semiannual full dividend periods for Series B Preferred Stock. If dividends are deferred for a cumulative total of six quarterly full dividend periods for Series A Preferred Stock or three semiannual full dividend periods for Series B Preferred Stock, whether or not for consecutive dividend periods, holders of the respective preferred stock have the right to elect two additional ~~information related~~Board members to the ~~Piedmont acquisition.~~Board of Directors.

~~20.~~21. SEVERANCE

During 2018, Duke Energy reviewed its operations and identified opportunities for improvement to better serve its customers. This operational review included the company's workforce strategy and staffing levels to ensure the company iswas staffed with the right skillsets and number of teammates to execute the long-term vision for Duke Energy. As such, Duke Energy extended voluntary and involuntary severance benefits to certain employees in specific areas as a part of workforce planning and digital transformation efforts.

During 2016, Duke Energy and Piedmont announced severance plans covering certain eligible employees whose employment will be involuntarily terminated without cause as a result of Duke Energy's acquisition of Piedmont. These reductions continued into 2017 and were a part of the synergies expected to be realized with the acquisition. Refer to Note 2 for additional information on the Piedmont acquisition.

~~218~~



~~FINANCIAL STATEMENTS~~	~~SEVERANCE~~

~~Severance benefit charges for initiatives and plans discussed above were accrued for a total of approximately 1,900 employees in 2018, 100 employees in 2017 and 600 employees in 2016.~~ The following table presents the direct and allocated severance and related charges ~~recorded~~accrued for approximately 140 employees in 2019, 1,900 employees in 2018 and 100 employees in 2017 by the Duke Energy ~~Registrants. Amounts are included~~Registrants within Operation, maintenance and other on the Consolidated Statements of Operations.



			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Year Ended December 31, 2019	$	16	$	8	$	6	$	3	$	3	$	—	$	1	$	1
Year Ended December 31, 2018	187		102		69		52		17		6		7		2
Year Ended December 31, 2017	15		2		2		1		1		—		1		9

Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont^(a)

Year Ended December 31, 2018 $ 187
$ 102
$ 69
$ 52
$ 17
$ 6
$ 7
$ 2
Year Ended December 31, 2017 15
2
2
1
1
—
1
9
Year Ended December 31, 2016 118
39
40
23
17
3
7


~~(a)~~	~~Piedmont severance benefit charges were $3 million for the two months ended December 31, 2016, and $19 million for the year ended October 31, 2016.~~

The table below presents the severance liability for past and ongoing severance plans including the plans described above.



				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Balance at December 31, 2018	$	205		$	100		$	51		$	41		$	9		$	2		$	2		$	—
Provision/Adjustments	24			4			11			2			10			1			1			—
Cash Reductions	(188		)	(93		)	(49		)	(37		)	(12		)	(2		)	(1		)	—
Balance at December 31, 2019	$	41		$	11		$	13		$	6		$	7		$	1		$	2		$	—

Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Piedmont
Balance at December 31, 2017 $ 19
$ 5
$ 2
$ 1
$ —
$ —
$ —
$ 5
Provision/Adjustments 200
98
50
40
10
2
2
—
Cash Reductions (14 ) (3 ) (1 ) —
(1 ) —
—
(5 )
Balance at December 31, 2018 $ 205
$ 100
$ 51
$ 41
$ 9
$ 2
$ 2
$ —

~~21.~~22. STOCK-BASED COMPENSATION

The Duke Energy Corporation 2015 Long-Term Incentive Plan (the 2015 Plan) provides for the grant of stock-based compensation awards to employees and outside directors. The 2015 Plan reserves 10 million shares of common stock for issuance. Duke Energy has historically issued new shares upon exercising or vesting of share-based awards. However, Duke Energy may use a combination of new share issuances and open market repurchases for share-based awards that are exercised or vest in the future. Duke Energy has not determined with certainty the amount of such new share issuances or open market repurchases.



FINANCIAL STATEMENTS	STOCK-BASED COMPENSATION

The following table summarizes the total expense recognized by the Duke Energy Registrants, net of tax, for stock-based compensation.


	Years Ended December 31,						Years Ended December 31,
(in millions)	2018		2017		2016		2019		2018		2017
Duke Energy	$	56	$	43	$	35	$	65	$	56	$	43
Duke Energy Carolinas	20		15		12		24		20		15
Progress Energy	21		16		12		24		21		16
Duke Energy Progress	13		10		7		15		13		10
Duke Energy Florida	8		6		5		9		8		6
Duke Energy Ohio	4		3		2		5		4		3
Duke Energy Indiana	5		4		3		6		5		4
Piedmont^(a)	3		3				3		3		3


~~(a)~~	~~Piedmont's stock-based compensation costs were not material for the two months ended December 31, 2016. See discussion below for information on Piedmont's pre-merger stock-based compensation plans.~~

Duke Energy's pretax stock-based compensation costs, the tax benefit associated with stock-based compensation expense and stock-based compensation costs capitalized are included in the following table.



	Years Ended December 31,
(in millions)	2019		2018		2017
RSU awards	$	44	$	43	$	41
Performance awards	45		35		27
Pretax stock-based compensation cost	$	89	$	78	$	68
Stock-based compensation costs capitalized	5		5		4
Stock-based compensation expense	$	84	$	73	$	64
Tax benefit associated with stock-based compensation expense	$	19	$	17	$	25

Years Ended December 31,
(in millions) 2018
2017
2016
Restricted stock unit awards $ 43
$ 41
$ 36
Performance awards 35
27
19
Pretax stock-based compensation cost $ 78
$ 68
$ 55
Stock-based compensation costs capitalized 5
4
2
Stock-based compensation expense $ 73
$ 64
$ 53
Tax benefit associated with stock-based compensation expense $ 17
$ 25
$ 20

~~219~~



~~FINANCIAL STATEMENTS~~	~~STOCK-BASED COMPENSATION~~

RESTRICTED STOCK UNIT AWARDS

RSU awards generally vest over periods from immediate to three years. Fair value amounts are based on the market price of Duke Energy's common stock on the grant date. The following table includes information related to RSU awards.



	Years Ended December 31,
	2019		2018		2017
Shares granted (in thousands)	571		649		583
Fair value (in millions)	$	51	$	49	$	47

Years Ended December 31,
2018
2017
2016
Shares awarded (in thousands) 649
583
684
Fair value (in millions) $ 49
$ 47
$ 52

The following table summarizes information about RSU awards outstanding.



			Weighted Average
	Shares		Grant Date Fair Value
	(in thousands)		(per share)
Outstanding at December 31, 2018	1,153		$	77
Granted	571		89
Vested	(631	)	77
Forfeited	(83	)	82
Outstanding at December 31, 2019	1,010		83
RSU awards expected to vest	951		83

Weighted Average
Shares
Grant Date Fair Value
(in thousands)
(per share)
Outstanding at December 31, 2017 1,121
$ 78
Granted 649
76
Vested (545 ) 78
Forfeited (72 ) 77
Outstanding at December 31, 2018 1,153
77
Restricted stock unit awards expected to vest 1,101
77

The total grant date fair value of shares vested during the years ended December 31, 2019, 2018 and 2017, ~~and 2016,~~ was $49 million, $43 million ~~$42 million~~ and ~~$38~~$42 million, respectively. At December 31, ~~2018,~~2019, Duke Energy had ~~$29~~$30 million of unrecognized compensation cost, which is expected to be recognized over a weighted average period of 23 months. Prior to Duke Energy's acquisition of Piedmont, Piedmont had an incentive compensation plan that had a series of three-year performance and RSU awards for eligible officers and other participants. The 2016-2018 performance award cycle was approved subsequent to the Agreement and Plan of Merger between Duke Energy and Piedmont and was converted into a Duke Energy RSU award at the consummation of the acquisition.

PERFORMANCE AWARDS

Stock-based performance awards generally vest after three years if performance targets are met. The actual number of shares issued will range from zero to ~~200 percent~~200% of target shares, depending on the level of performance achieved.



FINANCIAL STATEMENTS	STOCK-BASED COMPENSATION

Performance awards contain performance conditions and a market condition. The performance conditions ~~based on relative TSR compared to a predefined peer group, as well as a performance condition~~are based on Duke Energy's cumulative adjusted ~~EPS. Performance awards granted in 2018~~EPS and ~~2017 also contain a performance condition based on the~~ total incident case rate (total incident case rate is one of our key employee safety ~~metrics.~~

metrics). The market condition ~~component~~is based on TSR of Duke ~~Energy's performance awards~~Energy relative to a predefined peer group.

Relative TSR is valued using a path-dependent model that incorporates expected relative TSR into the fair value determination of Duke Energy’s performance-based share awards. The model uses three-year historical volatilities and correlations for all companies in the predefined peer group, including Duke Energy, to simulate Duke Energy’s relative TSR as of the end of the performance period. For each simulation, Duke Energy’s relative TSR associated with the simulated stock price at the end of the performance period plus expected dividends within the period results in a value per share for the award portfolio. The average of these simulations is the expected portfolio value per share. Actual life to date results of Duke Energy’s relative TSR for each grant are incorporated within the model. For performance awards granted in ~~2018,~~2019, the model used a risk-free interest rate of ~~2.4 percent,~~2.5%, which reflects the yield on three-year Treasury bonds as of the grant date, and an expected volatility of ~~16.0 percent~~14.8% based on Duke Energy's historical volatility over three years using daily stock prices.

The following table includes information related to stock-based performance awards.



	Years Ended December 31,
	2019		2018		2017
Shares granted assuming target performance (in thousands)	320		372		461
Fair value (in millions)	$	27	$	27	$	37

Years Ended December 31,
2018
2017
2016
Shares granted assuming target performance (in thousands) 372
461
338
Fair value (in millions) $ 27
$ 37
$ 25

~~220~~



~~FINANCIAL STATEMENTS~~	~~STOCK-BASED COMPENSATION~~

The following table summarizes information about stock-based performance awards outstanding and assumes payout at the target level.



			Weighted Average
	Shares		Grant Date Fair Value
	(in thousands)		(per share)
Outstanding at December 31, 2018	1,117		$	77
Granted	320		86
Vested	(310	)	75
Forfeited	(18	)	81
Outstanding at December 31, 2019	1,109		80
Stock-based performance awards expected to vest	1,080		80

Weighted Average
Shares
Grant Date Fair Value
(in thousands)
(per share)
Outstanding at December 31, 2017 1,065
$ 79
Granted 372
73
Vested (155 ) 81
Forfeited (165 ) 80
Outstanding at December 31, 2018 1,117
77
Stock-based performance awards expected to vest 1,086
77

The total grant date fair value of shares vested during the years ended December 31, 2019, and 2018, was $23 million and ~~2016, was~~ $13 million, ~~and $25 million,~~ respectively. NoNaN performance awards vested during the year ended December 31, 2017. At December 31, ~~2018,~~2019, Duke Energy had ~~$30~~$27 million of unrecognized compensation cost, which is expected to be recognized over a weighted average period of 2122 months.

~~PIEDMONT~~

Prior to Duke Energy's acquisition of Piedmont, Piedmont had an incentive compensation plan that had a series of three-year performance and RSU awards for eligible officers and other participants. The Merger Agreement provided for the conversion of the 2014-2016 and 2015-2017 performance awards and the nonvested 2016 RSU award into the right to receive $60 cash per share upon the close of the transaction. In December 2015, Piedmont's board of directors authorized the accelerated vesting, payment and taxation of the 2014-2016 and 2015-2017 performance awards, as well as the 2016 RSU award, at the election of the participant. Substantially all participants elected to accelerate the settlement of these awards. As a result of the settlement of these awards, 194 thousand shares of Piedmont shares were issued to participants, net of shares withheld for applicable federal and state income taxes, at a closing price of $56.85 and a fair value of $11 million. The 2016-2018 performance award cycle was approved subsequent to the Merger Agreement and was converted into a Duke Energy RSU award at the consummation of the acquisition.

~~Piedmont's stock-based compensation costs and the tax benefit associated with stock-based compensation expense are included in the following table.~~

(in millions) Year Ended October 31, 2016
Pretax stock-based compensation cost $ 16
Tax benefit associated with stock-based compensation expense 6
Net of tax stock-based compensation cost $ 10

~~22.~~23. EMPLOYEE BENEFIT PLANS

DEFINED BENEFIT RETIREMENT PLANS

Duke Energy and certain subsidiaries maintain, and the Subsidiary Registrants participate in, qualified, non-contributory defined benefit retirement plans. The Duke Energy plans cover most employees using a cash balance formula. Under a cash balance formula, a plan participant accumulates a retirement benefit consisting of pay credits based upon a percentage of current eligible earnings, age or age and years of service and interest credits. Certain employees are eligible for benefits that use a final average earnings formula. Under these final average earnings formulas, a plan participant accumulates a retirement benefit equal to the sum of percentages of their (i) highest three-year, four-year, or five-year average earnings, (ii) highest three-year, four-year, or five-year average earnings in excess of covered compensation per year of participation (maximum of 35 years) or (iii) highest three-year average earnings times years of participation in excess of 35 years. Duke Energy also maintains, and the Subsidiary Registrants participate in, non-qualified, non-contributory defined benefit retirement plans that cover certain executives. The qualified and non-qualified, non-contributory defined benefit plans are closed to new participants.

Duke Energy approved plan amendments to restructure its qualified non-contributory defined benefit retirement plans, effective January 1, 2018. The restructuring involved (i) the spin-off of the majority of inactive participants from two plans into a separate inactive plan and (ii) the merger of the active participant portions of such plans, along with a pension plan acquired as part of the Piedmont transaction, into a single active plan. Benefits offered to the plan participants remain unchanged except that the Piedmont plan's final average earnings formula was frozen as of December 31, 2017, and affected participants were moved into the active plan's cash balance formula. Actuarial gains and losses associated with the Inactive Plan will be amortized over the remaining life expectancy of the inactive participants. The longer amortization period lowered Duke Energy's 2018 pretax qualified pension plan expense by approximately $33 million.

Duke Energy uses a December 31 measurement date for its defined benefit retirement plan assets and obligations.

As a result of the application of settlement accounting due to total lump-sum benefit payments exceeding the settlement threshold (defined as the sum of the service cost and interest cost on projected benefit obligation components of net periodic pension costs) for one of its qualified pension plans, Duke Energy recognized settlement charges of $94 million, primarily as a regulatory asset within Other Noncurrent Assets on the Consolidated Balance Sheets as of December 31, 2019 (an immaterial amount was recorded in Other income and expenses, net within the Consolidated Statement of Operations).

~~221~~



FINANCIAL STATEMENTS	EMPLOYEE BENEFIT PLANS

Settlement charges recognized by the Subsidiary Registrants as of December 31, 2019, which represent amounts allocated by Duke Energy for employees of the Subsidiary Registrants and allocated charges for their proportionate share of settlement charges for employees of Duke Energy’s shared services affiliate, were $53 million for Duke Energy Carolinas, $26 million for Progress Energy, $20 million for Duke Energy Progress, $6 million for Duke Energy Florida, $4 million for Duke Energy Indiana, $2 million for Duke Energy Ohio and $8 million for Piedmont.

The settlement charges reflect the recognition of a pro-rata portion of previously unrecognized actuarial losses, equal to the percentage of reduction in the projected benefit obligation resulting from total lump-sum benefit payments as of December 31, 2019. Settlement charges recognized as a regulatory asset within Other Noncurrent Assets on the Consolidated Balance Sheets are amortized over the average remaining service period for participants in the plan. Amortization of settlement charges is disclosed in the tables below as a component of net periodic pension costs.

Net periodic benefit costs disclosed in the tables below represent the cost of the respective benefit plan for the periods presented prior to capitalization of amounts reflected as Net property, plant and equipment, on the Consolidated Balance Sheets. Only the service cost component of net periodic benefit costs is eligible to be capitalized. The remaining non-capitalized portions of net periodic benefit costs are classified as either: (1) service cost, which is recorded in Operations, maintenance and other on the Consolidated Statements of Operations; or as (2) components of non-service cost, which is recorded in Other income and expenses, net, on the Consolidated Statements of Operations. Amounts presented in the tables below for the Subsidiary Registrants represent the amounts of pension and other post-retirement benefit cost allocated by Duke Energy for employees of the Subsidiary Registrants. Additionally, the Consolidated Statements of Operations of the Subsidiary Registrants also include allocated net periodic benefit costs for their proportionate share of pension and post-retirement benefit cost for employees of Duke Energy’s shared services affiliate that provide support to the Subsidiary Registrants. However, in the tables below, these amounts are only presented within the Duke Energy ~~column.~~column (except for amortization of settlement charges). These allocated amounts are included in the governance and shared service costs discussed in Note ~~13.~~14.

Duke Energy’s policy is to fund amounts on an actuarial basis to provide assets sufficient to meet benefit payments to be paid to plan participants. Duke Energy does not anticipate making any contributions in ~~2019.~~2020. The following table includes information related to the Duke Energy Registrants’ contributions to its qualified defined benefit pension plans.



			Duke				Duke		Duke		Duke		Duke
	Duke		Energy		Progress		Energy		Energy		Energy		Energy
(in millions)	Energy		Carolinas		Energy		Progress		Florida		Ohio		Indiana		Piedmont
Contributions Made:
2019	$	77	$	7	$	57	$	4	$	53	$	2	$	2	$	1
2018	141		46		45		25		20		—		8		—
2017	19		—		—		—		—		4		—		11

Duke
Duke
Duke
Duke
Duke

Duke
Energy
Progress
Energy
Energy
Energy
Energy

(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana

Piedmont^(a)

Contributions Made:








2018 $ 141
$ 46
$ 45
$ 25
$ 20
$ —
$ 8
$ —
2017 19
—
—
—
—
4
—
11
2016 155
43
43
24
20
5
9


~~(a)~~	~~Piedmont contributed $10 million to its U.S. qualified defined benefit pension plan during the two months ended December 31, 2016, and $10 million for the year ended October 31, 2016.~~

~~222~~



FINANCIAL STATEMENTS	EMPLOYEE BENEFIT PLANS

QUALIFIED PENSION PLANS

Components of Net Periodic Pension Costs


	Year Ended December 31, 2018																								Year Ended December 31, 2019
				Duke						Duke			Duke			Duke			Duke									Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy						Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont			Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	182		$	58		$	51		$	29		$	22		$	5		$	11		$	7		$	158		$	49		$	46		$	26		$	20		$	4		$	9		$	5
Interest cost on projected benefit obligation	299			72			94			43			50			17			23			11			317			75			100			45			54			18			26			10
Expected return on plan assets	(559		)	(147		)	(178		)	(85		)	(91		)	(28		)	(42		)	(22		)	(567		)	(147		)	(178		)	(88		)	(89		)	(28		)	(43		)	(22		)
Amortization of actuarial loss	132			29			44			21			23			5			10			11			108			24			39			15			24			4			8			8
Amortization of prior service credit	(32		)	(8		)	(3		)	(2		)	(1		)	—			(2		)	(10		)	(32		)	(8		)	(3		)	(2		)	(1		)	—			(2		)	(9		)
Amortization of settlement charges																									6			2			1			1			—			2			—			—
Net periodic pension costs^(a)(b)	$	22		$	4		$	8		$	6		$	3		$	(1	)	$	—		$	(3	)	$	(10	)	$	(5	)	$	5		$	(3	)	$	8		$	—		$	(2	)	$	(8	)



	Year Ended December 31, 2018
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	182		$	58		$	51		$	29		$	22		$	5		$	11		$	7
Interest cost on projected benefit obligation	299			72			94			43			50			17			23			11
Expected return on plan assets	(559		)	(147		)	(178		)	(85		)	(91		)	(28		)	(42		)	(22		)
Amortization of actuarial loss	132			29			44			21			23			5			10			11
Amortization of prior service credit	(32		)	(8		)	(3		)	(2		)	(1		)	—			(2		)	(10		)
Net periodic pension costs^(a)(b)	$	22		$	4		$	8		$	6		$	3		$	(1	)	$	—		$	(3	)



	Year Ended December 31, 2017
				Duke						Duke			Duke			Duke			Duke
	Duke			Energy			Progress			Energy			Energy			Energy			Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio			Indiana			Piedmont
Service cost	$	159		$	48		$	45		$	26		$	19		$	4		$	9		$	10
Interest cost on projected benefit obligation	328			79			100			47			53			18			26			14
Expected return on plan assets	(545		)	(142		)	(167		)	(82		)	(85		)	(27		)	(42		)	(24		)
Amortization of actuarial loss	146			31			52			23			29			5			12			11
Amortization of prior service credit	(24		)	(8		)	(3		)	(2		)	(1		)	(1		)	(2		)	(2		)
Settlement charge	12			—			—			—			—			—			—			12
Other	8			2			2			1			1			—			1			1
Net periodic pension costs^(a)(b)	$	84		$	10		$	29		$	13		$	16		$	(1	)	$	4		$	22

Year Ended December 31, 2016
Duke
Duke
Duke
Duke
Duke
Duke
Energy
Progress
Energy
Energy
Energy
Energy
(in millions) Energy
Carolinas
Energy
Progress
Florida
Ohio
Indiana
Service cost $ 147
$ 48
$ 42
$ 24
$ 19
$ 4
$ 9
Interest cost on projected benefit obligation 335
86
106
49
55
19
28
Expected return on plan assets (519 ) (142 ) (168 ) (82 ) (84 ) (27 ) (42 )
Amortization of actuarial loss 134
33
51
23
29
4
11
Amortization of prior service credit (17 ) (8 ) (3 ) (2 ) (1 ) —
(1 )
Settlement charge 3
—
—
—
—
—
—
Other 8
2
3
1
1
1
1
Net periodic pension costs^(a)(b)
$ 91
$ 19
$ 31
$ 13
$ 19
$ 1
$ 6


(a)	Duke Energy amounts exclude $4 million, $5 million ~~$7 million~~ and $8$7 million for the years ended December 2019, 2018 ~~2017~~ and ~~2016,~~2017, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.


(b)	Duke Energy Ohio amounts exclude $2 million, $3$2 million and $4$3 million for the years ended December 2019, 2018 ~~2017~~ and ~~2016,~~2017, respectively, of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006.

~~223~~



FINANCIAL STATEMENTS	EMPLOYEE BENEFIT PLANS

Piedmont
Two Months Ended Year Ended
(in millions)
December 31, 2016 October 31, 2016
Service cost $ 2
$ 11
Interest cost on projected benefit obligation 2
9
Expected return on plan assets (4 ) (24 )
Amortization of actuarial loss 2
8
Amortization of prior service credit (1 ) (2 )
Settlement charge 3
—
Net periodic pension costs $ 4
$ 2

Amounts Recognized in Accumulated Other Comprehensive Income and Regulatory Assets


	Year Ended December 31, 2018																			Year Ended December 31, 2019
				Duke						Duke		Duke		Duke		Duke							Duke						Duke			Duke			Duke		Duke
	Duke			Energy			Progress			Energy		Energy		Energy		Energy				Duke			Energy			Progress			Energy			Energy			Energy		Energy
(in millions)	Energy			Carolinas			Energy			Progress		Florida		Ohio		Indiana		Piedmont		Energy			Carolinas			Energy			Progress			Florida			Ohio		Indiana		Piedmont
Regulatory assets, net increase (decrease)	$	298		$	170	��	$	40		$	31	$	9	$	10	$	30	$	8	$	(212	)	$	(156	)	$	(79	)	$	(59	)	$	(20	)	$	12	$	22	$	—
Accumulated other comprehensive loss (income)
Deferred income tax expense	$	(2	)	—			1			—		—		—		—		—
Deferred income tax expense (benefit)																				$	20		—			1			—			(1		)	—		—		—
Amortization of prior year service credit	1			—			—			—		—		—		—		—		1			—			—			—			—			—		—		—
Amortization of prior year actuarial losses	10			—			(4		)	—		—		—		—		—		(15		)	—			(2		)	—			3			—		—		—
Net amount recognized in accumulated other comprehensive income	$	9		$	—		$	(3	)	$	—	$	—	$	—	$	—	$	—	$	6		$	—		$	(1	)	$	—		$	2		$	—	$	—	$	—


	Year Ended December 31, 2017																							Year Ended December 31, 2018
				Duke						Duke			Duke			Duke		Duke									Duke					Duke		Duke		Duke		Duke
	Duke			Energy			Progress			Energy			Energy			Energy		Energy						Duke			Energy		Progress			Energy		Energy		Energy		Energy
(in millions)	Energy			Carolinas			Energy			Progress			Florida			Ohio		Indiana			Piedmont			Energy			Carolinas		Energy			Progress		Florida		Ohio		Indiana		Piedmont
Regulatory assets, net (decrease) increase	$	(212	)	$	(70	)	$	(49	)	$	(37	)	$	(11	)	$	9	$	(19	)	$	(64	)
Regulatory assets, net increase																								$	298		$	170	$	40		$	31	$	9	$	10	$	30	$	8
Accumulated other comprehensive (income) loss
Deferred income tax expense	$	—		$	—		$	3		$	—		$	—		$	—	$	—		$	—		$	(2	)	$	—	$	1		$	—	$	—	$	—	$	—	$	—
Prior year service credit arising during the year	1			—			—			—			—			—		—			—			1			—		—			—		—		—		—		—
Amortization of prior year actuarial losses	(7		)	—			(7		)	—			—			—		—			—			10			—		(4		)	—		—		—		—		—
Net amount recognized in accumulated other comprehensive income	$	(6	)	$	—		$	(4	)	$	—		$	—		$	—	$	—		$	—		$	9		$	—	$	(3	)	$	—	$	—	$	—	$	—	$	—



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

1-32853	DUKE ENERGY CORPORATION ~~(a Delaware corporation)~~ ~~550 South Tryon Street~~ ~~Charlotte, 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 IRS Employer Identification Number~~		~~Commission file number~~		~~Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number~~
1-4928		DUKE ENERGY CAROLINAS, LLC ~~(a North Carolina limited liability company)~~ ~~526 South Church Street~~ ~~Charlotte, North Carolina 28202-1803~~ ~~704-382-3853~~ ~~56-0205520~~		~~1-3274~~		~~DUKE ENERGY FLORIDA, LLC~~ ~~(a Florida limited liability company)~~ ~~299 First Avenue North~~ ~~St. Petersburg, Florida 33701~~ ~~704-382-3853~~ ~~59-0247770~~
~~1-15929~~	~~PROGRESS ENERGY, INC.~~ ~~(a North Carolina corporation)~~ ~~410 South Wilmington Street~~ ~~Raleigh, North Carolina 27601-1748~~ ~~704-382-3853~~ ~~56-2155481~~		~~1-1232~~		~~DUKE ENERGY OHIO, INC.~~ ~~(an Ohio corporation)~~ ~~139 East Fourth Street~~ ~~Cincinnati, Ohio 45202~~ ~~704-382-3853~~ ~~31-0240030~~
~~1-3382~~	~~DUKE ENERGY PROGRESS, LLC~~ ~~(a North Carolina limited liability company)~~ ~~410 South Wilmington Street~~ ~~Raleigh, North Carolina 27601-1748~~ ~~704-382-3853~~ ~~56-0165465~~		~~1-3543~~		~~DUKE ENERGY INDIANA, LLC~~ ~~(an Indiana limited liability company)~~ ~~1000 East Main Street~~ ~~Plainfield, Indiana 46168~~ ~~704-382-3853~~ ~~35-0594457~~
~~1-6196~~	~~PIEDMONT NATURAL GAS COMPANY, INC.~~ ~~(a North Carolina corporation)~~ ~~4720 Piedmont Row Drive~~ ~~Charlotte, North Carolina 28210~~ ~~704-364-3120~~ ~~56-0556998~~				56-0205520


~~SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:~~
~~Registrant~~1-3382	DUKE ENERGY PROGRESS, LLC	56-0165465



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



Estimated aggregate market value of the common equity held by nonaffiliates of Duke Energy at June 30, 2018.	$	56,283,598,357
Number of shares of Common Stock, $0.001 par value, outstanding at January 31, 2019.	727,010,882



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


Registrant	Title of each classTrading symbolswhich registered


Duke Energy Corporation ~~(Duke Energy)~~		Common Stock, $0.001 par value		DUK New York Stock Exchange LLC


Duke Energy		5.125% Junior Subordinated Debentures due ~~January 15, 2073~~		DUKH New York Stock Exchange LLC


Duke Energy		5.625% Junior Subordinated Debentures due ~~September 15, 2078~~		DUKB New York Stock Exchange LLC


Duke Energy	Depositary Shares, each representing a 1/1,000th DUK PR A New York Stock Exchange LLC



Estimated aggregate market value of the common equity held by nonaffiliates of Duke Energy at June 30, 2019.	$	64,230,558,771
Number of shares of Common Stock, $0.001 par value, outstanding at January 31, 2020.	733,321,965


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	DUKE ENERGY	9
	GENERAL	9	GENERAL	9
	BUSINESS SEGMENTS	9	BUSINESS SEGMENTS	9
	EMPLOYEES	21	EMPLOYEES	21
	EXECUTIVE OFFICERS	22	EXECUTIVE OFFICERS	22
	ENVIRONMENTAL MATTERS	22	ENVIRONMENTAL MATTERS	22
	DUKE ENERGY CAROLINAS	23	DUKE ENERGY CAROLINAS	23
	PROGRESS ENERGY	23	PROGRESS ENERGY	23
	DUKE ENERGY PROGRESS	23	DUKE ENERGY PROGRESS	23
	DUKE ENERGY FLORIDA	23	DUKE ENERGY FLORIDA	24
	DUKE ENERGY OHIO	24	DUKE ENERGY OHIO	24
	DUKE ENERGY INDIANA	24	DUKE ENERGY INDIANA	24
	PIEDMONT	24	PIEDMONT	24

1A.	RISK FACTORS	24	RISK FACTORS	24

1B.	UNRESOLVED STAFF COMMENTS	32	UNRESOLVED STAFF COMMENTS	32

2.	PROPERTIES	33	PROPERTIES	33

3.	LEGAL PROCEEDINGS	37	LEGAL PROCEEDINGS	37

4.	MINE SAFETY DISCLOSURES	37	MINE SAFETY DISCLOSURES	37

PART II.
5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	38	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	38

6.	SELECTED FINANCIAL DATA	39	SELECTED FINANCIAL DATA	39

7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	40	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	40

7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	83	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	75

8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	84	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	76

9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	259	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	243

9A.	CONTROLS AND PROCEDURES	260	CONTROLS AND PROCEDURES	244

PART III.
10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	262	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	246

11.	EXECUTIVE COMPENSATION	262	EXECUTIVE COMPENSATION	246

12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	262	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	246

13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	263	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	247

14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	263	PRINCIPAL ACCOUNTING FEES AND SERVICES	247

PART IV.
15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	264	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	248
	EXHIBIT INDEX	E-1	EXHIBIT INDEX	E-1
	SIGNATURES	E-2	SIGNATURES	E-2


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



1-15929	PROGRESS ENERGY, INC.	56-2155481



1-1232	DUKE ENERGY OHIO, INC.	31-0240030



			~~Title of each class~~



TABLE OF CONTENTS


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


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


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


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


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


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


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


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


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


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


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


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


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


◦	The inherent risks associated with the operation of nuclear facilities, including environmental, health, safety, regulatory and financial risks, including the financial stability of third-party service providers;


◦	The timing and extent of changes in commodity prices and interest rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets;


◦	The results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings, interest rate fluctuations, compliance with debt covenants and conditions and general market and economic conditions;


◦	Credit ratings of the Duke Energy Registrants may be different from what is expected;


◦	Declines in the market prices of equity and fixed-income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans and nuclear decommissioning trust funds;


◦	Changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants;


◦	The level of creditworthiness of counterparties to transactions;